THE RIGHT OF A TENANT TO REMOVE FIXTURES AFTER TAKING A NEW LEASE.

There has been much controversy as to the right of a tenant to remove trade fixtures after the expiration of the term under which they were installed. It has always been held that the right of removal of trade fixtures is, in a sense, a privilege which may be lost or waived.1 Where the term was certain the earlier English authorities limited the right of removal to the actual term of the demise.2 This rule was early relaxed and it was held that the tenant might remove fixtures of this nature, either during his term, or thereafter while he is still in occupation, in contemplation of law under the original lease, "during what may, for this purpose, be considered as as excrescence on the term."

The question here presented is as to the rights of a tenant who continues in possession under a new lease, reserving no right to the lessee in fixtures annexed during the previous term. In Fitzherbert v. Shaw, decided in 1789, a purchaser of land brought ejectment against a tenant. The parties agreed that judgment should be signed for the plaintiff with a stay of execution. It was held that "the fair interpretation of the agreement was that as the defendant was to remain in possession for a certain time after that agreement was entered into, and judgment signed in the ejectment, he should do no act in the meantime to alter the premises, but should deliver them up in the same situation they were in when the agreement was made and the judgment signed."

This case was followed in Heap v. Bar

(1) London, etc., Co. v. Drake, 95 E. C. L. 798; Ex parte Stephens, 7 Ch. Div. 127; Ex parte Brook, 10 Ch. Div. 100; Talbot v. Whipple, 14 Allen, 177; Shepard v. Spalding, 4 Met. 416.

(2) Tyler on Fixtures, 427; Jones Landlord & Tenant, 721; Poole's Case, 1 Salk, 368; Lee v. Risdon, 1 Taunt, 191; Minshall v. Lloyd, 2 M. & W. 450.

ton, where there was a similar agreement and it was held that "the fair effect of the agreement precluded the defendant's right to remove the fixtures in question," Williams, J., remarking, that the tenants "remained in as trespassers subject to the plaintiff's undertaking not to issue a writ of restitution until a given day." In Thresher v. East London, etc., Co., it was decided that a lessee, who had erected trade fixtures, consisting of buildings, and who afterwards took a new lease of the premises which expressly mentioned "buildings" thereon, and which contained a covenant to repair the premises and "buildings," should be bound to repair the buildings so erected by him, unless strong circumstances existed to show that they were not intended to pass under the general words of the demise. In Sharp v. Milligan, fenants in possession agreed to take a new lease of a mill, with the engine, gas houses and appurtenances, as the same shafts and going gear for working the mawere then occupied by them, and the main chinery therein. It was held that they were not entitled to a lease excluding the portion of the gas works and machinery erected by them.

It has not been considered in England that these cases determined the question. here involved. In Ex parte D'Eresby, the Supreme Court of Judicature said that "when the simple case shall arise of a tenant having removable fixtures, continuing his possession under a new or extended term, we desire to hold ourselves perfectly free as to the question whether he retains his right of removal during such continuous possession." But the above cases have in some measure at least been made the basis of a rule adopted by many courts in the United States that fixtures not reserved in a new lease are lost to the tenant.

The earliest leading American case on the subject is Loughran v. Ross, decided

Vol. 68

in 1871. It was there held that if a tenant, having the right to remove a building erected by him on the demised premises, accepts a new lease of such premises, without reservation or mention of fixtures, his right of removal is gone. The court cites as authority the early English cases above mentioned. This case in effect overrules the earlier case of Devin v. Dougherty.10

The rule of Loughran v. Ross has been followed in a number of other states and for a long time at least, was the prevailing rule in this country." The reason of the rule is stated as follows: "It results from the terms of the lease that whatever constituted a part of the freehold at the time the lease was accepted must be surrendered at its termination and the lessee will not be permitted to say that part of the premises leased was in fact a trade fixture erected by him under a previous lease and that previous lease and that he has a right against the face of this contract to sever and remove it. To permit the tenant to do this would, in effect, be to permit him to deny the title of his landlord

(10) 27 How. Pr. 455 (1864).

man

V.

