Court Opinion

ID: 8816784
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:20:57.412327+00
Date Added: 2024-06-11T17:04:30.091316
License: Public Domain

MUNGER, District Judge
(after stating the facts as above). The plaintiffs, in support of a cross-appeal, urge that the evidence shows that there was a constructive trust established, whereby the defendants held the property in trust for the plaintiffs, while the defendants urge that the plaintiffs’ evidence shows nothing more than an express trust concerning lands and relating thereto, and that such a trust is invalid under the Colorado statute of frauds (section 2660, Rev. Stats, of Colo. 1908), which forbids the creation or declaration of such a trust otherwise' than by deed or conveyance in writing, subscribed by the party or by his agent authorized by writing. It is not necessary to determine this issue, because the court below decided on conflicting evidence that no such agreement as the plaintiffs rely upon had been made. That conclusion is supported by direct evidence and by many circumstances in the case, and should not be set aside.
[1] The defendants assert that the court should have dismissed the plaintiffs’ bill, because, when it turned out that the equitable relief sought by the bill, the declaration of a trust, could not be granted, the court was without jurisdiction to proceed further, leaving the parties to their actions at law for further relief sought. The correctness of this conclusion may be conceded, if the bill had sought only the establishment of a trust relationship; but the bill also proceeded upon a familiar ground of equitable jurisdiction for relief from a forfeiture asserted by the defendants. A court of equity has power to relieve a tenant from forfeiture of his estate, because of a failure to pay the rent reserved at the time required by tffe terms of his lease, when it is just to do so. Sheets v. Selden, 7 Wall. 416, 19 L. Ed. 166; Kann v. King, 204 U. S. 43, 27 Sup. Ct. 213, 51 L. Ed. 360; The “Elevator Case” (C. C.) 17 Fed. 200; 1 Pom. Eq. Jur. §§ 433, 434, 450, 453.
[2] When the conclusion of the lower court is accepted that there was no agreement on the part of the defendants to hold the Denver theater as trustees for the plaintiffs until they should be ready to assume possession of it, we have the fact remaining that the plaintiffs did not take possession of the leased property, but allowed the *511lessor to remain in possession for 7% months before demanding possession. The lessor did not refuse or withhold possession. Finding no one claiming possession on the part of the lessees, he continued to use and occupy the premises, conducting a theater as he had done before the execution of the lease. After the 10 weeks’ period had expired for which plaintiffs had paid the rent in advance, and when more than 3 weeks had elapsed thereafter without payment of the rent reserved by the terms of the lease, the lessor assigned his interest to a corporation as a new tenant, and thereafter insisted that the plaintiffs had forfeited their estate. Under the terms of the lease, as they have .been quoted, no demand was necessary as a foundation for a legal forfeiture. Lewis v. Hughes, 12 Colo. 208, 20 Pac. 621; Fifty Associates v. Howland, 5 Cush. (Mass.) 214; 24 Cyc. 1355; 16 R. C. L. 1128.
[3, 4] We perceive no equitable grounds for relief from the forfeiture which the defendants have declared. The default in the payment of the rent must be taken to be willful. The rent due amounted to the sum of $9,500 before possession was demanded of the lessor. A valuable luisiness property was left without attempt at occupation by the tenants, when a large portion of its leasehold value consisted in the uninterrupted continuance of its use as a theater; the new lessee was allowed to expend $14,000 in making substantial alterations and improvements of the building, under circumstances that imparted knowledge to the plaintiffs, and without objection on their part, and, when possession was demanded, no tender or offer to pay the rent due was made. In the case of Sheets v. Selden, supra, the court said, in refusing equitable relief from a forfeiture declared against a tenant:
“Courts of equily are governed by the same rules in the exercise of this jurisdiction as courts of law. All arrears of rent, interest, and costs must be paid or tendered.”
And in the case of Kann v. King, supra, the same court said:
“In considering this subject two propositions are obvious: First, where the forfeiture from which relief is sought has been occasioned by the gross negligence of the person claiming to be relieved, the default so occasioned is not one brought about by accident or mistake; • and, second, that even where accident or mistake has been shown, especially in the absence of culpability or fraud on the part of the other party, a court of equity will not grant reliei from the forfeiture, unless it can be done with justice to that party.”
For these reasons the cross-appeal must fall.
