Maryland Theatrical Corp. v. Manayunk Trust Co.

Digges, I., delivered the opinion of the Court. The question presented by this appeal is whether or not a lease, entered into by the predecessor in title of the appellant as lessee and the predecessor in title of the appellees as lessor, is redeemable. This lease was dated May 29th, 1914, and covered a lot located in Baltimore City known as 114 West Lexington Street. This lot had a frontage of 22% feet on Lexington Street, an irregular depth of 107 feet, and contained 2,534 square feet.

It was leased for the purpose of and is now being used as the entrance to a theater belonging to the appellant. The lease was “for a term of six years, commencing on the first day of October, 1914 and ending on ⁶⁰⁴ the 30th day of September, 1920; at the end of said term of ■six years the tenant, its successors and assigns shall have the right to renew this lease for a further term of eight years commencing on the first day of October, 1920 and ending •on the 30th day of September, 1928; at the end of said term of eight years said tenant shall have the right to renew this lease for a further term of ten years commencing on the first day of October, 1928 and ending on the 30th day of September, 1938.” The tenant, for itself, its successors and assigns, covenanted and agreed to pay to the landlord, her personal representatives and assigns, the sum of $6,500 per year for the said term of six years, the sum of $7,500 per year for the said term of eight years, and for the said term of ten years the sum of $7,500 per year, together with such other amount per year, in addition to said $7,500, as may be fixed in the method later prescribed in said lease; the payments -of rent to be made in equal monthly instalments in advance, accounting from the first day of each of the said terms. It was further provided that, if the amount of rent for the afore.said term of ten years in addition to the aforesaid sum of $7,500 could not be agreed upon by the landlord and the tenant, then the landlord and the tenant should each appoint ■one arbitrator on or before the first day of May, 1928, and ■said two arbitrators should fix said additional amount, and if they could not agree, they should appoint a third arbitrator, .and the majority of the three should fix said additional .amount, which said additional amount fixed in either method should bind the parties; and if said two arbitrators could not .agree on said additional amount, or could not agree on the third arbitrator, on or before June 1st, 1928, or if, having .agreed on the third arbitrator, the majority could not agree •on said additional amount on or before July 1st, 1928, then said appointment should be void, and the tenant agreed to pay a reasonable rent per annum for said property for said'term •of ten years, said reasonable rent to be determined in a suit instituted in one of the courts of Baltimore City to recover the rent for the month of October, 1928, to be tried before the court, without a jury, and if in said suit the judgment should ⁶⁰⁵ be for $625 or less, exclusive of costs, then the said rent for the ten year term should be $625 per month, and if said judgment should be for a sum, exclusive of costs, more than $625, then the monthly rent for the said ten year term should be that sum. It is further provided: “In addition to the aforesaid sums the tenant for itself, its successors and assigns agrees to pay to the landlord her personal representatives and assigns as rent during the continuance of this lease the following sums when due after demand by the landlord, to wit, one-half of any increase in taxes on the leased promises over the taxes for the year 1914 arising not from an increased rate but solely from an increased assessment on said leased premises, the present assessment being $40,125; also any water rent on said leased premises in excess of $13; also any fire insurance premiums paid by the landlord in excess of the rate of $50 per annum.” And further: “This lease shall be deemed renewed for the aforesaid term of eight years and for the aforesaid term of ten years unless the tenant, its successors or assigns shall give notice to the landlord and her personal representatives or assigns to the contrary on or before the first day of April, 1920 or the 1st day of April, 1928, respectively and unless this lease be terminated in any manner prior to the 30th day of September, 1938, then and in that event the tenant, its successors and assigns shall have the right on the 29th or 30th day of September, 1938, to purchase the leased premises at and for the sum of $125,000 and the landlord, her personal representatives and assigns covenants upon the payment to her, him or them of the said sum of $125,000 to convey the leased premises to the tenant, its successors or assigns hereunder by a good and sufficient deed free from all encumbrances except an annual ground rent of $240.” The foregoing is a statement of such portions of the lease as are necessary for the determination of the questions here involved.

