H. H. DUKE and wife, Nettie C. Duke,
v.
L. L. DAVENPORT and Louis L. Davenport, Jr.
No. 107.
Supreme Court of North Carolina.
September 29, 1954.*669 Davenport & Davenport, Nashville, for appellants.
Thorp & Thorp, Rocky Mount, for appellees.
DENNY, Justice.
The defendants challenge the correctness of the court's conclusion of law to the effect that when the defendants failed to exercise their option to extend the lease for an additional fifteen years or any part thereof, from the expiration of the first five years, by giving notice as required by the lease, but held over, they became and remained tenants at will until 28th February, 1954, and that their occupancy since that time has been wrongful.
The plaintiffs argue and seriously contend that the judgment below should be affirmed on authority of Vanderford v. Foreman, 129 N.C. 217, 39 S.E. 839; Merchants Oil Co. v. Mecklenburg County, 212 N.C. 642, 194 S.E. 114; and Elm & Greene Streets Realty Co. v. Demetrelis, 213 N.C. 52, 194 S.E. 897.
In the case of Vanderford v. Foreman, supra [129 N.C. 217, 39 S.E. 840], the lease had expired on 31st December, 1899. Demand for possession and notice to vacate had been properly given and an action for possession instituted. A substantial amount of rent accrued after the expiration of the lease and before the final disposition of the action. In the meantime, the defendant tendered a smaller sum than was due for rent, subject to certain conditions, not pertinent here, and the plaintiff accepted the tender. Whereupon, the defendant contended that the acceptance of rent converted the tenancy into one from year to year. The Court held otherwise, but stated there would be force in this contention, "if there had not been served in proper time a notice upon the defendants to vacate the premises and deliver possession at the end of the term."
The pertinent facts in Merchants Oil Co. v. Mecklenburg County, supra, were as follows: Mecklenburg County, on 7th January, 1935, leased to the plaintiff the old courthouse lot in the City of Charlotte for a period of two years beginning 1st February, 1935, at a stipulated annual rental, payable monthly. The lease contained a provision granting to the lessee the option to renew such lease for an additional term of three years, beginning 1st February, 1937, provided and on condition that the lessee should notify the lessor of its election to renew the lease, and prescribed the manner *670 in which the notice was to be given and requiring such notice to be given on or before the 30th of November, 1936. The lessee failed to give the notice to the defendant in the manner and within the time specified in the lease, but did notify the defendant on 24th December, 1936 that it desired to exercise its option to renew.
The lessee having failed to renew the lease as provided in the contract, the lessor gave it notice to vacate the premises and advertised for bids thereon. The plaintiff instituted the action to restrain Mecklenburg County from executing a lease to a new tenant. A temporary restraining order and notice to show cause was issued. Upon the hearing on the notice to show cause why the restraining order should not be continued until the hearing, judgment was entered dissolving the temporary restraining order. Upon appeal to this Court the ruling of the court below was affirmed.
The Demetrelis case involved a rather unusual factual situation. The defendant leased certain hotel property on 27th February, 1925 for a period of ten years at a monthly rental of $700. The lease contained an option for its renewal for an additional five years provided the lessee, at least six months before the expiration of the ten-year period covered by the lease, gave notice by registered mail to the owner of the hotel of the lessee's intention to extend or renew the lease. No notice was given during the ten years or later. During the ten-year period the rental was lowered and raised from time to time "as business was good or bad". [213 N.C. 52, 194 S.E. 898.] This same practice was continued after the expiration of the tenyear lease. On 16th January, 1937 the plaintiff gave the defendant notice to vacate the premises on 1st March, 1937.
On the above facts, the defendant contended that the payment of rent and the acceptance thereof until the institution of the action, constituted a waiver of the notice required by the renewal or extension clause of the lease, and that his lease had been extended for an additional five years. The lower court held that the lease had not been so extended, and upon appeal the ruling was upheld. This Court said: "Upon the expiration of the lease on February 27, 1935, the plaintiff was entitled to recover damages for the occupation of the premises thereafter, and therefore it could receive payment for such occupation voluntarily without the effect of continuing the lease. Vanderford v. Foreman, 129 N.C. 217, 39 S.E. 839; Mauney v. Norvell, 179 N.C. 628, 103 S.E. 372."
