McNally v. Moser

Hammond, J., delivered the opinion of the Court. This is an appeal by lessees, and the guarantors of their obligations under the lease, from a declaratory judgment in favor of the landlords that the lease remained in effect and the rent continued payable month by month, against a defense that the zoning ordinances prohibited the use of the leased premises for the purposes contemplated by the lease. In 1940, the appellees, Dr. Simon Moser, a chiropractor, and his wife, a physiotherapist, purchased the three story building in Baltimore known as 2923 N. Charles St. and began to use the upper floors for their home and the ground floor as their professional offices. Brendan McNally, an appellant, knew the Mosers when he was in chiropractic school, and when he was graduated, came into their office to observe the treatment of patients.

When he received his license to practice, he became a full time assistant of Dr. and Mrs. Moser. In 1951, Dr. Moser became ill of Parkinson’s disease and soon was almost completely disabled. He arranged to sell bis practice and his equipment to Dr. McNally. There was executed a contract of sale whereby all the equipment and the good-will were sold for $10,000, with the major part of the sales price represented by a promissory note (secured by a chattel mortgage on the equipment) payable in- monthly in ¹³¹ stallments beginning November 1, 1951, and ending October 1, 1955.

As part of the deal there was a ten year lease for the ground floor offices at a rental of $125.00 a month for the first four years and $150.00 a month for the next six years. Under the terms of the lease, the Mosers had the right to terminate the tenancy after four years upon giving due notice, and Dr. McNally had the right to extend the lease for an additional five years beyond the ten year period. A. W. Harrison and Minnie Harrison, the father and mother of Mrs. McNally, unconditionally guaranteed the full and faithful performance of the McNallys under the lease. Matters went on uneventfully for sometime.

Dr. and Mrs. Moser helped Dr. McNally to keep and increase the practice. Dr. Moser made himself available for reasonable periods of consultation and kept his name on the door, and Mrs. Moser made appointments for Dr. McNally and otherwise helped him as much as she could. In early November, 1954, Dr. McNally informed the Mosers that it was his understanding that the lease terminated on October 1, 1955, and that he intended to vacate and stop paying rent on that date. On November 11, 1954, the Mosers’ counsel wrote Dr. and Mrs. McNally, advising them that the lease remained in effect according to its terms until September 30, 1961, and that unless the McNallys indicated their intention of honoring the lease, a proceeding would be instituted for a declaratory judgment establishing its validity and their obligations under it.

On November 18, 1954, Dr. McNally’s lawyer wrote a letter to the Building Inspector of Baltimore City, asking whether the use of the premises as a non-resident professional office complied with the zoning law. Four days later, the reply from the Building Inspector’s office was: “* * * this property may not be used for a doctor’s office unless the doctor resides on the premises * * Dr. McNally took no action and made no move until October 1, 1955, and did not, in any way, disclose to the Mosers his inquiry or the result, or make any effort, either on his own or through the Mosers, to obtain official permission to continue the use of the leased premises as professional offices. On February 18, 1955, the Mosers brought a proceeding for ¹³² a declaratory judgment against the McNallys and the Harrisons, reciting the execution and guarantee of the lease, the notice of the intention to quit, the failure of the defendants to answer the letter from the Mosers asking acknowledgment of liability under the lease, and concluding with a prayer for a declaration of the rights and interest of the Mosers under the lease. Two weeks later, by letter dated March 2, 1955, the acting zoning enforcement officer of Baltimore notified Dr. and Mrs. Moser to discontinue the use of the leased premises as a non-resident office.

On March 17, 1955, after the zoning enforcement officer’s attention had been called to the declaratory judgment proceeding, he agreed “to stay any further proceedings” until the litigation was concluded. A demurrer to the petition was filed and overruled in April. An answer was filed, wherein the appellants alleged that “the use of the premises in question as a doctor’s office for the practice of chiropractic was contrary to the provisions of Article 40 of the Baltimore City Code of 1950 as revised by Sections 10, 11 and 41 of Ordinance No. 711, approved May 21, 1953, known as the Zoning Ordinance, since the occupant of the basement office does not reside on the property in question; that the said Acting Zoning Enforcement Officer for Baltimore City directed the Plaintiffs by said letter (Plaintiff’s Exhibit A) to discontinue the use of the premises as a doctor’s office at once; * * The answer also contained the following assertion: “that the lease in question is null and void since the purpose and terms of said lease were in violation of the provisions of the Baltimore City Code of 1950, as revised by Section 9 of Ordinance 444, approved April 23, 1941, and other pertinent sections of the then existing Zoning Ordinance, when said lease was signed by the Plaintiffs and Defendants; furthermore, that the lease is null and void since the purpose and terms of said lease violate the provisions of Article 40 of the Baltimore City Code of 1950, as revised by Sections 10, 11 and 41 of Ordinance No. 711, approved May 21, 1953, which was the prevailing Zoning Ordinance in the City of Baltimore at the time of the filing of the Plaintiff’s Petition for Declaratory Judgment.” The case was tried on October 4, 1955, and judgment was ¹³³ entered in favor of the Mosers, declaring that the lease continued in force until September 30, 1961; that the defendants’ liability for the stipulated monthly rental continued; that the Mosers had the privilege of entering and re-letting the premises, but had no duty to do so; that the defendants remain liable for the payment of the rental provided for, less any rentals received by plaintiffs if they elected to re-let; and finally, that the Mosers should recover the rent for the month of October, 1955. Dr. McNally moved out of the leased premises on October 1, 1955 — the day that he said almost a year before that he would move.

