1. The law imposes no obligations on a landlord to pay the
tenant for buildings erected on demised premises. The innovation on
the common law rule that all buildings become part of the freehold
has extended no further than the right of removal while the tenant
is in possession.
Page 69 U. S. 492
2. Where a lease binds a landlord to pay his tenant,
on the
efflux of the term, for buildings erected by the tenant, or to
grant him a renewal, the landlord is not bound to pay when the
lease has been determined by
nonpayment of rent before such
efflux, and by forfeiture and entry accordingly.
3. This is true even though by the terms of the lease the
repossession by the landlord is to be
"as in his first and
former estate," and though the erections were not on the
ground at the date of the lease. _
Link demised, on the 1st of May, 1857, to Sherman, a lot in
Chicago, for twelve years from that date. The lessee covenanted to
pay all the taxes and assessments levied on the premises during the
term.
It was provided that in case of a failure by the lessee to pay
the rent when due, the lessor, his heirs or assigns should have the
right to enter into the demised premises, with or without process
of law, and expel the lessee or any persons occupying them, "and
the said premises again to repossess and enjoy,
as in his first
and former estate," and the lessee covenanted that if the term
should at any time, at the election of the lessor or his assigns,
be ended, he and all those occupying the premises under him would
immediately and peaceably surrender the possession of the premises
to the lessor or his assigns. Sherman contemplated making an
erection upon the premises, which it was agreed he might do, and
the lease contained the following covenant:
"It is agreed upon by and between the parties that at the
expiration of ten years from the first day of May, one thousand
eight hundred and fifty-nine, it shall be at the election of the
first party either to purchase the buildings erected on said leased
premises at the appraised value at that time or renew the lease of
the said demised premises for the term of ten years longer, and the
value of the buildings as well as the value of the rent of the said
demised premises, to be appraised by three disinterested persons,
who are to decide the value of the buildings as well as the value
of the rent of the above-mentioned premises, as the case may be.
And it is further agreed upon by and between the parties that at
the expiration of each and every ten years from May first, one
thousand eight hundred and sixty-nine, for and during the term of
ninety-nine years from the date
Page 69 U. S. 493
of this indenture, that the party of the first part is either to
renew the lease or purchase the buildings as above stipulated."
The lessee did erect a brick structure or storehouse on the
premises valued at $2,500 to $4,000.
The rights of the lessee Sherman became afterwards vested in one
Kutter, and those of Link, the lessor, in a certain Smith.
On the 1st of May, 1862, Smith, as assignee of Link, went upon
the premises and demanded the rent due that day on the lease, which
was not paid, and the next day he gave notice that he had elected
to forfeit the lease for nonpayment of rent due May 1, 1862.
In July, 1862, Kutter (assignee of Sherman) notified to the
defendant that, owing to the forfeiture of the lease from Link to
Sherman for nonpayment of rent, he (Kutter) was entitled to have
the brick building on the demised premises appraised under the
terms of the lease, and the value of it paid to him. Smith refusing
to join in any effort to have it appraised, this suit,
an
action on the case was brought in the Circuit Court for the
Northern District of Illinois.
The declaration set out the lease by Link to Sherman, the
subsequent vesting of the lessor's title in the defendant, Smith,
and of the lessee's in the plaintiff, Kutter, and that the
defendant had declared the lease forfeited and taken possession of
the demised premises and refused to join the plaintiff in having an
appraisement of the building standing on said premises, and also
neglected and refused to pay plaintiff the value of that building,
whereby he became liable to plaintiff for its value, and this
action was brought to recover it.
