5. A.D. Juilliard & Co. v. American Woolen Co., 31 A. 2d 800(R.I.1943)
Supreme Court of Rhode Island
FACTS
On May 1983, the Atlantic Mills leased premises in the city of Providence to the Riverside Worsted Mills(Lessee) for the term ending Sep 1955. Plaintiff, A.D.Juilliard(Landlord) succeeded to the rights of the lessor in this lease on Dec 1936. On April 1899, the lessee, Riverside Worsted Mills assigned the lease to the American Woolen Company NJ which in turn assigned it to the American Woolen Company MA in 1916. Afterwards, there are more successive assignees; National Providence Worsted Mills 1931, American Woolen Company 1934, Textile Realty Company 1939 and Reo Realty Company. No on in these lease did assume the obligation to pay rent for the unexpired term of lease. Plaintiff brought a suit in 1941 to recover the rent and tax of 1940-1941.
ISSUE
Whether the contract was “Sublease” or “Assignment” , accordingly the defendant is free of liability to pay the rent of the remained term of original contract between Landlord and lessee?
RULE
General Rule; Texas civil court of appeal
In the absence of the assumption by the assignee of the obligations of the lease, the liability of such assignee to the lessor rests in privity of estate which is terminated by a new assignment of the lease made by the assignee.
Majority Rule
In the absence of any restriction in the lease governing its assignment, has the effect of leaving the matter of the assumption by an assignee of future rentals for the unexpired term of the lease to the contract between him and his assignor.
APPLICATION
(1)1st contention
Plaintiff contends that the assignee of a lease of real property is liable for the payment of the stipulated rent for the entire unexpired term notwithstanding that the assignee to assume such obligation and assignee the lease before the expiration of the term. Despite of the general rule requires the privity of estate. This is contrary to the authorities. But plaintiff urges to follow the progressive law.
Indeed, there is a case where the court held that Assignee of the unexpired of a lease of real property, the assignee under such circumstances becomes primarily liable for the debt, and the original lessee is only secondary liable. Waggoner v. Edward/Marathon Oil Co. v. Rone However, the same court urges the supreme court of the state to promulgate a rule of decision in keeping with the great weight of authority and which it is believed is more consistent with the principles of justice.
According to investigations, Texas rule has never been considered by the supreme court of that state, the case which plaintiff relies on was distinguishable in its facts from this case.
The Court held that the majority rule is the sounder rule.
(2)2nd contention
Plaintiff contends that defendant indirectly assumed to pay such rent by its course of dealing with the plaintiff’s predecessor in title. 4 incidents and court’s opinion follows;
A. The language in the writing for construction in 1905 clearly means that when American Woolen Company’s having status of lessee and not of assignee. But it was just for rights and obligations regarding the construction
B. The language that describes defendant subleased to the American Woolen Company in contract for adjoining tracts of land (1915) is inconsistent with the theory that American Woolen Company was simply an assignee of the sublease. And the Court found nothing in that evidence even tending to show that the parties intended to creat or reg=cognize any contract by which the defendant was to assume the obligations of the covenants of the lease.
C.The notice of rent increase from $500 to $2333,33 sent to Riverside Worsted Mills, and defendant did no pay the increased rent until after in had completed a careful investigation of the matter. And the vice president of Atlantic Mills characterized the lease as Ironclad. But, the statement by the vice president of Atlantic Mills was an opinion of a layman in his own interests on a matter of law. It was not acquiesced in by any duly authorized representative of defendant -> defendant as assignee of the lease, deemed it necessary to make sure that it was obliged to pay the greatly increased rental, so long as it continued in possession of the premises.
D.The rent of period from 1931 to 1934 by National providence Worsted Mills, the subsidiary corporation of defendant was evidence that defendant leased the premises and liable under the lease. However, defendant in order to reduce expenses under the financing situation of National
Providence Worsted Mills, it had entire stock ownership and contrail of its business. The defendant could well pay rent for occupation of the premises by the subsidiary without assuming the covenants of the lease.
The evidence is not consistent only with an assumption of the lease by the defendant. The Trial justice found with no error.
(3)3rd contention
Plaintiff lastly contends that the assignment of the lease from the Textile to the Reo Realty Company was colorable and therefore did not terminate defendant’s liability, even though it had not assumed the obligations of the lease.
If the assignment is colorable then it will not terminate his liability to the lessor for rent, while he, in reality, continues in possession of the premises of the premises covered by the lease or enjoys any benefits from the use of such property.
However, defendant had no interests. Neither defendant or Textile had not control over the lease premises nor possession of such premises.
CONCLUSION
Defendant is not liable for the rent of the certain term because the assignment of the lease to the Reo Realty Company terminated defendant’s liability for rent under the lease.
NOTE
계약서의 성격에 따라 - Sublease 또는 Assignment - 주인과 첫임차인 사이 본래 리스기간 중 남아있는 기간에 대한 sub임차인의 책임여부도 달라지는 것을 배웠습니다.
>>Difference between the Sublease and Assignment
Assignment is similar to the transfer
Mother corporation and child corporation
(Hive and Odor)