Case Name: A. F. Becker et al., Appellees, v. E. T. Rute et al., Appellants
Court: Iowa Supreme Court
Jurisdiction: Iowa
Decision Date: 1940-06-18
Citations: 228 Iowa 533
Docket Number: No. 44970
Parties: A. F. Becker et al., Appellees, v. E. T. Rute et al., Appellants.
Judges: Hamilton, C. J., and Sager, Mitchell, and Hale, JJ., concur.
Reporter: Iowa Reports
Volume: 228
Pages: 533–543

Head Matter:
A. F. Becker et al., Appellees, v. E. T. Rute et al., Appellants.
No. 44970.
June 18, 1940.
H. E. Narey, for appellants.
K. B. Welty, for appellees.

Opinion:
Stiger, J.
On April 9, 1937, plaintiffs leased to defendants, appellants, the ground floor of the Central Arcade Building situated in Arnolds Park from May 1 to October 1, 1937, for $3,100, payable as follows: $600 upon the execution of the contract, $1,000 on May 1, 1937, $500 on June 1, 1937, $500 on July 5 and $500 on July 15, 1937. Appellants failed to pay rent due July 5th and July 15th and on July 20, 1937, plaintiffs brought this action for the past due rent.
The lease contains the following provisions:
"That the time and times of making payment of the money, as herein provided, and the performance of each and every agreement, covenant, and provision hereof, on the part oí the second parties, are the essence and important part of this lease, and any failure on the part of the second parties, to comply with any of the terms and conditions of this lease shall make the whole amount immediately due and payable, and the first parties may proceed to collect the same; that upon the violation of any provision of this lease, at the election of the first parties there shall be a forfeiture of this lease, and all of the rights and privileges of the second parties, hereunder, and the first parties may immediately, and without notice terminate this lease, and take immediate possession of the premises. Thereupon, second parties shall immediately quit and surrender the premises to the first parties, and in the event of their failure so to do, the first parties may recover possession thereof by action at law, in Forcible Entry and Detainer of Real Property."
Appellants, in their answer, admitted taking possession of the premises under the lease, Exhibit A, which was made a part of plaintiffs' petition, and nonpayment of the rent.
As a defense to the action- they allege in division one that "on July 16, 1937, the plaintiffs exercised their right of election above recited and provided in said lease, and served a written notice of said election and forfeiture upon these defendants, a copy of said notice being attached hereto, marked Exhibit 'I', and made a part of this answer; that upon receipt of said written notice of election, Exhibit 'I', the defendants vacated said premises and restored possession thereof in the plaintiff and the plaintiff continued in possession of said premises thereafter throughout the unexpired term of said lease, using and appropriating the said premises for his own personal gain and business; that the reasonable rental value of said premises and property for the balance of the said term exceeded the sum of One Thousand and no/100 ($1,000.00) Dollars." After admitting that plaintiffs had served notice of forfeiture of the lease, the answer continues: "That the plaintiff having under the provisions of said lease elected to cancel the same and to take possession of said premises, has waived his right and is estopped from claiming any further rent due from these defendants under said lease." (Italics ours.)
In division two of the answer appellants alleged the notice, Exhibit 1, constituted an election to cancel the lease; that the lease contained no provision for cancellation, and when the-notice was served they delivered possession of the premises to plaintiffs; that plaintiffs continued in possession for the balance of the term of the lease and operated it as their own business and that the reasonable rental value of the property for the unexpired. term exceeded $1,000 and that appellants were entitled to credit of said sum upon the rent due.
Division three of the answer makes the same allegations as to cancellation of the lease and possession by plaintiffs and further states that the plaintiffs had an opportunity to rent the premises for the unexpired term of the lease for $150 per week and if plaintiffs had rented the premises they would have realized an amount more than sufficient to pay the rent due from the appellants.
Another division of the answer alleges that immediately on receipt of the notice appellants surrendered the premises to plaintiffs which transaction amounted to a mutual rescission.
The notice served on appellants, Exhibit 1, was made a part of appellants' answer and introduced in evidence by them..
After an extensive statement of the provisions of the lease and the default in payment of the rent, the exhibit notified appellants that:
"The undersigned have elected, as provided in said Agreement, to cancel, terminate and forfeit said Lease Agreement and all of your rights and privileges thereunder and to take immediate possession of said property; that your rights in said property, upon the completed service of this Notice, will have been terminated and under said Contract, and as therein provided you will forthwith and immediately quit and surrender the premises and all of the equipment and furnishings contained therein and covered by said Contract to the undersigned.