On the trial, the court instructed the jury as follows:
"By the terms of the lease from Link to Sherman, it seemed to be
contemplated that the lessee should have power to put improvements
upon the land which might remain there on the 1st of May, 1869
('ten years from the 1st day of May, 1859'), and it was by the
terms of the lease then left optional with the lessor to purchase
the buildings erected on the land at the appraised
Page 69 U. S. 494
value or renew the lease for ten years longer, but up to that
time -- that is to say till May, 1869 -- the clause of forfeiture
for the nonpayment of rent was nevertheless in force and binding on
the lessee, and notwithstanding improvements may have been in the
meantime put upon the land, if the lessee did not pay the rent
according to the terms of the lease, it was competent for the
lessor to declare 'the term' ended and to reenter, and in case of a
determination of the lease in that way prior to the time fixed
(
viz., May 1, 1869), no provision seemed to be made by the
lease for the payment by the lessor of any improvements put by the
lessee upon the land, and in the case supposed, in the absence of
such provision, the lessee could not recover for the improvements,
and the plaintiff can be in no better position than Sherman.
Consequently, if, on the 1st day of May, 1862, there was rent due
and in arrears, unpaid, after demand made for the payment thereof,
and the lessor or his assigns exercised the option given by the
lease, and declared 'the term' ended, and reentered and took
possession of the premises, of which the lessee and his assignee
had due notice, then the plaintiff cannot recover against the
defendant in this action the value of the improvements made by
Sherman or his assignee."
Verdict and judgment went accordingly, and the plaintiff,
Kutter, took a writ of error to reverse the judgment.
Page 69 U. S. 497
MR. JUSTICE MILLER delivered the opinion of the Court.
If we correctly understand plaintiff's counsel, one of the
positions assumed by him in argument is that the fact that under
these circumstances, defendant comes into the use and possession of
the building, erected by the labor and money of plaintiff's
assignor, entitles plaintiff to recover the value of that building
without aid from the contract on that subject in the lease, which
we will consider hereafter. The authorities cited to support this
position relate to remove fixtures in which tenants have been
permitted to remove fixtures from the premises which they have
placed there during the tenancy.
Without elaborating the argument, it may be remarked that none
of these authorities is applicable, for two reasons.
1. The character of the building in the present case does not
bring it within any of the principles upon which certain erections
have been held removable as fixtures.
2. The doctrine concerning this class of fixtures, which is a
strong innovation upon the common law rule that all buildings
become a part of the freehold as soon as they are placed upon the
soil, has extended no further than the right of removal while the
tenant is in possession, and has never been held to give a right of
action against the landlord for their value.
We can very well understand that if defendant wrongfully entered
upon the building and retains wrongful possession of it, he may be
liable to plaintiff in action of trespass
quare clausum
fregit. But, as we understand the facts, there is no such
wrongful entry, and plaintiff bases his right to recover upon a
very different view of the matter.
There was in the contract of lease between Link and Sherman a
covenant that, at the expiration of ten years from the first day of
May, 1859, it should be at the election of the lessor to purchase
the buildings erected on the leased premises at their appraised
value at that time or renew the lease of said premises for the term
of ten years longer at a rent to be appraised in like manner, and
this election, on the part of the lessor was to be exercised at the
expiration
Page 69 U. S. 498
of every ten years for the period of ninety-nine years. The
plaintiff now contends -- because the defendant terminated the
lease before the first ten years had expired by virtue of a clause
authorizing the lessor to do so for nonpayment of debt -- that
therefore defendant became liable to pay him the appraised value of
the building. He accordingly gave a notice of his claim and of his
readiness to join in appointing appraisers, and then brought this
suit.
It will be observed that while the right thus claimed is one
growing out of the contract, and, as would reasonably be supposed,
is for the failure to perform some obligation which that contract
imposed, the action is neither covenant nor assumpsit, nor any
other form of action founded on contract, but is an action on the
case. And the counsel who framed the declaration objects in this
Court
"that the court below treated the case as one in an action of
covenant, to enforce as against defendant Smith, the provision of
the lease, upon the covenant on the part of Link as to the purchase
of the building at the end of the term."
