Perkins v. Langdon

Denny, J. The defendant demurred ore tenus to the complaint in this Court, on the ground that it does not state a cause of action against the defendant. A careful consideration of all the allegations contained in the plaintiffs’ complaint and the amendments thereto, leads us to the conclusion that the demurrer should be sustained. After interposition of the demurrer, counsel for plaintiffs argued that the terms of the lease were such as to constitute a joint enterprise, and therefore the lessor and the lessees were operating the warehouses as partners. "We do not concur in this view. The provisions of G.S. 42-1 are controlling on this point, which statute reads as follows: “No lessor of property, merely by reason that he is to receive as rent or compensation *389 for its use a share of the proceeds or net profits of the business in which it is employed, or any other uncertain consideration, shall be held a partner of the lessee.” S. v. Keith, 126 N.C. 1114, 36 S.E. 120; Lawrence v. Weeks, 107 N.C. 119, 12 S.E. 120; Day v. Stevens, 88 N.C. 83. The gravamen of plaintiffs’ cause of action is the sale of the leased warehouses before the expiration of the lease. But the weakness of the plaintiffs’ position lies in the fact that the lease contains no stipulation against a sale of the leased properties during its existence. It is quite clear, from an examination of the pleadings, that the plaintiffs do not allege that the defendant made any promise to them not to sell the warehouses during the existence of the lease. The only controversy between them on this point, was whether or not the lease was to be canceled if the lessor should sell the leased properties before the expiration of the lease. “The owner of leased property may sell it during the continuance of the lease, and the lessee cannot prevent the landlord from selling the premises, subject to the lease, in the absence of covenants, or resist a change of landlords.” 51 C.J.S., p. 895, 35 C.J. 1213. It is also said in 32 Am. Jur. 99 : “A landlord may transfer his reversion, or any part thereof, ... his right to make such transfer is incident to his right of property and necessary to the full enjoyment of it. It is generally held that in the absence of a stipulation to that effect in the lease, a voluntary transfer of the reversion by the landlord neither terminates the leasehold estate nor deprives the tenant of any of his rights under the lease. ... On the other hand, there is authority to the effect that where the lessor transfers the reversion to an innocent purchaser for value who had no notice of the tenancy, and nothing sufficient to put him upon inquiry existed at the time of the sale, the transfer destroys the leasehold, is a wrong to the lessee, and renders the lessor liable to the lessee in an action at law for damages.” Likewise, Tiffany Real Property, Third Edition, Vol. 1, Chap. 5, Section 110, has this to say about the transfer of reversion: “The lessor’s reversion, or estate in reversion, may be transferred by the lessor to another, and by the latter again transferred, and so again by the last transferee, and each transferee becomes the landlord for the time during which he holds title to the reversion. The ordinary mode in which such a transfer, with its consequent change of landlords, occurs, is by voluntary conveyance by the lessor, or by his transferee, of his estate in the land. The conveyance need not refer in terms to the lease, a conveyance of the premises by the landlord being necessarily subject to the rights of the tenant, and consequently being of a reversionary interest only, provided the grantee, or a purchaser for value, has notice, actual or constructive, of the lease. Such notice the grantee may have from the tenant’s posses *390 sion of tbe premises or from tbe record of tbe lease, if tbe lease is witbin tbe recording laws, as leases, except for brief periods, usually are. In case tbe lease is witbin tbe recording laws, and is not recorded, and tbe grantee, being a purchaser for value, bas no notice thereof otherwise, be will take free from any rights in tbe tenant under tbe lease. If, on the other band, tbe lease is not witbin tbe recording laws, tbe grantee, although a purchaser for value, and without notice thereof, will, it seems, take subject thereto.” Tbe right of a landlord to sell leased premises, in tbe absence of a stipulation or covenant not to do so, is supported by tbe overwhelming weight of authority. Thompson on Real Property (Permanent Edition), Vol. 3, Chap. 23, Sec. 1380; Grover v. Norton, 183 N.Y.S. 131; Friedlander v. Rider, 30 Neb. 783, 47 N.W. 83; Peterman v. Kingsley, 140 Wisc. 666, 123 N.W. 137; Kilmer v. White, 254 N.Y. 64, 171 N.E. 908; In re O’Donnell, 240 N.Y. 99, 147 N.E. 541; Hughes v. Donlon, 149 Tenn. 506, 261 S.W. 960, 35 A.L.R. 506; Wilson v. Beck (Texas Civil Appeals), 286 S.W. 315; Garetson v. Hester, 57 Cal. App. 2d 39, 133 Pac. 2d 863. Moreover, rents due under a lease follows the reversion. G.S. 42-2; Kornegay v. Collier, 65 N.C. 69; Bullard v. Johnson, 65 N.C. 436; Holly v. Holly, 94 N.C. 670. It does not appear from tbe plaintiffs’ pleadings whether tbe plaintiffs were in tbe actual possession of tbe premises in question at tbe time tbe defendant sold tbe warehouses, or whether tbe possession bad been released to tbe defendant for tbe interim period between seasons. Furthermore, tbe pleadings are silent as to whether tbe purchasers of tbe leased premises knew of tbe existence of tbe outstanding lease at tbe time they purchased tbe properties, or whether they were innocent purchasers for value and bad no notice of tbe tenancy and nothing sufficient to put them on inquiry existed at tbe time of tbe transaction. Neither is it alleged that plaintiffs made any demand on tbe new owners of tbe property for tbe possession of tbe leased premises during tbe 1948 marketing season, in accordance with tbe terms of their lease or that such possession was refused. What tbe facts are in this respect, will no doubt have a material bearing on tbe future course of this litigation. But when tbe allegations of tbe plaintiffs’ pleadings are considered in light of tbe authorities cited herein, we bold that where tenants merely allege that their landlord bas sold tbe leased premises during tbe existence of their lease, and that they have been damaged as a result of such sale, such allegations, standing alone, do not state a cause of action. Tbe demurrer ore tenus is sustained, tbe judgment below is set aside and tbe cause remanded to tbe Superior Court of Alamance County, where tbe plaintiffs may have leave to amend their pleadings as provided *391 by statute, if so advised. G.S. 1-131; Watson v. Lee County, 224 N.C. 508, 31 S.E. 2d 535. Demurrer to complaint sustained.