Opinion
April 15, 1952. Rehearing Denied June 4, 1952.
Appeal from the Circuit Court, Dade County, Marshall C. Wiseheart, J.
Thomas Jean Ellis, Miami Beach, Charles H. Wakeman, Jr., and Ellis, Ervin Wakeman, all of Miami (Joel P. Newman, Vivian L. Scheaffer, Turk Newman, all of Miami Beach, Daniel Neal Heller and Julius I. Friedman, Miami Beach of counsel), for appellants.
R.C. Lohmeyer and Sibley Davis, all of Miami Beach, for appellee.
On June 23, 1947, Joseph and Ida Kaplan leased the Taft Hotel in Miami Beach, Florida, to Jacob and Sophie Fein for a term of five years, beginning November 1, 1947, at an annual rental of $19,500, payable in installments, during the tourist season. The first installment of $1,000 became due and payable on November 15, 1947; $3,000 due December 15, 1947; $4,000 due January 2, 1948; $4,000 due January 15, 1948; $3,000 due February 1, 1948; $3,000 due February 15, 1948, and the remaining sum of $1,500 falling due on March 1, 1948.
The lessees deposited $4,500 with the lessors as security for the proper return of the personal property, as well as for the proper return of the demised premises, with provisions for inspection in October, 1952, and arbitration of any disputes, and for the return of any balance of the $4,500 simultaneously with the lessees vacating the demised premises. The lease further provided that in default of payment of any installment of rent for a period of seven days, the lessors were given the option to consider the lessees tenants at sufferance and immediately re-enter the premises.
The lease contained covenants, the breach of which gave the lessors the right to terminate the lease and oust the lessees. Pertinent covenants are viz.:
"(a) To pay any installment of rent within 7 days after same becomes due.
"(b) To pay charges for gas, electricity and other illuminant and for water, within 15 days after the same becomes due.
"(c) To pay all charges for telephone services within 15 days after same becomes due.
"(d) Not to use the demised premises for any purpose other than as a hotel of good reputation and character.
"(e) To use the premises in accordance with the laws, statutes and ordinances applicable and not to use same for immoral purposes.
"(f) To keep in good condition and repair the interior of the premises, etc., ordinary wear and tear excepted.
"(g) To permit Lessors to enter and view premises and make repairs.
"(h) To make no structural alterations.
"(i) To use premises in such a way as not to increase rate of insurance and not to keep inflammable fluid or explosive fluid on the premises.
"(j) To place no sign on premises without written consent of Lessors.
"(k) To pay all licenses or operating taxes.
"( l) To give immediate notice to Lessors in case of damages by fire, windstorm or hurricane."
Section 5 of the lease provides that if the lessees shall not pay the rent reserved at the time and in the manner stated, or shall fail to keep and perform any other condition, stipulation or agreement therein contained on the part of the lessees to be kept and performed * * * the lessors may, at their option, terminate and end said lease and may re-enter without the necessity of giving or taking legal proceedings to accomplish such entry upon the property, whereupon the terms hereby granted, and, at the lessor's option, all right, title and interest under it shall end and the lessees shall become tenants at sufferance, or else, the lessors may, at their option, elect to declare the entire rent for the balance of the term, or any part thereof, due and payable forthwith and may proceed to collect the same either by distress, foreclosure or otherwise, and the lessors may take possession of the premises and rent the same for the account of the lessees.
Section 11 of the lease provides: The lessees agree to call upon the lessors not later than October 31, 1952, and not earlier than October 15, 1952, to inspect the condition of the personal property described in the inventory. After the lessors make such an inspection with the lessees during the dates referred to and find the personal property is in good condition, ordinary wear and tear excepted, then the lessors shall, simultaneously with the lessees vacating the premises, return unto the lessees the sum of $4,500, which the lessors will be holding for the proper return of the personal property of the Taft Hotel. If upon inspection the lessors are not satisfied with the condition of the personal property, the lessors shall immediately notify the lessees in writing in what particulars the said personal property does not meet with the approval of the lessors and thereupon the lessees shall meet the requirements as set forth by the lessors, or dispute the necessity for meeting such requirements.
