Opinion
No. 92-CV-30212.
Decided July 30, 1993.
Frost Jacobs and Ayana L. Sloan, for plaintiff.
Deardorff Haas and Timothy J. Deardorff, for defendant.
This matter came before the court on plaintiff's motion for summary judgment on rent owed by defendant under a lease agreement. Plaintiff ("lessor") has requested that the court find that defendant ("lessee") vacated the leased premises prior to the expiration of the lease, thereby breaching the terms of the lease agreement and entitling lessor to judgment as a matter of law. Lessee contends that a provision in the lease allowing lessor to re-enter and repossess the premises upon any default by lessee rendered the lease void from the time that lessee surrendered the leased premises, thereby absolving lessee from any further obligation to pay rent under the lease.
I. FACTS
The parties do not dispute the facts. On November 27, 1991, lessor and lessee entered into a lease agreement for property located at 7710 Shawnee Run Road, Madeira, Ohio, for a term from December 1, 1991 to November 30, 1992. The terms of the lease required lessee to pay rent of $1,100 per month, plus a $25 late fee for any month in which the rent was not received by the fifth day of the month. By letter dated April 1, 1992, lessee informed lessor of its intention to vacate the premises by June 1, 1992, six months short of the lease term. On July 15, 1992, lessee surrendered the premises and returned the keys to the property manager. Defendant paid no rent after June.
II. DISCUSSION
Lessee bases its contention that the lease was void from the time it surrendered the premises and returned the keys upon the following language in the preprinted lease agreement: "If said Lessee, its heirs, successors or assigns, shall fail to keep any of the other covenants or agreements of this Lease by said Lessee to be kept; it shall be lawful for said Lessor, its successors or assigns, into said premises to reenter, and the same to have again, repossess and enjoy, as in its first and former estate; and thereupon this Lease, and everything therein contained on the said Lessor's behalf to be done and performed shall cease, determine and be utterly void."
The court notes that antiquarian, or perhaps antediluvian, legal forms still exist, and are often copied presently by those seeking to avoid contact with lawyers. The drafter of this document has avoided contact with the twentieth century, as no modern lawyer would draft or approve such language. Sadly, though, this court still must regularly deal with language seemingly transferred directly from quill pen to word processor. This case exemplifies the danger of not drafting a modern lease which explains its terms in plain language. However, even though it is hornbook law that ambiguities in a document are construed against the drafter, in this case lessor, even that maxim is not sufficient to sustain lessee's position.
Lessee argues that under the terms of the lease, lessor, in reserving to itself the right to re-enter, repossess and enjoy the premises upon lessee's breach, limited its remedies to such re-entry and repossession, and, that as a result, the lease became void on July 15, 1992. Contrary to lessee's argument, however, Ohio courts have not found language similar to that quoted above or actions by the lessor in compliance with such language to constitute voidance of a lease agreement by operation of law. Though recent precedent is sparse, an examination of Ohio cases shows a similarity of approach for the last seventy-five years.
In the leading Ohio case on the issue, the Ohio Supreme Court found that a lease agreement remained viable even though the lessors had accepted the keys and attempted to re-rent the premises. Bumiller v. Walker (1917), 95 Ohio St. 344, 116 N.E. 797. In that case, Walker (the lessor) executed a written lease agreement with Bumiller (lessee) for the term of one year, beginning May 10, 1910. Bumiller took possession of and occupied the premises for the prescribed term. On May 10, 1911, Bumiller paid his thirteenth monthly rent installment and continued in possession of the premises. On June 6, 1911, however, Bumiller vacated the premises and refused to pay any further rent. Walker re-entered the premises for the remaining eleven months at a lower rent, and sued Bumiller for the difference between the amount due under the lease and the amount Walker received for rent during that period. Bumiller contended that on June 6, 1911, he had surrendered and delivered possession of the premises to Walker, who had accepted the surrender and retaken possession of the premises.
While ruling for Bumiller on other grounds, the Ohio Supreme Court found that a landlord's acceptance of the key to the leased premises, his advertising for a new tenant and renting the premises to another upon its vacation by the old tenant were not sufficient to constitute a termination of the lease. The landlord, Walker, had a legal duty to accept the key, advertise for a new tenant and re-rent the premises in order to mitigate his damages. Thus, the lessor had an obligation to accept the return of the keys following the vacation of the premises by the lessee, and such acceptance did not void the lease agreement.
Under the precedent set in Walker, the Hamilton County Court of Appeals ruled in Baker v. Herrlinger (1922), 16 Ohio App. 253, that a lessor's acceptance of the keys to leased premises tendered by the lessee before the lease expired did not constitute a voidance of the lease where the lessor notified the lessee at the time of receiving the keys that he was not accepting the surrender of the lease or waiving his rights under the lease.
