Wattles v. South Omaha Ice & Coal Co.

Ragan, O. On the 1st day of November, 1894, Gurdon W. Wattles and F. L. Cotton entered into an agreement in writing in and by which Wattles leased to Cotton for five years from said date the east one-half of the southwest quarter of the northwest quarter of section 1, township 15 north and range thirteen (13) west of the 6th P. M., “together with the buildings situated thereon.” A rent of $6,000 was reserved, payable in 60 installments of $100 each. The first installment was paid at the date of the execution of the lease and one installment fell due on the first day of each month thereafter. In the lease, Cotton covenanted as follows: “That at the expiration of the term above granted * * * he will quietly and peaceably yield up possession of said premises * * in as good condition as the same were when entered upon, ordinary wear or damage by fire excepted. * * * It is understood and agreed that the buildings on the above described property have been placed in good repair by [the lessor] and shall be kept in the same condition by [the lessee] during the term of this lease, natural decay and wear and tear excepted.” Cotton assigned his interest in this lease to the South Omaha Ice & Coal Company, hereinafter called lessee, which took possession of the leased premises and began using the same for the purposes for which they were leased; that is to say, for harvesting ice formed on the waters on said leased lands and storing such ice in the buildings thereon. The rent reserved was paid up to the 1st day of September,1896. On the 22d day of August of said year the buildings on the leased premises “were destroyed and rendered entirely valueless by a violent wind storm or hurricane.” Notwithstanding the destruction of the ice houses, the lessor claimed that he was entitled to collect the rent reserved in the lease accruing subsequent to the destruction of the buildings; that he was under no obligation to rebuild the destroyed ice houses, but that the lessee was bound to re — 255 — build tbe same. Tbe lessee denied tbat he was bound to rebuild tbe destroyed ice bouses and insisted tbat be was entitled to an apportionment of tbe rent reserved until sucb time as tbe lessor should rebuild tbe bouses destroyed. Tbe parties made up an agreed case under tbe provisions of sections 567, 568, 569 of tbe Code of Civil Procedure and submitted it to tbe district court of Douglas county. Tbe parties filed in tbe agreed case in tbe district court a stipulation of tbe facts. Tbis stipulation recited tbe execution of tbe lease between Wattles and Cotton; tbe assignment of bis interest in tbe lease by Cotton to tbe South Omaha Ice & Coal Company; tbe covenants in tbe lease already mentioned; tbe taking possession of tbe leased premises by tbe lessee; tbe payment of tbe rent to September, 1896, and tbe destruction of tbe ice bouses by a hurricane. Tbe stipulation further recited tbat tbe premises bad been leased for tbe sole and exclusive purposes of gathering ice formed on tbe waters on said lands and storing sucb ice in tbe buildings situate thereon; tbat 15 acres of the demised land were covered with water from which in tbe winter ice was gathered for storage; tbat tbe destroyed buildings were 6 in number, built together, each 100 feet long and 20 feet in width, and bad a storage capacity for ice of from 8,000 to 10,000 tons; tbat there were no other buildings or improvements of any kind on tbe leased premises at the time they were leased or since; tbat tbe fair rental value of tbe entire premises was $1,200 per year, and tbat tbe fair rental value of tbe premises since tbe destruction of tbe ice bouses, or without them, was $600 per year. Tbe district court was of opinion tbat tbe agreements and promises made in the lease by tbe lessee amounted to a covenant on bis paid to rebuild tbe destroyed ice bouses and tbat be was liable for all the rent reserved in tbe lease and entered a decree accordingly. Tbe lessee has appealed. Tbis case should be treated in all respects as though it was an ordinary action at law by the lessor to recover — 256 — the rent reserved in the lease and that the lessee had interposed as a .defense the destruction, without his fault or the fault of the lessor, of a substantial part of the leased premises, and invoked in Ms answer, by way of a cross-petition, the equitable power of the court for an apportionment of the rent. 1. The lessee covenanted to keep in repair the leased premises and at the expiration of the term surrender them in as good condition as they were when he entered, ordinary wear and tear and natural decay excepted. Does this covenant include a promise by the lessee to restore the buildings destroyed without his fault? That it does is the first argument urged in support of the decree. It is insisted that such was the rule of construction applied to such a covenant at common law. The earliest American case which we have been