One obvious reason why plaintiff does not wish to be considered
as suing on the contract is the difficulty of holding that the
covenant to purchase is one which runs with the land or which in
any other manner, binds Smith as assignee of Link. An action of
covenant would also be liable to the objection that the contingency
on which the lessor was bound either to renew the lease or purchase
the building had never arisen.
To avoid these difficulties, the plaintiff brings an action on
the case, in which he sets out this covenant with the entire lease
and the other facts of the case, and seems to suppose that by
virtue of the flexibility of this form of action, it may be found
to embrace some principle which will justify a recovery. We have
already seen that the law imposes upon the defendant no obligation
to pay for the building apart from the contract. If the contract,
when examined in the light of the facts proved, imposes no such
obligation, we are at a loss to perceive what other ground of
liability can be asserted against defendant.
Page 69 U. S. 499
It is argued that the plaintiff's assignor became the owner and
had title or estate in the building as separated and distinguished
from the land, and while the defendant had the right to enter, take
possession, and hold for a failure to pay rent, that right was in
some way subordinate to plaintiff's right to the house. But if we
concede so singular a proposition as that the title to the soil was
in defendant, while that of the building was in plaintiff, it by no
means follows that defendant is bound to purchase plaintiff's
building. The utmost that can be claimed on that subject is that
Smith is bound by the covenant of Link, the lessor, to purchase at
the end of ten years
or renew the lease. He may always
exercise his option in favor of the latter proposition, and by the
contract may never be bound to purchase. So that if the title to
the building is in plaintiff and defendant has wrongful possession
of it, we revert again to the proposition that trespass, or some
form of action for use and occupation, is all the legal remedy
which the plaintiff has.
But we cannot concede that plaintiff or his assignor had at any
time the legal title to the building, as distinct from the lot. The
well settled rule is that such erections as this become a part of
the land as each stone and brick are added to the structure. The
only exceptions to this rule are the class of fixtures already
adverted to and such rights as may grow out of express contract.
The contract before us was not intended to change this rule. The
agreement to purchase means nothing more than that in a certain
event, the lessor will pay the lessee the value of such building,
but there is no implication of any general title or ownership in
the lessee apart from that event. This contingency has not
occurred, and that it can never occur is the fault of the plaintiff
and his assignor. This observation is also applicable to the
supposed hardship of taking the building, the product of the
plaintiff's money and labor, without compensation. It is from
plaintiff's own default that the right to do this arises. He had
his option to pay the rent due defendant and retain the right to
payment for his building when the time should arrive, or to give up
his building, and with its loss relieve
Page 69 U. S. 500
himself of the burden of paying rent. He chose the latter with
full knowledge, and there is no injustice in holding him to the
consequence of his choice.
The covenant for reentry provides that, in default of payment of
rent, the lessor may enter "and the said premises repossess and
enjoy, as in his first and former estate."
The plaintiff insists that the building is no part of such
former estate, and defendant, therefore, does not become its owner
by virtue of the reentry. We have already shown that the building
does become a part of the land as it is built. No such meaning was
ever before attached to the use of the word "estate" in a legal
document. It is used in reference to the nature of defendant's
interest in the property, and not to the extent of improvements on
the soil. As if the lessor had a fee simple estate, it reverted to
him again as a fee simple. If he had a term for years, he was in
again as part of his term. But it had no relation to the question
of whether that estate might be more or less valuable when
repossessed, or might bring to him more or less buildings.
We hold, then,
1. That without the aid of a special contract, the law imposes
no obligation on the landlord to pay his tenant for buildings
erected on the demised premises.
2. That treating the parties to this suit as standing in the
places of the original lessor and lessee, no obligation arises from
the contract in this case, that the lessor shall purchase or pay
for the building erected on said premises, except as an option, to
be exercised at the end of each period of ten years.
3. That the act of defendant in reentering and possessing
himself of the premises for plaintiff's failure to pay rent imposes
upon him no obligation to pay plaintiff the value of the
building.
As the ruling of the court, to which exception was taken, was in
conformity to these principles, the judgment must be
Affirmed with costs.