Section 12 of the lease provides:
"12. The Lessees, under date of this indenture of lease, have deposited with the Lessors the sum of fifteen Thousand ($15,000.00) Dollars, receipt of which is hereby acknowledged by the Lessors. The parties hereto agree that during the last year of the terms of this lease the need for security for the benefit of the Lessors will decrease and therefore the Lessors will return the following sums to the Lessees on the following dates:December 15, 1951 $3,000.00 January 17, 1952 3,000.00 January 27, 1952 3,000.00 February 15, 1952 2,000.00 February 27, 1952 2,000.00 March 15, 1952 2,000.00
As a condition precedent to the requirement of the Lessors to return the above stated amounts of security on the dates stated above, the Lessees shall not have committed a breach of any condition, covenant or agreement contained in this said indenture of lease and this said indenture of lease shall be in full force and effect and of good standing.
"The Lessors and the Lessees covenant and agree that in the event of the termination of this lease at any time before the expiration of the term of five years hereby created, for the breach of any covenant contained herein, then in such case the sum of Fifteen Thousand ($15,000.00) Dollars shall at once pass to and become the property of Lessors, not as a penalty or forfeiture, but as liquidated damages to the Lessors because of such default by the Lessees hereby fixed and agreed upon between the parties hereto, both of the parties hereto recognizing the impossibility of precisely ascertaining the amount of damages that will be sustained by the Lessors in consequence of such default and both parties desiring to obviate any question or dispute concerning the amount of such damage and the cause and effect of such default in consequence of such forfeiture, have taken these elements into consideration in fixing and agreeing upon the amount of liquidating damages to be paid by the Lessees to the Lessors.
"The amount of $15,000.00 has not been required to be deposited by the Lessees with the Lessors for the purpose of coercing the said Lessees to perform the conditions and agreements of this indenture of lease, but for the purpose of fixing and determining definitely the Lessors' damage in the event the Lessees shall fail to perform the conditions and agreements of this indenture of lease; it being the distinct understanding and agreement by and between the parties that the said $15,000.00 deposited with the Lessors by the Lessees, as set forth in this paragraph, shall be and it hereby determined as liquidated damages.
"The Lessors shall pay to the Lessees on each anniversary date of this agreement, one (1%) percent interest on the amount of security moneys now deposited with in or hereafter deposited with it. The first interest payment to the Lessees, as aforesaid, shall be made on the first anniversary date of this agreement."
The lessees operated the Taft Hotel and paid the stipulated rent for the first year. On July 12, 1948, they assigned to Samuel Katz the aforesaid lease, which assignment the lessors accepted or approved on condition that Samuel Katz pay $200 additional monthly for the waiver of the nonassignment clause. Samuel Katz, under the transfer of the lease, went into the possession of, operated the hotel and paid one year's rent and defaulted on the $1,000 installment which became due on November 1, 1949. The lessors instituted eviction proceedings in the County Judge's Court, when a judgment of eviction was entered and a writ based thereon placed the lessors in possession of the Taft Hotel.
Samuel Katz filed in the Circuit Court of Dade County his bill of complaint against Joseph Kaplan and Ida Kaplan, lessors, praying for a declaratory decree and alleged facts substantially as above set forth. It was further alleged that the lessors, as a matter of law, should be required by an appropriate decree to return to the plaintiff-appellee (a) the sum of $4,500 deposited for the safe return of the personal property situated in the Taft Hotel; and (b) the further sum of $15,000 deposited with the lessors, less $1,000 due for rent on November 1, 1949. Plaintiff-appellee alleged that in equity and good conscience the aforesaid sums were held by the lessors as security and not as liquidated damages for a breach of the lease and the retention by the defendants-appellants of the sums (totalling $19,500) constitutes a pecuniary forfeiture. The lessors answered the bill of complaint and admitted that the lease was terminated by the judgment of eviction as entered in the County Judge's Court of Dade County, but further alleged that the defendants-appellants had suffered damages in excess of the liquidated damages provided for in the lease and that plaintiff-appellee was not entitled to any refund whatsoever.
