Landlord and Tenant, Covenant to renew. Covenant. Damages, In contract. In an action against a lessor of real estate for a breach of a covenant, in a lease for one year, to execute before a certain date at the request of the plaintiff a new lease for the further term of two years at the same rent, it is no defense that before such request the lessor sold and conveyed the leased premises to a third person with notice of all the terms of the lease. In such an action it is not material to determine whether the plaintiff could enforce the covenant specifically against the defendant's grantee.
In an action for the breach of a covenant, in a lease to the plaintiff of a hotel in Florida for one year, to execute at the request of the plaintiff a new lease for the further term of two years at the same rent, where a breach of the covenant by the defendant was proved, it appeared that the property best could be used as a hotel for winter visitors and was intended so to be used, and that when the lease was made both parties understood that the plaintiff did not expect to make any substantial profit during the first year but did expect to do so during the next two years and that it was for this reason that the covenant for renewal was inserted. The plaintiff, who had had long experience in the hotel business, testified to his actual receipts and expenditures during the time that he was in possession of the hotel and as an expert testified to his opinion of what could be realized during the two following years and of the consequent value of the leasehold estate. Held, that in the assessment of damages the jury properly could consider the evidence of prospective profits and that this evidence was not so speculative or uncertain as to preclude the recovery of such profits as the plaintiff had shown that he would have realized.
In an action for the breach of a covenant, in a lease to the plaintiff of a hotel in Florida for one year, to execute before a certain date at the request of the plaintiff a new lease for the further term of two years at the same rent, it appeared that before such request the defendant sold and conveyed the hotel to a third person, who, two or three months before the date when the plaintiff was entitled to the new lease from the defendant, informed the plaintiff of his purchase and offered to give the plaintiff a new lease at a somewhat higher rent. The plaintiff refused to accept such a lease and demanded from the defendant performance of the covenant of renewal. There was evidence of prospective profits which the plaintiff was entitled to have considered by the jury. Held, that the plaintiff was not bound to accept the offer of the third person for the purpose of reducing the damages which otherwise he might claim, because until the time for the performance of the covenant he had the right to assume that the defendant would perform or would procure the performance of his obligation.
SHELDON, J.
It is not material to determine whether the plaintiff could have enforced specifically against the defendant's grantees her agreement to give him a new lease. However this might be, the defendant was personally liable upon her covenant, and her conveyance of the leased premises did not relieve her from that liability. Riley v. Hale, 158 Mass. 240. Jones v. Parker, 163 Mass. 564, 568. Carpenter v. Pocasset Manuf. Co. 180 Mass. 130, 133. See Manning v. Fitch, 138 Mass. 273; Tufts v. Atlantic Telegraph Co. 151 Mass. 269. The cases of Hickey v. Railway Co. 51 Ohio St. 40, and Sexauer v. Wilson, 136 Iowa, 357, relied on by the defendant, turned on what was regarded in those cases as the intention of the parties. We need not consider whether, upon similar facts, we should follow those decisions. No such intention appears in this case as was found there. It follows that the judge acted rightly in refusing the defendant's first, sixth and seventh requests for instructions, and in giving the plaintiff's first and second requests. And we find no error in the way in which the other requests bearing upon the issue of liability were dealt with.
Where a lessor has prevented the lessee from entering and occupying the leased premises, or where an owner of property has broken his agreement to give a lease thereof to a prospective tenant, the measure of damages in an action for this breach of contract, if no rent has been paid and if nothing further appears, is the difference between the actual value of the leasehold estate that should have been enjoyed and the agreed rental that was to have been paid therefor. Jewett v. Brooks, 134 Mass. 505. Riley v. Hale, 158 Mass. 240. Dodds v. Hakes, 114 N.Y. 260. Giles v. O'Toole, 4 Barb. 261. Denison v. Ford, 10 Daly, 412. Cilley v. Hawkins, 48 Ill. 308. This value, as in all cases in which the value of real estate or an interest therein is concerned, means the value for any and all uses to which the property is adapted and can readily be applied. If it is capable of being used in some particular way and has an enhanced value by reason of its availability for such use, the fact may be shown, and the value to be ascertained is the value thus enhanced; not because this is any other or greater value than the real market value of the property, but because it is the real value which is the subject of inquiry, and that value must depend much upon the nature of the property and its availability or adaptability for advantageous or profitable use. This rule generally has been applied where the value of property taken for a public use is to be determined, but it is not limited to such cases. Providence Worcester Railroad v. Worcester, 155 Mass. 35. Maynard v. Northampton, 157 Mass. 218. Blaney v. Salem, 160 Mass. 303. Sargent v. Merrimac, 196 Mass. 171, 178. The value of a leasehold estate, like that of any interest, is to be determined with reference to the use to which it can be most advantageously put. Manning v. Fitch, 138 Mass. 273. Tufts v. Atlantic Telegraph Co. 151 Mass. 269.
