Dieffenbach v. McIntyre
1952 OK 453, 208 Okla. 163, 254 P.2d 346 (1952)
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Rule of Law:
In Oklahoma, a lease contains an implied covenant requiring the lessor (landlord) to deliver actual physical possession of the entire leased premises to the lessee (tenant) at the beginning of the lease term.
Facts:
- Mildred E. McIntyre, a beauty parlor operator, needed to relocate her business by May 1, 1946.
- In April 1946, McIntyre entered into a three-year lease agreement with Nevin J. Dieffenbach to rent an entire four-unit building for $500 per month.
- Dieffenbach assured McIntyre that he had given the existing tenants in the other three units 30-day notices to vacate the premises.
- The possession date was delayed until June 1st, but on that date, two of the four units remained occupied by the previous tenants.
- Relying on Dieffenbach's further assurance that he would obtain full possession by June 7th, McIntyre moved into one of the vacant units and expended money on repairs.
- Dieffenbach failed to deliver possession of the two occupied units as promised.
- Unable to gain possession of the entire building for which she was paying rent, McIntyre vacated the premises around August 1, 1946.
Procedural Posture:
- Mildred E. McIntyre filed an action in the trial court against Nevin J. Dieffenbach to recover rent, repair costs, and anticipated lost profits.
- The trial court allowed the jury to consider the claims for rent and repair costs but refused to permit the introduction of evidence regarding lost profits.
- The jury returned a verdict in favor of McIntyre, and the court entered a judgment against Dieffenbach.
- Dieffenbach, as defendant-appellant, appealed the judgment to the Oklahoma Supreme Court.
- McIntyre, as plaintiff-appellee, filed a cross-appeal challenging the trial court's exclusion of her evidence on lost profits.
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Issue:
Does a landlord have an implied duty to deliver actual physical possession of the leased premises to a new tenant at the commencement of the lease term, or merely the legal right to possession?
Opinions:
Majority - Bingaman, J.
Yes, a landlord has an implied duty under a lease to deliver actual possession of the premises to the tenant. The court adopted the 'English rule,' which holds that a lease contains an implied covenant to place the lessee in actual possession of the property at the beginning of the term. The court rejected the 'American rule,' which would only require the landlord to deliver the legal right to possession, leaving the tenant to deal with holdover tenants. The court cited its own precedent in King v. Coombs and Flannagan v. Dickerson, confirming that Oklahoma has long adhered to the English rule. Therefore, Dieffenbach's failure to oust the holdover tenants and provide McIntyre with possession of the entire building constituted a breach of the lease. On the issue of damages, the court affirmed the trial court's decision to exclude evidence of lost profits, reasoning that McIntyre's business had not been established at the new location for a sufficient length of time (only two months) to make anticipated profits reasonably ascertainable.
Analysis:
This decision solidifies Oklahoma's adherence to the 'English rule,' placing the burden squarely on landlords to ensure that leased premises are vacant and available for new tenants at the start of a lease. This provides greater protection for tenants, who are not forced to undertake the cost and effort of evicting holdover tenants. The ruling distinguishes between the landlord's initial duty to deliver possession and later issues with trespassers that may arise after the tenant has taken possession. Furthermore, the case clarifies the standard for claiming lost profits as damages, establishing that a business must operate for a sufficient period to be considered 'established' before such speculative damages can be awarded.
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