able to find, which supports the contention under consideration, is Phillips v. Stevens, 16 Mass., 237, decided in 1819. The lessee covenanted that he “would keep in repair, support and maintain all and singular the fences and buildings, saving and excepting the natural decay of the same, as should be needful, at his own proper cost and charge; and at the end of said term * * * would quietly leave, surrender, and yield up the premises in as good condition as the same were in” at the date of his lease. The buildings on the leased premises were destroyed by fire without the fault of the lessee, and the supreme court of Massachusetts, in construing the covenant in the lease, held it to be a contract binding the lessee to rebuild the burned buildings. In Beach v. Crain, 2 N. Y., 87, the lease provided that the lessor should, at his own cost, erect a gate at the terminus of a road on the leased premises and keep, the gate there during his pleasure, and that all repairs necessary to be made to said gate were to be made by the lessee. Some person unknown, but without the fault of the lessee, removed the gate, and the court of appeals of New. York held that the covenant of the lessee to repair — 257 — the gate included a contract on his paid to replace it with a new one. In Polack v. Pioche, 35 Cal., 416, it seems that the lease contained the usual covenant of the lessee to repair and keep in repair the demised premises. The buildings on the leased land were destroyed by the breaking of the embankment of a reservoir, and this was caused by the act of someone, but not by any fault of the lessee. The court held that the covenant of the lessee to repair bound him to restore or rebuild the destroyed buildings; and the court declared that such had been the settled rule of construction of such a covenant since the time of Edward III. In Ely v. Ely, 80 Ill., 532, the lessee covenanted that he had received the leased premises in good order and condition, and that he would keep them in repair at his own expense, and that at the end of the term he would deliver the same up to his lessor in as good order and condition as when they were entered upon. The buildings upon the leased premises were wholly destroyed by fire without the fault of the lessee; and the supreme court of Illinois held that the legal effect of the covenant of the lessee to keep the demised buildings in repair, etc., was that in case the buildings burned he would rebuild the same. In David v. Ryan, 47 Ia., 642, the lessee covenanted that she would keep the leased premises in a good state of repair. They were destroyed by fire and the court held that the covenant of the lessee bound her to restore the buildings. In 1 Taylor, Landlord & Tenant [8th ed.], sec. 357, the rule is stated as follows: “When a tenant is under an express covenant to repair the premises, he is liable to make good all loss and damage which they may sustain, and must even rebuild in case of casualty by fire or otherwise.” In 12 Am. & Eng. Ency. of Law, p. 721, the authorities in support of the rule under consideration are collated and the rule is thus stated: “The alteration in the ten — 258 — ant’s liability for repairs, produced by Ms executing a lease in which lie makes an express covenant to repair, is so marked that be becomes liable to make good all loss and damage the premises may sustain, and must even rebuild in case of casualty by fire or otherwise.” Among the cases cited in the Encyclopedia of Law and by Taylor is the case of Phillips v. Stevens, supra, and that case seems to have been relied upon in the cases cited by us from New York, Illinois, California, and Iowa. The court in Phillips v. Stevens based its decision upon the principle that when one “by his own contract * * * creates a duty or charge upon himself he is bound to make it good notwithstanding any accident by inevitable necessity, because he might have provided against it by his contract;” and this is the principle upon which the cases from Illinois, Iowa, California, and New York mentioned above were decided. No one can find fault with the principle that a man should be compelled to perform what he has promised; but, with all due respect to the supreme court of Massachusetts, it seems to us that the court ignored the entire issue. The question there was not whether the lessee was obliged to perform a covenant he had made, but the question was what covenant he had made; that is, whether his covenant to repair and keep in repair the demised premises included within it a contract on his part to rebuild the buildings on the leased premises if they should be destroyed. But in that case, as in the other cases cited, and in every case that we have been able to find which supports the contention of the appellee here, it was taken for granted that the rule at common law was that a covenant by a lessee to repair was equivalent to and involved a covenant to rebuild. Assuming, however, that such