1012,

(11) Taylor Landlord & Tenant, 552; Ewell on Fixtures, 174-5; Tyler on Fixtures, 437-9; Merritt v. Judd, 14 Cal. 60 (engine and pump); Junger355 (brick building); Vovee, 19 Cal. Marks v. Ryan, 63 Cal. 107 (dwelling and barn); Wadman v. Burke, 147 Cal. 351, 81 Pac. 1 L. R. Ꭺ. (N. S.), 1192 (bar fixtures); Sanitary Dist. v. Cook, 169 Ill. 184, 48 N. EL 461, 39 L. R. A. 369, 61 Am. St. Rep. 161 (buildings, trade fixtures); Ganggel v. Ainley, 83 Ill. App. 582 (bakers' oven and wooden building); Smith v. Stoddard, 105 Ill. App. 510 (corn crib); S. C. 203 Ill. 424, 67 N. E. 980, 96 Am. St. Rep. 314; Hedderick v. Smith, 103 Ind. 203, 2 N. E. 315 (club house); Unz v. Price, 22 Ky. L. Rep. 791, 58 S. W. 705; Carlin v. Ritter, 68 Md. 478, 13 Atl. 370, 16 id. 301, 6 Am. St. Rep. 467 (buildings); Watriss v. Bank, 124 Mass. 571, 26 Am. Rep. 694 (bank vault); McIver v. Estabrook, 134 Mass. 550 (building); Williams v. Lane, 62 Mo. App. 66 (shelving); Anthony v. Rockefeller, 102 Mo. App. 326, 76 S. W. 491 (buildings and fences); Champ v. Roth, 103 Mo. App. 103, 77 S. W. 344 (shafting, platforms and pulleys); St. Louis v. Nelson, 108 Mo. App. 210, 83 S. W. 271 (buildings); Cook v. Scheid, 6 Ohio Dec. Reprint, 867 (engine and boiler); Spencer v. Comm. Co., 30 Wash. 520, 71 Pac. 53 (hydraulic press, floors and partition); Wright v McDonald (Tex. Civ. App.), 27 S. W. 1024 (house, railroad track and coal chutes); Questioned on appeal, 88 Tex. 140, 30 S. W. 907, See Hertzberg v. Witte, 22 See also Pronguey Tex. Civ. 320, 54 S. W. 921.

v. Gurney, 36 U. C., Q. B. 53, 37 id. 347 (bakery and fittings); Orr v. Davis, 17 New Zealand, L. R. 106 (shop fittings); Harper v. Gaynor, 19 Vict. L. R. 675 (stables).

any

ises leased without waste.14

No distinction is apparent in the early cases between the different kinds of trade fixtures. The same rule was applied to buildings and to other removable fixtures so long as they were trade fixtures. Nor was the fact that the right of removal of certain fixtures was provided by the terms of the lease or other agreement considered material. So long as the right of removal existed, it was apparently not considered material whether that right was given by agreement or by operation of law.15

Of late years there has been a breaking away from the doctrine of Loughran v. Ross. It was repudiated in Michigan in Kerr v. Kingsbury,16 decided in 1878. In that case Cooley, J., said: "The right of a tenant to remove the erections made by him in furtherance of the purpose for which

(12) Jones Landlord & Tenant, 718, quoting, Hedderick v. Smith, 103 Ind. 203, 2 N. E. 315. (13) Thresher v. Waterworks Co., 2 B. & C. 607; Watriss v. Bank. 124 Mo. 571; Loughran v. Ross, 45 N. Y. 792; Stephen v. Ely, 162 N. Y. 79; Nieland v. Mahinken. 85 N. Y. S. 809; Marks v. Ryan, 63 Cal. 107; San. Dist. v. Cook, 169 Ill. 184; Wadman v. Burke, 147 Cal. 351.

(14) 1 Taylor, Landl. & Ten. Sec. 343, 18 Encyc. of Law, 403; Henderson v. Squire, L. R. 4 Q. B. 170; Wilson v. Prescott, 62 Me. 115; Carlin v. Ritter, 68 Md. 478, 13 Atl. 370; U. S. v. Bostwick, 94 U. S. 65.

