Kutter v. Smith

LINK demised, on the 1st of May, 1857, to Sherman, a lot in Chicago, for twelve years from that date. The lessee covenanted to pay all the taxes and assessments levied on the premises during the term.

It was provided that, in case of a failure by the lessee to pay the rent when due, the lessor, his heirs or assigns, should have the right to enter into the demised premises, with or without process of law, and expel the lessee or any persons occupying them, 'and the said premises again to repossess and enjoy, as in his first and former estate;' and the lessee covenanted that, if the term should at any time, at the election of the lessor, or his assigns, be ended, he, and all those occupying the premises under him, would immediately and peaceably surrender the possession of the premises to the lessor or his assigns. Sherman contemplated making an erection upon the premises, which it was agreed he might do; and the lease contained the following covenant:

'It is agreed upon, by and between the parties, that at the expiration of ten years from the first day of May, one thousand eight hundred and fifty-nine, it shall be at the election of the first party either to purchase the buildings erected on said leased premises at the appraised value at that time, or renew the lease of the said demised premises for the term of ten years longer, and the value of the buildings as well as the value of the rent of the said demised premises, to be appraised by three disinterested persons, who are to decide the value of the buildings, as well as the value of the rent of the above-mentioned premises, as the case may be. And it is further agreed upon, by and between the parties, that at the expiration of each and every ten years from May first, one thousand eight hundred and sixty-nine, for and during the term of ninety-nine years from the date of this indenture, that the party of the first part is either to renew the lease or purchase the buildings as above stipulated.'

The lessee did erect a brick structure or storehouse on the premises, valued at $2500 to $4000.

The rights of the lessee, Sherman, became afterwards vested in one Kutter, and those of Link, the lessor, in a certain Smith.

On the 1st of May, 1862, Smith, as assignee of Link, went upon the premises, and demanded the rent due that day on the lease, which was not paid, and the next day he gave notice that he had elected to forfeit the lease for non-payment of rent, due May 1, 1862.

In July, 1862, Kutter (assignee of Sherman) notified to the defendant that, owing to the forfeiture of the lease from Link to Sherman, for non-payment of rent, he (Kutter) was entitled to have the brick building on the demised premises appraised under the terms of the lease, and the value of it paid to him. Smith refusing to join in any effort to have it appraised, this suit, an action on the case, was brought in the Circuit Court for the Northern District of Illinois.

The declaration set out the lease by Link to Sherman; the subsequent vesting of the lessor's title in the defendant, Smith, and of the lessee's in the plaintiff, Kutter; and that the defendant had declared the lease forfeited, and taken possession of the demised premises, and refused to join the plaintiff in having an appraisement of the building standing on said premises, and also neglected and refused to pay plaintiff the value of that building; whereby he became liable to plaintiff for its value, and this action was brought to recover it.

On the trial, the court instructed the jury as follows:

'By the terms of the lease from Link to Sherman, it seemed to be contemplated that the lessee should have power to put improvements upon the land which might remain there on the 1st of May, 1869 ('ten years from the 1st day of May, 1859'), and it was by the terms of the lease then left optional with the lessor to purchase the buildings erected on the land at the appraised value, or renew the lease for ten years longer; but up to that time, that is to say, till May, 1869, the clause of forfeiture for the non-payment of rent was nevertheless in force and binding on the lessee; and notwithstanding improvements may have been in the mean time put upon the land, if the lessee did not pay the rent according to the terms of the lease, it was competent for the lessor to declare 'the term' ended, and to re-enter, and in case of a determination of the lease in that way prior to the time fixed (viz., May 1st, 1869), no provision seemed to be made by the lease for the payment by the lessor of any improvements put by the lessee upon the land; and in the case supposed, in the absence of such provision, the lessee could not recover for the improvements; and the plaintiff can be in no better position than Sherman. Consequently, if, on the 1st day of May, 1862, there was rent due and in arrear, unpaid, after demand made for the payment thereof, and the lessor or his assigns exercised the option given by the lease, and declared 'the term' ended, and re-entered and took possession of the premises, of which the lessee and his assignee had due notice, then the plaintiff cannot recover against the defendant in this action the value of the improvements made by Sherman or his assignee.'

Verdict and judgment went accordingly; and the plaintiff, Kutter, took a writ of error to reverse the judgment.

Mr. E. S. Smith, for Kutter, plaintiff in error.

The court below-we may remark in the outset-treated the case as if it had been an action of covenant,-a suit to enforce, as against defendant Smith, the provisions of the lease upon the covenants on the part of Link, as to the purchase of the building at the end of the term. This was a mistake. The law, which, in an action of covenant, would have governed the case, has no direct application here, except as to the construction of the provisions of the lease, and the rights of the parties as they stood at the time of the suit. The action is an action on the case; an action, that is to say, on the special facts of this case; a form of action which in the plastic hands of the pleader becomes pliant, and takes a form as various as the business of men.

Now, here the owner of the soil has got possession of and is enjoying a house built by us; he has come into the use of buildings erected by our money and labor. We set forth those circumstances; make, in other words, an action on the case; and show that, ex aequo et bono, the defendant should pay us for that which of our money and labor he is enjoying and chooses to enjoy. The law is well settled, that a lessor cannot take buildings and fixtures placed on a lot by express agreement that he place them there; and that the lessee has the right to remove those buildings, whether it be at the end of the term, or on declaration of forfeiture by the lessor, at the expiration of the lease. Time is given by law for the removal of such fixtures, and any interposition, on the part of the lessor, to prevent the removal, is, in law, a conversion and an injury resulting from the act of the lessor, for which he must respond in damages.

Since the great case of Elwes v. Mawes, given in Smith's Leading Cases, the rigor of the common law has been greatly relaxed, both in this country and in England, and courts of law have adopted the principle, that it is for the benefit of the public to encourage tenants to make improvements in trade, and to do what is advantageous for the estate during the term, with the certainty of their still being benefited by it at the end of the term. We hold that the rule is the same, and that it applies, whether the tenancy be for years or at will. It matters not whether the building is erected upon blocks or upon stone masonry; whether of wood, stone, or brick. It is the property of the tenant, and he has the right to remove it at the end of the term, and the landlord cannot interfere unless the tenant damages the freehold. The rule is founded upon a high principle of justice and right, and in this country, especially, should be maintained as tending everywhere to improvements.