Chertkof v. Southland Corp.
1977 Md. LEXIS 823, 371 A.2d 124, 280 Md. 1 (1977)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A lessor's acceptance of rent that accrues after they have knowledge of a lessee's breach of a lease covenant constitutes a waiver of the right to declare a forfeiture for that breach, even if the lessor unilaterally declares that such acceptance does not constitute a waiver.
Facts:
- In April 1965, the lessor entered into a 10-year lease with Southland Corporation for a commercial property.
- The lease contained a covenant explicitly prohibiting Southland from assigning or subletting the premises without the lessor's prior written consent.
- On December 31, 1971, Southland assigned its entire interest in the lease to Baskin-Robbins Eastern Corp. without seeking or obtaining the lessor's consent.
- In May 1972, the lessor learned of the unauthorized assignment through a telephone call from Southland's comptroller.
- On May 31, 1972, the lessor sent a letter to Southland declaring the lease 'null and void' but also stating that accepting future rent checks 'shall not be construed as approval of assignment.'
- From April 1972 through October 1974, the lessor continuously accepted and cashed monthly rent checks paid by Baskin-Robbins's corporate affiliate, 31 Flavors.
- During this same period, the lessor engaged in negotiations with Baskin-Robbins and a sublessee, Fogelsanger, for new lease agreements.
- The lessor also accepted increased rental payments from Fogelsanger for her portion of the premises for 11 months, while simultaneously accepting the full base rent for the entire premises from 31 Flavors.
Procedural Posture:
- The lessor filed an action for ejectment and damages against the lessee and its assignee in the Superior Court of Baltimore City (a trial court).
- Following a nonjury trial, the trial court found that while a breach had occurred, the lessor had waived his right to forfeiture by accepting rent.
- The lessor, as appellant, appealed the trial court's judgment to the Court of Special Appeals (the intermediate appellate court).
- Before the case was considered by the Court of Special Appeals, the Court of Appeals of Maryland (the state's highest court) granted a writ of certiorari to hear the case directly.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a lessor waive the right to declare a forfeiture for a lessee's breach of a covenant against assignment by accepting rent that accrues after learning of the breach, even if the lessor unilaterally states that acceptance of the rent does not constitute a waiver?
Opinions:
Majority - Levine, J.
Yes. A lessor waives the right to declare a forfeiture for a lessee's breach by accepting subsequently accrued rent because such an act is fundamentally inconsistent with an intent to terminate the lease. The act of accepting rent, which is a benefit of the lease, affirms the tenancy and recognizes its continuation, effectively signaling an election by the lessor to continue the landlord-tenant relationship. The court reasoned that forfeitures are disfavored in the law, especially concerning restraints on alienation like non-assignment clauses. While waiver is a question of intent based on the facts, a lessor's unilateral, unagreed-upon reservation of rights is insufficient to overcome the powerful inference of waiver created by accepting rent. The court described the lessor's attempt to accept rent while simultaneously declaring forfeiture as an 'irreconcilable inconsistency' and akin to seeking to 'eat the cake and still keep it.' The trial court's factual finding of waiver was further supported by the lessor's negotiations for new leases and acceptance of double rent for a portion of the premises, all of which were actions inconsistent with an intent to terminate the original lease.
Analysis:
This decision solidifies the principle that a landlord's conduct can override their express declarations when it comes to waiving a lease breach. It establishes that a landlord cannot simultaneously accept the benefits of a lease (rent) while reserving the right to terminate it for a known, past breach. The ruling places a burden on landlords to act decisively upon discovering a material breach; they must either refuse subsequent rent and pursue forfeiture or accept the rent, which will likely be deemed a waiver of that specific breach. This precedent limits a landlord's ability to hold a forfeiture in abeyance while continuing to profit from the lease, promoting certainty in landlord-tenant relationships.
