Court Opinion

ID: 9684082
Source: CourtListenerOpinion
Date Created: 2023-08-24 13:46:14.9127+00
Date Added: 2024-06-11T18:17:50.870034
License: Public Domain

John B. Robbins, Judge, dissenting. Whether Adous is characterized as a sublessee or an assignee is a distinction without a difference. Either characterization would permit the trial court to apply equitable considerations to avoid forfeiture of the sublease. The absence of privity between Adous and appellants has no bearing on whether equity may intervene to enjoin a forfeiture. In Smith v. Whitener, 42 Ark. App. 225, 856 S.W.2d 328 (1993), this court held that privity of parties was not required in order for a plaintiff to assert the equitable remedy of unjust enrichment. Further, the cases from other jurisdictions cited by the majority, USA Petroleum Corp. v. Jopat Bldg. Corp., 343 So.2d 501 (Ala. 1977), and Thal v. S.G.D. Corp., 625 So.2d 852 (Fla. Ct. App. 1993), do not prohibit the intervention of equity on behalf of a sublessee; rather, they decline to invoke equity under the particular facts of those cases. Our inquiry in the case at bar should'simply be whether the trial court’s decision to apply equity was clearly erroneous. I do not believe that it was. A court of equity, even in the absence of special circumstances of fraud, accident, or mistake, may relieve against a forfeiture incurred by the breach of a covenant to pay rent, on the payment or tender of all arrears of rent and interest by a defaulting lessee. See generally Duncan v. Malcomb, 234 Ark. 146, 351 S.W.2d 419 (1961). The grounds upon which a court of equity proceeds in this connection are: that the rent is the object of the parties, and the forfeiture only an incident intended to secure its payment; that the measure of damages is fixed and certain; and that when the principal and interest are paid, the compensation is complete. Id. Further, the doctrine of equity is not for forfeiture, and the most vital question in determining whether a court of equity will grant relief against a penalty or forfeiture is said to be the ability and willingness of the party in default subsequently to perform the condition or make compensation for his failure of performance. Watson v. Stout Lumber Co., 175 Ark. 240, 298 S.W. 1010 (1927). Although these cases involved the application of equity between the original lessor and lessee, under the particular facts of the case at bar, I believe this distinction makes no difference. This was a long-term commercial lease in which appellants as lessors did not see fit to prohibit either an assignment or a sublease. Thus, they surely could not be surprised that a sublease was executed, nor could Adous be charged with notice that a sublease would be looked upon by appellants with disfavor. Further, before the controversy arose in this case, Adous had apparently operated the gas station and convenience store for over three years without incident and without prejudice to appellants. After the controversy arose, he proved his continuing ability to operate at the- site and pay rent in a timely manner. Thus, appellants have received exactly what they sought — a lease of the facility over a long period of time with timely payment of rent. The inequity in this case lies in the fact that Adous, who has agreed to uphold the terms of the original lease and has paid rent in a regular fashion, must now forfeit the business he has operated simply because GPI, who after 1997 was acting as a mere conduit, became unable to pay rent. This is the type of forfeiture that equity should prevent, and I believe the trial court was correct in attempting to do so. I therefore respectfully dissent. Roaf, J., joins in this dissent.