Lessor and lessee-Covenant for renewal—Option of lessor-Second term-Possession by lessee after expiration of term-Construction of deed-Specific performance. A lease for a term of years provided that when the term expired any buildings or improvements erected by the lessees should be valued, and it should be optional with the lessors either to pay for the same or continue the lease for a further term of like duration. After the term expired, the lesses remained in possession for some years when a new indenture was executed which recited the provisions of the original lease and, after a declaration that the lessors had agreed to continue and extend the same for a further term of fourteen years from the end of the term granted thereby at the same rent and under the like covenants, conditions and agreements as were expressed and contained in the said recited indenture of lease and that the lessees had agreed to accept the same, it proceeded to grant the further term. This last mentioned indenture contained no independent covenant for renewal. After the second term expired the lessees continued in possession and paid rent for one year when they notified the lessors of their intention to abandon the premises. The lessors refused to accept the surrender and, after demand of further rent and tender for execution of an indenture granting a further term, they brought suit for specific performance of the agreement implied in the original lease for renewal of the second term at their option. Held, affirming the judgment of the court below (28 N.B. Rep. 1), Ritchie C.J., and Taschereau J., dissenting, that the lessees were not entitled to a decree for specific performance. *XVIII. Can. S.C.R. 702. *PRESENT:-Sir W. J. Ritchie C.J., and Strong, Taschereau, Gwynne and Patterson JJ. Held, per Gwynne J., that the provision in the second indenture granting a renewal under the like covenants, conditions and agreements as were contained in the original lease, did not operate to incorporate in said indenture the clause for renewal in said lease which should have been expressed in an independent covenant. Per Gwynne J. (Patterson J., hesitante) that assuming the renewal clause was incorporated in the second indenture, the lessees could not be compelled to accept a renewal at the option of the lessors, there being no mutual agreement therefor; if they could the clause would operate to make the lease perpetual at the will of the lessors. Per Gwynne and Patterson JJ., that the option of the lessors could only be exercised in case there were buildings to be valued erected during the term granted by the instrument containing such clause; and, if the second indenture was subject to renewal, the clause had no effect, as there were no buildings erected during the second term. Per Gwynne J. The renewal clause was inoperative under the statute of frauds, which makes leases for three years and upwards, not in writing, have the effect of estates at will only and, consequently, there could be no second term of fourteen years granted except by a second lease executed and signed by the lessors. Per Ritchie C.J., and Taschereau J., that the occupation by the lessees after the term expired must be held to have been under the lease and to signify an intention on the part of the lessees to accept a renewal for a further term as the lease provided. APPEAL from a decision of the Supreme Court of New Brunswick (a), reversing the judgment of the judge in equity in favour of plaintiffs. The suit in this case was brought to compel specific performance by the defendants of an agreement contained in a lease made, in 1885, between the predecessors in title of the plaintiffs, as lessors, and the defendants, as lessess, which lease contained a covenant providing that, at its expiration, the improvements on the demised premises should be appraised and the landlords should then either pay the amount appraised or renew the lease for a further term of fourteen year. At the expiration of the lease, in 1869, the defendants remained in possession for some years, paying rent as reserved by the lease, and, in 1877, a renewal lease was executed for a term of fourteen years from 1869. On the ex (a) 28 N.B. Rep. 1. 1889 SEARS v. CITY OF SAINT JOHN. 1889 SEARS v. CITY OF piration of this renewed lease the defendants remained in possession of the premises, paying rent as usual, for a year, and then notified the plaintiffs that they abandoned the preSAINT JOHN. mises and sent back the key. The plaintiffs refused to accept the key and demanded the rent as it accrued and also tendered a renewal lease for execution to the defendants who refused to execute it or to pay the rent. The plaintiffs then brought a suit for specific performance. The judge in equity held that there did exist an agreement which the defendants could enforce against the plaintiffs, and that, if there was such an agreement binding on the plaintiffs, it must be binding on the defendants also; the more so as the principal part of the acts done from which such an agreement could be inferred were done by the defendants themselves. All the plaintiffs had done was to accept the rent. The defendants not only occupied the premises after the expiration of the