Opinion
15581.
OCTOBER 11, 1946. REHEARING DENIED NOVEMBER 16, 1946.
Specific performance. Before Judge Sloan. Hall Superior Court. May 29, 1946.
Wheeler, Robinson Thurmond, for plaintiff.
Herbert Edmondson, for defendants.
A demand for past-due and unpaid rent is a necessary allegation in a dispossessory proceeding instituted by a landlord against his tenant holding over, under the Code, § 61-301, where the landlord has waived his right of forfeiture, because of the non-payment of rent, by the acceptance of subsequent accruing rental.
No. 15581. OCTOBER 11, 1946. REHEARING DENIED NOVEMBER 16, 1946.
T. W. Oastler and S. P. Cronheim, by their agent, C. E. Smith, made an affidavit and caused a warrant to be issued under the Code, § 61-301, for the purpose of dispossessing Arthur Wright. It was alleged that the defendant was in possession, as a tenant, of a house and premises in the City of Gainesville; that he failed to pay the rent then due, and was therefore holding the house and premises over and beyond the terms for which they were rented or leased to him; and that possession had been demanded and refused. The defendant arrested the proceeding by filing a counter-affidavit and giving bond, and later filed an equitable amendment, which was allowed subject to demurrer. The case was then submitted to the trial judge for determination, upon an agreed statement of facts, without a jury.
The agreed facts were substantially as follows: On April 10, 1937, the defendant, Arthur Wright, as lessee, entered into a written lease contract with Gainesville Replacement Homes Inc., as lessor, for a house and lot in the City of Gainesville, by which contract he agreed to pay $2.87 per week as rental for a period of ten years. On October 23, 1937, another contract was made between the parties, in which it was agreed that the defendant would pay $2.35 per week as rental for a period of twenty years. Otherwise the terms of the two contracts were the same. It was further provided in the lease (so far as material to the issue here), as follows:
1. Rent is to be paid in advance, at the office of the lessor, on the first day of each week.
2. The lessee, at his own expense, is to maintain and make such repairs of the premises as may be deemed necessary by the lessor.
3. The lessee is to have an option to purchase the leased premises at any time within the terms by giving twenty days written notice of such desire and by payment of a stipulated purchase-price, provided there is no default in any of the provisions, covenants, or conditions of the lease.
4. In the event of a breach of any of such provisions, covenants, or conditions on the part of the lessee, "It shall be lawful for the lessor, its successors or assigns, at its or their option . . at any time thereafter, to give written notice to the lessee . . [and] terminate this lease . . and thereafter the lessee, his heirs, legal representatives, or assigns shall have no interest whatsoever in said premises."
Time is deemed to be of the essence of the lease contract.
During the period from October 23, 1937 to January 1, 1943, the lessee was irregular in meeting some of the weekly rent payments and became 74 payments in arrears. Thereafter and until October 20, 1945, the lessee paid regularly $2.35 each week.
On October 1, 1936, Gainesville Replacement Homes Inc. executed to Reconstruction Finance Corporation a deed to secure the payment of a debt, and pledged as security therefor the property held under the lease agreement with Arthur Wright, and other property. Gainesville Replacement Homes Inc. defaulted in the payment of its debt, and on October 3, 1944, Reconstruction Finance Corporation sold the property, according to the provisions of the security deed, but subject to any rights that the defendant and other lessees might have therein. The property was bought in by Reconstruction Finance Corporation. On February 8, 1945, the property was sold to Joan Realty Company, subject to the rights of any lessees. On March 10, 1945, Joan Realty Company notified the lessee in writing that the lease contract was canceled, effective that day, by reason of his default in the 74 rent payments and default in maintaining the building in proper repair. Possession was demanded. The lessee then proposed to pay the amount in arrears, but this was refused on the ground that the owner had elected to rescind the lease contract. The lessee agreed to remain in the house and continued the weekly rental payments of $2.35. On March 30, 1945, Joan Realty Company sold the leased premises and other property to T. W. Oastler and S. P. Cronheim, the plaintiffs in error, subject to the rights of all tenants. In October, 1945, the Office of Price Administration approved an increase of weekly rental on the property, and on October 9, 1945, the lessee was notified that the weekly rent would be increased to $2.75, effective October 16, 1945. On October 20, 1945, when the increased rent was demanded, the lessee refused to pay more than $2.35. It was then agreed that a weekly tender would be unnecessary until the question could be settled by the court. The lessee was never requested to make any repairs on the property, nor was any payment for repairs demanded.
In the defendant's equitable amendment to the counter-affidavit be tendered the total amount of rent that he was then in arrears and an additional sum (the balance of the purchase-price), stating that he elected to exercise his option to purchase the property, and prayed: (1) That the court deny the dispossessory warrant; (2) that the lease contract be declared of full force and effect; and (3) that the plaintiffs be ordered to specifically perform the contract and execute a deed to the property.
The plaintiffs filed a demurrer to the equitable amendment, on the ground that it affirmatively appeared therein that the lessee was in arrears in the payment of rent and that the election to terminate the lease was prior to the election to purchase and before any tender. The demurrer was overruled.