We call attention to the fact that the plaintiff in the Demetrelis case contended that after the expiration of the lease the defendant was a tenant from month to month, or at sufferance. Presumably this contention was based on the fact that the amount of the monthly rental was constantly changing. Be that as it may, it gave the statutory notice to quit in compliance with that required for a tenancy from year to year. Therefore, when this Court upheld the ruling of the lower court to the effect that there had been no renewal or extension of the lease, it was immaterial on the facts before the court whether the tenacy was from year to year, month to month, at will, or sufferance.
The above cases are not controlling on the findings of fact as set forth in the record now before us.
When the lease under consideration expired according to its terms, and no request for renewal having been made in the manner provided in the lease, the plaintiffs had the right to treat the defendants as trespassers and to bring an action for their eviction without notice. Murrill v. Palmer, 164 N.C. 50, 80 S.E. 55; 32 Am. Jur., Landlord and Tenant, section 919, page 779, and section 952, page 803; 51 C.J.S., Landlord and Tenant, § 74(a), p. 623; Tiffany on Real Property (3rd Ed.) Vol. 1, section 175, page 281. But, when the plaintiffs permitted the defendants to remain as tenants and accepted the $125 per month as rent for more than two years, without any understanding as to the character of the occupancy, the tenancy is presumed to be one from year to year. Harty v. Harris, 120 N.C. 408, 27 S.E. 90; Holton v. Andrews, 151 N.C. 340, 66 S.E. 212; *671 Murrill v Palmer, supra; Cherry v. Whitehurst, 216 N.C. 340, 4 S.E.2d 900; Sinclair Refining Co. v. Shakespeare, 115 Colo. 520, 175 P.2d 389, 171 A.L.R. 1058; 32 Am.Jur., Landlord and Tenant, section 942, page 793, et seq.; Tiffany on Real Property (3rd Ed.) Vol. 1, section 183, page 293, et seq.; Thompson on Real Property, Permanent Edition, Vol. 3, section 1037, page 40, and section 1017, page 2 in the supplement thereto.
We think the law applicable to the facts in this case was stated by Hoke, J., in speaking for the Court in Murrill v. Palmer, supra [164 N.C. 50, 80 S.E. 56], in which he said: "It is a principle fully recognized, and not infrequently applied in this state, that when a tenant for a year or a longer time holds over and is recognized as tenant by the landlord without further agreement or other qualifying facts or circumstances, he becomes tenant from year to year, and subject to the payment of the rent and other stipulations of the lease as far as the same may be applied to existent conditions. * * *
"The position, in the first instance, is at the option of the landlord. He may treat his tenant, who holds over, as a trespasser and eject him, or he may recognize him as tenant, but when such recognition has been made, a presumption arises of a tenancy from year to year, and as stated under the terms and stipulations of the lease as far as the same may apply. This is a rebuttable presumption which may be overcome by proper and sufficient proof. When there is testimony permitting the inquiry, it is usually a question of intent,an intent, however, which under some circumstances may be inferred from conduct and in direct opposition to the express declaration of one or the other of the parties".
As pointed out by Justice Hoke in the above case, the presumption that a tenancy is from year to year is rebuttable, but in this case the finding of fact as set out hereinabove in paragraph five, negatives any agreement or understanding by the parties that might rebut the presumption that the tenancy under consideration is one other than that from year to year. Hence, we hold the present tenancy of the defendants is one from year to year.
The contention of the defendants that by giving notice on 4th February, 1954, that they would exercise the option to extend the lease for the remainder of the fifteen years, extended the lease for that period, is without merit. Merchants Oil Co. v. Mecklenburg County, supra; 32 Am.Jur., Landlord and Tenant, section 978, page 821, and section 979, page 821, et seq. When the defendants failed to exercise their option to extend the lease as provided therein, but held over, and the plaintiffs recognized them as tenants and continued to accept the rent unconditionally, the character of the tenancy became fixed and may not be terminated except by mutual consent, surrender at the end of a tenancy year, or by notice to quit, given one month or more before the end of the current year of the tenancy. G.S. § 42-14; Cherry v. Whitehurst, supra. As to forfeiture upon the failure to pay rent, see G.S. § 42-3.
The judgment of the court below is reversed and this cause remanded for judgment in accord with this opinion.
Reversed and remanded.