Court Opinion

ID: 9530417
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:59:42.278338+00
Date Added: 2024-06-11T13:28:06.668632
License: Public Domain

DUNCAN, J.
(Pro Tempore), dissenting in part.
Defendant Continental Leasing Co. raised timely objection to the petition seeking to require it to arbitrate under the lease between plaintiff, as lessor, and Robert E. Thompson, as lessee. Defendant also objected to the entry of judgment against it by the circuit court based on the award of the arbitrators.
Defendant Continental was not a party to the lease; the lease contained no provision binding assignees or sublessees to the covenants thereof; nor did defendant expressly assume any of the obligations of the lease.
When a party other than the lessee is shown to be in possession and occupancy of leased premises, the law will presume that the lease has been assigned to such party, and the party may be held liable for the payment of the rent unless able to overcome the presumption by proof that some other relationship exists between that party and the original lessee. Leadbetter v. Pewtherer, 61 Or 168, 121 P 799.
*164However, in the absence of an express agreement by the assignee to be bound by the lease covenants, the assignee is bound only by those covenants which run with the land. No privity of contract arises from the naked assignment, but only privity of estate. First Nat. Bank v. Hazelwood Co., 85 Or 403, 166 P 955. Only real covenants run with the land. It is an essential quality of a real covenant that it relates to the realty, having for its object something annexed to or inherent in or connected with the land or other real property. First Nat. Bank v. Hazelwood Co., supra.
Under authority of that case, a covenant to pay rent runs with the land. It is deemed, however, that a covenant to arbitrate is personal and does not run with the land. Accordingly, defendant was entitled to have its alleged obligation to pay rent tried out in an appropriate law action.
It is unnecessary to impose a contractual relationship on defendant where none was entered into by it. If fraud existed, plaintiff had a remedy. Also, plaintiff could have fully protected himself, if desired, by a clause in the lease prohibiting an assignment or subletting or by a clause expressly binding assignees and sublessees to all obligations of the lease.
The trial court was without jurisdiction to compel defendant Continental Leasing Co. to arbitrate and the judgment against that defendant based on the arbitration award should be reversed.