#### HILDEBRAND MACHINERY COMPANY, Incorporated, v. A. L. POST and W. F. POST, Trading Under the Firm Name of POST MACHINE COMPANY.

(Filed 14 June, 1933.)

1. Deeds and Conveyances C f—

Where a deed provides that it is subject to a written lease previously executed by the grantor, the grantee takes the premises subject to the lease although the lease is for more than three years and is not recorded, C. S., 3309.

2. Landlord and Tenant B lb — Lease in this case held to he for term of four years which could not ho shortened at option of lessor.

A lease contract provided in one item that it was to run for a period of four years, and in a subsequent paragraph provided that if the lessee failed to pay the rent “or upon sixty days notice by either party” the lessee would vacate the premises. *Held,*the manifest intention of the parties was that the lease should run for the whole period of four years provided the lessee paid the rent as stipulated, and during the four-year period neither the lessor nor his assignee would be entitled to possession of the premises upon sixty days notice so long as the lessee performed all the conditions imposed upon him, the lease having no provision whereby the term might be shortened at the option of the lessor.

Appeal by plaintiff from *Alley, J.,*at February Term, 1933, of BuNCOmbe.

Affirmed.

Plaintiff, a corporation, is the owner of a certain parcel of land situate in the city of Asheville, N. C., on which are located buildings constructed for use as a machine shop. The land and buildings were conveyed to the plaintiffs, for a valuable consideration, by W. C. Ervin and wife, by deed dated 15 September, 1932. This deed was duly recorded in Buncombe County on 20 October, 1932, and contains a paragraph as follows:

“But this deed is made expressly subject to a lease to the Post Machine Company dated 15 July, 1931, and to all taxes for the year 1932, which taxes the party of the second part assumes and agrees to pay as ¡Dart of the consideration for this conveyance.”

The defendants are in possession of the parcel of land and the buildings located thereon, now owned by the plaintiff under and by virtue of said deed, claiming the right to such possession under a lease executed by C. E. Kistler, agent for W. C. Ervin, which is as follows:

“This contract of lease made and entered into this 15 July, 1931, by and between A. L. Post and *W.*F. Post, trading and doing business as a partnership under the firm name and style of Post Machine Company, .Buncombe County, State of North Carolina, party of the first part, and O. E. Kistler, agent of *W.*C. Ervin, party of the second part; *Wit-*nesseth: For and in consideration of mutual covenants hereinafter *745contained and tbe expected performance of the same, sums of money to be paid, the use of certain properties, tools, and machinery hereinafter designated, and other valuable considerations, the parties hereto for themselves, their successors, heirs and assigns, do mutually agree with each other as follows :

1. (a) Parties of the first part agree to buy certain property, a list of which is hereto attached, marked Exhibit A, and made a part of this contract, at the price stipulated thereon.

(b) Parties of the first part agree to buy all the machinery, tools, etc., marked Exhibit B, and hereto attached and made a part of this contract, at the price stipulated thereon, and at the stipulated time.

2. The parties of the first part agree to rent the following described property, to wit:

The buildings of the old Carolina Machinery Company known as the Machine Shop, the Pattern Shop and the Foundry, together with all real estate upon which they are situate, including sidetrack, machinery and tools, Exhibit B, excepting therefrom the land referred to in paragraph six hereafter. The rent for the aforesaid property is to be $100.00 per month, payable in advance, to wit: on the 25th day of each and every succeeding month.

3. Parties of the first part agree to give a good and sufficient bond in'the sum of $1,500 to insure the return of said property, patterns, machinery, tools, etc., as set forth on the inventory marked Exhibits A and B and hereto attached and made a part of this agreement, in as good shape as same were at the date of these presents, ordinary wear and tear excepted.

4. That this contract of lease is to run for a term of four years from date of these presents, with the privilege of the party of the first part renewing said lease at a monthly rental to be agreed between the parties hereto, and by written notice to the party of the second part on or before the first day of April, 1935.

5. Parties of the first part agree to make prompt payment of the rental hereinbefore specified at the time and terms hereinbefore specified, and that if and in the event parties of the first part fail to pay said rent as hereinbefore set forth, or upon sixty days notice by either party, then and in that event parties of the first part agree to vacate said buildings and yield possession of said fixtures, patterns, buildings herein rented, and this contract of lease shall become void and of no effect and said parties of the first part agree to vacate and deliver up possession of said premises in as good and ample manner as same are, ordinary wear and tear excepted.