October 1, 1955, was also the date for the last payment under the note and mortgage which secured the bill of sale for the equipment to Dr. Mc-Nally. The defense of the appellants, based on illegality, has two prongs. The first is that the lease was an illegal bargain when it was made because the zoning ordinances then in effect made illegal the use of the leased premises for nonresident professional offices, and second, that Zoning Ordinance No. 711, adopted in May, 1953, made the previous use illegal. There was not at the trial, and is not here, any contention that the lease does not continue until 1961 unless the appellants are right in their contention as to illegality.

It was they who pleaded illegality, it is they who had the duty of producing evidence to show it, and finally, it is they who had the burden of persuading the court that they had established the illegality. One who relies on illegality, failure of consideration or other affirmative defenses, has imposed on him the burden of persuasion. Borchard, Declaratory Judgments, 2nd Ed., p. 405-9. Shedlinsky v. Budweiser Brewing Co. (N. Y.), 57 N. E. 620 ; Dickson v. Uhlmann Grain Co., 288 U. S. 188 , 77 R. Ed. 691; Palmer v. Chamberlin (C. A. 5th), 191 F. 2d 532 ; Romanus v. Biggs (S. C.), 51 S. E. 2d 503 ; Bryan v. Pasadena Holding Co. (Calif.

App.), 35 P. 2d 334 . Courts do not ordinarily take judicial notice of the ordinances of Baltimore. Givner v. Cohen, 208 Md. 23, 30 . The appellants did not prove the ordinances on which they rely, nor do they quote or identify with particularity the legal ¹³⁴ significance of the sections of the ordinances on which they depend to show illegality.

In determining whether the lower court erred in holding that the appellants had not met the burden of persuasion, we limit our consideration to so much of the ordinances and their effect as was revealed by the testimony in the case. Field v. Malster, 88 Md. 691 ; Givner v. Cohen, supra; Central Savings Bank v. Baltimore, 71 Md. 515 . Within this limit the record shows no proof that in 1951, when the lease was entered into, the zoning ordinances prohibited the use of parts of residences for professional offices by non-residents. Far from showing that the parties knew or contemplated that such use was forbidden, the evidence tends to show that both the landlords and the tenants assumed that the use was and would continue to be legal.

Dr. McNally testified that the first he knew of the possibility of illegality was in 1954. It was shown that the Mosers, seven years after they had begun to use their North Charles Street home as an office, had secured a permit to do so, on which there was a notation “Doctor resides on premises” but their testimony was that they did not know that a doctor who did not reside on the premises could not use the offices for professional purposes, and their first knowledge that zoning had any relevance in the case was after the suit for declaratory judgment was filed. Each side, at the time of the sale of the practice and the making of the lease, was represented by experienced counsel, and there is no suggestion that it was thought necessary to take zoning into account in any way. The acting zoning enforcement officer of Baltimore testified as to the inquiry of 1954 by Dr. McNally’s lawyer and his reply, and as to the sending of the March 2, 1955, notice to the Mosers that the use of the premises by Dr. McNally was forbidden by the zoning ordinance, and the March 17, 1955, letter to counsel for the Mosers that enforcement would be stayed until the litigation was concluded.

There is nothing in this correspondence which compels or clearly leads to the inference that prior to 1953 the ordinance prohibited the use for which the premises were leased. Judge Manley, in his decision, said the question was, at the least, debatable. The impression from the writings from the zoning enforcement office ¹³⁵ is that it was, in their view, the 1953 ordinance (which created a residential and office use district, under the terms of which professional men could have offices in their homes and nonresidents could not have such offices in the homes of others) that made Dr. McNally’s office in the Moser home a violation of the law. It is not unreasonable to infer that it would not have been necessary to enact the 1953 ordinance had the earlier ordinances accomplished the result that it, apparently, was passed to accomplish.

The zoning enforcement officer testified that his records showed that some non-resident professional men had received permits from the board of zoning appeals prior to 1953 to have offices in residences. Judge Manley asked him whether the board had not undergone a change of heart on such applications a few years ago — had not the board changed what it previously had been doing— and the witness answered that this was so “With the introduction of the revised zoning ordinance in 1953, which established an office use district.” We think that the appellants failed to produce evidence that required the court to be persuaded that the lease was an illegal bargain when it was entered into. If it was the ordinance of 1953 that made illegal a use theretofore legal, this supervening happening might have created an impossibility of performance or a frustration of the purposes of the lease, that would allow the tenants to terminate the lease and end their responsibility under it. This is so because, as we have noted, it was not contemplated by the parties that there would be any impossibility or frustration and the tenants did not bind themselves to pay rent regardless of any such happening, although they could bindingly have done so, since the bargain would not have been against public policy or public morals.

Restatement, Contracts, Sec. 458, and see also Sec. 456, Comment (c), Illus. 2, and Sec. 457. The principles of the Restatement have been variously applied in the following cases: Wischhusen v. Spirits Co., 163 Md. 565 , 572 et seq.; Fast Bearing Co. v. Precision Development Co., 185 Md. 288 , 307 el seq.; State v. Dashiell, 195 Md. 677 , 689 et seq.; Baltimore Luggage Co. v. Ligon, 208 Md. 406 , 417 et seq. ¹³⁶ It was the appellants who asserted that they had been relieved of their liability under the lease and who had the burden of persuading the court that Ordinance No. 711 of 1953 produced the result that they claim — that the use of the leased premises for a professional office was impossible in fact. The appellants offered neither witnesses nor other evidence requiring such a finding. The zoning enforcement officer, testified that two physicians, who had been using residential premises in the Charles St.-St. Paul St. area for offices while living elsewhere, had challenged the ruling of the board that they must