Jaber v. Miller
239 S.W.2d 760 (1951)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
The determination of whether a transfer of a lease is an assignment or a sublease is governed by the intention of the parties, rather than the common law rule that a transfer for the entire remaining term is automatically an assignment.
Facts:
- In 1945, Jaber leased a commercial building for a five-year term, from March 1, 1946, to March 1, 1951. The lease stipulated that it would terminate if the building was destroyed by fire.
- In 1949, Jaber transferred his lease to Norber & Son for the entire remainder of the term using a document titled 'Contract and Assignment'.
- As consideration for the transfer, Norber & Son paid Jaber $700 in cash and executed several promissory notes. Jaber reserved a right to re-enter the premises if the notes or the underlying rent to the owner were not paid.
- Subsequently, Miller acquired the leasehold interest from Norber & Son.
- Miller, struggling with the payments, negotiated with Jaber to replace the remaining large notes with fourteen smaller promissory notes of $175 each.
- On December 3, 1949, the building was completely destroyed by fire.
- Following the fire, Miller contended that the transfer was a sublease and that his obligation to pay the notes, which he characterized as rent, was extinguished when the fire terminated the primary lease.
Procedural Posture:
- Miller brought suit against Jaber in a chancery court (a court of first instance) seeking the cancellation of fourteen promissory notes.
- The chancellor (trial court judge) ruled in favor of the plaintiff, Miller, and ordered the notes to be canceled.
- Jaber, the defendant, appealed the chancellor's decision to the Arkansas Supreme Court. Jaber is the appellant and Miller is the appellee.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Should the determination of whether a lease transfer constitutes an assignment or a sublease be governed by the intention of the parties rather than the strict common law rule based on the duration of the term transferred?
Opinions:
Majority - George Rose Smith, J.
Yes. The determination of whether an instrument is an assignment or a sublease is to be governed by the intention of the parties. The court rejected the feudal common law rule, which held that any transfer of a lessee's entire interest in the term is an assignment, regardless of the parties' intent. The court described this traditional rule as an unjust 'trap' that persists from 'blind imitation of the past' and is disconnected from modern commercial realities. The court reasoned that laypersons understand the practical difference between selling a lease (assignment) and renting it out (sublease), and the law should reflect this understanding rather than rigid, archaic technicalities. Applying the new standard, the court found clear evidence of an intended assignment: the document was titled an 'Assignment,' it used language of transfer and sale, and the consideration was structured as a purchase price paid with promissory notes rather than as periodic rent. Therefore, the notes represented deferred payments for the sale of the lease, and Miller's obligation to pay them was not extinguished by the fire.
Analysis:
This decision marks a significant departure from the majority common law rule followed in most American jurisdictions. By rejecting the inflexible, feudal-era distinction between an assignment and a sublease, the Arkansas Supreme Court adopted a more modern, flexible standard based on the contracting parties' intent. This precedent aligns the law with the reasonable expectations of commercial parties and laypersons, reducing the risk of inequitable outcomes caused by a 'trap for the unwary.' Future cases in Arkansas involving lease transfers will require a fact-intensive inquiry into the parties' intent, focusing on the language of the instrument and the context of the transaction, rather than a simple mechanical test based on the duration of the transfer.
Unlock the full brief for Jaber v. Miller