was and is the rule of construction at common law, are we bound by that rule? Section 1, chapter 15, Compiled Statutes of this state, provides that so much of the common law of England as is applicable and not inconsistent with any law passed — 259 — or to be passed by the legislature of this state, is adopted and declared to be law within the state. Section 53, chapter 73, Compiled Statutes, provides that “in the construction of every instrument creating or conveying, ox* authorizing or requiring the creation or conveyance of any real estate, or interest therein, it shall be the duty of the courts of justice to carry into effect the true interest of the parties, so far as such intent can be collected from the whole instrument, and so far as such intent is consistent with the rules of law.” If, then, the rule at common law is as is contended by the appellee, it is at most but a rule of construction, and we are not bound to apply that rule of construction to a real estate contract if to do so would result in giving to the contract an effect not within the contemplation or intention of the parties at the time it was made. We do not know why a lease for real estate should not be construed as any other contract, — why we should not apply to it the test universal among all civilized peoples, namely,'to look to the subject-matter of the contract, the language of the parties, and ascertain, if we can, what was their intention; on what proposition did the minds of the contracting parties meet; what did they consciously consent to. If we apply this rule of construction to the contract under consideration we have for subject-matter of the contract a small tract of land, fifteen acres of which was covered with water. From this water ice could be harvested in the winter season, and stored in buildings thexx standing upon the leased premises. The lessee accepted his lease and entered upon these premises to use them solely for the purposes of harvesting and storing ice. When he did so he stipulated that the leased premises were in good repair, in good condition, and he promised that he would keep them in good repair and at the expiration of his lease so surrender them. What did the parties to this contract understand and intend! by the terms “repair” and “keep in repair”? These words “repair” and “keep in repair” are not technical words, nor should they be given a technical or strained interpret — 260 — tation. They should receive their ordinary interpretation. To repair, as it is ordinarily used, means to amend, not to make a new thing, but to refit, to make good or restore an existing thing. (See Todd v. Inhabitants of Rowley, 8 Allen [Mass.], 51; Stevens v. Milnor, 21 N. J. Eq., 358.) When we speak of repairing a thing, the very expression presupposes something in existence to be repaired. If a carpenter contracts to repair a house, or a mason a chimney, the ordinary construction of these contracts would not be that these parties had agreed to build a new house or a new chimney. If the construction of the lessee’s covenant contended for by the appellee here be correct, then had this entire tract of land and its buildings been Swept away by a flood of the Missouri river, the lessee would be liable for their value to the lessor. Before we can say that a lessee assumed the liability of any such a contingency as that supposed, we must find his assumption of such a risk in the clear and express language of his contract. In Pollard v. Shafer, 1 Dall. [U. S.], 210, the lessee covenanted to pay rent and deliver up the premises in good repair. The lessor sued for a failure of the covenant to keep in good repair. The lessee pleaded that an alien enemy — the British army — invaded the city of Philadelphia, took possession of the leased premises, and committed the destruction made the subject of the lessor’s action. The question was whether the special matter pleaded was a defense. The supreme court of Pennsylvania held that it was. In that case, as in the case at bar, it was insisted that the covenant of the lessee to keep the demised premises in repair bound him to restore the buildings if destroyed. The court said: “I am of opinion that the defendant is excused from his coAmnant to deliver up the premises in good repair: (1) Because a covenant to do this against an act of God or an enemy ought to be special and express, and so clear that no other meaning could be put upon it; (2) because the defendant had no consideration, no premium for this risk, and it — 261 — was not in the contemplation of either party. * * * Suppose when the lease was executed that the lessee had been asked, ‘Is it your meaning that in case the buildings shall be destroyed by an act of God or public enemies you are to rebuild or repair them?’ His answer would have been, unquestionably, ‘No, I never entertained such an idea.’ Should the like question have been put to the lessor, his answer would certainly have been ‘No, I did not expect anything so unreasonable.’ ” In Levey v. Dyess, 51 Miss., 501, it was held that in the absence of covenants by the lessee amounting to express covenants to rebuild structures destroyed by casualty, or by proof of negligence by the lessee, the loss is on the landlord. In Warren v. Wagner, 75 Ala., 188, the lessee covenanted that at the expiration of the lease he would surrender the premises in as good order and condition as they were when he accepted them, usual wear and tear excepted, and it was held that this covenant did not include an agreement on the part of the lessee to rebuild the structures on the premises destroyed by fire. To the same effect see Howeth v. Anderson, 25 Tex., 557. In that case the court said: “Leases are construed like other written agreements, so as to give effect to the intention of the parties.” To the same effect Warner v. Hitchins, 5 Barb. [N. Y.], 666. In that case the covenant of the lessee was to surrender possession of the leased premises at the expiration of the term in the same condition they were in at the commencement of the lease, natural wear and tear excepted. The leased buildings were destroyed by fire and it was insisted in behalf of the lessor that the covenants of the lessee included a covenant to rebuild. But the court said that in order to hold the lessee liable for the value of the destroyed buildings he must have expressly agreed to rebuild them or restore them. In Wainscott v. Silvers, 13 Ind., 497, the covenant of the lessee was, at the expiration of the term, to surrender the leased premises in as good condition as when they — 262 — were received. The court said: “The law as between landlord and tenant we understand to be that the tenant is not responsible for buildings accidentally burned down during his tenancy, unless he has expressly covenanted or agreed to repair. It is not sufficient to charge him that he agreed * * * to surrender the premises at the end of his term in the same repair or condition they were in at the time of the contract.” We reach the conclusion that an express agreement of a lessee to keep in good repair leased premises, and at the expiration of the term surrender their possession in as-good condition as they were when hé entered, natural decay, wear, and tear excepted, is not, and does not include, a covenant to rebuild buildings destroyed without his fault. 2. The lessor in this case is under no obligation to rebuild the destroyed buildings during the term, for the simple reason that he has not contracted so to do. (Turner v. Townsend, 42 Neb., 376.) 3. By the lease under consideration the premises were let to the lessee for a specified term, in consideration of which he covenanted to pay to the lessor a specific sum as rent, payable in installments on certain dates during the term. The lease contained no provision binding the lessor to rebuild. The lease contained no provision for any abatement of the rent promised, for any reason whatsoever. The question presented is: A substantial part of the leased premises having been destroyed without the fault of either lessor or lessee, is the latter entitled to an apportionment of the rent accruing thereafter? The common law construction of such a covenant as this would not relieve the tenant from payment of the entire rent reserved. The old English case of Paradine v. Jane, Aleyn [Eng.], 26, was a suit on a covenant to pay rent. The lessee defended the action on the ground that during the civil wars of England Prince Rupert, an alien born, with a hostile army, had driven him out of possession of the premises. But the court decided that although the whole — 263 — army had been alien born enemies, the lessee was still bound to pay the entire rent reserved, because he had expressly covenanted so to do. This construction of the covenant to pay rent has been very generally followed in the United States. (See the rule stated and the authorities collated in 12 Am. & Eng. Ency. of Law, p. 741.) In 1787 the question was presented to the supreme court of Pennsylvania in Pollard v. Shaffer, 1 Dall. [U. S.], 210. In that case the lessee defended against an action for rent upon the ground that he had been deprived of the use of the premises by an alien enemy, namely, the British army. But tiie court followed the common law rule announced in Paradme v. Jane, supra, and held the lessee liable for the entire rent reserved. The principle upon which the court based its decision was (1) that the covenant to pay the rent was express, and (2) that since, by the lease, the lessee was to have the advantage of casual profits of the leased premises, he should run the hazard of casual losses during the term. The question was presented to the supreme court of Massachusetts in 1809, in Fowler v. Bott, 6 Mass., 62. The lease in that case was for a mill and it was destroyed by fire during the term. The court followed the common law rule and held that the lessee was liable for