Brady v. Brady

Oeeutt, J\, delivered 'the opinion of the Court. This is an appeal from a judgment of the Superior Court of Baltimore City, entered on a directed verdict for the defendant in an action of ejectment for non-payment of rent, brought by Walter E. Brady, landlord, against Howard W. Brady, tenant, for the recovery of an. undivided one-third interest in a leasehold property at the northwest corner of ⁴⁰⁵ Monroe Street and Patterson Avenue in Baltimore City, known as the “Fulton Goal .& Wood Yard.” The father of the parties to this appeal founded and for many years carried on a coal business on that property under the name of “E. S. Brady & Co.” At his death the title to-it became vested in hisi two sons and his wife, each of whom held an undivided one-third interest therein. After their father’s death, Walter E. Brady and Howard W. Brady together carried on the business under their father’s name until 1914, when Howard W. Brady bought out his brother’s interest in the business, and on the 18th of April, 1914, Walter E. Brady leased to Ms brother his undivided one-third interest in the property. That lease, aftea* providing that the term, of the tenancy should he for two years at au annual rental of $333.36, payable quarterly in instalments of $83.34 on the first day of July, October, January and April, and that il could from time to time, at the option of the lessee, be renewed, so that the term could extend to March 31, 1924, but no longer, and that the lessee should keep a trestle on the premises in repair, contained this clause: “And the said Walter E. Brady doth hereby covenant that he will pay one-third of all taxes, ground rent, water rent, fixe insurance premium and of all other legal charges or necessary expenses on or repairs to said property, except repairs to said trestle, during the term of this lease or any renewal thereof; the other two-thirds parts thereof to he paid by the owners of the other two — undivided—third parts of said premises.” And in addition to that clause' the lease contained the provisions ordinarily found in such an instrument.

From these facts it appears that the lessor and the lessee each occupied a dual relation to the property, and that, while the appellant as lessor was entitled to receive from the lessee rent for an undivided one-third interest in the property, at the same time, as a tenant in common with others of the whole property, he was hound to pay one-third, of all the legal charges and expenses, such as ground rent, taxes, insurance, and the like, which might properly he charged ⁴⁰⁶ .against it, and such expenses as might be necessary to keep the property in repair. As a practical and convenient manner of dealing with these respective rights and obligations, instead of collecting from the appellant his proportion of the expenses incurred for the repair of the property and the payment of ground rent, taxes and other charges properly chargeable against it, as such expenses accrued, and paying him the rent in full ■quarterly instalments, the appellee, at the time when each instalment of rent became due, rendered to the appellant a ■statement, in which the appellee charged himself with the rent due and credited himself with the appellant’s share of such expenses paid by the appellee for the upkeep of the property, which the appellant in the lease had covenanted to pay, and if the account showed a balance in favor of the appellant, a check covering such balance was sent with the account. This course of dealing was begun when the first Instalment of rent became due on July 1st, '1914, and was •continued until April 1st, 1918, and in each instance, where the-account showed a balance due the appellant, he received and accepted the balance in settlement of the account. These facts may be said to be undisputed, for, while the appellant said he disputed several of the. accounts furnished prior to April 1st, 1918, he nevertheless accepted the appellee’s check in settlement of them and thereby ratified them.

Beginning, however, with the statement of July 1st, 1918, which showed a: balance of $85.66 against the appellant, he refused to accept the amount claimed by the appellee in the statement to be due him, in settlement of the rent, and on August 24th, 1918, his attorney wrote the appellee that the lease was terminated as a result of its breach by the appellee, and inclosing a check for $135.32 “in full settlement of his contributive share of the accrued taxes, ground rent and water rent.” This check was returned with a letter from the -Appellee’s attorneys, denying any breach of the lease, and •stating that the check was not based on the proper adjustment of the accounts between the parties. On October 1st, ⁴⁰⁷ 193 8, the appellee again rendered the appellant a statement, in which he charged him with one-third of the expense of a heating plant installed on the property in the place of an old one which had become worn out, and with one-third of an insurance premium, which, after crediting the accrued rent, left a balance of $343.51 due by the appellant to the appellee. The appellee continued to render such accounts to the appellant until April 1st, 3921, when the balance due by the appellant for his share of the expense of the upkeep of the property exceeded the amount due him for rent by a sum said to be $858.96. The appellant refused to accept these statements as a compliance with the lease and, his demands for rent having been refused, he brought this action of ejectment for the non-payment of rent.

The only issue in the case therefore is whether the rent named in the lease was duly paid by the appellee. Certainly it was not paid in the instalments named in the lease, an.d upon the facts of this ease the question arises as to whether the payment of the net balance due to the appellant upon an account stated between him and the appellee can be regarded as a payment of the rent due under the lease in accordance with its terms, and the answer to that question depends upon whether the covenant on the part of the appellee to pay rent is to bo construed in connection with the appellant’s covenant to pay one-third of all taxes, ground rent, water rent and other expenses necessary to the upkeep of the property, or whether the two are to be regarded as independent covenants. If we were dealing with the usual covenant on the part of a landlord to keep the leased premises in repair, the covenant would, under the weight of authority, he considered as entirely independent of the covenant to pay rent, and a failure to repair would he no defence to any action founded upon non-payment of rent (Tiffany, Landlord & Tenant, page 1237), and it is to covenants of that character that the cases relied upon by the appellant refer. But whether such a covenant on the part of the landlord is to be considered as independent of or dependent upon tbe lessee’s covenant to ⁴⁰⁸ pay rent depends upon the intention of the parties.

And if they are interdependent this rule, as stated in Mr. Tiffany’s treatise on the law of landlord and tenant applies: “That is, if a particular stipulation by the landlord, and that by the tenant for the payment of rent, are ‘dependent,’ then the non-performance by the landlord is a defense to the claim for rent, while it is otherwise if the stipulations are ‘independent.’ This is merely an application of a general principle applicable to all contracts or instruments containing executory stipulations by both parties.” And it is said in Ilcdsbury1s Lmvs of England: “Where the lessee is expressly authorized by the lease to make deductions from the rent, the balance represents till that is due to the lessor under the reservation of rent, and it is only such balance that he is entitled to recoven’, whether by distress or by action.” 18 Ilalsbury’s Laws of Eng., sec. 949. Applying those principle.? to the facts of this ease, it is clear enough that the parties meant these two covenants to be construed together and as interdependent, and that therefore the amount payable- by the lessee at each rent period should be the difference between the sums of money expended on his behalf for taxes, insurance, repairs and other expenses necessary for the upkeep of the property, and the sum due him for rent. Unquestionably the lease contemplated that the money for the payment of “taxes, ground rent, water rent, fire insurance premium and all other legal charges or neicessiary expenses or repairs to said property’' should bo advanced by the tenant in possession of the property, and when the lessor covenanted to “pay one-third” of such expenses he can only have meant that he would pay the persons who made such advances his proportion of the expense incurred. It was obviously impracticable to- pay many of these charges in any other way.

And this is the- construction which the parties themselves placed on the contract. Howard W. Brady testified that by an arrangement between him and the appellant he was to advance the money for these expenses and reimburse himself from the rent and pay the ⁴⁰⁹ appellant the balance. George H. Metcalf, the appellee'.? bookkeeper, said that Walter E. Brady gave him instructions to the same effect