(15) Marks v. Ryan, 63 Cal. 107; St. Louis v. Nelson, 108 Mo. App. 210, supra.; Unz v. Price, 22 Ky. L. 791, 58 S. W. 705; Talbot v. Cruger, 151 N. Y. 117, 45 N. E. 364; Stephens v. Ely, 162 N. Y. 79, 56 N. E. 499; Kern v. Kingsbury, 39 Mich, 150, hereinafter cited.

(16) 39 Mich. 150.

the premises were leased, is conceded. The principle which permits it is one of public policy, and has its foundation in the interest which society has that every person shall be encouraged to make the most beneficial use of his property the circumstances will admit of. On the other hand, the requirement that the tenant shall remove during his term whatever he proposes to claim a right to remove at all, is based upon a corresponding rule of public policy, for the protection of the landlord, and which is that the tenant shall not be suffered, after he has surrendered the premises, to enter upon the possession of the landlord or of a succeeding tenant, to remove fixtures which he might or ought to have taken away before. A regard for the succeeding interests. is the only substantial reason for the rule which requires the tenant to remove his fixtures during the term. But why the right should be lost, when the tenant, instead of surrendering possession, takes a renewal of his lease, is not very apparent. There is certainly no reason of public policy to sustain such a doctrine; on the contrary, the reasons which saved to the tenant his right to the fixtures in the first place are equally influential to save to him on a renewal, what was unquestionably his before. What could possibly be more absurd than a rule of law which should in effect say to the tenant who is about to obtain a renewal: 'If you will be at the expense and trouble, and incur the loss, of removing your erections during the term, and of afterwards bringing them back again, they shall be yours; otherwise you will be deemed to abandon them to your landlord.'"

The rule has likewise been repudiated or discredited elsewhere. In Bank v. Merrill, the Wisconsin Supreme Court said: "He (the tenant) is not supposed to treat for a lease of what he already owns, but for a lease of what the landlord owns; and if he accepts a lease which does not in clear terms, cover the property which he himself owns, it ought not, as against him, and for the purpose of working a release of his

(17) 69 Wis. 501, 34 N. W. 514, see also Wright v. McDonald, 88 Tex. 140, 30 S. W. 907; Wittenmeyer v. Board, 10 Ohio C. C. 119.

right to the landlord, to be construed to cover such property." It has been held not to apply where the lease provides for the right of removal of such fixtures at its termination,18 although, as above indicated, such an agreement did not in fact in any sense vary the common law rights of the parties. It has been held not to apply to the case of a new lease which is a renewal of the old one on the same terms.19 This latter limitation has, in fact, been recognized in some of the states where the rule obtains.20

In states where the rule obtains, its application has been, plication has been, in other particulars, much circumscribed. In Washington, where the rule obtains, it has been held not to apply where a tenancy from month to month was converted into a tenancy for 18 months at the same rental but in consideration of certain repairs by the lessee.21 In Illinois, where the rule obtains, it was held not to apply where a partnership lease was surrendered and a lease accepted by one of the partners covering the balance of the term upon the same conditions as the original lease,22 and this notwithstanding the rule that such a transaction operated as a surrender of the old lease.23 It may also be observed that in Maryland where the rule formerly obtained, it was abolished by statute in 1898.24

But the most significant development of recent decisions is the virtual repudiation

(18) McCarthy v Truemacher, 108 Ia. 284, 78 N. W. 104; Daly v. Simonson, 126 Ia. 716, 102 N. W. 780; and see O'Brien v. Mueller, 96 Md. 134, 53 Atl. 663.

(19) Radey v. McCurdy, 209 Pa. St. 306. 58 Atl. 558; Young v. Consolidated Imp. Co., 23 Utah, 586, 65 Pac. 720; Ross v. Campbell, 9 Colo. App. 938, 47 Pac. 465; Royce v. Latshaw, 15 Colo. App. 420, 62 Pac. 627; Crandall v. Ulyatt, 40 Colo. 35, 90 Pac. 59.

