Jacobs v. Klawans

Prescott, J., delivered the opinion of the Court: As a result of a hearing on motion for a summary judg ¹⁵⁰ ment, the appellees obtained a judgment against the appellants for rent allegedly due under a lease and the cost of documentary stamps used in recording the lease. On January 2, 1953, the parties hereto entered into a written lease for a term of ten years. This agreement, in pertinent part, provided that “The lessees shall have no power to assign or sublet the whole or any part of the lease or premises or store fixtures without first obtaining the written consent of the lessors, their heirs and assigns * * *” and that the “lessees agree to pay all state and federal documentary stamps upon this lease or transfer.” On March 21, 1959, the appellants desired to sublet the premises subject to the lease, and submitted to the appellees the name of a proposed sublessee, who was ready, willing and able to become such sublessee. The appellees refused to permit the subletting.

Thereafter, several other names were submitted as prospective sublessees. The appellees declined all of them. For the purposes of this case, we shall assume that the appellees refused to agree to the subletting for personal reasons, only. Irked by what they thought was unreasonableness on the part of the appellees, the appellants consulted legal counsel regarding their rights.

They were advised that the lease had not been recorded among the land records, and, therefore, the instrument created only a tenancy from year to year. Accepting this advice as being correct (but see Code [1957], Article 21, Section 1), the appellants, on September 28, 1959, served written notice of termination of the tenancy, effective as of December 31, 1959. On October 5, 1959, the appellees recorded the lease among the land records and-presented the appellants with a bill for the cost of state' documentary stamps, which the appellants refused to pay. Thereafter, the appellees instituted this suit for April and May, 1960, rental payments and for the cost of the state documentary stamps, and filed a motion for a summary judgment.

The appellants filed general issue pleas and an answer to the motion for a summary judgment. Subsequently, the ¹⁵¹ appellants filed a “counter claim for declaratory judgment,” in which they raised the same questions they present on this appeal. The trial judge rendered judgment in favor of the appellees for the rent due for April and May of 1960, plus the cost of the state documentary stamps, and the appellants appealed. Two questions are raised.

The appellants claim: (1) that notwithstanding the provision in the lease that the lessees shall not have the power to assign or sublet without first obtaining the written consent of the lessors, the lessors cannot, arbitrarily, withhold such consent; and (2) that the lease is null and void. I This precise question does not seem to have reached this Court on any former occasion; 1 and, although it, apparently, has not been passed upon in a great number of jurisdictions, the decisions of the courts that have determined the question are in very substantial accord. Basing the decisions, for the main part, on the grounds that restraints on the alienation of property interests are justified if the objectives behind the imposition outweigh the social evils which flow from the enforcement of the restraint, or that the interference with the power of alienation is so insignificant that no appreciable harm results from the enforcement of the restraint, the lessor’s right to refuse consent, even though his refusal be arbitrary and unreasonable, has generally been upheld, where the covenant prohibiting assignment or subletting has been without qualification; but such covenants, being restraints on alienation, are not favored at law and have been strictly construed. Coulos v. Desimone, 208 P. 2d 105, 109 (Wash. 1949) ; Gruman v. Investors Diversified Services, 78 N. W. 2d 377, 379 (Minn. 1956); Abrahamson v. Brett, 21 P. 2d 229, 232 (Ore.); Richard v. Degen & Brody, Inc., 5 Cal.

Rptr. 263, 269 (Cal. App. 1960); Friedman v. Thomas J. Fisher & Co., 88 A. 2d 321 (Mun. Ct. App., Dist. Col.); ¹⁵² Muller v. Beck, 110 A. 831 (NJL); Durand v. Lipman, 1 N.Y.S. 2d 468 .

The encyclopedias and text writers, likewise, recognize the rule as it has been stated above. In 51 C.J.S., Landlord and Tenant, § 36, it is stated: “However, where a subletting or assignment of the leased premises without the consent of the lessor is prohibited, he may withhold his assent arbitrarily * * *, unless * * * the lease provides that consent shall not be arbitrarily or unreasonably withheld, * * *.” See also 32 Am. Jur., Landlord and Tenant, § 397; Restatement, Property, § 410; 1 American Law of Property, § 3.58, p. 305. And Professor Powell, even though he predicts that the time may soon come when the allowance of lease clauses forbidding assignments and subleases will be curtailed by statute, states that the law at present permits a lessor to “insert in his lease as stringent a clause restricting alienations of the term as he can persuade the lessee to accept.” 2 Powell, Real Property, pp. 308, 309.

We agree with the rule as it has been stated above, thinking that the right of the lessor to select a lessee of his own choosing to occupy and use his property offsets, if it does not outweigh, any evils flowing from the enforcement of the restriction on alienation, and that such restriction is in many cases, especially when the duration of the lease is short, of minor importance; and we hold that the appellees in the instant case had a right to refuse giving their consent to the subletting, even if we assume that such consent was withheld arbitrarily and unreasonably. II The appellants raise their second question in this manner. They state that prior to 1951 a lease for a term of more than seven years was required to be recorded by the Code (1939), Article 21, Section 1, in order to be effective, even as between the parties. They claim further that the title of Chapter 565 of the Acts of 1951, which purported to change the law so as to make unrecorded leases of more than seven years valid as between the parties, was misleading, and that ren ¹⁵³ dered the statute (hereafter referred to as the Act) unconstitutional and void.

Therefore, say the appellants, that as the Act was unconstitutional, the lease herein created only a tenancy from year to year, 2 which had been seasonably terminated, and, consequently, the appellees were not entitled to the judgment rendered below. In the