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Professor Byron Warnken and Professor Elizabeth
Samuels
University of Baltimore School
of Law
| Citation |
Julian v. Christopher, 320 Md. 1, 575 A.2d 735 (1990). |
Parties
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Guy D. Christopher -- landlord, plaintiff at trial in District Court,
appellee in Circuit Court, respondent in Court of Appeals.
Douglas Julian and William J. Gilleland, III -- tenants, defendants
at trial in District Court, appellants in Circuit Court, petitioners in
Court of Appeals. |
| Disposition/Mandate
Sought |
Christopher/landlord: in trial court, an order granting
repossession of the leased premises, based on a finding of a breach of
the lease by the tenant. In Circuit Court, affirmance of the judgment
below. In Court of Appeals, affirmance of affirmance of the judgment.
Julian and Gilleland/tenants: in trial court, denial of an order granting
repossession. In Circuit Court, reversal of the judgment below.
In Court of Appeals, reversal of affirmance of the judgment. |
| Legal Theories |
Christopher/landlord at trial: Under the common law rule followed by
the Maryland Court of Appeals, when a lease requires a landlord's consent
for subletting, and is silent concerning acceptable bases for denying consent,
then the landlord may withhold consent for any reason, even an arbitrary
and capricious reason. Therefore, Christopher's withholding consent
was permissible, and the tenants' subletting of the premises constituted
a breach of the lease that entitled the landlord to repossession.
Julian and Gilleland/tenants at trial: not stated in opinion.
Presumably either (1) when a clause requires consent for subletting and
is otherwise silent, then a landlord may not refuse consent unreasonably,
or (2) the parties intended that under the consent clause in their lease
the landlord would only refuse consent in order to prevent subletting to
"someone who would tear the apartment up," or both.
Julian and Gilleland/tenants in Circuit Court: same as at trial.
Therefore trial court erred in entering judgment in favor of Christopher.
Christopher/landlord in Circuit Court: same as at trial. Therefore
judgment was properly entered by trial court.
Julian and Gilleland/tenants in Court of Appeals: same as at trial.
Therefore Circuit Court erred in affirming trial court.
Christopher/landlord in Court of Appeals: same as at trial. Therefore
Circuit Court properly affirmed District Court. |
| Procedure |
(a) Christopher/landlord sues in District Court for repossession of
premises leased to Julian and Gilleland/tenants.
(b) District Court judgment for Christopher/landlord.
(c) Julian and Gilleland/tenants appeal to Circuit Court for Baltimore
City.
(d) Circuit Court affirms District Court.
(e) Julian and Gilleland/tenants file a writ of certiorari to the Court
of Appeals of Maryland, which grants the writ. |
Legally Significant
or Key Facts |
Tenants Julian and Gilleland rented business premises from
landlord Christopher. The lease contained a "silent" consent clause,
i.e., a clause that required written consent of the landlord for a sublease
or assignment and that did not specify what would be acceptable bases for
denial of consent. The tenants requested permission to sublet part
of the premises. The landlord responded that he would not consent
unless they paid an additional $150/month. The tenants allowed the
sublessee to take possession anyway. |
| Issue(s) |
(a) Under Maryland law, is a landlord prohibited from unreasonably
withholding consent to a sublease or assignment when a clause in a lease
requires the landlord's consent but is silent with respect to permissible
reasons for refusal?
(b) Does this new rule prohibiting a landlord from unreasonably withholding
consent apply in this case in which the rule is adopted even though the
lease between the parties was entered into before the adoption of this
rule, when the landlord could withhold consent for any reason? |
| Holding(s) |
(a) Yes. Under Maryland law, a landlord is prohibited
from unreasonably withholding consent to a sublease or assignment when
a clause in a lease requires the landlord's consent but is silent with
respect to permissible reasons for refusal.
(b) Yes. This new rule prohibiting a landlord from unreasonably
withholding consent does apply in this case in which the rule is adopted
even though the lease between the parties was entered into before the adoption
of this rule, when the landlord could withhold consent for any reason. |
| Court's Rationale |
(a) In Jacobs v. Klawans, 225 Md. 147, 169 A.2d 67 (1961), the Court
followed the common law rule that when a lease specifies simply that the
tenant may not sublet or assign without the landlord's consent, then the
landlord may withhold consent for any reason, even if the withholding is
arbitrary and unreasonable. When that case was decided, most authorities
supported the rule.
Today, secondary authorities reject the common law rule and the modern
trend of judicial decisions is also to reject the traditional rule.
Now the current Restatement (Second) of Property states that the landlord
may not withhold consent unreasonably unless the parties have freely negotiated
a provision giving the landlord an absolute right to withhold consent.
Powell on Real Property now states that because landlord-tenant relationships
have become more impersonal, and because housing and commercial space have
become more scarce, modern courts strictly construe restrictions on tenants'Ôerty.
Whereas at the time of Jacobs v. Klawans most jurisdictions followed the
common law rule, the trend today is to impose a reasonableness standard.
(Louisiana, Alabama, and then eight of the next fourteen states to consider
the issue have imposed such a standard.)
Public policy requires that the landlord act reasonably when a lease
clause requires consent for subletting or assigning. If a landlord
may arbitrarily withhold consent, then the tenant's right to sublet or
assign is virtually nullified. Most tenants would expect that a landlord
under such a clause would be required to act reasonably and would not be
free to completely deny the right to sublet or assign.
There are two public policy reasons why the common law should be rejected.
First, public policy disfavors restraints on alienation. In the absence
of a consent clause, tenants may freely sublet or assign. Although
lease clauses restricting alienation are permitted, they are strictly construed
so as to favor tenants' rights of alienation. Secondly, in a lease
as in other contracts, there is an implied covenant of good faith and fair
dealing, which dictates a reasonableness standard in a lease that does
not specify a standard for withholding consent.
(b) The new rule applies to this case for two reasons. (1) If
the ruling were purely prospective it would be mere dictum. (2) The
tenants should benefit from their effort and expense in challenging the
old rule. Otherwise, there would be no incentive for a litigant to
appeal from a decision upholding a precedent. However, the new rule
should not be applied to this case if the landlord carries the burden at
the trial on remand of proving that he actually knew of and relied upon
the common law rule of Jacobs v. Klawans. |
| Dicta |
(a) Obvious examples of reasonable refusals to consent to
a particular sublease are: financial irresponsibility or instability of
the transferee and unsuitability or incompatibility of the transferee's
intended use of the premises.
(b) If the landlord refuses to consent to a sublease solely for the
purpose of increasing the rent, the refusal is unreasonable, unless the
sublease will necessitate extra expenditures by or more economic risk for
the landlord.
(c) The new Maryland rule prohibiting a landlord from unreasonably withholding
consent to sublease or assign applies, beyond this case, only to cases
involving leases entered into after the date of this decision.
(Leases entered into before the date of this decision should be interpreted
under the law that existed at the time the agreements were executed.
It would be unfair to upset those transactions, and the courts should protect
the right of contracting parties to rely on existing law.) |
| Separate Opinions |
None. |
Judgment/
Disposition |
Circuit Court judgment reversed, and case remanded to the Circuit Court
for that court to vacate the judgment of and remand the case to the District
Court for further proceedings. |
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