Brief Fact Summary. Defendant Rabinowitz leased store premises to Plaintiff Adrian to commence on a date certain, and after the payment of the first month’s rent by Plaintiff, the premises were not available due to a hold over tenant.
Synopsis of Rule of Law. When a lease term is to commence in the future, the lessor undertakes an implied duty to make the premises available and open to the lessee’s entry on the first day of the lease term.
Issue. Did the lease contract impose on the lessor a duty of putting the tenant in actual and legal possession of the premises at the beginning of the lease term?
Held. Yes, but the Judgment must be reversed on the basis that the lower court incorrectly computed the damages.
Because the express covenant for quiet enjoyment is generally interpreted to secure the lessee from acts of hindrance performed by the lessor or his agents, the express covenant does not protect the lessee from interference by strangers with his possession. Therefore, for Plaintiff to prevail the duty must be implied.
The Court considers the question of whether the lessor is under a duty to put the premises in actual and legal possession of the lessee at the beginning of the term and finds that there is such a duty. The Court finds favor with the English rule which states that when the term of lease is set to commence in the future, there is an implied undertaking by the lessor that the premises shall be open to the lessee’s entry, legally and actually, when the time for possession arrives. The Court finds that other American jurisdictions impose such a duty.
The actions of the lessor (Defendant) in evicting the hold over tenant is evidence that the lessor was acting as if there were a duty to deliver actual and legal possession to the Plaintiff lessee at the commencement of the lease.
The Court found that the lower court made an error with regard to the computation of damages. The lower court found that the Plaintiff would have disposed of at least $2,800 worth of seasonal merchandise during the time the premises were unavailable, and that Plaintiff was compelled to sell the merchandise at 25% below cost. The Court found this formulation to be far too speculative and that the proper formulation of damages should be the difference between the actual rental value and rent reserved for the period of the deprivation of possession.
The Court ruled that parol evidence could be adduced to prove that additional damages should be awarded to Plaintiff as the result of the breach, but that based on the evidence in the record, Plaintiff did not make a showing that would justify the application of such evidence to determine damages. Further, that the business was a new venture which failed prior to the ending of the first rent term, and that shows the uncertainty of measuring damages for loss of the opportunity to sell seasonal goods.
Discussion. Hold over tenants can be a great problem for landlords. It makes sense to create a duty for the landlord to promptly deliver possession of the premises because the prospective lessee has no direct legal rights against a hold over tenant, while the landlord does have such rights.