Annapolis Fire & Marine Insurance v. Rich

Barnes, J., delivered the opinion of the Court. The appellees, Edward L. Rich, Jr. and The Equitable Trust Company, Trustees under the Will of Charles Combs Burch, as owners and landlords of the property 112 East Madison Street in Baltimore City sued General and Excess Underwriters, Incorporated (General), Annapolis Underwriters, Inc. (Underwriters) and the appellant, Annapolis Fire and Marine Insurance Company (Annapolis Fire), as tenants holding over to recover rent for the months of February, March and April ⁵⁷⁶ 1963 amounting to $675 ($225 a month) for the first floor of 112 East Madison Street and three automobile parking spaces. The action was filed in the Superior Court of Baltimore City. It was tried before Judge Sodaro, without a jury.

Judge Sodaro, after testimony was taken and arguments presented, rendered judgment against Annapolis Fire for $675. Judgments by default had’ previously been entered against General and Underwriters and judgments on inquisitions were made absolute against them. The motion of Annapolis Fire for a new trial or for judgment n.o.v. in its favor was overruled by the lower court and this appeal was entered by Annapolis Fire from the final judgment against it. The original written lease for the first floor of 112 East Madison Street, with three automobile parking spaces in the rear of the premises with the use in common with other tenants of the front entrance hall (the premises) was executed by Charles Combs Burch as lessor and General as lessee on August 26, 1957.

The term of the lease was for five years beginning September 1, 1957 and ending, without notice, on August 31, 1962. The annual rent was $2700 payable in equal monthly installments of $225 each, in advance, on the first day of each month during the term. Paragraph 5 of the lease provided as follows: “5. The Lessee covenants that it will not assign or sublet this Lease without the prior consent in writing of the Lessor, first had and obtained, such consent, if given, to be restricted to such person or persons to whom or for such purpose or purposes for which such consent shall be specifically given, such consent not to be construed or taken as in any way waiving this general provision and restriction.” Paragraph 9 of the lease provided: “9.

The Lessee shall have the privilege of placing a sign in the panel space between the two front windows on the Madison Street side of the first floor.” General placed a substantial sign as permitted in paragraph 9, bearing the legend: "General Excess Underwriters, Inc., cor ⁵⁷⁷ respondents for Insurance Underwriters at London and Paris.” After Mr. Burch died, the appellees, as trustees under his will, assumed control over the premises in 1961. General, Underwriters and Annapolis Fire had a close business relationship. They were in various aspects of the insurance business and had a number of officers, directors and stockholders in common with each other. For example, Monroe H. Lowitt was president and a stockholder of General, an officer and stockholder of Underwriters, and a vice president (but not a stockholder) of Annapolis Fire.

He helped to organize Underwriters and Annapolis Fire. Underwriters was the underwriting agent for Annapolis Fire. General became embarrassed financially and during the term, Underwriters and Annapolis Fire moved into and occupied the premises some time in 1959. Annapolis Fire placed a substantial sign on the Madison Street outside wall of the premises directly under the sign of General, bearing the legend: “Home Office Annapolis Pire and Marine Insurance Company.” Mr. Lowitt testified that he obtained the permission of Mr. Burch to place the Annapolis Fire sign on the front wall of the premises.

When Mr. Rich, a member of the Maryland Bar and a co-trustee under Mr. Burch’s will, first inspected the premises on behalf of the trustees, he saw the signs on the Madison Street wall of the premises. He indicated that there is also a similar Annapolis Fire sign on the Calvert Street side of the premises. Mr. Rich received a letter dated June 8, 1962 from Mr. Lowitt on the letterhead of General which stated: “This is to advise you that we do not expect to renew our lease which expires on November 30, 1962.” 1 After receipt of this letter, Mr. Rich had a conference with Mr. Lowitt on July 5, 1962 at the premises. Mr. Rich testified that he had met Mr. Lowitt before and knew he was the owner and general manager of General, the lessee referred to ⁵⁷⁸ in the lease of August 26, 1957.

Mr. Lowitt identified himself as also being an officer of Annapolis Fire and also as an officer of Underwriters. Mr. Rich then gave the following account of the conversation: “Mr. Lowitt told me the General and Excess Underwriters, Inc. was completely broke and were very much in debt, and that Annapolis Fire and Marine Insurance Company were occupying the premises and had been for some tune, and that Annapolis Underwriters, Inc. were also occupying them and had been for some time, and the rent had been paid sometimes by Annapolis Underwriters and sometimes by Annapolis Fire and Marine. I told him I was very glad we had three tenants now which we would accept in place of the one we had, and we had some who could pay the money. We talked about some payment.

He talked about whether they were going to stay. He expressed the fact that they were going to move to One Charles Center, which had not been done. I called their attention to the fact they had cheaper rent, with a parking area, and urged them to stay. He said under the circumstances they did not know what they were going to do but they were there for the time being.” After returning to his office, Mr. Rich confirmed his conversation with Mr. Lowitt by a letter dated July 5, 1962.

