Court Opinion

ID: 8908996
Source: CourtListenerOpinion
Date Created: 2022-11-27 02:22:02.377492+00
Date Added: 2024-06-11T17:08:23.283293
License: Public Domain

WELLS, Judge.
The sole question for review and apparently one of first impression before our appellate courts is whether a landlord may recover back rent from a month-to-month periodic tenant at will where despite the landlord’s prior notice of a rental increase, the tenant continued to pay and the landlord to accept without objection, the same amount of rent as earlier paid. We answer in the negative.
Defendant corporation contends in its first three assignments of error that the trial court erred in concluding, as a matter of law, that defendant’s failure to respond to plaintiff’s rental increase notice (hereinafter “notice”) effectively constituted an acceptance and agreement to pay the increased monthly rent of $4,200.00. We agree with defendant. As a matter of basic contract law, there can be no contract unless there exists a “meeting of the minds,” Richardson v. Storage Co., 223 N.C. 344, 26 S.E. 2d 897 (1943). Implicit in this rule is the corollary that a party to a contract may not have terms imposed upon him by the other party. “Contract requires a conscious assent to terms proposed by another.” Corbin on Contracts, § 59 (1963).
Although we have found no previous North Carolina case directly on point, we are guided by our Supreme Court’s decision *594in Realty Co. v. Spiegel, Inc., 246 N.C. 458, 98 S.E. 2d 871 (1957) which held that a landlord’s acceptance of rent with full knowledge of tenant’s breach constituted a waiver of the landlord’s right to forfeiture. Although the case did not raise the issue of a landlord’s right to back rent, the court’s analysis and application of principles of waiver appear to require our application of the waiver principle in this case to defeat plaintiff’s claim.
The Spiegel court noted that the expiration of the deadline required by the lessor company for the lessee to cure the breach gave rise to the landlord’s right to elect whether to continue the lease (despite the breach) or terminate the tenancy. If the lessor chose to continue accepting rent he implicitly continued the tenancy; otherwise, the lessor’s refusal to accept rent would allow the company to terminate the tenancy and recover damages for wrongful possession of the tenant’s holdover. The Court held that the landlord’s acceptance of rents after the expiration of the “cure deadline” constituted a waiver of tenant’s breach and an implied continuation of the tenancy contract. 246 N.C. at 467-68, 98 S.E. 2d at 878.
The Spiegel court relied on Winder v. Martin, 183 N.C. 410, 111 S.E. 708 (1922) from which we also derive direction:
It is the generally accepted rule that if the landlord receive rent from his tenant, after full notice or knowledge of a breach of a covenant or condition in his lease, for which forfeiture might have been declared, such constitutes a waiver of the forfeiture which may not afterwards be asserted for that particular breach, or any other breach which occurred prior to the acceptance of the rent. Id. at 411, 111 S.E. at 709.
We therefore hold the rule to be that a landlord’s notice of rent increase constitutes an offer to create a new contract or tenancy at the increased rent. The rental increase becomes effective and binding upon the tenant only where the tenant by words or conduct clearly indicates the tenant’s assent to the new term.
Under the foregoing rule then, plaintiff lessor’s continued acceptance of the rent ($2,625.00 a month) previously paid by defendant after the notice and effective date of the rent increase in August 1982, constituted a continuation of the previous tenancy and establishes a rejection of the offer to create a new tenancy at *595the rental amount of $4,200.00 a month. The plaintiff was therefore not entitled to recover the back rent as awarded by the trial court. This portion of the judgment below is reversed. The trial court’s judgment with respect to the $3,000.00 rent paid on and after March 1985 is affirmed.
Because of the result we have reached, it is unnecessary for us to determine defendant’s other assignments of error.
Reversed in part; affirmed in part.
Judges JOHNSON and COZORT concur.