Sheridan v. O. E. Doherty, Inc.

Chadwick, C. J. — The facts of this case are admitted. One Gerald was a sublessee of the Seattle Brewing & Malting Company, which held by lease from the Gottstein Investment Company, the owner. The lease from the Investment Company to the Brewing Company, as well as the lease from the Brewing — 562 — Company to Gerald, expired on August 31, 1917. On November 1,1916, Gerald sublet a part of tbe premises to the appellant for a term expiring August 31, 1921. Unlike tbe two former leases, appellant’s lease contained several restrictive covenants and clauses. Tbe lease of tbe Brewing Company and tbe lease of Gerald, having expired by limitation on August 31, 1917, and not having been renewed, tbe owner (Gottstein Investment Company) leased tbe entire premises to respondents. • Appellant refused to quit upon demand. A notice was served under tbe forcible entry and detainer statute, and after three days appellant was ousted under tbe process of tbe court. Tbe ouster was sustained at tbe trial, and judgment entered. Tbe principal reliance of appellant is that, whereas, an action of unlawful detainer will not lie unless tbe conventional relation of landlord and tenant exists between tbe parties (Meyer v. Beyer, 43 Wash. 368, 86 Pac. 661; Shannon v. Grindstaff, 11 Wash. 536, 40 Pac. 123; Seattle Operating Co. v. Cavanaugh, 6 Wash. 325, 33 Pac. 356); and there being no such relation by contract or by estoppel resting in tbe conduct of tbe parties, tbe court was in error in overruling its demurrer to tbe complaint and entering judgment upon tbe admitted facts. It is admitted that ejectment will lie, but it is argued that, having seized upon tbe summary remedy given by statute in aid of tbe right of a landlord to re-possess himself of bis property at tbe termination of a lease, tbe court must accept the theory of tbe appellant and proceed only in tbe exercise of its special jurisdiction ; that it cannot try out tbe general issue of title and take a judgment which is in legal effect a writ of ejectment. State ex rel. Seaborn Shipyards Co. v. Sup’r Ct., 102 Wash. 215, 172 Pac. 826; Jeffries v. — 563 — Spencer, 86 Wash. 133, 149 Pac. 651; Big Bend Land Co. v. Huston, 98 Wash. 640, 168 Pac. 470. Whether this conclusion logically follows depends upon the soundness of the premise assumed by counsel—-that is, that there is no privity of contract or estate between the parties and hence no relation of landlord and tenant. It is argued that the owner or one claiming under him cannot maintain unlawful detainer unless it is shown that the defendant holds in the same estate as the one who stands in immediate contractual relation with the owner or his immediate successor in interest. In other words, that, appellant having taken possession under a lease containing restrictive clauses and covenants differing in form from the conditions and covenants contained in the contract of his immediate lessor, there is no such privity of estate or contract as will sustain a summary proceeding; that a forcible detainer implies a breach of contract, and appellant being in no way answerable to respondents, either by express words or by the implication of its contract, they must find their remedy, if any, in ejectment. To sustain this theory, we must assume as a premise that the demise from Gerald to appellant is in fact and in law a sublease. It is established that, if a lessee sublet the premises or a portion of the premises for the entire term or the remainder of a term, the subletting will operate as an assignment either of the entire estate or pro tanto as the case may he. Tiffany, Landlord and Tenant, § 151; Taylor, Landlord and Tenant (9th ed.) § 16; Underhill, Law of Landlord and Tenant, §624; McAdam, Landlord and Tenant (4th ed.) §233. In Weander v. Claussen Brewing Ass’n, 42 Wash. 226, 84 Pac. 735, 114 Am. St. 110, the question was — 564 — whether the relation of landlord and tenant existed, between the owner and a sublessee of a part of the premises for the entire term. The court said: “In order to pass upon this question it is necessary to determine what was the legal effect of the written instrument which they jointly executed. Appellant contends that it was a lease, and that it constituted him a tenant of respondent, while the latter urges that it was in law an assignment and not a lease, for the reason that it transferred all rights which respondent acquired from its lessor, including the entire term under its