the entire rent reserved. In that case the court seems to have based its decision upon the ground that the lease amounted to a bargain and sale of the leased premises for the term. The common law rule of construction quoted above was also followed in Fowler v. Payne, 49 Miss., 42, Harrington v. Watson, 11 Ore., 143, Womack v. McQuarry, 28 Ind., 103, Lanpher v. Glenn, 33 N. W. Rep. [Minn.], 10, and in many other cases not necessary to cite here. Chancellor Kent, discussing the question under consideration, says: “It is well settled that upon an express contract to pay rent the loss of the premises by fire or inundation, or external violence, will not exempt the party from his obligation.” (3 Kent, Commentaries [13th ed.], sec. 466.) The rule announced in Paradine v. Jane has been abolished by statute in the — 264 — state of New York, and perhaps some other states, and the courts of last resort in the states of Kansas and South Carolina have declined to follow the rule, but, with these exceptions, we think it may be safely said that in every other state where the rule has been presented for consideration to the court of last resort it has been followed. In 1832 the supreme court of Ohio announced an exception to this rule. In that case the leased premises consisted of a cellar or basement in a building several stories high. The entire building was destroyed by fire, without the fault of the lessee, and the lease contained no covenant on the paid of the lessor to rebuild, and the court held that the destruction of the leased premises terminated the relation of landlord and tenant. This case was followed and the exception sustained in Stockwell v. Hunter, 11 Met. [Mass.], 448; Graves v. Berdan, 26 N. Y., 498; Harrington v. Watson, 11 Ore., 143; Ainsworth, v. Ritt, 38 Cal., 89; McMillan, v. Solomon, 42 Ala., 356. Indeed, the exception to the rule seems to be about as well established in the United States as the rule itself. In some of the cases following the rule the reasons for its existence are said to be that it is only equitable that the lessee should pay the entire rent notwithstanding a destruction of a part of the leased premises, since the lessor must bear the loss of the destroyed property; and that the enforcement of the rule tends to diminish the carelessness and increase the vigilance of a lessee. We do not know what reason led to the formulation of this rule, but if the one quoted above is the correct one, it is of no force at the present time, because the lessor may protect his interest in the property while in the hands of the lessee by insurance. The reason given for the formulation of the exception to the mile is that by a lease of a room or basement in a building no interest in the. soil passes to the lessee, and that when the basement or room is destroyed the leased estate is gone and the relation of landlord and tenant terminated. But it seems to us that another principle underlies and controls the excep — 265 — tion, and that is this: That the leased room or building having been destroyed without the fault of the lessee,, the consideration for his promise to pay the rent accruing thereafter failed. The common law rule announced in Paradine v. Jane is merely a rule of construction of a real estate contract. We have already seen to what extent the common law is in force in this state and have noted the command of the legislature to the courts of this state in construing reai estate contracts to look to the subject-matter of the contract, the language employed by the contracting parties, and to ascertain if possible, and give effect to, the intention of the contracting parties; A lease for real estate is not a bargain and sale for a given time of the lessor’s interest in the leased premises. It is rather a hiring or letting of property for a certain' time and for a named consideration; and when a lessee covenants to pay rent for a term the consideration for that covenant is his right to the use and occupancy of the thing' leased. In the covenant of a lessee to pay at stated times certain sums of money for the rent — that is, for the privilege or the right to use and occupy the leased premises — is involved the condition that such leased property shall be in existence and be capable of being used and enjoyed by the lessee. The promise to pay a stated sum of money as rent for leased premises for a certain term is based upon the presumption that the leased premises shall exist for the term. In the case at bar, if the lessee had been evicted from part of the demised premises by the holder of a title-paramount to that of the lessor’s, the lessee would be entitled to an apportionment of the rent. (Taylor, Landlord & Tenant, sec. 387, and cases there cited.) Under the exception established to the rule, had the entire leased premises been washed away by a flood, the relation of landlord and tenant existing between the parties to this suit would have from that moment ceased. This