McKeen v. Brooks

MR. JUSTICE HOLLOWAY delivered the opinion of the court. In May, 1912, John Brooks, the owner of certain real estate, leased the property to McKeen and Friedlein for the term of three years. The lessees were authorized, at their own expense, to inclose the property and to erect necessary buildings thereon to render it-available as an amusement park. The original cost of these improvements was $1,547.45, and the property was devoted to the purpose intended for the seasons 1912 and 1913. In April, 1913, Brooks sold the property, and in January, 1914, the purchaser demanded possession from the lessees, who thereupon surrendered possession and brought this action to recover from Brooks the original cost of the improvements which they had placed upon the property. Defendant prevailed in the lower court, and plaintiffs appealed from the judgment and from an order denying them a new trial. It is the general rule that in the absence of a special [1] agreement the tenant cannot, by erecting buildings or making [486] other improvements upon the leased property, impose upon the landlord the burden of making compensation for such improvements. (2 Tiffany on Landlord & Tenant, see. 270.) The rule is recognized in this instance, but it is insisted that by contract the lessor bound himself to pay for the improvements originally placed upon this property by the lessees. The rights of the parties are to be determined by reference [2] to that provision of the lease which reads as follows: “This lease may be terminated prior to the expiration of the term hereinbefore specified in case of sale of said real property by said party of the first part [Brooks], and it is hereby agreed by all parties hereto that said party of the first part has the right to make sale of said real property at any time but in ease of sale by said party of the first part prior to the expiration of the said term of three years, then in the event that the said parties of the second part [McKeen & Friedlein] shall be disturbed for or on account of said sale in their possession of the said leased premises, said first party shall reimburse the said parties of the second part for the original cost of the improvements placed upon the said leased premises,” etc. The single question for decision is: Under what circumstances did the lessor agree to become liable to the lessees for the original cost of their improvements? It is clear that a sale of the premises of itself did not render him liable; neither' did the fact that the lessees were disturbed in their possession. To fasten responsibility upon him, it required a sale before the expiration of the lease and a disturbance of the lessees’ possession “for or on account of said sale.” In the connection in which it is used, the word “for” cannot be given any meaning whatever, but the phrase “on account of said sale” furnishes the key to the solution of the question. As here used, it means “by reason of” (6 Words and Phrases, 4968; Brown v. German-American T. & T. Co., 174 Pa. 443, 34 Atl. 335), or “as the direct and proximate result of” (1 Words and Phrases, Second Series, 546; Houston & Tex. C. R. R. Co. v. Anglin, 45 Tex. Civ. App. 41, 99 S. W. 897). [487] We will not indulge the presumption that the parties to the lease assumed that if a sale was made, the purchaser would commit a tort; and therefore the phrase “on account of said sale” ought not to be extended in its meaning to cover the case of a wrongful disturbance of the lessees’ possession; on the contrary, the parties must have had in contemplation a sale made under such circumstances that the purchaser might rightfully demand possession before the expiration of the term. We are unable to agree with counsel that the provision in the lease quoted above is in effect a covenant for quiet enjoyment. Instead of assuring quiet enjoyment, the lessor reserved to himself the right to disturb the possession of the lessees before the expiration of the lease, in consideration that he should pay the original cost of improvements, if he did so.- Apparently the parties all understood that a sale might be made under such circumstances that the purchaser would not be entitled to possession until the expiration of the lease, or, again, that the lessor might be required to deliver possession immediately in order to effect a sale, and in the latter event the lessees agreed to surrender possession and accept the original cost of their improvements as compensation for the relinquishment. Under no other circumstances do we think it can be said that the sale would be the direct and proximate cause of the disturbance of the lessees’ possession. The phrase “on account of said sale” appears to have been used advisedly for the purpose of limiting the lessor’s liability to the particular combination of circumstances indicated, viz., a sale coupled with a rightful demand for possession. In the absence of an agreement, the purchaser of these [3] premises was not entitled to possession as against the lessees, if he had knowledge — actual or constructive — of the lease, but he purchased subject to it, and the rights of the lessees were not affected. (24 Cyc. 926; 1 Tiffany on Landlord & Tenant, sec. 146.) The record disclosed that at the time of the sale, the lessees [4] were in possession of the property, and the purchaser was [488] thereby charged with knowledge of any interest which they could establish (Baum v. Northern Pac. Ry. Co., ante, p. 219, 175 Pac. 872), and in addition he had actual knowledge of the outstanding lease, and it is not contended that there was any agreement with the lessor for possession prior to the expiration [5] of the term. Under these circumstances, the purchaser was not entitled to demand possession, and the lessees were not required to obey the notice to quit. While they did not own any interest in the fee, they were the owners of the use of the premises during the term of their lease, or until'it was extinguished as provided for in the contract (16 B. C. L. 676), and could maintain an action for damages against anyone who invaded their possession. The landlord is not liable to the tenant for the wrongful acts [6] of a third person which he has not sanctioned or authorized (24 Cyc. 1056), and the record in this instance discloses that Brooks had no knowledge of the act of the purchaser in demanding possession, and was not in any sense responsible for it. If we assume for present purposes that by the terms of this lease the lessees were given an option to terminate it upon a sale by the lessor, this fact would only reflect upon their liability for future rent, and not upon the liability of Brooks for their initial expenditure. The language cannot be construed to mean that the liability of the lessor attached upon a termination of the lease. By the express terms of the contract his liability was contingent upon a sale, coupled with a disturbance of the lessees’ possession “on account of said sale.” We think the trial court was correct in its conclusion that the lessees- were not disturbed in their possession as the direct and proximate result of the sale by Brooks, and that they cannot recover in this action. The judgment and order are affirmed. {Affirmed. Mr. Cheep Justice Brantly and Mr. Justice Cooper concur.