6. That said property hereby leased does not include that formerly let to the American Scrap Material Company, and party of the second part further agrees not to rent the property rented to the American *746Scrap Material Company to any competitor of said parties of tbe first part, junk and scrap companies excepted.

In testimony whereof tbe parties hereunto have set their hands and seals the date and year first above written.

W. F. Post. (Seal.)

A. L. Post. (Seal.)

O. E. Kistler. (Seal.)

Agent for *~W.*C. Ervin.”

At the date of the deed from *W.*C. Ervin and wife to the plaintiff, to wit: 15 September, 1932, the lease from "W. C. Ervin to the defendants was duly assigned and transferred by O. E. Kistler, agent for W. C. Ervin, to the plaintiff. The lease was thereafter, to wit: 20 September, 1932, duly recorded in Buncombe County.

On 17 September, 1932, by letter addressed to them, the plaintiff gave notice to the defendants that under and pursuant to the provisions of paragraph 5 of the lease, plaintiff would on 19 November, 1932, demand possession of the property described in the lease. The defendants promptly advised plaintiff that they would decline to surrender possession of the property on 19 November, 1932.

At the date of the commencement of this action, to wit: 24 November, 1932, the defendants had paid or tendered to the plaintiff all sums due as rent for the property described in the lease, and had fully performed all the covenants and agreements undertaken by them as lessees of said property.

The court was of opinion that plaintiff was not entitled to recover of the defendants possession of the property described in the lease, and on motion of the defendants at the close of all the evidence, dismissed the action by judgment as of nonsuit. From this judgment, plaintiff appealed to the Supreme Court.

*Sanford W. Broum and J. W. Haynes for plaintiff.*

*Harkins, Van Winkle & Walton and Charles G. Buck for defendant.*

CoNnoe, J.

Under and by virtue of its deed from *W.*C. Ervin and wife dated 15 September, 1932, *the*plaintiff is now the owner of the parcel of land and of the buildings described in its complaint, subject,' however, to the rights of the defendants under and by virtue of the lease to them executed by O. E. Kistler, agent for W. C. Ervin, and dated 15 July, 1931. The fact that the lease, although for a term of more than three years, was not recorded at the date of the deed to the jffaintiff (C. S., 3309) is immaterial. The land and the buildings described in the deed were conveyed to the plaintiff subject to the lease, which was duly assigned to the plaintiff contemporaneously with the execution of the deed to the plaintiff. See *Hardy v. Fryer,*194 N. C., 420, 139 S. E., *747833, and cases cited in tbe opinion in tbat case. Tbe plaintiff concedes that it owns tbe property conveyed to it by its deed from *W.*0. Ervin and wife, subject to tbe rights of tbe defendants under tbis lease. At least, tbe plaintiff does not contend to tbe contrary on tbis appeal.

Tbe plaintiff contends, however, tbat having given sixty days notice to the defendants in accordance with tbe provisions of paragraph 5 of tbe lease, tbat it would demand possession of tbe property described in tbe lease on 15 November, 1932, it was entitled to such possession on tbat date, notwithstanding tbe payment by tbe defendants of all sums due as rent under tbe lease, and notwithstanding full performance by tbe defendants of all tbe covenants and agreements undertaken by them as lessees. Tbe language of paragraph 5 construed in connection with tbe language of tbe entire lease *(Benton v. Lumber Co.,*195 N. C., 363, 142 S. E., 229) does not sustain tbis contention. It is expressly provided in paragraph 4 tbat tbe lease should run for four years from its date. There is no provision in tbis paragraph by which tbe term might be shortened at tbe option of tbe lessor, as was tbe ease in *Texas Co. v. Fuel Co.,*199 N. C., 492, 154 S. E., 829. It was manifestly tbe intention of tbe parties to tbe lease tbat tbe term should be four years, and tbat tbe lessees should have tbe right to bold tbe property described in tbe lease for tbe full term, provided they paid tbe rent as stipulated in tbe lease. If they failed to pay tbe rent monthly as stipulated in the lease, and tbe lessor demanded possession of tbe property, after having given sixty days notice of such demand, then and in tbat event tbe lessees agreed to vacate tbe buildings and yield possession of tbe property to tbe lessor. In support of tbis construction see *Trust Co. v. Duffy,*153 N. C., 62, 68 S. E., 915, and *Robertson v. Robertson,*190 N. C., 558, 130 S. E., 166.

There was no error in tbe judgment dismissing tbe action as of non-suit, and discharging tbe receiver, who bad been appointed by tbe court during tbe pendency of tbe action. Tbe judgment is

Affirmed.