The record shows that the tenant entered into possession under the lease and paid the rent therein specified for the first six year period, which ended September 30th, 1920, and after that date continued, for the additional period of eight years, paying the increased rent specified for that period, ⁶⁰⁶ which, would .expire September 30th, 1928; that about March 15th, 1928, the appellant gave verbal notice to the defendant of its intention to redeem the property affected by the lease, and on or about April 30th, 1928, gave formal notice in writing of its intention so to do. The appellees denied the right of the appellant to redeem the lease, whereupon the appellant filed its bill in the Circuit Court of Baltimore City, in which it alleged that it was entitled to redeem the lease, that it was ready, able, and willing to pay the redemption price fixed by law; that the defendant denied the redeem-ability of said rent and refused to execute a deed redeeming the same upon payment or tender to them by the appellant of “a sum of money equal to the capitalization of the rent reserved at the rate of six per cent., together with any and all rent accruing to the day of such tender.” The bill prayed that the defendant be required by decree, upon payment or tender of the redemption price, to execute and deliver to the appellant a deed redeeming the rent reserved on the property referred to in the aforesaid lease in accordance with the provisions of section 95 of article 21 and section 25 of article 53 of the Code, “to the end that said annual rent reserved in said lease may be merged and extinguished,” and that the appellant “may hold said property clear and discharged from said lease.” After testimony and hearing, the chancellor, on March 28th, 1929, passed a decree dismissing the bill of complaint, from which decree the appeal here was taken. The statute under which the appellant claims the right to redeem this lease is section 93 of article 21 of the Code, and reads as follows: “All rents reserved by leases or subleases of land hereafter made in this State for a longer period than fifteen years shall be redeemable at any time after expiration of five years from date of such leases or subleases, at the option of the tenant, after a notice of one month to the landlord, for a sum of money equal to the capitalization of the rent reserved at a rate not exceeding six per centum.” The appellees (defendants below) contended before the chancellor, as they do now: First, that even if the lease is ⁶⁰⁷ considered to be for a 24-year term, it is not redeemable, because the redemption statutes were not intended to apply, and cannot be applied, to a rent so fluctuating and uncertain .as it is in this lease; second, that the lease is for a period less than fifteen years, i. a lease for six years, with successive rights of renewal for eight and ten years respectively; third, the Act of 1914, chapter 371, which became effective April 10th, 1914, prior to the execution of the lease under discussion, excludes this lease from the operation of the redemption laws, because the term of the lease, including all renewals, does not exceed twenty-five years. We will consider these questions in reverse order.

The lease was dated May 29th, 1914. The Act of 1914, chapter 371, was approved and became effective on April 10th, 3914; it declares that the provisions of chapter 485 of the Acts of 1884, chapter 395 of the Acts of 1888, and chapter 207 of the Acts of 1900, “were not intended to apply and do not apply to leases or subleases of property leased for business purposes, when such leases or subleases contain a clause prohibiting assigning or subleasing all or any part or parts of the property leased, without the written consent of the landlord, and where the term of such lease or subleases, including all renewals provided for therein, shall not exceed twenty-five years.” The effect of this act was to make irredeemable certain leases which under the previous statutes were redeemable. It prescribed a class of leases which should be irredeemable, and set out the requisites necessary to entitle a lease to be placed in said irredeemable class. These requirements were three: First, that it should be a lease for business purposes; second, that such lease must contain a clause prohibiting assigning or subleasing all or any part or parts of the property leased without the written consent of the landlord; and third, that the term of such lease or sublease, including all renewals provided for therein, should not exceed twenty-five years.

Does the lease under consideration here contain such provisions as place it in the irredeemable class provided for in ⁶⁰⁸ the Act of 1914? There is no doubt that it is a lease for business purposes, and the term, including all renewals, does-not exceed twenty-five years; but it is equally clear that it ■does not contain a clause prohibiting assigning or subleasing all or any part of the property, without the written consent of the landlord. It is contended by the appellees that if the lease is for business purposes and is for a term of less than twenty-five years, it is irredeemable, because the provision as to its containing a clause against assignment and the provision as to the term of less than twenty-five years should be read in the alternative, and that if it was for business purposes, and either contained a clause against assignment or was for a term less than twenty-five years, the Act of 1914 applies and renders it irredeemable. This position, we think, is erroneous, because, as stated, the language of the Act of 1914 clearly prescribes the three conditions above set forth, and the result to the parties, if we omit either of the conditions, is very different from when both are included.