In Chapman v. Knickerbocker Amusement Co. (1949), 85 Ohio App. 215, 84 N.E.2d 283, the Court of Appeals for Franklin County decided a case concerning the status of sublessees when the prime lessee of a commercial structure surrendered its lease. Although the terms of the lease were not recited by that court, the issue before it as to whether the lessee remained liable when the lessor retook possession of the premises is on point with the case at bar. The Chapman court held that a landlord's re-entry and repossession of premises abandoned by a tenant for the purpose of attempting to re-rent the same was, at best, an equivocal act which did not constitute the landlord's acceptance of the termination of the lease. Instead, the determination as to whether a landlord's retaking possession of the leased premises constituted a voidance of a lease depended upon the landlord's intent. If his purpose was to attempt to relet the premises for the benefit of the tenant in order to reduce the tenant's liability under the lease, there was no acceptance of the surrender and the lease remained viable. This is the situation with the present case — the plaintiff attempted, albeit unsuccessfully, to re-rent in order to mitigate the damages sought from defendant.
The Chapman court further stated that a constructive surrender of leased premises by operation of law could be determined from the acts of the parties only when the intent to accept such a proffered surrender was made reasonably clear and unequivocal, or was the logical and necessary result of the landlord's conduct. "The mere entry and taking possession of premises abandoned by a tenant, for the purpose of leasing them, is, at best, an equivocal act not amounting to an election by the landlord between an acceptance of surrender terminating the lease and his right to relet for the purpose of mitigating the damages for which the tenant is liable." Chapman at 217-218, 84 N.E.2d at 285. Thus, the power to declare the lease void remained solely within the discretion of the lessor.
In Brokamp v. Linneman (1923), 20 Ohio App. 199, 153 N.E. 130, the lessee violated a condition of the lease which contained a forfeiture provision substantially similar to the forfeiture provision in the instant case. The Brokamp court stated that a break of a condition of the lease does not work a forfeiture, nor does it divest the title of the lessee. A forfeiture clause is inserted for the benefit of the lessor only and does not render a lease void, but voidable, at the option of the lessor, and the lessor, in order to take advantage of the clause, must by some positive act declare a forfeiture. Id. at 201, 153 N.E. at 130.
Additionally, in Schulz v. Grimes (Feb. 11, 1992), Miami App. No. 91 CA 3, unreported, 1992 WL 24883, the court said that simply abandoning the premises and giving the keys to lessor does not constitute a surrender, there must be some action by lessor indicating his intention to terminate the lease.
The lessor's right to determine whether to forfeit the lease or to waive forfeiture and look to the tenant for redress was similarly upheld where a suit for unpaid rent was brought by a lessor against a parent corporation that had guaranteed its subsidiary's performance on a lease. In Eden Realty Co. v. Weather-Seal, Inc. (1957), 102 Ohio App. 219, 2 O.O.2d 238, 142 N.E.2d 541, the court stated: "The rule here stated applies even though there is a condition in the lease that, upon the neglect of the tenant to pay rent, the lease shall cease and determine, or shall become null and void, or contains other language of the same import, because such condition does not render the lease absolutely void. It is void at the option of the lessor as to the estate and interest of the lessee who has breached the covenant, but as to the said lessor, the lease is voidable, and is void only if he so determines. He may dispense with the forfeiture and affirm the continuance of the lease." Id. at 222-223, 2 O.O.2d at 240-241, 142 N.E.2d at 544.
In Bevard v. Drucker (1932), 43 Ohio App. 294, 182 N.E. 699, a lessor attempted to use a forfeiture clause to terminate a lease of a lessee who had breached a covenant in the lease. The Bevard court stated, "the clause in the lease, providing that upon default the lease should be void, can only be construed as a forfeiture provision. It could not have been intended that upon default in payments, the lease would be void ab initio, as a literal construction would imply. A forfeiture would have to be declared." Id. at 297, 182 N.E. at 701.
The facts of Bevard are slightly different from the instant case. In Bevard, the breaching lessee wanted to remain in possession of the lease. Furthermore, the lease contained a right of purchase clause. However, neither of these two distinguishing facts has an impact on the Bevard court's conclusion that a forfeiture clause is only operable at the election of the lessor. "Our conclusion is that the `void' clause in the lease did not extinguish all the rights of the lessee in case of default, but gave to the lessor the right to declare a forfeiture. * * *" Id. at 298, 182 N.E. at 701.
III. CONCLUSION
It is apparent that in Ohio, where there is a forfeiture clause in a lease, the breach by the lessee does not automatically cause the lease to be forfeited. Instead, the lessor has the option of forfeiting the lease. Therefore, in the instant case, the lessee's breach of the lease did not work an immediate forfeiture as a matter of law, as defendant asserts. If such were the result, a tenant could simply breach the lease, and if the landlord attempted to mitigate damages, escape any liability for further lease payments. Surely, such a result would be incongruous — a tenant could then profit by his own wrong and breach any lease at will, unless the landlord refused to mitigate damages. The law in Ohio does not require such a commercially unreasonable and legally untenable state of affairs.
In Eden Realty Co. v. Weather-Seal, Inc., supra, the Ninth District Court of Appeals explained the policy behind the rule restricting election of forfeiture to the lessor as preventing a party from taking advantage of his own wrong, stating that courts will not construe a lease so as to enable a lessee to put an end to it at his pleasure, by his own improper conduct. In the instant case, as in Eden Realty Co., the lessee is attempting to terminate the lease by its own conduct in breach of its terms.
Therefore, the facts being undisputed, lessor is entitled to summary judgment for the amount of the unexpired portion of the lease as a matter of law.
Judgment accordingly.