lease, with no reversionary interest reserved. The instrument is in the form of a lease, and contains apt words designating it as such; but it covers the entire term which respondent had acquired by its own lease. No portion of the term whatever is reserved for reversion to respondent. It is conceded that the terms and covenants of the instrument are in the exact words of the lease held by respondent, and no other or new covenants are included therein. We think, under the authorities, that the legal effect of such an instrument is that of an assignment in full of the lease by its holder; that it is not a new lease, which creates a new lessor and subtenant, with the relation of landlord and tenant between the two, but the new nominal lessee becomes an assignee of the whole leasehold estate affected.” So if Gerald had sublet to appellant in- the terms of his own lease and for a term equal in time, respondents could maintain an action of unlawful detainer upon the expiration of Gerald’s term unembarrassed by the plea that the conventional relation of landlord and tenant did not exist. The controlling question, then, is whether a sublease for a, term beyond the original term: — the sublease containing independent and restrictive covenants distinguishing it in form from the contract of the immediate lessor with the owner or landlord—is a sub-, letting which will bar the relation of landlord and — 565 — tenant, or is an assignment entire or pro tanto which will create the relation and thus give the owner or one claiming under him avail of the right to maintain unlawful detainer as against a sublessee holding over after the expiration of the original term. It is said, with much show of reason and sustaining authority, that the relation of landlord and tenant never exists between the owner and a subtenant, for there is neither privity of contract nor of estate to sustain the relation. 16 R. C. L., p. 879; Shannon v. Grindstaff, supra. We are not inclined to raise the question whether the contract as between Gerald and appellant was one other than of subtenancy; for the transaction may be called a lease between the second and third parties and nevertheless operate as an assignment as between the original lessor and such third party. 16 R. C. L., pp. 824, 825. When the question is raised between the owner and the sublessee, the courts have not hesitated to look to the legal effect of the contract. No importance is attached to the words “demise” or “lease” or to the form, covenants or conditions of the contract if its legal effect be to convey the entire term. Underhill, Landlord and Tenant, § 626; Woodhull v. Rosenthal, 61 N. Y. 382. It is upon this principle that a subletting for the entire or remainder of a term is held to be an assignment, giving the owner a right to maintain an action of unlawful detainer as against one claiming as a sub-lessee is sustained. There is another principle—and we deem it to be decisive of this case; it is that, in order to sustain a sublease, there must be a reversionary interest in the premises, however small it may be. The only covenants which may be relied upon to assert or sustain a reservation of a reversion in Gerald (his demise being for a' time beyond his term) is a right to re-enter for nonpayment of rent or condition broken. — 566 — But it is held that a right of re-entry for condition broken or for the nonpayment of rent cannot exist as an independent condition, but only as an incident to an estate or interest for the protection of that for which it is reserved. “A mere reservation of rent, or a reservation of a right of re-entry for a breach of any of the conditions of the lease, will not change the legal relation of the parties .... and the introduction of new covenants into the instrument, does not change the legal effect of giving up the reversion.” "Wood, Landlord and Tenant (2d ed.), p. 179, note. The right of re-entry for nonpayment of rent or for condition broken, is not of itself a reservation of a reversion or any part of the estate granted, but is a mere chose in action. “When enforced, the grantor is in through the breach of the condition, and not by the reverter.” Craig v. Summers, 47 Minn. 189, 49 N. W. 742, 15 L. R. A. 236. See, also, Weander v. Claussen Brewing Ass’n, 42 Wash. 226, 84 Pac. 735, 114 Am. St. 110, and cases there cited; Ohio Iron Co. v. Auburn Iron Co., 64 Minn. 404, 67 N. W. 221; Underhill, Landlord and Tenant, § 626. But if we grant that Gerald had a