Case ID: tenn_113/html/0200-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice Shields", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Reed v. Estes et al.
    
    
      (Jackson.
    
    April Term, 1904.)
    1.MECHANIC'S RIEN. Does not attach to property oí lessor for improvements made under contract with lessee alone.
    Where the lessor allowed the lessee to make certain improvements on the leased premises, and agreed to, and did, contribute a certain sum towards the cost thereof, the contractor making the improvements under -a contract with the lessee alone, has no lien upon the property of the lessor owner.
    Code cited and construed: Sec. 3531 (S.); secs. 2739, 2740 (M. & V.); sec. 1981a (T. & S.); sec. 1981 (1858).
    3. LEASE. Construction of restriction in, against underletting. Case in judgment.
    The lease mentioned in the first headnote provided that the leased premises should be occupied and used as a saloon and residence, and the lessee agreed that he would not underlet said premises without the consent of the lessor, and that “in case of underletting, without authority, this lease may be declared forfeited by the lessor at her option.” The contractor claimed a lien upon the entire property. •
    
      Held: 1. A lessor may contract against .both voluntary or involuntary assignments of the leased premises, or any part thereof, and provide for forfeiture, in case the restriction is violated.
    2. Contracts in restraint of the sale or transfer of property, and providing for forfeitures, are not favored by law.
    3. A restriction in a lease will not be enforced by forfeiture of the leasehold interest unless the case is brought clearly within the specified restrictions provided in the lease.
    4. The restriction in this lease merely applies to a voluntary un-derletting, and not to an involuntary sale or assignment of the leased premises.
    
      5. The lien of the contractor attached only to the leasehold estate, and the purchaser under this proceeding brought to enforce said lien will acquire only such estate therein as was held by the lessee subject to the terms and provisions of the lease.
    FROM SHELBY.
    Appeal from tbe Chancery Court of Shelby County. — ■ P. H. Heiskell, Chancellor.
    Robert B. Goodwyn, for Reed.
    R. M. Heath and W. A. Buckner, for Estes et al.
    
   Mr. Justice Shields

delivered the opinion of the Court.

This bill was brought to enforce a mechanic’s lien claimed by complainant to exist in his favor upon the fee in the real estate therein described, the property of the defendant Mrs: Estes, for a portion of the debt due him from her codefendants, M'allalieu & True, and upon a leasehold estate in the same property held by the latter under a lease made to them by Mrs. Estes for a term of years, for the remainder of it.

Complainant had no contract with Mrs. Estes or her a.gent to make the improvements for- which the debt sued for is due. His contract was solely with Mallalieu & True, tbe lessees. Mrs. Estes’ only connection with tbe improvements was an agreement made by hér with ber lessees allowing them to make tbe improvements, and agreeing to contribute $1,000 towards tbe cost of tbe same, wbicb sbe bas done.

Tbe statute creating tbe lien claimed in tbis case (Shannon’s Code, section 3531) confines it to cases where tbe contractor making tbe. improvements bas a special contract with tbe owner of tbe property upon wbicb it is made or bis agent.

Tbe facts of tbis case do not bring it within tbis. statute. Complainant did not contract with the owner or ber agent. By bis contract with tbe lessees be did not become tbe creditor of Mrs.- Estes, or acquire any lien upon ber property. A lessee cannot, without special authority to do so, create an indebtedness against tbe lessor or incumber bis property for improvements. Tbe bill must fail to tbis extent.

Eelief against tbe leasehold estate is resisted upon, tbe contention that tbe sale sought in tbis cause would be in effect an assignment of it without tbe consent of tbe lessor, wbicb is prohibited by tbe terms of tbe lease.

Tbe provision of that instrument relied upon is tbis:

“Tbe property to be occupied and used as a saloon and residence . . . tbe second party agrees that they "will not underlet tbe whole or any part of said premises without tbe written consent of tbe first party, or her assigns, and in case of underletting, without authority, tbis lease may be declared forfeited by said party at ber option . . . and the first party shall have the right to re-enter it and retain possession of the premises without being required to make demand.”

A sale under execution or attachment is an assignment, to all intents and purposes. The provision of the lease relied upon, however, does not prohibit an assignment of it, but an underletting of the whole or any part of the property without the written consent of the lessor. A distinction is recognized between contracts in restraint of the assignment of a leasehold estate and those restricting the underletting of the property, but it need not be considered in this case.

Lessors may contract in leases against voluntary and involuntary assignments of the leasehold estate, or un-derletting of the whole or any part of the leased premises, and provide for forfeiture and re-entry in case the restriction is violated.

They have the right to select their tenants, and to restrict the occupation of their property to such persons as they may desire, and it is often necessary that this be done in order to protect and preserve the premises. A provision of this kind in a lease will be enforced according to the intention of the parties when clearly expressed in the instrument.

But contracts in restraint of sales and transfers of property, and forfeitures, are not favored by the law, and restrictions thrown around the assignment of leases, the underletting and occupation of property, followed by forfeiture when violated, must be clear and specific, and will not coyer cases not coming clearly within them.

There is no provision in this lease for personal occupation by the lessees; it merely limits the use of the property to saloon and residence purposes.

The restriction in the lease prohibits voluntary, hut not involuntary underletting of the leased property.

A sale made in the- enforcement of a mechanic’s lien upon a leasehold is an involuntary underletting, and is not prohibited by a provision against a voluntary assignment or underletting, in the absence of collusion and fraud.

It is well settled in Tennessee that a mechanic’s lien will attach to a leasehold estate for improvements made thereon at the instance of the lessee, to he enforced by a sale in the usual way, when an involuntary assignment or underletting is not forbidden in the lease, and the complainant is entitled to this relief in this case, there being no such restriction.

The purchaser will acquire only such estate therein as was held by the lessees, subject to all the terms and provisions of the contract made by them with the lessor.

The decree of the chancellor adjudging that complainant had a lien upon the fee in the property for a portion of the indebtedness due him for the improvements made is reversed; in all other things it is affirmed.