Case ID: wis_148/html/0063-01.html
Source: Caselaw Access Project
Author: {"author": "Siebecker, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Katz, Respondent, vs. Miller and others, Appellants.
    
      December 8, 1911
    
    January 9, 1912.
    
    
      Trusts and trustees: Authority of managing trustee: Evidence: Acts binding on co-trustee and on successors: Landlord and tenant: Covenants against assignment and subletting: Waiver: Estop-pel: Appeal: Dismissal: Stipulation.
    
    1. The authority of one of two testamentary trustees to act for and bind the other in the management and leasing of real estate may be established by the direct testimony of such managing trustee as to the authority given him, coupled with proof of acquiescence and assent on the part of the other in his acts.
    2. Acceptance of rent by the lessor from an assignee of the lease, with knowledge of and oral assent to the assignment, constitutes a waiver of the breach of the covenant in the lease against assignment without the written consent of the lessor.
    
      3. Such acceptance of rent after knowledge 'that the premises have been sublet is also a waiver of prior breaches of the covenant against subletting.
    4. A waiver by trustees of the breach of a covenant against assignment in a lease of trust property, operates to discharge the forfeiture both as to them and as to their successors in office.
    5. Where the assignee of a lease submitted to the lessors his plan for changes proposed to be made in the building to fit it for use as a store and offices, to be sublet by him throughout the term of the lease, and with their knowledge and consent expended a large sum in carrying out such plans, and such lessors continued for a number of years to accept rent with knowledge of subletting by him, they are estopped from enforcing a subsequent forfeiture for subletting to a new tenant.
    6. Where, pending an action by the assignee of a lease to restrain the lessor from enforcing an alleged forfeiture for breach of a covenant against assignment and subletting, the parties made a stipulation by which they evidently intended to preserve to each the right to prosecute the action to a final determination, an appeal by the lessor from an adverse judgment will not be dismissed on the ground that, after appealing, he gave notice of termination of the tenancy under certain provisions of the lease, thus recognizing it as a subsisting contract and leaving nothing to be adjudicated in the action.
    'Appeai, from a judgment of tbe circuit court for Milwaukee county: J. C. Ludwig, Circuit Judge.
    
      Affirmed.
    