On final hearing, after hearing evidence adduced by the respective parties and argument of counsel, the Chancellor entered a decree, and pertinent provisions thereof are viz.:
"1. The Court finds and decrees that the true construction of the aforesaid lease, assignment thereof described in said instrument as `Modification, Assignment and Assumption', and the ratification of said assignment is that the provision for retention of said deposit made with the defendants under said lease in the amount of Nineteen Thousand Five Hundred ($19,500) Dollars was a penalty and not a valid and enforcement provision for liquidated damages and was made as security for the faithful performance by the lessee of the covenants, terms and provisions on the part of the lessee to be kept and performed, and that the plaintiff is entitled to the recovery of said deposit less all reasonable damages sustained by the Defendants by reason of the default on the part of the lessee and the Plaintiff who succeeded to said lessee's right of any of the covenants, terms and provisions to be kept and performed by said lessee and his said assign, the Plaintiff herein, up to date of eviction of the Plaintiff by the Defendants, viz.: November 30, 1949.
"2. The Court does find and decree that there is due by the Plaintiff to the Defendants as damages for the breach of the terms of said lease and assignment thereof, the following sums:Installment of rent due on November 1, 1949 $1,000.00 Additional Rent under said assignment due November 1, 1949 200.00 Damages to the Taft Hotel Building 3,000.00 Damages to furniture, furnishings, linens, blankets, rugs, equipment and other personal property 950.00 _________ Total $5,150.00
"3. That there is due the Plaintiff the amount of said deposit in the amount of Nineteen Thousand Five Hundred ($19,500) Dollars, together with interest thereon at the rate of six (6%) percent per annum, from December 1, 1949 to date, in the amount of Six Hundred Fifty ($650) Dollars and the Court finds and decrees that there is due the Plaintiff by the Defendants as interest on the aforesaid deposit made with the Defendants in the amount of Nineteen Thousand Five Hundred ($19,500) Dollars, computed at the rate of one (1%) percent per annum, for the period from November 1, 1948 to November 1, 1949, the sum of One Hundred Ninety Five ($195) Dollars, all of which sums aggregate the amount of Twenty Thousand Three Hundred and Forty Five ($20,345.00) Dollars, and that after deducting the damages to which defendants are entitled up to date of eviction aggregating the sum of Five Thousand One Hundred Fifty ($5,150) Dollars, there is due the Plaintiff the sum of Fifteen Thousand One Hundred Ninety Five ($15,195) Dollars, and it is considered, ordered and adjudged that the Plaintiff do have and recover of the Defendants said sum of Fifteen Thousand One Hundred Ninety Five ($15,195.00) Dollars, together with all costs in these proceedings, including reporter's fees, to be taxed by the Clerk, for which let execution issue."
It was the Chancellor's conclusion, as set out in the final decree, that the security deposit in the sum of $19,500 paid by the lessees to the lessors when the lease was signed was in the nature of a penalty rather than for liquidated damages. Evidence was adduced by the parties and the findings, supra, made as to the items recoverable by the lessors against the lessees for a breach of lease. It is contended by counsel for the appellants that the items so allowed were totally inadequate as full compensation and that the Chancellor erred in refusing to hear or receive further evidence as to the Lessors' losses. The testimony on the point in controversy has been carefully reviewed and it has not, in the opinion of the writer, been fully made to appear that the Chancellor abused his discretion on the point in issue. Farrington v. Harrison, 95 Fla. 769, 116 So. 497.
It is our view and conclusion that the decree appealed from should be affirmed on the authority of the opinion of this Court adopted under date of December 11, 1951, in the case of Stenor, Inc., v. Lester, Fla., 58 So.2d 673. See Smith v. Newell, 37 Fla. 147, 20 So. 249; Greenblatt v. McCall Co., 67 Fla. 165, 64 So. 748, and similar cases. The rule adopted in the Stenor, Inc., case, supra, is in harmony with Pomeroy's Equity Jurisprudence (5th Ed.), Vol. 2, Chapter 2, pp. 203-326; 51 C.J.S., Landlord and Tenant, §§ 102 to 119, pages 677 to 710; 32 Am.Jur. 447-452, pars. 540-547; Annotation of cases, 106 A.L.R. 292-318. It therefore follows that our previous opinion adopted in this cause August 7, 1951, is hereby set aside, invalidated and held as naught and on rehearing granted the decree of the lower Court is affirmed.
Affirmed.
SEBRING, C.J., MATHEWS, J., and PARKS, Associate Justice, concur.