"You are Notified that upon the completed service of this Notice, that said Lease shall stand terminated, canceled and forfeited, and that thereafter any retention of possession by you shall be considered unlawful, wrongful and in violation of the terms expressed in said Contract."
The trial court found the lease provided for forfeiture for nonpayment of rent, that plaintiffs declared a forfeiture and were entitled to judgment for rent that had matured prior to the forfeiture. The court rejected the claim of appellants that they were entitled to credit for the value of the use of the premises after the forfeiture. We .concur in the conclusions and judgment of the trial court.
I. Appellants' first proposition that there was no competent evidence of a forfeiture because plaintiffs did not introduce the lease in evidence cannot be sustained. The lease was made a part of the petition, it became a part of the record in the case and, furthermore, appellants admitted in their answer the execution of the lease, Exhibit A, and possession thereunder.
II. Another proposition urged by appellants is that the lease contains a section entitled General Provisions; that the provisions in the lease for payment of rent are not included among the general provisions; that the statement in the lease "upon the violation of any provision of this lease, at the election of the first parties there shall be a forfeiture of this lease", refers only to a violation of one or more of the ten general provisions and therefore the lease did not provide for a forfeiture on the ground of nonpayment of rent. This assignment is likewise without merit. The lease provided for a forfeiture upon a violation of "any provision of this lease." The words "any provision" include all the terms, covenants and conditions in the contract and manifestly include the provision for payment of rent. .
In connection with this assignment appellants urge that the lease provides that any failure on the part of second parties to comply with any of the terms and conditions of this lease shall make the whole amount immediately due and payable and the first parties may proceed to collect the same; that the lease contemplated one remedy for a violation of the "general provisions", that is, the right of forfeiture, and another remedy for a violation of the terms and conditions, that is, the right to declare the whole amount due and payable. We do not so construe the' contract. Time of performance of 1 ' each and every agreement, covenant, and provision hereof, on the part of the second parties" is made "the essence and important part of this lease."
It is quite obvious that the words "terms and conditions" include "each and every agreement, covenant and provision hereof", and upon a violation of any provision of the lease, that is, any terms and conditions thereof, plaintiffs- had the right, which they did not exercise, to declare all the rent due, and, in addition, had a right to forfeit the contract and recover the accrued rent.
Appellants also assert the notice of forfeiture, Exhibit 1, was unsigned and therefore did not constitute any evidence of a forfeiture. We do not agree with appellants. The notice was addressed to them and stated that the "undersigned, A. F. Becker and R. M. Becker" elected to forfeit the lease agreement and to take immediate possession of the property and that upon completed service of the notice all rights of the appellants would be terminated.
As above stated, appellants admitted in their answer that plaintiffs had exercised their right of election and served a written notice of forfeiture upon the appellants "marked Exhibit '1', and made a part of this answer, and upon receipt of said written notice of election the appellants vacated said premises and restored possession to plaintiffs." The context showed it was a notice of forfeiture given by plaintiffs and pursuant thereto appellants surrendered possession of the building. The record clearly shows that appellants understood the exhibit constituted a notice of forfeiture to them by plaintiffs. There is no suggestion that the appellants were in any way. prejudiced by the lack of signatures. We are of the opinion that there was a sufficient notice of forfeiture. See Neeley v. Incorporated Town of Mapleton, 139 Iowa 582, 117 N. W. 981; Cleophas v. Walker, 211 Iowa 122, 233 N. W. 257.
III. Another assignment is that the court erred in finding there was a forfeiture by plaintiffs and should have found that appellants abandoned the leased property and were entitled to credit on the rent due for the reasonable rental value of the use of the premises by plaintiffs for the unexpired term. The rule in this state is that if the tenant abandons leased property it is the duty of the landlord to minimize his damages by using reasonable diligence to relet the property. Benson v. Iowa Bake-Rite Company, 207 Iowa 410, 221 N. W. 464. The rule is not applicable to this case because appellants did not abandon the property but surrendered the premises to plaintiffs pursuant to the notice of forfeiture which terminated the lease.
We cannot accept appellants' contention that the notice constituted a cancellation of the lease, or if not a cancellation, then a mutual rescission. The lease contained no provision for a cancellation. However, plaintiffs made no attempt to cancel the contract nor is there any evidence of a mutual rescission. As above stated, the transaction amounted to- a forfeiture.
After the forfeiture was completed and the lease thus terminated, appellants had no further right under the lease and plaintiffs were entitled to the rent that had matured at the time of the forfeiture. The judgment is affirmed. — Affirmed.
Hamilton, C. J., and Sager, Mitchell, and Hale, JJ., concur.
Miller and Bliss, JJ., dissent.