[5 J The defendants insist that there is no basis for allowing a recovery from the defendants of the $5,000 paid by the plaintiffs in advance as rental from November 15 to January 24, because it was paid according to their express covenant in the lease. It is the general rule that the failure of the lessee to take possession is no defense lo a claim for rent, because that liability is fixed, not by the fact of possession, but by the covenant to pay rent. Oregonian Ry. Co. v. Oregon Ry. & Nav. Co. (C. C.) 27 Fed. 277; Moore v. Dove, Fed. Cas. No. 9757; Union Pac. Ry. Co. v. Chicago, R. I. & P. Ry. Co., 164 Ill. 88, 45 N. F. 488; Tiffany on Landlord & Tenant, 1154; Taylor on Landlord & Tenant, § 15.
*512The mere fact that the lessor remains in possession after the term of the lease has begun does not involve any exclusion from the premises, in the absence of any request for possession by the lessee. If tire tenant desires to occupy the premises, he should, manifest that intention in a decisive way. Millie Co. v. Thalmann, 34 App. Div. 281, 54 N. Y. Supp. 276; Vanderpool v. Smith, 4 Abb. Dec. (N. Y.) 461; Fitzhugh v. Baird, 134 Cal. 570, 66 Pac. 723; Little v. Hudgins, 117 Ark. 272, 174 S. W. 520. The continued occupation by the lessor awaiting the tenant’s entry often is a protection to the interests of both against possible injury of the building by fire, by trespass, by lapse of insurance, or by deterioration. So long as such possession by the lessor i<s permissive, or not adverse to the lessee, it cannot amount to an eviction or termination of the lease, or excuse the tenant from payment of rent according to his contract, nor can it be a basis for.recovery from the lessor of rent that has already been advanced. The portion of the decree awarding a judgment against the defendants for the recovery of the rent paid must therefore be reversed.
[6] As the parties are in a court of equity, and as the defendants Bonfils and Greaves ask affirmative relief in having determined the rights of those defendants to the $5,000 paid by the lessees, we think that the denial of relief from the forfeiture of the lease should be coupled with a determination of the rights of the parties before the court arising from the payment of this sum, and the occupation of the leased premises by the lessor during the term in which the lease was in full effect, in order that the whole controversy between the parties may be settled.
It is evident that the trial court found that there was no abandonment or surrender of the leased premises in December, as claimed by the defendants, because the decree for the restoration of the $5,-000. presupposes that the lessees were entitled to a possession under ,their lease for the full term of the ten weeks ending January 24. We may accept this conclusion, also, as the testimony was in direct conflict. What was, then, the legal effect of the continued possession by the lessor with the acquiescence of the lessees? The law implies a promise by the occupier, who has entered and occupied the premises by permission of the owner, and without any express contract to pay the- owner a reasonable rent for his occupiation. Carpenter v. United States, 17 Wall. 489, 21 L. Ed. 680; Lazarus v. Phelps, 152 U. S. 81, 14 Sup. Ct. 477, 38 L. Ed. 363; United States v. Whipple Hardware Co. (C. C. A.) 191 Fed. 945; Cobb v. Kidd (C. C.) 8 Fed. 695. 'The vendor may become liable to his vendee, or the lessor to his lessee, for use and occupation of the land conveyed, when he continues in possession after the time the grantee was entitled to possession. Preston v. Hawley, 139 N. Y. 296, 34 N. E. 906; Larrabee v. Lumbert, 34 Me. 79. Greaves and Bonfils each obtained a one-third portion of the beneficial use of the theater building during a period of 10 weeks, for which period the plaintiffs had paid the rent demanded by their lease, and this occupation was with the knowledge and consent of the plaintiffs. It was the opinion of the trial court that the failure of the lessees to take possession was with the knowledge and acquiescence of the *513lessor, and the evidence sustained this conclusion. The plaintiffs are therefore entitled to recover from each of these two defendants one-third of the value of such use and occupation. The answer of the defendant Bonfils asserted a set-off as assignee of legal demands against the plaintiffs, but there was no evidence given to show that he was such assignee.
The decree will be affirmed as to the Empress Theater Company, and will be reversed as to the defendants Bonfils and Greaves, with directions to the trial court to allow proofs of the value of the use and occupation by Bonfils and Greaves, as has been indicated, and to enter a judgment for that sum against them, and to deny other relief prayed for by the parties other than the Empress Theater Company. The appellants will recover their costs in cases numbered 5439 and 5440, and no costs to be taxed in this court in favor of either of the parties in case numbered 5444.