relation would not have been terminated by the act of the parties, but by operation of law, and the lessee would have been — 266 — relieved from the payment of rent accruing thereafter, upon the principle that the consideration for Ms promise to pay such rent had failed. If we look to the subject-matter of the lease under consideration and the language employed by the parties in making the contract, we cannot say that, either of these parties, at the time they made this lease, had in contemplation the fact that the leased premises, or any part thereof, might be destroyed by a hurricane. They did not contract with reference to such a casualty. To use the language of McKean, C. J., in Pollard v. Shaffer, supra, had the lessor been asked at the time this lease was made, “Is it your intention to hold the lessee liable for the entire rent reserved in case the leased buildings shall be destroyed by cyclone?” he doubtless would have answered that he had never considered that contingency. If the question had been asked the lessee whether it was his intention to pay the entire $6,000 rent even if one-half of the leased property should be destroyed before the expiration of the term, it is very probable that he would have said that he had no such an intention. Yet in construing this contract we must, if possible, give effect to the intention of the parties, notwithstanding the common law rule of construction. To' us it seems that the lessor, in effect, said to the lessee: “I own this tract of land and these ice houses; they are in good repair; they are fit for the purposes of harvesting and storing ice; I will hire them to you for five years if you will pay me $1,200 per year and keep the premises in good repair.” To .this the lessee assented. This was an offer and a promise upon the part of the lessor to furnish for the entire time the hired property; it was a promise and a covenant upon the part of the lessee to pay the monthly installments of rent for the right to use and occupy the hired property if it existed. But it was not a proposition on the part of the lessor to quitclaim his right to the use and occupancy of the leased premises to the lessee for five years in consideration of $6,000 paid, or to be paid, by the latter. This rule of construction of the — 267 — common law is a harsh and a technical one. We do not certainly know the conditions that existed when it was formulated, nor do we know in what reasons it had its origin, but we do know that since the decision of Paradme v. Jane the conditions of the race have changed; its conscience and intellect have been quickened, and this rule, however meritorious it may have been at the time and place of its origin, is opposed to the genius and spirit of the present age and in conflict with its judgment and conscience. In one or two instances, in states where its effect has not been even limited by statute, its applicability to real estate contracts in this country has been questioned. Such was the case of Ripley v. Wightman, 4 McCord [S. Car.], 447, where it was held that the fact that a house had been rendered untenantable by a hurricane afforded the lessee a defense to the action for the rent. In Whitaker v. Hawley, 25 Kan., 674, the buildings upon the leased premises were wholly destroyed by fire without the fault of the lessee, and the court held that because of the accidental destruction by fire of the buildings upon the leased premises the lessee was entitled to an apportionment of the rent. In that case Brewer, J., speaking for the court, said: “And right here it may be remarked that a lease is in one sense a running rather than a completed contract. It is an agreement for a continuous interchange of values between landlord and tenant rather than a purchase single and completed of a term or estate in lands.” We are aware that this case stands practically alone, and in a footnote to McMillan v. Solomon, 94 Am. Dec., 654, its isolation is pointed out with a remark by the editor that it is supported by “much charity and some logic.” We approve of the opinion because we think it is good law as well as good sense. We approve of it also because it is a magnificent protest against slavish devotion to antiquated rules; and we approve of it because it breathes the spirit of humanity and. equity and is based on a thought of the nineteenth century. We reach the conclusion that the common law rule — 268 — of construction under consideration is not in force in this state and formulate the rule as follows: Where a substantial portion of leased premises is destroyed without the fault of the lessee, he is entitled to an apportionment of the rent covenanted to be paid and accruing thereafter, in the absence of an express assumption by him of the lisle of such destruction. The decree appealed from is reversed and the cause remanded with instructions to the district court to enter a decree in accordance with this opinion. Reversed and remanded.