term, knowing that the plaintiffs had not exercised their option of paying for improvements, and, consequently, were bound to renew the lease but also paid the rent accordingly. This, he considered evidence that they were willing to accept the lease of the premises that the plaintiffs were bound to give. If they did not intend to do so they were wrongdoers, a position which they had no right to assert. This decision was reversed by the full court(a), where it was held that, as no valuation of the buildings had been made at the expiration of the term, the fact of the lessees remaining in possession and paying a year's rent only created a tenancy from year to year, and no agreement on their part to accept a renewal of the term could be implied therefrom. The plaintiff then appealed to the Supreme Court of Canada. Gilbert, Q.C., and Sturdee, for the appellants. The Supreme Court of New Brunswick held in Irvin v. Simonds (aa) that if the lessee of a renewable lease holds over after (a) 28 N.B. Rep. 1. (aa) 11 N.B. Rep. 190. 1890 SEARS บ. CITY OF its expiration and pays rent, which is accepted by the lessor, the tenancy under the lease continues. That case has always been followed in New Brunswick. See also Kimball v. Cross (b); Kramer v. Cook (c); McDonell v. Boulton (d); SAINT JOHN. Nudell v. Williams (e); Despard v. Walbridge (f); Walsh v. Lonsdale (g); Wylson v. Dunn (h). The plaintiffs have been guilty of no laches. Archbold v. Scully (j); Fry on Specific Performance, p. 477. Jack, for the respondents. The courts will always refuse to construe a lease as perpetually renewable unless such right of renewal is clearly expressed. Woodfall, Landlord & Tenant (11 ed.) 329; Baynham v. Guy's Hospital (m); Tritton v. Foote(n). The plaintiffs are precluded by laches from bringing this suit. Huxham v. Llewellyn(p). The defendants had a right to remain in possession until paid for their improvements. Nudell v. Williams (q). SIR W. J. RITCHIE C.J.-The facts upon which the decision of this case depend are stated in the case and factums submitted to the court, as follows: On the twenty-fourth day of July, A.D., 1855, one Edward Sears, by indenture executed by him and the respondents, leased certain premises in the city of Saint John, New Brunswick, to the respondents, for fourteen years from the first day of May then last past, at the rental of one hundred pounds, or four hundred dollars, payable by even and equal half-yearly payments on the first days of November and May in each year during the term. This indenture contained a covenant upon the proper construction of which in connection with the attendant circumstances, the deter (b) 136 Mass. 300. (e) 15 U.C.C.P. 348. (f) 15 N.Y. 374. (h) 34 Ch. D. 569. 1890 SEARS mination of this appeal depends, and which is set out in the printed case as follows: And it was thereby mutually agreed, covenanted and understood by and between the parties to these presents that in case the Ritchie C.J. said mayor, aldermen and commonalty of the city of Saint John, their successors or assigns, should erect and put up any buildings or improvements upon the said demised premises within and during the said term, the same shall be valued and appraised by two indifferent persons, one to be chosen by and of the part of the said the mayor, aldermen and commonalty on the city of Saint John, their successors or assigns, the other by and on the part of the said Edward Sears, his heirs and assigns, and which two persons, in case of disagreement, should choose a third, the appraisement or determination of any two of whom should be final and conclusive, and it should be at the option and election of the said Edward Sears, his heirs and assigns, to pay or cause to be paid to the said the mayor, aldermen and commonalty of the city of Saint John, their successors or assigns, such appraised value of such buildings or improvements, to the extent of five hundred pounds or to extend and continue the lease and demise of the said lot and premises with the said right of way unto the said the mayor, aldermen and commonalty of the city of Saint John, their successors or assigns, for a further term of fourteen years, at the same yearly rent, payable in like manner and under the like covenants, conditions and agreements as are expressed and contained in these presents, and so as often as such case should happen at the end or expiration of any lease or demise of the said premises, for any further term or terms, there should be a like valuation, and the like option as therein before mentioned. The respondents entered into and continued in possession of the demised premises and paid the rent as the same matured, until the first day of May, A.D. 1877, and also, during the term granted by the said indenture, erected a building on the demised premises. On the first day of October, A.D. 1877, the assigns of the reversion in the premises, by indenture executed by them and the respondents, renewed and continued the demise of the premises for fourteen years from the first day of May, A.D. 1869, at the same yearly rent, payable in the same manner, and under the like covenants, conditions and agreements as are expressed and contained in the said recited indenture of lease. |