Foreman Automobile Co. v. Morris

Opinion of the Court by Judge Sampson Reversing. This proceeding was instituted in the Calloway circuit court under the new act of the G-eneral Assembly, [2] 1922, commonly called the Declaratory Judgment Law, for the purpose of obtaining a construction and enforcement of a written contract entered into between the appellant and appellee, whereby the latter agreed to erect a large building of stated dimensions and character upon a certain lot in the city of Murray to be rented to and used by appellant as a garage and sales place for automobiles. The contract sets out in detail the character of building to be erected and, excluding the specifications for the building, reads: “This contract made and entered into this the 13th day of September, 1915, by and between M. T. Morris, party of the. first part, and the Foreman Automobile Company, incorporated, party of the second part. “Witnesseth: That first party agrees to build a garage on the lot known as the F. P. Stum lot which lies on the corner just east of the M. E. Qhurch South, in the city of Murray, Kentucky, said garage to be built as soon as possible after this date and to be built according to the following specifications. (Then follows the specifications.) “The first party leases to second party the building to be constructed as herein described at four hundred fifty ($450.00) dollars per year to August 1, 1917, said rental to begin the day the building is completed and to be payable monthly; also first party hereby gives the second party the option to renew this contract for a year at a time as long as second party desires not exceeding a period of twenty years; and in case of renewal of this contract on or about August 1, 1917, or at any time thereafter, second party is to pay first party $500.00’ per year rental; also second party agrees to renew this contract each year after August 1, 1917, providing second party has the Ford motor'agency for Calloway county; also first party is to have free storage for his family car whenever he may desire so long as the building is leased by party of the second part.” The foregoing contract was executed in duplicate and signed by each of the parties. A general demurrer was filed to the petition as amended and the court taking the view that the contract was unilateral sustained the demurrer and upon plaintiff’s failure to plead further, dismissed the case, and this appeal results. The question is, therefore, upon the sufficiency of the.petition as amended. The substance of the rent contract above copied may be stated as follows: [3] Morris let tbe building from its completion in 1915, and grounds, to the automobile company to August 1,1917, at $150.00 per year, payable in monthly installments, and the company agreed to pay tbe rents. Morris gave to tbe company tbe option to extend tbe rental contract from August 1, 1917, for a year at a time so long as tbe company desired to use tbe building, not exceeding a period of twenty years, on condition only that tbe extension of tbe contract on and from August 1,1917, or at tbe beginning of any year thereafter, shall be allowed tbe company on tbe payment to Morris of $500.00 per year as rental in monthly installments. Tbe company agreed and obligated itself to continue tbe lease in force from year to year after August 1, 1917, so long as it continued to be tbe agent of tbe Ford Motor Company in Calloway county, and also to give Morris free storage room for bis car in tbe garage so long as it continued to bold tbe premises. After tbe lease contract was entered into, according to tbe averments of tbe petition, tbe garage was built and turned over to tbe automobile company some time in 1915, and it held and used tbe same, paying its rentals promptly until August 1, 1917, at which time it elected to bold tbe lease for another year at $500.00 per year, and paid those rentals and at the end of that year elected to bold tbe premises for another year and so on until April, 1922, when tbe automobile company was about to enter into a contract of sale of its agency for Ford cars, machinery and acc.essories to one Beale and to assign to him its lease on tbe garage, when Morris, tbe lessor, learning of this and being informed be could get a much larger rental for tbe use of tbe garage, notified appellant company that tbe lease bad been terminated and thereafter be would not and did not receive rentals from appellant company although duly tendered; thereupon the automobile company, before closing its trade with Beale, instituted this action to determine whether it bad a right under-tbe terms of tbe lease-contract to assign the leasehold to Beale, and if it could not do so, it desired to know whether it can itself continue to bold the lease against Morris and conduct an automobile business. As by tbe terms of tbe contract tbe automobile company assumed certain obligations and appellant Morris assumed other obligations, tbe contract was mutual and enforceable and tbe court was in error in bolding it to be unilateral. [4] The next important question in the ease is whether the leasehold was assignable, or conversely stated, would an attempt to transfer the lease by assignment work a forfeiture thereof? Our statutes, by section 2292, provides: “Unless the landlord consents thereto in writing, every assignment, or transfer of his term or interest in the premises, or any portion thereof, by one who is a tenant at will or by sufferance, or who has a term less than two years, shall operate a forfeiture to the landlord, who, after having given the occupant ten days’ written notice to quit, may re-enter and take possession, or may, by writ of forcible entry or detainer, or the proper procedure, recover possession of the premises from any occupant thereof, whoever she or he may be.” Construing this section according to its plain intent a tenant cannot assign the leasehold or any portion thereof if his term is less than two years, and we have held in the case of Grizzle v. Pendleton, 15 Bush 115, that the word “term” is intended to and refers to the original time for which the lease was to continue; and that a tenant who originally had a term for two years or more could not be dispossessed under this section of the statutes even though he had occupied the premises for a portion of the time and the remaining portion was less than two years. A contract like the one under consideration which gives absolutely to the tenant a certain fixed period and at the end of such term the option to extend the lease for a year at a time but not to exceed a given number of years, has been held to be a contract for more than one year and the landlord cannot oust his tenant under the terms of section 2292', Kentucky Statutes. This rule is very well expressed in 16. R. C. L. 831, where the text reads: “It has been held that an assignment of a lease providing for a term of one year, with the option on the part of the lessee to renew from year to year for five years, does not violate a statute prohibiting the assignment, without the lessor’s written consent, of a term not exceeding two years, as such option transferred the term into a lease for more than one year.” The text is supported by Donovan v. Brewing Co., 92 Mo. App. 341; Jones, et al v. Board of Trade, etc., 99 Mo. App. 443. It therefore appears that the lease under consideration was for a term of more than one year, and was not subject to be terminated by the landlord through the methods set out in section 2292, Kentucky Statutes. [5] The leasehold did not depend upon the appellant company continuing its agency for the Ford Motor Company except to the extent that the said company obligated itself to continue to occupy the premises and to pay the rents from year to year so long as they held such agency, but the automobile company was not obligated to continue the agency in order to continue the lease, for the lease may be continued for the full term of twenty years even though Beale first acquired from the automobile company the said agency. For the reasons indicated the judgment of the lower court must be reversed for proceedings consistent with this opinion. Judgment reversed.