Academy of Music Co. v. Davidson

LyoN, C. J. The plaintiff corporation leased its building, known as the Academy of Music, in the city of Milwaukee, except a store therein used as a.saloon, and some other rooms, to the Milwaukee Theatre Company, a corporation in which defendant was interested as a stockholder and officer. About three months before such lease was executed, such store or saloon was leased by plaintiff to one Tony Yollert for three years from September 15, 1890, at a specified rental. Yollert had made two’ payments of rent, and was not in default when the building was thus leased to the theatre company. In the negotiations for the lease to that company the plaintiff evidently was apprehensive that the theatre company might, if it had control of the Academy of Music, take the entertainments and performances which otherwise would be held therein to the David: son Theatre, which that company owned and controlled, to the injury of the good will of the Academy, and so it sought to guard itself against that contingency by certain covenants in the lease mentioned in the above statement of facts. Moreover, the business of Yollert depended largely upon the patronage of the employees in the Academy, and of people who went there to witness exhibitions and performances therein. The plaintiff was interested in the success of Yollert’s business, which might be injured or destroyed should the theatre company close the Academy or use it for such entertainments infrequently. Manifestly, the covenant of the defendant upon which this action is predicated was exacted and given to guard against sucha contingency. The covenant is that, if the leasing of the Academy to the theatre company caused Yollert to leave the building and throw up his lease, the defendant would assume the lease and pay plaintiff the rent stipulated therein for the full time thereof. Yollert did leave the building, and did throw up his lease in May, 1891. The plaintiff is not prejudiced by the fact [135] that it took the necessary steps to terminate tbe lease and get Yollert out of the saloon because of his default in the payment of rent. The covenant is not that defendant thereby becomes security for Yollert for the payment of the rent, but is an original covenant on his part that if the specified contingency arises he will assume the lease and pay the rent. The covenant itself thus becomes the equivalent of a formal lease by plaintiff to defendant containing the conditions specified in Yollert’s lease. Under this covenant, defendant was entitled to the possession of the saloon before he could, be held liable on his covenant. Hence it was necessary for the plaintiff, after Yollert’s default, to obtain possession of the saloon to the end that it might put defendant in possession thereof. When that was done, or offered to be done, the covenant in suit, which was accepted by plaintiff, fixed the rights and liabilities of the parties. It would be simply a play upon words to say that the mere execution of the lease must have worked those results, or the defendant is not liable. Having due regard to the situation of the parties, the surrounding circumstances, and the objects manifestly intended to be accomplished by the parties by giving and accepting it, the only reasonable construction of the covenant is that inasmuch as the profits of Yollert’s business were sufficient to enable him to pay his rent while the Academy was managed by the plaintiff, if the- theatre company should so' change or restrict the use thereof as to seriously injure such business of Yollert, in consequence whereof Yollert should cease to pay rent and leave the building, the defendant was to assume the lease and pay the stipulated rent for the balance of the term. The foregoing construction of the covenant is substantially that given thereto by the learned circuit judge in his instructions to the jury. The finding of the jury upon the controlling question in the case is a finding that the contin [136] gency bad arisen which fixed the liability of defendant under his covenant. The testimony, although' controverted in some particulars, is sufficient to support findings that the theatre company changed and restricted the use of the Academy from what it had theretofore been, and presumably would have continued to be had the plaintiff retained control of it, so that the business of Yollert was practically destroyed, and he left the building and threw up the lease because thereof. This supports the finding that the leasing of the Academy to the theatre company produced those results. It is argued that plaintiff cannot recover because it failed to subrogate defendant to its rights against Tony Yollert. It is a sufficient answer to this position that plaintiff has not agreed to do so. The covenant is not to subrogate defendant to plaintiff’s rights against Yollert, but to sub-rogate him to Yollert’s liabilities under the lease to plaintiff. The most defendant can plausibly claim under the covenant is that it may be implied, from his agreement to assume Yollert’s lease in the specified contingency, that plaintiff was bound to obtain an assignment thereof to him. It has already been suggested that the accepted covenant in question is the equivalent of a lease by plaintiff to defendant containing the terms and conditions of the Yollert lease. Hence a formal assignment of that lease to defendant is entirely unnecessary, and for that reason it should not be held that the covenant requires such assignment to be obtained. The foregoing views determine the case on the merits favorably to plaintiff. It only remains to consider briefly certain rulings of the court admitting testimony against the objections of defendant thereto. Such testimony is to the effect that, before and at the time Yollert left the building and threw up his lease, he claimed that the theatre company had so reduced the number of performances in the [137] Academy that his trade had thereby fallen off, and that he was losing money in the business, and could not go on with' it, at least without a reduction of his rent, which were the reasons why he was about to leave and did leave the building and throw up his lease. Some of this testimony consisted of statements contained in correspondence between defendant and the agents of plaintiff, and some of it was given by such agents, who testified on the trial that Yollert so claimed. The same claim was substantially made in a letter dated January 14, 1891, written by Yollert to. plaintiff, which letter was at once forwarded by the secretary of plaintiff to defendant. In ruling upon an objection to this class of testimony the learned circuit judge stated that he admitted it,'“not for the purpose of proving the facts stated in Yollert’s letter, or as competent to prove such facts, but for the purpose of showing the claim made by Yollert in respect to his leaving, and in respect to his loss of patronage by reason of the leasing of the property to the Milwaukee Theatre Company.” We think it was competent to prove in this manner the claim of Yollert as to the reasons why he left the building and threw up his lease. Yollert having died before the trial, no other direct testimony of the fact was attainable. We are aware of no rule of evidence which would shut out testimony of such statements made while Yollert was still in possession of the saloon and was about leaving it — such testimony having been carefully excluded as proof of the truth of such claim. By the Gov/rt.— The judgment of the circuit court is affirmed.