(20) 105 McDonough v. Starbird, Cal. 15, 38 Pac. 510; Hedderick v. Smith, 103 Ind. 203, 2 N. E. 315; Watriss v. Bank, 124 Mass. 571; Clark v. Howland, 85 N. Y. 204.

(21) Lynn v. Waldron, 38 Wash. 82, 80 Pac.

of the doctrine in New York. The rule was followed in that state in a number of cases and applied both to buildings and other fixtures.25 But in other cases it was

either limited or criticised.

In

In Howe's Cave Ass'n. v. Houck,26 it was held that the taking of a new lease was not conclusive but simply raised a presumption that might be rebutted by showing a contrary intention. In Livingston v. Sulzer,27 it was held that words in the new lease excepting such portion of the property as was owned by the tenant was a sufficient manifestation of intent to take the case out of the rule. In Moore v. Wood, it was said: "The rigor of the ancient law of fixtures has yielded and must continue to yield to The the contingencies of modern times. law must take notice of trade and manufacturer and their wants and afford them adequate and appropriate protection." Smusch v. Kohn,29 it was held that the rule should not be applied to ordinary removable fixtures. In Lewis v. Ocean, etc., Co.,30 in the court of appeals, Loughran v. Ross, was discredited. Peckham, J., said: "The decision in that case was placed upon quite technical reasoning, supported, it is true, by some authorities, but it is not one of those cases whose principle should be extended." Finally in Bernheimer v. Adams, the question was squarely presented and Loughran v. Ross, so far as it applied to trade fixtures, was virtually overruled. The court held that "no rule of law or public policy required that tenants should lose their rights (to trade fixtures) by a failure to specify in the lease that the right

31

(25) Abell v. Williams, 3 Daly, 17 (buildings); Hayes v. Schultz, 33 Misc. 137, 68 N. Y. S. 340 (building); Nieland v. Mahnken, 89 App. Div. 463, 85 N. Y. S. 809 (watering trough and other fixtures); Talbot v. Cruger, 151 N. Y. 117, 45 N. E. 364 (buildings); Stephens v. Ely, 162 N. Y. 79, 56 N. E. 499 (plumbing). See also Van Vleck v. White, 66 App. Div. 14, 72 N. Y. S. 1026; Scott v. Haverstraw, 135 N. Y. 141, 31 N. E. 1102. (26) 66 Hun, 205, 21 N. Y. S. 40, affirmed 141 N. Y. 606, 36 N. E., 740.

of removal was reserved, and such a doctrine would be most inequitable." This case draws a distinction between trade fixtures and removable buildings erected by a tenant which are in their nature "distinctively realty." As to this it is said, "The Loughran case involved the right to remove a building which distinctively real property We think the Loughran

was

32

case should be deemed not applicable to trade fixtures not distinctly realty, designed to retain their character as personal property and capable of removal without material injury to the freehold." It is to be observed, however, in this connection, that in Loughran v. Ross, the building in question was admittedly a removable fixture and the decision was not predicated on the fact that it was a building or not strictly a trade fixture. It is a well recognized fact that buildings may be trade fixtures, and it is probably not the intention of the court Bernheimer v. Adams, to discriminate between different kinds of trade fixtures nor to hold that buildings may not be trade fixtures, but to make the fact of erection for purposes of trade or otherwise the basis of the distinction. In the later case of Precht v. Howard, a building was held not removable after successive leases and the decision was predicated on the fact that "the structure had not been erected for purposes of trade."

33

in

(32) Ewell on Fixtures, 96; Brown v. Reno &c Co., 55 Fed. 229, 231; Security &c Co. v. Willamette &c. Co., 99 Cal. 636, 34 Pac. 321; Wiggins v. Ohio &c R. Co., 142 U. S. 396; Van Ness v. Paccard, 2 Pet. 137.

(33) 187 N. Y. 136, 79 N. E. 847, 9 L. R. A. (N. S.), 483 (1907).

(34) Bergh v. Herring, 136 Fed. 368, 70 L. R. A. 756.

(35) 27 How. Pr. 455, see note 10.