reversionary interest up to the time his lease expired, it ceased when he quit, leaving the sublease in legal effect no more than an assignment for his term. “A lease by a lessee to a third person, extending beyond his own term, is not a sublease, but is in legal effect an assignment of his lease.” Mulligan v. Hollingsworth, 99 Fed. 216 (syllabus). “So, if lessee for three years assigns his term for four years, or demises the house for four years, he does not by this gain a tortious reversion, and it does but amount to an assignment of his interest.” Hicks v. Downing, 1 Lord Raymond, 99. — 567 — See, also, Wollaston v. Hakewill, 3 Man. & G., 297; Taylor, Landlord and Tenant (9th. ed.), § 111. It seems fundamental that Gerald could not transfer a greater interest or estate in the premises than he could assert against his own landlord. “The transfer .... of the tenant’s entire interest in the whole premises, leaving no reversion in him, has almost invariably been regarded, not as a sublease but as an assignment .... And the fact that the transfer is in form a sublease, or reserves rights as against the transferee similar to such as are ordinarily reserved on a lease, has ordinarily been considered immaterial.” Tiffany, Landlord and Tenant, § 151. The covenants relied on to take this case out of these rules in no way touch the reversion. They are personal to Gerald, and when his interest expired by the lapse of time, they lost all their contractual force. The condition that appellant would not keep, sell or give away intoxicating liquors upon the premises, and like conditions, were purely personal, and in no way affect the primary estate or reversion. Therefore, to sustain itself under the covenants and restrictive clauses of its lease, appellant must show that some fragment of the term remains in its lessor. To hold otherwise, would put us to the extremity of holding that a transfer, in form a sublease coequal in time with the original lease, would be an assignment making the sublessee liable as a tenant holding over; but if the original lessee assumes to grant more than the whole of his estate, his grantee will be protected as a sublessee, and as such may insist upon ejectment instead of the more summary remedy of unlawful detainer. The legal effect of an assignment of a lease is to put the assignee in the shoes of the assignor. This is but another way of say: ing that the sublessee cannot claim more as against — 568 — the owner or one claiming under him than the immediate lessor could have claimed. "When we have determined that the demise is in legal effect an assignment, and not a subletting, it follows that we must hold that the owner or one claiming under him may oust appellant as one holding over after the expiration of his term, for the privity of estate is established. “If the sublease so effectually passes the whole term that it must be held to be an assignment, then privity of estate is established, and the sublessee becomes bound by the covenants of the original lease, irrespective of his intention.” St. Joseph & St. L. R. Co. v. St. Louis, I. M. & S. R. Co., 135 Mo. 173, 36 S. W. 602, 33 L. R. A. 607. See, also, Shannon v. Grindstaff, 11 Wash. 536, 40 Pac. 123; Capital Brewing Co. v. Crosbie, 22 Wash. 269, 60 Pac. 652. So that, whether the duty of appellant to quit at the expiration of the term of its immediate lessor lies in the covenants of the lease to Gerald or arises out of the statute or the general rules of law, the result is the same—he is a tenant holding over; the conventional relation of landlord and tenant is established, and he may be ousted by summary process. It is complained that the court entered a judgment in form a judgment of ejectment; but, if this be granted, it cannot avail appellant. The case of State ex rel. Seaborn Shipyards Co. v. Superior Court is not in point. We held in that case that one who came into court under the forcible entry and detainer statute (Chapter II, Title "VT, Rem. Code) could not, by amendment to his pleadings, convert his action into one for ejectment. This, because of the special jurisdiction exercised by the court in such cases. Here the case was brought as one for unlawful detainer and was — 569 — tried as such. If the court committed error in the form of its judgment, why, we are here for the correction of such errors. The judgment will he affirmed with directions to enter a formal judgment under the statute. Main, Mackintosh, Tolman, and Mitchell, JJ., concur.