The court found and held: (1) That the default for which a forfeiture was claimed occurred prior to January 1, 1943, and when the property was owned by Gainesville Replacement Homes Inc.; and that this corporation never declared a forfeiture, but continued to act under the terms of the lease contract, by accepting rent payments regularly until October 3, 1944, thereby waiving its right to cancel the contract for previous defaults. (2) There was no default during the ownership of Reconstruction Finance Corporation, Joan Realty Company, or the plaintiffs; and the plaintiffs' efforts to cancel the contract were illegal and ineffectual. (3) There was no evidence that any sums due under the lease contract to Gainesville Replacement Homes Inc. were assigned to or acquired by the plaintiffs. (4) Upon compliance with the terms of the contract, the lessee has a right to exercise his option to purchase the property.
To the judgment overruling the demurrer to the equitable amendment, and to the findings and judgment of the court, the plaintiffs excepted.
The sole question for determination here is whether the attempted cancellation of the lease contract by the successors in title to the original lessors because of defaults in the weekly rent payments, occurring during the period of ownership by the original lessor, was effectual. This can be determined by considering the right of the original lessor to terminate the lease contract at the time of its transfer of the reversion.
Stipulations for forfeitures in leases are not favored by the courts. 32 Am. Jur., § 848; Hicks v. Beacham, 131 Ga. 89 ( 62 S.E. 45). And in cases of doubt, in contests between landlords and tenants, the issue will be resolved in favor of the tenant. The lease contract in this case provided that rent was to be paid in advance on the first day of each week at the office of the lessor. It further provided that, in the event of a breach of any of the provisions, covenants, or conditions of the lease, the lessor, its successors or assigns, could at any time thereafter terminate the lease by giving written notice to the lessee. Time was to be of the essence. The provision for forfeiture was for the benefit of the lessor, and after a default in rent payments it had the election to determine whether to declare a forfeiture or not. Its election to terminate the lease must have been evidenced by some unequivocal act. Here the lessor did nothing to indicate an intention to terminate the lease, or to indicate that in the future a strict compliance with the terms of the contract would be required. A cause for the forfeiture of a lease, or a right on the part of the lessor to reenter the leased premises for a breach of a condition, may be waived; and generally a lessor will be estopped from asserting a forfeiture for breach of a covenant or condition in a lease, and to have waived his right to such a forfeiture, where, after such breach of condition by the non-payment of rent, he accepts rent from his tenant with knowledge thereof, unless there are circumstances to negative the presumption of his affirmance of the continuance of the lease, arising from such acceptance of rent by him. 32 Am. Jur., § 883; Guptill v. Macon Stone Supply Co., 140 Ga. 696 ( 79 S.E. 854, Ann. Cas. 1915A, 1249); McCranie v. Rigsby, 172 Ga. 860 ( 159 S.E. 233). And strict compliance with the terms of a lease contract may be waived, even though time is of the essence. Jordan v. Rhodes, 24 Ga. 478; Moody v. Griffin, 60 Ga. 460. For several years the lessee was irregular in meeting some of the weekly rent payments, and on January 1, 1943, was 74 payments in arrears. Thereafter and for a period of nearly two years, and while the reversion was still owned by the original lessor, the lessee paid the rent regularly and fully compiled with the terms of the lease contract. There is nothing in the record to indicate that the lessor objected to the irregularity in meeting the payments or that it did not recognize the lease contract as being in full force and effect at all times. Accordingly, such conduct must be held to constitute a waiver of strict compliance with the terms of the lease contract, and the lessor would be estopped to declare a forfeiture, by reason of such prior defaults in rent payments, without first making a demand for the rent in arrears and giving the lessee an opportunity to comply with such demand. In Mahoney v. McKenzie, 27 Ga. App. 245, 250 ( 107 S.E. 775), it was said: "We do not think that dispossessory warrant proceedings can be used arbitrarily and summarily by a landlord for the purpose of ousting a tenant and securing possession of premises without good cause. They were intended for landlords honestly and justly entitled to the relief sought therein and proceeding in good faith. The provisions of the lease having been waived by the landlord, the tenant was entitled to a demand for the rent due, and the evidence showing that no such demand was made and that the rent due had been tendered before the affidavit was made for the issuance of the dispossessory warrant, we think the court erred in overruling the certiorari."
Even though no point was raised as to the right of the successors in title of the original lessor to declare a forfeiture for defaults in rent payments occurring while the reversion was owned by the original lessor, we assume, but only for purposes of this decision, that such right was transferred by the latter. Thus, in the circumstances of this case, before the lease contract could have been terminated by reason of such defaults, a demand for the rent in arrears should have been made, and before a dispossessory warrant could have issued, under the Code, § 61-301, it must have been shown that a demand for the rent in arrears had been made and that the lessee had failed or refused to meet such demand. The agreed statement of facts shows that this was not done. A demand for possession was first made and a tender by the lessee of the rent in arrears was refused. Therefore, it follows that the attempt to declare a forfeiture and the attempt to dispossess the lessee without first making such a demand was ineffectual, and the findings and judgment of the lower court are affirmed.
Judgment affirmed. All the Justices concur.