This letter is as follows: “Mr. Monroe H. Lowitt, General and Excess Underwriters, Inc., Annapolis Fire and Marine Company, Annapolis Underwriters, Inc., 112 E. Madison Street, Baltimore 2, Maryland Re: The Burch Estate Dear Mr. Lowitt: This will confirm my talk with you today to the effect that the Trustees will be glad to have you continue leasing the property known as 112 E. Madison ⁵⁷⁹ Street, first floor, from the Burch Estate. We do not know where you will get as much area with parking lots available as exist at 112 E. Madison Street for the amount of money which you are now paying, and accordingly suggest that you consider this matter very seriously. We are pleased to learn today that you are considering the possibility of continuing to lease these premises at the expiration of the present lease. If there is anything we can do to make your stay pleasant and confortable [comfortable], we will be glad to consider same.” The letter was signed by Mr. Rich as Executor and Trustee of the Estate of Mr. Burch and a copy was sent to Mr. Laun, Assistant Trust Officer of The Equitable Trust Company.

Shortly thereafter Mr. Rich instructed the officers of The Equitable Trust Company, co-trustee, to bill all three corporations for the rent, but, apparently through inadvertance, the Trust Company continued to send bills for the rent to General as it had done theretofore. After Underwriters and Annapolis Fire had moved into the premises, Underwriters sent the $225 rent each month to The Equitable Trust Company by its corporate check. Annapolis Fire gave its corporate check each month for $112.50 to Underwriters. General, Underwriters and Annapolis Fire continued to occupy the premises after August 31, 1962, the end of the term specified in the written lease.

Mr. Rich testified that Robert G. Lembach, attorney for the three corporations, telephoned him on February 25, 1963 and advised him that Underwriters had moved out of the premises and that Annapolis Fire was going to move out and “wanted to get out by the first of March 1963.” During that conversation, Mr. Rich told Mr. Lembach that “They had been accepted under the lease earlier, and they had to pay the rent” to which Mr. Lembach replied: “I understood we were on a month to month basis.” Mr. Rich replied: “No you are not, you are all responsible for the rest of the year from August 31.” Mr. Rich testified further that Mr. ⁵⁸⁰ Lembach told him on March 26, 1963 that Annapolis Fire and Underwriters had been paying the rent. Diligent efforts were made by the landlords to rent the premises after they were fully vacated at the end of March, 1963, but without avail. Written demands by the landlords to pay the rent due for February and March, 1963, and to become due on April 1, 1963, were sent to Underwriters and to Annapolis Fire on March 28, 1963, with the statement in each letter “we hold you jointly and severally liable on this rent with other tenants of this space.” The landlords contend that by the entry of Underwriters and Annapolis Fire into the premises, the payment of rent and the placing of the signs on the buildings, Underwriters and Annapolis Fire became jointly and severally liable for the rent as tenants and when the two corporations, with General, held over as tenants after August 31, 1962 they were liable for the rent for the next year as tenants from year to year. On the other hand, Annapolis Fire contends that Annapolis Fire was not a co-tenant holding over on the written lease because it was not a party to it, nor was it liable for rent under an oral lease because there was no intention to make one and no meeting of the minds with respect to such an oral lease; that the landlords could not grant Annapolis Fire any leasehold estate when the written lease for the premises was in effect; that Mr. Lowitt, as vice president of Annapolis Fire had no authority to bind the corporation by his representations; and, that the landlords elected to charge General and Underwriters as tenants holding over, thereby excusing Annapolis Fire from liability.

The basic position of Annapolis Fire on the facts is that it was a subtenant of the premises and not a co-tenant, liable for the rent as a tenant holding over. Judge Sodaro did not file an opinion in the case, but by directing the entry of judgment against Annapolis Fire, he necessarily found that Annapolis Fire was a co-tenant holding over and was not a sub-tenant. We are of the opinion that the lower court’s finding was not clearly erroneous and, in accordance with Maryland Rule 886a, the judgment must be affirmed. It is uncontradicted that both Underwriters and Annapolis Fire were in possession of the premises, together with General ⁵⁸¹ in 1959 and thereafter, prior to the termination of the written lease of August 26, 1957.

The close business relationship between the three corporations, the cessation of payment of the rent by General and the assumption of that obligation by Underwriters and by Annapolis Fire (at least indirectly) indicates that the possession of Underwriters and Annapolis Fire was with the consent of General. The testimony of Mr. Lowitt that Annapolis Fire obtained the permission of Mr. Burch during his lifetime to place the Annapolis Fire “Home Office” sign on the outside walls of the premises, indicates that even prior to July 5, 1962 the landlord had recognized Annapolis Fire as a co-tenant of the premises, with General and Underwriters (from which corporation he had been receiving the rent), and that Annapolis Fire considered its position at that time to be that of a co-tenant. Otherwise, if it had considered itself to have been a sub-tenant of either General or of Underwriters, or of both, it would have merely obtained their permission and General or Underwriters, or