    Edward H. Brodbead was tbe owner of certain real estate located at 89-91 Wisconsin street in tbe city of Milwaukee. He died in 1890 leaving a will under wbicb these premises were left to Erank G. Bigelow and Julia L. Cbaffee in trust during tbe life of Julia L. Cbaffee. In December, 1902, Bigelow and Cbaffee as trustees, tbe remaindermen joining, executed a lease of these premises to one Phillipsborn-for a term of ten years commencing May' 1, 1904. Tbe lease contains a covenant against underleasing tbe premises or assigning tbe lease without tbe written consent of tbe lessors.
    Pbillipsborn bad intended to use tbe building on tbe premises, wbicb is a tbree-story brick building, for a cloak and suit store, but abandoned this idea and requested tbe plaintiff to take an assignment of tbe lease. This plaintiff agreed to do, provided tbe consent of tbe lessors sbonld be obtained. Tbe facts relating to such consent are as follows: An agent of Pbillipsborn, one John E. DeWolf, talked witb Bigelow, and Bigelow told bim tbat be would consent to tbe assignment and tbe subletting of tbe premises, provided tbe tenants were satisfactory. Plaintiff proposed to Bigelow to make changes in tbe building so as to prepare tbe ground floor for stores and tbe second and third floors for offices, and Bigelow said be would approve tbe proposed changes in tbe building if tbe guarantors on tbe lease to Pbillipsborn would continue as guarantors under tbe assignment. Tbe lease provided tbat proposed changes in tbe building should be approved by Bigelow and tbat tbe guaranty of tbe sureties was to terminate when tbe lessee bad expended $4,000 in making tbe changes. The, guarantors consented to tbe assignment. Among 'the proposed sublessees was tbe United Cigar Stores Company, and certain changes in tbe building were desired. These changes, together witb other changes which would make tbe building fit for an office building, were submitted to Bigelow and approved in writing by bim. There was evidence on tbe trial of this action tending to show tbat Bigelow bad signed a consent to tbe subleasing to tbe cigar company, - but no such writing was produced. Eive thousand dollars was expended in remodeling tbe premises to make them suitable as an office building, and tbe plaintiff sublet all but one room in tbe building and paid bis rent to tbe lessors.
    There was evidence tbat Miss Chaffee was of advanced years and was not experienced in business affairs. Mr. Bige-low testified, in effect, tbat she intrusted all of tbe trustee matters to him and tbat witb her acquiescence be acted practically as tbe sole trustee. In July, 1905, Bigelow and Chaf-fee resigned their trusteeship and George P. Miller was appointed trustee. While 'Bigelow and Chaffee were trustees tbe rent was always paid by tbe plaintiff or bis agent to Bige-low, sometimes by a check payable to Bigelow and sometimes, and always at last, by checks payable to the bank with which Bigelow was connected. The payments were credited on the books of the estate by a clerk and the receipts describe the lease as the Phillipsborn lease. After Miller became trustee the rent was collected by his agent until 1908, when Miller first learned of the assignment. It appeared that Miller knew that the premises were being sublet to various tenants before he became trustee and up to the time when he refused to receive rent from the plaintiff.
    In May, 1909, Miller and the remaindermen notified the plaintiff and his tenants to quit the premises, and in their action against them for unlawful detainer alleged as the grounds for the action that the covenant of the lease to Phil-lipsborn against assignment and subletting had been violated. The plaintiff then began action to enjoin the trustee and the remaindermen from bringing any action to declare the lease forfeited because of the breach of the covenants against assignment and subletting.
    Upon the evidence tending to establish the facts as stated in the foregoing the court found, among other findings, as follows:
    “III. The said Julia Chaffee is and was at the time of the leasing of said premises and execution of said lease, a woman of advanced age and inexperienced in business affairs; that she at all times intrusted to said Bigelow the entire management of said trust and the control and handling of the property covered thereby; that in all matters relating to the management of said trust estate the said Bigelow, by and with the consent of the said Chaffee, acted practically as sole trustee.”
    The court also found that Phillipsborn abandoned the design of using the building for the manufacture and sale of cloaks and dry goods and offered to assign the Tease to the plaintiff upon condition that he would perform all the conditions and covenants to be performed by Phillipsborn; that the plaintiff informed Bigelow of his willingness to take an assignment of the lease provided be might sublet the premises to tenants for stores and offices and obtain the consent of the trustees, through Bigelow, to the assignment and subletting; that Bigelow assented to the assignment and to the proposed subletting provided the guarantors would continue their guaranty in force under such arrangement; and that relying on the consent of Bigelow, for the trustees, to the assignment and subletting the plaintiff expended upwards of $5,000 in changing and altering the building to fit it for renting to subtenants, and thereafter sublet the first fioor as' stores and the second and third floors as offices, the subtenants occupying under their subleases to Bigelow’s knowledge'and without objection from him or Miss Chaffee.
    The court found that there was no sufficient proof that a written consent had been given by the lessors to the assignment and subletting. It found that the plaintiff paid the rent according to the conditions of the lease and that Bigelow and Chaffee received it while they were trustees knowing that, the lease had been assigned to the plaintiff, that the plaintiff had been engaged in subletting, that he had expended large sums of money in fitting the premises for subletting, and that he intended to sublet the premises during the remainder of' the term.
    The court held that the breaches of the covenant against assignment had been waived, that the covenant against subletting applied to a subletting of the whole-of the premises, and not to a subletting of less than the whole, and enjoined the bringing of any action for a recovery of the premises, based upon a breach of the lease by assignment or subletting.
    The trustee and the remaindermen appeal separately from this judgment.
    Eor the appellants there were briefs by Miller, Mach & Fairchild, and oral argument by Geo. P. Miller.
    
    They cited, among other authorities, New Home 8. M. Go. v. Simon, 113' Wis. 267, 89 N. W. 144; Wesling v. Kroll, 78 Wis. 636, 47' N. W. 943; Winslow v. B. ■& 0. B. Go. 188 U. S. 646, 23 Sup. Ct. 443; Foss v. N. W. Nat. L. Ins. Go. 137 Wis. 492, 118 N. W. 212; Monroe W. W. Go. v. Monroe, 110 Wis. 11, 85 N. W. 685; Swedish Am. Nat. Bank v. Koebernick, 136 Wis. 473, 117 N. W. 1020; Gastello v. Citizens State Bank, 140 Wis. 275,'122 N. W. 769; Kew v. Trainor, 150 Ill. 150, 37 N. E. 223; Bruley v. Garvin, 105 Wis. 625, 81 N. W. 1038; Wood, Land! & T. (1st ed.) p. 529, sec. 323; 1 Taylor, Land! & T. (9tb ed.) §§ 278, 286, 411; 2 id. § 501; Stats. (1898), sec. 2302.
    
