Hartford Deposit Co. v. Rector

Hr. J dstice Sears delivered the opinion of the court. It is contended by counsel for appellee that the effect of the. assignment by appellee to Clayton was, under the provision of the lease, to release appellee from any further liability for rent. In this connection it was sought to show by parol what the understanding of the parties was in the inserting of the provisions as to assigning the lease. All evidence in this behalf was, however, properly excluded by the court. The parol negotiations of the parties at the time of making the lease were all merged in the sealed writing, and there is no ambiguity in its terms. The question presented is, therefore, do the- provisions of the lease operate to relieve appellee from any further liability for rent after assignment by him to Clayton. We think not. The most that can be said of the provision permitting appellee to assign, is that it operates to relieve him from the necessity of obtaining the lessor’s assent to the assignment. He stood then, as though no limitation upon his right to assign was contained in the lease, or as he would, if, under such limitation, the landlord had assented to the assignment. But the right of the tenant to, assign his leasehold does not carry with it a release of all obligation upon his covenants to pay rent for the remainder of the term after the assignment. ¡Nor does the acceptance of rent by the landlord from the assignee accomplish such a release of the assigning tenant. The privity of contract is not disturbed by the fact that there is no longer any privity of estate between the landlord and the tenant who assigned. 2 Taylor on Landlord & T. (8th Ed.), 438; Sexton v. Chicago. Storage Co., 129 Ill. 318; Bliss v. Gardner, 2 Ill. App. 422; Wall v. Hinds, 4 Gray, 256; Bailey v. Wells, 8 Wis. 141; Barnard v. Godscall, Cro. Jac., 309; Auriol v. Mills, 4 T. R. 94. ÜSTo question arises here of any distinction between the actions of covenant and debt. The abstract fails to disclose the form of action, and the point is not argued. We are of opinion that appellee remained liable for the rent under the terms of the lease after the assignment to Clayton. The second ground of defense to the action of appellant was an alleged surrender and acceptance. There is no evidence to support such a defense. The only evidence which could tend to such a defense was a part of the stipulation of facts, which was excluded by the court, as we think, properly. ¡No question as to the propriety of this ruling is presented by any assignment of cross-errors. There is no basis whatever, as we view the case, for holding that there was here any surrender and acceptance. The mere fact of the assignment and the acceptance of rent from the assignee carries no conclusion of a surrender and acceptance. Hoerdt v, Hahn, 91 Ill. App. 514. We come, then, to a consideration of the third ground of defense interposed by appellee to the suit of appellant, viz., that the action of the appellant corporation in leasing to appellee was ultra vires and that no action will lie upon such a contract, .because it is illegal and void. This ground of defense would be good if it could be said that the act here in question, viz., the leasing of this real estate to appellee, is an act which the appellant corporation could in no event perform under its authorized powers. It is now established that the defense of ultra vires may be successfully interposed in a collateral proceeding where it is made to appear that the disputed act is one which the corporation was not under any circumstances authorized to perform. But the difficulty with the defense as here applied is that the act here in question, viz., holding real estate for the purposes of the corporation and leasing a portion of such real estate for other purposes, is an act which might properly be done under the charter powers of the corporation. The most that can be said of the act is that it is an abuse of a power. In such case the rule is that the plea of ultra vires will not avail, for such abuse of a power can not be attacked collaterally. The only method of correction being through action of the State, the abuse, if any, of its power by the appellant, can not be set up collaterally by appellee under the plea of ultra vires. Wilmans v. Bank, 1 Gil. 667; Bradley v. Ballard, 55 Ill. 413; Darst v. Gale, 83 Ill. 136; Hough v. C. C. Land Co., 73 Ill. 23; Alexander v. Tolleston, 110 Ill. 65; Kadish v. G. C. E. L. & B. Ass’n, 151 Ill. 532; Barnes v. Suddard, 117 Ill. 237; Cooney v. Booth Packing Co., 169 Ill. 370; Eckman v. C., B. & Q. R. R. Co., 169 Ill. 312; C. & A. R. R. Co. v. Keegan, 185 Ill. 70. We do not regard the decision in Nat. Home B. & L. Ass’n v. Home Bank, 181 Ill. 35, as asserting any different doctrine than that above announced. It, perhaps, presented more clearly a distinction not noted in the earlier Illinois cases, but it does not announce that a mere abuse of an authorized power can be availed of by any other than the State, and certainly not by one who has entered into the relation of tenant to the corporation, and by such claim of ultra vires disputes his landlord’s right to demise. The decision in that case holds that a loan association organized under the laws of 1879 has no power to acquire and hold real estate except such as has been mortgaged to it, or in which it has an interest, and that contracts made for the purchase of real estate in which it has no interest are not enforceable. Here the corporation has unquestioned powers to acquire and hold real estate necessary for the purposes of its authorized business. The only question here is, has the corporation abused its authorized power in the manner and extent in which it did the act, which, in a proper manner and to a proper extent, it had power to do. In the Home Bank case, as in some other Illinois cases, the matter is treated as a question of estoppel, based upon the fact of an executed contract, the benefits of which had been enjoyed by the corporation. In other cases it is treated as a matter of the right of any other than the State to raise question as to abuse of an authorized power by a corporation. In Eckrum v. C., B. & Q. R. R. Co., supra, the court said of this rule of estoppels “ And this rule applies with equal force to the other party setting up that the contract was ultra vires the corporation.” Therefore, in either view, we are of opinion that the defense of ultra vires will not here avail. We are of opinion that the learned trial judge held correctly that the first and second grounds of defense above noted were insufficient to defeat a recovery by appellant, and that there was error in holding that the third ground, viz., the plea of ultra vires, constituted a valid defense. The finding of the court should have been for the appellant company for the amount of rent sued for. This suit arose upon a confession of judgment under the warrant of attorney contained in the lease for the sum of $700, entered September 5, 1899. There is due upon that judgment the amount of $742.50. The judgment of the Superior Court is reversed and judgment is entered here for seven hundred and forty-two dollars and fifty one-hundredths. Reversed and judgment in this court.