In this case both parties agreed that the property could best be used as a hotel for winter visitors, and that it was intended to be so used; and if that was so, the measure of damages was prima facie the value of the property for this use during the two years after June 1, 1910, over and above the rent which was to be paid therefor. That there might be some difficulty in fixing this value, or that its determination must be partly the result of an estimate rather than of an exact computation, does not affect the application of the rule. Magnolia Metal Co. v. Gale, 189 Mass. 124, 133. Hunt v. Boston Elevated Railway, 199 Mass. 220, 225. Page v. Johnston, 205 Mass. 274, 278. Putting the case in another way, the plaintiff has been prevented from making that use of the property which it was contemplated that he should make, and he is entitled to the damages which thus have been caused to him. Townsend v. Nickerson Wharf Co. 117 Mass. 501, 503. Kostopolos v. Pezzetti, 207 Mass. 277. Snow v. Pulitzer, 142 N.Y. 263. Stewart v. Lanier House Co. 75 Ga. 582.
Moreover, according to the evidence, both parties understood that the plaintiff did not expect to make any substantial profit during the first year, but did expect to do so during the next two years, and it was for this reason that the covenant for renewal was inserted. If so, the jury could give to him such prospective profits as it was fairly proved that he would have realized. This was the rule stated in Hadley v. Baxendale, 9 Exch. 341. And see Jaques v. Millar, 6 Ch. D. 153; Dexter v. Manley, 4 Cush. 14; French v. Connecticut River Lumber Co. 145 Mass. 261; O'Brien v. Worcester, 172 Mass. 348, 354; Speirs v. Union Drop Forge Co. 180 Mass. 87; Leavitt v. Fiberloid Co. 196 Mass. 440, 446; Hanson Parker v. Wittenberg, 205 Mass. 319, 327; John Hetherington Sons, Ltd. v. William Firth Co. 210 Mass. 8, 21.
The quantum of such prospective profits was not so speculative or uncertain as to preclude their recovery. Chaplin v. Hicks, 2 K.B. 786, 791, 795, 798. There was evidence of the actual receipts and expenditures during the time that the plaintiff was in possession. He testified as an expert to his opinion of what could be realized during the two following years and of the value of the leasehold estate in view thereof. Looking at the evidence of his knowledge and experience, we cannot say that this was wrong. The case comes well within the rule of Gagnon v. Sperry Hutchinson Co. 206 Mass. 547, 556.
Doubtless it could not have been shown with absolute certainty that the plaintiff would have made any or what amount of profits. As in the case of almost any business, this would depend upon his ability to make a large number of other contracts of a more or less favorable character with other persons. A falling off in the number of visitors to Florida might turn an anticipated profit into a loss. All of his expectations might be disappointed from the happening of divers other contingencies. Todd v. Keene, 167 Mass. 157. Fox v. Harding, 7 Cush. 516, 522. But these considerations were of equal weight in many of the cases above cited, and are not decisive as matter of law, however they might have been regarded by the jury.
The defendant's twenty-first request was rightly refused. The offer of the Anthonys to the plaintiff to give him a new lease at a somewhat higher rent was made in April, 1910. The defendant was not bound to give a new lease to the plaintiff until June of that year. The plaintiff, in spite of the prophecy made to him of a breach of the defendant's agreement, had until the latter time a right still to expect that she would not allow her engagement to be violated, and was not bound to accept the earlier offer of the Anthonys for the sake of reducing the damages which otherwise he might claim. This was expressly decided in Emory Manuf. Co. v. Salomon, 178 Mass. 582. To the same effect see Havemeyer v. Cunningham, 35 Barb. 515.
The other exceptions need not be considered in detail. In the opinion of the majority of the court, none of them can be sustained.
Exceptions overruled.