U.S. Supreme Court Dermott v. Wallach, 68 U.S. 1 Wall. 61 61 (1863)
Dermott v. Wallach
68 U.S. (1 Wall.) 61
ERROR TO THE CIRCUIT COURT
FOR THE DISTRICT OF COLUMBIA
Where a lease at $3,000 a year, payable in monthly installments, stipulated that if the tenant underlet or attempted to remove any of the goods on the premises without the landlord's consent, then, at the sole option and election of the landlord, the term should cease, AND MOREOVER, in either of said cases, "one whole year's rent, to-wit, the rent of $3,000 over and above all such rents" as have already accrued, shall be and is hereby reserved and shall immediately accrue and become due and owing, and shall and may be levied on by distress and sale of all such goods as may be found on the premises,
Held, in a case where a removal and consequent levy had been made while the lease had yet more than a year to run, that although the clause in the lease was obscure, the $3,000 was "rent," intended to be secured in advance and in a gross sum instead of in the monthly shape, and was not a penalty above and independent of the other and usual rents.
Mrs. Dermott leased to Dexter a hotel for three years from 1st October, 1855, to be extended to five, at the option of the tenant. The rent was $3,000 a year, payable in monthly sums of $250. It was expressly stipulated between the parties and made a condition that if the tenant should assign or underlet the premises without the written consent of the landlord or should remove or attempt to remove any of his goods or chattels (except the same be replaced of equal value) from the premises without a like consent, then and in either case and event, at the "sole option and election" of the landlord, the term should cease and the landlord might immediately reenter upon the premises and expel the tenant, AND MOREOVER, in either of said cases, or the happening of the events,
" one whole year's rent, to-wit, the rent of $3,000 over and above all such rents (that is to say, all such of the rents hereinbefore reserved to be paid on the first day of each month during the said term . . . as shall have then already accrued) shall be and by these presents is reserved to be paid by the said Dexter to the said Dermott, and shall immediately thereupon accrue and become due and owing from him to her, and shall and may be levied by distress and sale of all such goods and chattels as may be found on the premises. "
Dexter the tenant took possession, and afterwards executed
two deeds of trust of the goods and chattels in the hotel to the defendant, Wallach, to secure certain promissory notes. One of the notes not being paid at maturity, Wallach advertised the goods and chattels for sale, and was proceeding with the sale when Mrs. Dermott levied a distress upon them for $3,000. This was on the 18th of May, 1857, about a year and five months before the lease would expire. The ordinary rent had been all punctually paid to the 1st of May, the month in which the distress was made, so that no rent of the ordinary kind was due at the time of the distress. Wallach having replevied the goods seized, the defendant avowed, setting up, by way of justification for the taking, the attempt to remove them from the premises, and alleging that by such removal one year's rent had accrued. There were two pleas to the avowry. I. No rent in arrear. II. No demand for the rent.
The substantial question was whether this $3,000 was "rent," or was a penalty, that is to say, whether the clause meant that in the event of a removal, or attempted removal, Mrs. Dermott might get a year's rent in advance, or whether it meant that she should have a sum of money equivalent to a year's rent "over and above" all rents, by way of penalty.
The Circuit Court for the District of Columbia, in which the case arose, gave judgment for the plaintiff. On error here, the question was the same as below and as already stated.
MR. JUSTICE NELSON delivered the opinion of the Court:
The case turns mainly upon the question whether the $3,000 mentioned in the lease, accruing on the happening of this event, is rent or a penalty.
The argument on behalf of the tenant is that by the true construction of the lease, the landlord, on the happening of the event, may at his option consider the term as ended and re-enter, and in addition distrain for the $3,000, and hence the term having ended, or it being in the power of the landlord to end it, the sum reserved cannot be regarded as rent, but as a penalty, as the relation of landlord and tenant has ceased.
We do not agree to this construction. Although the wording of the clause occasions some obscurity and hesitation, yet, regarding the sense and substance of it, there can be little doubt about its meaning. It will be observed that if the tenant assigns or underlets, the term ceases at the option of the landlord. So in the event of the removal or attempt to remove the goods. Now the words, "at the sole option
and election" of the landlord are superfluous if intended to be limited to this breach of the covenant. All that was necessary was the inhibition to assign, underlet, or remove the goods and the right of reentry in case of breach. Without giving the option or election, the landlord had the right to waive the forfeiture. Receiving rent with knowledge of the breach is a waiver. So levying a distress for the rent, or in any other way consenting to a continuance of the term. These words, we are of opinion, are entitled to an influence in the construction of this part of the lease beyond these covenants of forfeiture, and may aid in the construction and meaning of the clause which provides for the payment of the year's rent in advance. And the true meaning, we think, is that the landlord may at his option consider the term at an end and reenter in the events mentioned, or may at his option (understood), have the year's rent in advance.
We do not think the word "moreover," in the connection found, necessarily means the rent in advance, in addition to the previous remedies mentioned, but rather an alternative remedy.
These covenants are inserted in a lease for the better security of the rent. The one in question simply makes the rent payable in advance, instead of by installments, on the happening of the event stated. It would have been not only strange but unreasonable to have made this stipulation as contended for on the part of the plaintiff, to take effect at the moment the term ceased, or might be put an end to by the landlord. The words should be very clear and controlling to lead to such an interpretation.
It is argued that the reservation of this $3,000 rent in advance should be regarded as a penalty, for the reason that the event would happen on the removal of a single article of goods, and that the remedy is out of reasonable proportion to the injury. But the answer is the covenant against removal necessarily embraced all the goods on the premises that furnished security for the rent, and it is not for the tenant to set up as a defense to its enforcement, that the breach is not as great as it might have been. The removal of a single
article is a wrong which he is not permitted to take advantage of, and besides, there is no hardship in the case, for if he desired to remove any particular article, the covenant permits it on replacing goods of equal value.
The removal of the goods took place on the 18th of May, 1857, some year and five months before the expiration of the lease, so that practically the reservation of the rent in advance, on the event in the lease happening, works but simple justice to all parties. It became the substitute for the rent reserved payable monthly. If the tenant had brought about the event by the removal of the goods within a year of the termination of the lease, whether or not he might have had a remedy to abate the excess, we need not discuss.
Judgment reversed and cause remanded for a venire de novo.