When the second and third conditions are present, the lease would be for a term not exceeding twenty-five years, and the lessee would remain the tenant throughout the term; whereas if the second condition was absent, the term of the lease still would not exceed twenty-five years, but there might be any number of successive tenants during the term. Neither do we think the second contention of the appellees, to wit, that the lease is for a period less than fifteen years, can prevail. The purpose of the redemption statutes, the policy of the state in enacting the same, and the mischief sought to be remedied, have been judicially determined by this court, and clearly stated by our predecessors in Stewart v. Gorter, 70 Md. 242 , wherein it was said: “The Act of 1888 was the result of a well-grounded belief that these long leases, with their covenants of renewal, were injurious to the prosperity of the Oity of Baltimore, and that sound public policy demanded that all leases hereafter' made, if for more than fifteen years, might be ended at the option of the tenant or lessee, upon paying the capitalization of his ⁶⁰⁹ ground rent at six per centum. It was the system of these long leases, irredeemable until the end of the term, that the Legislature wished to break up, rather than for any special consideration for the lessees, that caused the Act.” What was there said in reference to' the Act of 1888 applies with full force to the Act of 1900, which controls the lease now under consideration.

It is true that the Act of 1914, chapter 371, states that it was not the purpose of the Legislature in 1884, 1888 and 1900 to apply those statutes governing the redemption of leases to leases for business purposes; and the contention was made in Marburg v. Mercantile Building Co., 154 Md. 438 , that the courts should give effect to a subsequent legislative declaration as to what was the purpose of prior legislatures in enacting this legislation. That contention was answered by the court, speaking through Judge Sloan, when it said: “The interpretation of statutes is the province of the courts, on which legislative interpretation of prior acts is not binding. Gough v. Pratt, 9 Md. 526, 532 ; Southgate v. Annan, 31 Md. 113, 118 .” In King v. Kaiser, 126 Md. 213 , in speaking of Stewart v. Gorier, supra, it was said: “Some reliance also appears to have been placed upon the decision of this court in Stewart v. Gorter, 70 Md. 242 ; but a reading of that opinion cannot fail to disclose the fact that what had been attempted in that case was a deliberate evasion of the Acts of 1884, chapter 485, and 1888, chapter 395, intended to put an end to the creation of irredeemable leases. Thus that case is wholly inapplicable to a case like the present.” The lease then being considered by the court was one for a term of five years at an annual rental of fifty dollars, and provided that the lessor “does hereby lease for a period of five years renewable for an additional period of twenty years at sixty dollars per year.” After the expiration of the five year term, the lessee filed a bill in equity to compel the execution of a lease for an additional term of twenty years at a rental of sixty dollars per annum, and was met with the defense ⁶¹⁰ that the lease from its inception was a lease for twenty-five years, and, being for more than seven years, was not valid unless executed, acknowledged and recorded as prescribed by article 21, section 1, of the Code.

The court there decided that for the purpose of the recording statutes it was a lease for five years with the option of compelling the execution of a new lease for the additional period of twenty years, and therefore the original lease for five years was valid, even though unrecorded. The question of the redeem-ability of the lease did not enter into the determination of the case, but in the course of that opinion it was said: “The question in this case is, whether the provision mentioned in the agreement is to be regarded as an extension of the term, or an option for another term, or an agreement to lease at a subsequent time for a twenty-year term. The cases construing the proper meaning to be ascribed to the term ‘renewal’ or ‘renewable’ are by no means uniform. Something of a collection of them will be found in 7th- Words and Phrases, page 6086, and Jfth Words and Phases, 2d series, pages 268 and 269.

A careful examination of the cases there cited tends to the conclusion that the construction to be given to the words ‘renewal’ and ‘renewable’ is controlled by the intention of the parties at the time when the paper is executed.” And the court there found that it was the intention of the parties that a term of five years be created, with the right or option on. the part of the lessee to require the execution of a new lease for an additional period of twenty years. The court in that case held that the decision in Stewart v. Gorter had no application, and gave as its reason for this statement that it was a palpable attempt to evade the redemption statutes, but such a purpose would not be conclusive upon the question of redeemability, for if we are to carry out the spirit and intent of the redemption statutes, such cases should not be decided with sole reference to whether the record did or did not show an attempt or intention to evade the statute. In Swan v. Kemp, 97 Md. 687 , it was declared that the redemption legislation, as interpreted in Stewart v. Gorter, ⁶¹¹ supra, was remedial in its character, the court there stating: “It is, therefore, by the settled rale of construction in such eases, to be liberally construed so as to advance the remedy and suppress or prevent the mischief against which it is directed. Accordingly it was applied in the case just cited to a lease which, by its strict, literal terms, did not come within the wording of the