Opinion ID: 1710329
Heading Depth: 1
Heading Rank: 2

Heading: McDel Corporation as indemnitor.

Text: The lease was originally executed by American Oil, lessor, and McCarthy, lessee. A provision in the lease prohibited assignment of the lease without written consent of the lessor. McCarthy, however, assigned the lease to McDel Corporation; and McDel accepted the assignment, agreeing to be bound by all the terms of the lease. McDel Corporation now contends that it cannot be bound by an indemnity agreement to which it was not a party. This contention must fail for two reasons. First, the evidence shows that agents of American Oil knew of the existence of McDel Corporation to begin with. In addition, American Oil accepted checks drawn on McDel's account. American Oil did business directly with McDel Corporation. Such conduct clearly establishes that American Oil waived the contract provision as to assignment. Galvin v. Lovell (1950), 257 Wis. 82, 88, 42 N. W. 2d 456. In addition, breach of a contract provision prohibiting assignment can be raised only by the lessor. As stated in 51C C. J. S., Landlord and Tenant, pp. 80, 81, sec. 33c: Restrictions against assignment or subletting imposed by the terms of the lease are intended for the benefit of the lessor rather than the lessee, and likewise benefit the lessor's assigns; and if neither of these objects to a breach of the restriction no one else may do so. One to whom the term has been assigned in breach of the restriction cannot set up the breach in defense of an action brought against him by the lessor on the lease or in defense of an action brought against him by the lessee on obligations incident to the assignment. . . McDel Corporation seeks a review of that part of the judgment which held that there was a valid assignment of a lease and that the lease provision which prohibited against assignment was waived by American Oil. Upon review we conclude the trial court was correct in its ruling. The American Oil did waive the contract provision in respect to assignment. Inasmuch as the part of the judgment appealed from must be reversed, we do not reach the remaining issue of apportionment of negligence between American Oil and McDel Corporation. By the Court. That part of the judgment appealed from which holds that defendant American Oil Company's claims for indemnification from defendant McDel Corporation and third-party defendant James G. McCarthy be dismissed on their merits, and limiting defendant American Oil Company's right to contribution against McDel Corporation to percentages of negligence found by the jury is reversed. The cause is remanded for entry of a revised judgment in accordance with this opinion.