The Law School Authority

Italian Fisherman v. Middlemas Case Brief

Summary of Italian Fisherman v. Middlemas, Ct. of App Maryland [1988]

Relevant Facts: Fisherman(ant) entered into a 25yr ground lease w/ Mr & Mrs Middlemas.  The lease provided that Fisherman would be permitted to build on the property, and Fisherman could not assign, sell, or transfer the lease or sublet w/o consent. Fisherman constructed a building to use as a restaurant.  A year later Fisherman negotiated w/ Armand’s for the sale of the building and the lease.  Middlemas consented to an assignment.  Fisherman assigned all of its right, title, and interest in the lease to Armand’s.  Fisherman and Armand’s executed a security agreement which was recorded in the Land Records.  For 7 yrs Armand’s operated then closed and attempted to sell, Fisherman declined consent to the sale.  Armand’s failed to pay taxes or rent for two months, moved out and declined to file an answer to the complaint.

Legal Issue(s):   Whether Fisherman, as the assignor of a leasehold estate and lessee, has the right of reentry upon default in the terms of the lease by Armand’s, the assignee?

Court’s Holding: No.

Procedure: Middlemas filed suit against Armand’s who did not answer, Fisherman filed 3rd Party intervenor, Trial ct. no right of reentry after assignment.  Affirmed.

Law or Rule(s): When a lease is transferred by assignment privity of estate ends btwn lessor and lessee and is created btwn lessor and assignee.  Privity of K btwn lessor and lessee does not end and lessee is still bound by terms of the lease.  When a lease is transferred by sublease, privity of estate and K continues btwn lessor and lessee.

Court Rationale: Under the strict application of the law Fisherman did not have the right of reentry as lessee.  The lease provided that Fisherman had to obtain consent, Middlemas consented to an assignment to Armand’s, but conditioned consent so that Fisherman would remain liable for any unpaid rent. Fisherman divested itself of all right, title, and interest.  The language of the assignment was unequivocal and Middlemas consented to the assignment in those terms. Armand’s became Middlemas’ lessee and paid rent for years.  Thus a lessor-lessee relationship existed.  Armand’s could not transfer any interest (by way of security agreement), w/o Middlemas’ consent.  Therefor the security agreement, which Middlemas was unaware of, did not vest Fisherman w/ any exercisable rights against Middlemas. Fisherman was obligated to pay the rent by virtue of its continuing privity of contract w/ Middlemas, despite the assignment.  Once transferred by act of assignment, this right of reentry was lost unless revived by the lessor.  Once Middlemas decided to terminate the lease on the grounds of abandonment, no act of Fisherman could undermine this election.

Plaintiff’s Argument: (EE) Middlemas did not consent to a transfer of interest from Armand’s to Fisherman after the assignment, and Fisherman had divested all right, title, and interest by the assignment.

Defendant’s Argument: (ANT) The intent of the parties, security agreement; payment of late rent; Middlemas’ insistence that Fisherman remain liable for rent; granted Fisherman an interest, and the right to reenter.

Leasehold – an estate in r. property held by leasee/tenant under a lease.  Four principle types: estate for years; periodic tenancy; tenancy at will, and tenancy at sufferance.

Copyright © 2001-2012 All rights reserved. Privacy Policy HotChalk Partner