Court Opinion

ID: 9738263
Source: CourtListenerOpinion
Date Created: 2023-08-26 19:47:12.485958+00
Date Added: 2024-06-11T07:24:04.718065
License: Public Domain

*540KINGSLEY, J.
I dissent.
Looking at all of the facets of the transaction between the parties, including the substantial down payment made by the original tenant ($300,000), and the broad permission to assign the lease, in an indefinite number of assignments and reassignments, to potentially insolvent assignees, I can see no reason not to read the disputed language in section 7.01 as meaning exactly what it says—namely, that neither the original tenant nor any assignee nor reassignee should be required to devote to the building operations any additional personal funds. The parties, by a document obviously drawn with great care by counsel, and executed by experienced businessmen, expresses a clear intent that the tenants and assignees were not to be liable to pay, out of their own pockets, any funds beyond the original down payment.
However, as my colleagues point out, a tenant is obligated under two theories, one contractual under the lease and the other arising out of the estate which he holds. The exculpatory clause herein involved released defendants completely from what would otherwise have been a contractual obligation to continue to pay rent; it did not totally release them from their liability as tenants in possession although, since they were not required to dip into their “personal” funds, it did so in part.
Basic considerations of fair dealing require that defendants, although relieved of personal loss by the clause in question, not be permitted to utilize their own default to make a profit at plaintiff’s expense. Defendants are therefore liable to plaintiff for any net income received by them from their operation of the building during the five-month period of default, but not to exceed their contractual liability. How much that may be we do not know on this record. We know that they received some rent from two tenants; they may have received more. We know nothing as to the out-of-pocket costs which they incurred in operating the building during that default period. I would reverse the judgment with directions to take the necessary accounting for the period in question and to give judgment in accordance with the sum so found.