Adler & Co. v. Western Railway

SOMERVILLE, J. Tlie plaintiff sued the defendant railroad company for setting fire to and destroying on, to Avit, November 24, 1912, his Avarehouse and its contents, located on a lot adjoining the defendant’s right of way. The defendant interposed a special plea which may be summarized as follows: On January 4, 1902, the defendant leased the warehouse premises to E. Gillman and assigns, “for the term of ten years from the 4th day of January, 1902, and the further term hereinafter mentioned,” viz.: “In the event the landlord shall not exercise said option of purchase at the end of said ten year period, the said E. Gillman, tenant, his successors or assigns, shall have option after 60 days’ written notice given prior to the termination of said lease, either to remove the material in said building * * * or to-continue the occupation of same for another ten years’ period under this agreement.” Gillman occupied the premises under this lease until June 16, 1906, when he executed to Laughlin & Co-, a Avritten assignment of the lease, along with a grant of all his title and rights thereunder; and on September 10, 1906, Laughlin & Co. assigned their rights, title, and interest in the lease to the plaintiff’s, L. C. Adler & Co. Thereafter Adler & Co. entered into possession, and on May 8, 1912, they Avrote and delivered to the defendant this notice: “This is to notify you that as [512] assignee of the lease executed between you and E. Gill-man on January 4, 1902, we are holding possession of the property and privileges., set forth in said lease under the terms of said lease (italics supplied) for another period of ten years.” The plea concludes as follows: “L. C. Adler & Co., by the writing and delivery of said letter, elected to extend the said lease under the option allowed the original tenant and his assigns for ten more years; and the defendant accepted the same and continued said lease with plaintiffs, and when the fire occurred, as alleged ■in the complaint, the plaintiffs were in possession of the premises described in said lease, holding the same as above averred.” The demurrer to this plea presents two questions: (1) Are the plaintiffs contractually bound by that covenant of the lease which requires that “the tenant shall hold the landlord harmless for all claims for injury or loss whatsoever to material or property on the leased premises resulting from fire from locomotives or any other cause?” (2) If not contractually binding on plaintiffs, did this convenant nevertheless run with the land so as to bind them as assignees of the leasehold, by virtue of their privity of estate with the landlord? The covenant to extend this lease for a second period of ten years was a present demise on condition.'— Tenn. Co. v. Pratt Co., 156 Ala. 446, 47 South. 337; 24 Cyc. 1008. It ran with the land, it is true, but, by its own specific terms, it bound both the original tenant and his assigns to an occupation “under this agreement” — which could only mean under this contract of lease. When the plaintiffs, as assignees of the original lease —and then by reason of long delay being without right to do so — elected to continue their occupation and priv [513] ileges, they expressly declared that they weré doing so “under the terms of said lease.” And when the defendant — then armed with the right to terminate their occupation and privileges — accepted them as tenants for the extended period, he clearly did so with the understanding that the terms of the original lease should continue in full force and effect. The covenant of exoneration was one of these terms. It was prospective in its operation, and from its very nature it defined the relation of the landlord to the actual occupant and user of the premises, whoever he might be, throughout the term, rather than to the original tenant only. Our conclusion, upon a consideration of the entire contract and the relation of the plaintiffs thereto, is that they must be held to have assumed those obligations which the contract imposed upon the original tenant, and which are continuous in their nature and contingent in their operation or performance; and that the covenant of exoneration is of such a character. The'argument in denial of this conclusion is — assuming for the argument that this covenant was personal and did not run with the land — that as assignee the plaintiffs were not bound by it during the original term; that they were equally free during the extended term, to which they were entitled by virtue of the assignment and not by virtue of any subsequent agreement with the landlord; and hence that their election to extend their occupation “under the terms of the lease” contemplated only such terms as already bound them, viz., the covenants real in the lease. This view is specious and plausible, though somewhat artificial. But, whatever of merit it might otherwise have, it is refuted by the consideration that, at the time of the plaintiffs’ written notice of the extension of their former leasehold, they were in default as to the giving [514] of that- notice, and the defendant’s acceptancé of their proposition to continue their tenancy was entirely optional on his part; so that their undertaking must be construed according to the ordinary, common sense meaning of the language employed, and not restricted by its supposed relation to an invalid claim of right. In short, the landlord’s waiver of his right to forthwith reclaim the premises is a sufficient consideration for the assignee’s asumption of every unexecuted obligation imposed by the terms of the original lease upon the tenant for the benefit of the landlord. We deem it unnecessary to determine whether the covenant in question is a real covenant which binds the assignee by mere privity of estate; or whether, if not technically a real covenant, an intention to bind assignees thereby is deducible from the terms of the original contract. The general subject is discussed at some length in Gilmer v. M. & M. Ry. Co., 79 Ala. 569, 58 Am. Rep. 623, Etowah Co. v. Wills Valley Co., 121 Ala. 672, 25 South. 720, and in Judge Freeman’s nóte, 82 Am. St. Rep. 659; and the tendency of the modern authorities seems to be to uphold the view that a covenant for exoneration of the landlord from liability for causing loss by fire is binding upon the assignee of the lease. — Kenneday v. Iowa, State Ins. Co., 119 Iowa, 29, 91 N. W. 831; Wooldridge v. Ft. Worth Co., 38 Tex. Civ. App. 551, 86 S. W. 942. See, also, Webb v. Robbins, 77 Ala. 176, 183. It results, from our conclusion as above stated, that the demurrer to the plea was properly overruled, and the judgment must be affirmed. Affirmed. Anderson, C. J., and Mayfield and Thomas, JJ., concur