      Frank M. Hoyt, for tbe respondent,
    on tbe question of waiver cited 21 Am. & Eng. Ency. of Raw (2d ed.) 587; Bandol v. Tatum, 98 Cal. 390, 33 Pac. 433; Detlor v. Holland, 57 Ohio St. 492, 49 N. E. 690; Jolly v. Single, 16 Wis. 280; O’Keefe v. Kennedy, 57 Mass. 325; 1 Taylor, Landl. & T. § 410; 2 id. § 495 ; and on tbe doctrine of estoppel, Ghyno-weih v. Tenney, 10 Wis. 397; Bacine Co. Bank v. Lathrop, 12 Wis. 466; Monroe W. W. Go. v. Monroe, 110 Wis. 11, 22, 85 N. W. 685; Swedish Am. Nat. Bank v. Koebernick, 136 Wis. 473, 117 N. W. 1020.
   Siebecker, J.

Tbe court found that tbe trustees, Eramb G. Bigelow and Julia L. Chaffee, waived tbe breach of tbe covenant in tbe lease'against assignment without tbe written consent of tbe lessors. It appears that tbe premises in question were duly assigned to Bigelow and Chaffee as testamentary trustees, pursuant to tbe will of Edward H. Brodhead, deceased, upon tbe trust to pay out of tbe income thereof tbe expenses of tbe administration of tbe trust and to divide tbe remainder as directed by tbe will. Tbe court found that they duly qualified and acted as such trustees until July 7, 1905, and that Bigelow bad charge of tbe management of tbe affairs of tbe trust. Upon tbe evidence adduced tbe court also found that Chaffee, as trustee, intrusted tbe entire management of tbe trust to Bigelow, and tbat witb ber consent be acted for ber in all matters in managing and administering tbe affairs of sucb trust. Tbis fact is assailed by tbe present trustee, Mr. Miller, tbe appellant, upon tbe ground tbat tbe evidence does not sustain tbe court’s finding on tbis issue in tbe case. Tbe evidence of Bigelow is tbat sbe authorized bim to manage, control, and handle tbe property and to do whatever was required to discharge tbe duties of the trustees in tbis regard. Tbe evidence fails to show tbat Miss Chaffee took any active part in tbe management of the property, but it shows tbat in tbe control and management of this property Bigelow practically did everything required to be done to discharge tbe obligations imposed by tbe trust. It is averred tbat tbis does not constitute proof authorizing Bigelow to act for Miss Chaf-fee as sucb trustee, because bis asserted authority cannot be established by sucb declarations. We do not regard bis statements as irrelevant to tbe inquiry; they bear on tbe question of bis authority to act for ber, and should be considered in connection witb tbe other facts and circumstances of tbe case. It is undisputed tbat be as trustee did tbe negotiating for tbis lease; tbat be dealt witb tbe plaintiff concerning tbe assignment thereof to tbe plaintiff, and conducted all of tbe transactions, including tbe reception of tbe rents due under tbe lease, practically as sole trustee, for a period of over a year, and tbat Miss Chaffee at no time throughout this time appeared to take part in or objected to tbis method of conducting tbe business in which she was a co-trustee. Her conduct respecting tbe matter is persuasive as tending to show tbat sbe did intrust tbe entire management of tbe trust and tbe control and handling of tbe trust property to ber co-trustee, Bigelow, and tends to support tbe evidence of Bigelow tbat sbe conferred full authority on bim to act for and represent ber in all these respects. Tbe acts of Bigelow must be held to have bad ber approval and assent and to be binding on them as trustees in the transactions between them and the plaintiff concerning this lease and the occupancy and use of the trust property.

