Opinion ID: 3165692
Heading Depth: 2
Heading Rank: 2

Heading: Failure to Obtain Consent to Assign

Text: Walls also argues the lease should be canceled because it was materially breached by the various assignments that were executed without her consent. Here, too, Walls waived the breaches with respect to all of the assignments except the Petrohawk-Exxon assignment. In a letter dated May 21, 2010, Walls's attorney stated, Arlie Walls and Zelda Walls initially leased with Griffith Land Services, Inc. and it is my understanding that those leases have been assigned to Petrohawk. Mrs. Walls has retained our firm to assist her in collecting the proper amount of royalties on these leases. By writing the letter and taking payment from Petrohawk, Walls waived any breaches resulting from assignments up to that point. See Clear Creek, 255 S.W. at 8 (holding that one party to a contract who, with knowledge of a breach by the other party, continues to accept benefits under the contract, and suffers the other party to continue in performance thereof, waives the right to insist on the breach (citations omitted)). There remains, however, the assignment from Petrohawk to Exxon. This assignment was executed without receiving Walls's consent and took place after the May 21 letter was sent and after Walls accepted payment. Petrohawk argues this assignment was not prohibited because Walls unreasonably withheld her consent. The lease permitted assignments if written consent were obtained, which would not be unreasonably withheld. In Warmack v. Merchants National Bank of Fort Smith, 612 S.W.2d 733, 735 (Ark. 1981), the Supreme Court of Arkansas expressly adopted § 15.2 of the Restatement (Second) of Property, which states: contract, and suffers the other party to continue in performance thereof, waives the right to insist on the breach. Clear Creek Oil & Gas Co. v. Brunk, 255 S.W. 7, 8 (Ark. 1923) (citation omitted). Walls cannot now insist on the breach after she has accepted payment by Petrohawk. Walls has waived any breach by Petrohawk. -6- A restraint on alienation without the consent of the landlord of the tenant's interest in the leased property is valid, but the landlord's consent to an alienation by the tenant cannot be withheld unreasonably, unless a freely negotiated provision in the lease gives the landlord an absolute right to withhold consent. Restatement (Second) of Property: Land. & Ten. § 15.2 (1977). In Warmack, the court explained that unreasonable is a term of art meaning without fair, solid and substantial cause or reason. Warmack, 612 S.W.2d at 735 (quotation and citation omitted). Here, Walls's letter to Petrohawk did not give a fair, solid and substantial cause or reason for not consenting to the assignment. Instead, Walls asked why it was in her best interests to consent. Then, before waiting to receive a response from Petrohawk, Walls filed suit against Petrohawk the very next day. We find no error in the district court's conclusion that Walls unreasonably withheld consent.