The lease, as stated, contained a covenant against assignment thereof without the written consent of the lessors. The court found that no such consent was obtained when it was assigned to the plaintiff, but held that this breach was waived by the lessors by Bigelow’s reception of the rent with full knowledge of such assignment. The facts are without dispute that he knew of and orally assented to the assignment and for one year accepted and collected the rent accruing thereon from the plaintiff. Under the circumstances the acceptance of the rents was a waiver by the lessors of the breach of the covenant against assignment. Gomber v. Hackett, 6 Wis. 323; Jolly v. Single, 16 Wis. 280; Palmer v. City L. Co. 98 Wis. 33, 13 N. W. 559; O’Keefe v. Kennedy, 3 Cush. (57 Mass.) 325.

The covenant against subletting was breached, but this also was fully known to the trustees 'when they accepted under the lease rent which accrued after the breach. Such acceptance is a waiver of such prior breaches. It appears, however, that Mr. Miller, as trustee, from the 1st of February, 1909, to the commencement of this action, refused to accept any rent accruing under the lease, and claimed that he had no knowledge of the breach of the covenant and that he had not consented thereto nor to the subletting of the premises by the plaintiff to his various tenants after the payment of the last instalment of rent prior to February 1, 1909, and that he had not waived these breaches of the lease. The waiver of the breach against assignment by the acting trustees, before Mr. Miller’s appointment, operated to discharge the forfeiture and amounted to an election to continue the lease in force with the plaintiff as lessee of the premises. This became binding on all of the parties thereto, and Mr. Miller, who succeeded to the trusteeship, has no cause for declaring the lease forfeited on. account thereof. 1 McAdam, Landl. & T. § 192.

Mr. Miller, however, insists that the underletting of the ground floor in May, 1909, was a breach and justifies a reentry by the defendants. This claim' is based on the ground that the covenant against underletting is continuous, and hence that the.former waivers of its breach discharged only these particular breaches, and that he can insist upon the subsequent forfeitures. As stated in the statement of facts, plaintiff submitted his plans for changes in the building, to' fit it for use as a store and offices instead of the use specified in the lease, and obtained the assent of Bigelow thereto both before and after his purchase of the lease. It was understood that the proposed changes were to be made for the purpose of enabling the plaintiff to sublet the building in parts as stores and offices, and to that end plaintiff expended upwards of $5,000. He thereafter, to the knowledge of the trustees, devoted the building to such uses, by underletting it from the beginning of the term to February, 1909, when Miller for the first time insisted that such underletting avoided the lease. It is clear that the plaintiff was induced to incur this large expenditure for the purpose of underletting the building, as proposed, throughout the term of the lease, and that the acting trustees, who had full control of the premises, fully understood this and assented thereto, and that up to February 1, 1909, with full knowledge thereof, they acquiesced in plaintiff’s use of the premises. To permit the lessors to re-enter for underletting would, under these circumstances, operate to do such an injustice to the plaintiff as equity will not tolerate. The facts and circumstances present a case showing that the plaintiff was induced through the acts of the lessors to expend large sums of money and to change his position to his prejudice, by accepting an assignment of the lease and thereby assuming all of its obligations, upon the understanding that he could underlet the premises throughout tbe term in tbe maimer be bas done. Tbis establishes an estoppel witbin tbe rule of tbe following eases wbieb equity will enforce against tbe lessors to protect tbe rights of tbe plaintiff: Benavides v. Hunt, 79 Tex. 383, 391; Carpenter v. Wilson, 100 Md. 13, 59 Atl. 186; Knoepher v. Redel, 116 Mo. App. 62, 92 S. W. 171; The "Elevator Case," 17 Fed. 200; 1 McAdam, Landl. & T. § 194.

Tbe right to dismiss tbe appeal upon tbe ground that Mr. Miller, as trustee, on October 31, 1911, gave notice of tbe termination of tbe tenancy under tbe provisions of the lease, .thus recognizing it as a subsisting and operating- contract and hence leaving nothing to adjudicate in this action, we do not regard as well founded under tbe stipulation of tbe parties to tbe action. Tbe parties evidently intended by this stipulation to preserve to each tbe right to prosecute tbe action to a final determination upon tbe issues presented, and that any act of either party respecting other rights arising under the lease was not to affect tbe right of prosecuting tbis action to a final judgment. Tbe motion must therefore be denied.

By the Court. — The judgment appealed from is affirmed.