
    VALIDITY OF UNRECORDED LEASES WITH PRIVILEDGE OF AN ADDITIONAL TERM.
    Common Pleas Court of Montgomery County.
    Staley, Crabb & Thomas v. Thomas Cusack Co. (two cases.)
    Decided, November, 1920.
    
      Pleading—Demurrer Applies to the Petition as it Stands Without Presumption as to Outside Facts—Leases toith Covenants to “Renew” and Covenants to “Extend” Distinguished—Actions by Foreign Corporations.
    
    1. Demurrer on the ground of la.ck of capacity to sue does not lie against a petition filed by a foreign corporation, where there is nothing on the face of the petition to show lack of qualification on the part of the plaintiff to bring an action in this state through failure to make certain filings as required by statute.
    2. A lease for one year with a privilege of renewal for an additional three years is not open to the construction that it is a lease for four years, and therefore invalid unless .written, acknowledged and recorded.
   Snediker, J.

These two cases are before the court on demurrers to the several petitions. The allegations of the petition in Case No. 46452 are to the effect:

“Plaintiff says that on or about January 1, 1919, it entered into a written contract with the defendant whereby it acquired for one year from said date exclusive advertising rights for the west wall of defendant’s store located on premises known as 1028 and 1031 .West Fifth street, Dayton, Ohio. That as a part of said contract, plaintiff was granted privilege of renewal of the same for an additional period of three successive years on the same terms.”

In Case No. 46480, the allegations of the petition are:

“Plaintiffs, Staley, Crabb & Thomas, says that it is a corporation engaged in display advertising by means of out door walls, bill boards; that its principal place of business is located in Indianapolis, Ind.; that defendant, The'Thomas Cusack Co., is also a corporation engaged in the same line of business as a competitor and rival of plaintiff, and has its principal place of business in the city of Chicago, 111.; that both plaintiff and defendant are engaged in said business in the city of Dayton, Ohio; that plaintiff has rights by virtue of certain written contracts with certain lessors to the use of certain walls in said city of Dayton, and also to the use of certain land in said city for bill board display; that in each and every one of said written contracts there is granted to the plaintiff, privilege of renewal of said lease or contract for three successive years on the same terms; that in each and every one of said contracts which is in writing, it has the privilege of renewal for one year from the respective dates hereinafter set forth, and has therefore in each and every case acquired a contract writing for one year from and after the respective dates of expiration hereinafter set forth.”

The grounds of the demurrers filed are in each ease:

1. That said plaintiff as shown by the petition has no legal capacity to sue, and if the court should find that this demurrer on that ground is not well taken, then,

2. That the petition does not state facts sufficient to constitute a cause of action.

Upon the argument of these demurrers, counsel for defendants made and endeavored to support two contentions. First, they say ants made and endeavored to support two contentions. First, that the plaintiff is a foreign corporation and these petitions do not show that it has complied with the law of Ohio with respect to filings required in order to qualify it to bring an action in this state. Neither of these petitions have anything to show with respect to whether or not plaintiff has so complied with the law. They do not on their face allege that it lias not so complied, and therefore, do not so show that it is unqualfied at this time - to bring an action in this state. We understand that a demurrer applies itself to the petition as it stands without any presumption as to facts outside of the petition. The old rule that a pleading must be taken more strongly against the pleader is not now so much observed as formerly, and.if it were, it would not serve the purpose of the defendants in their demurrers. If these petitions indicated on their face that plaintiffs had not made proper filings, then the demurrers would be well taken, but as they do not so show, the demurrers ought to be and are accordingly overruled in that regard.

The next point suggested by counsel was with respect to the invalidity of the lease set out in Case No. 46452. Defendants claim that a lease to the plaintiff for one year with the privilege of renewal of the same for an additional period of three successive years ought to be construed as a lease for four years, and that so construed it ought to be written, acknowledged and recorded.

Upon examining the authorities bearing upon the contention of counsel for defendant in this behalf, we have found some diversity of opinion of the courts of last resort with reference to the construction of a contract of this character.

The New York cases (principally) support counsel, and there is some comfort to be derived from the decisions of Massachusetts. Upon a careful consideration of the question, we are not prepared to follow these states. Speaking respectfully, we think that the courts last referred to, have overlooked to some extent, the meaning of the English language in rendering their opinions. The whole matter can be determined by a proper definition of the word “renewal.”

In the 68 W. Va., the Supreme Court at page 330, had the identical question before it. It was discussed as follows:

“Text writers, we believe, without exception, recognize, as do the decisions, the distinction between leases containing covenants to renew, on the same or different terms, and those containing covenants to continue, extend, or containing such words as ‘with the privilege to have,’ ‘with the privilege of keeping,’ ‘with the privilege if desired,’ or ‘at the option of the lessee for a further term.’ When the covenant is to renew it is generally regarded that the lease indicates the intention of the parties to execute a new lease, and as requiring of the lessee notice to the lessor .at or before the expiration of the lease'of his election to renew. Jones on Landlord and Tenants, Sections 337-339; taylor on Landlord and- Tenant, Section 406; tiffany on Landlord and Tenant, 1514; Underhil on Landlord and tenant, 1362. Jones, Section 338, substantially using the language of the Wisconsin court in Kellock v. Scribner, 98 Wis. 104, which opposes the rule of the Missouri and New Hampshire courts, says: ‘There is authority that the words (renew and extend) should be construed in accordance with their. ordinary meaning. Obviously, one means to prolong, or to lengthen out, the other, to make over, to re-establish, to rebuild; and those- courts and writers that have construed them accordingly certainly have the best of the argument, if the judicial construction is to follow the true defination of the words.’ ”

In the case of Harry Gray et al v. Maier & Zobelein Brewery et al, 2 Cal., App. Reports, page 683. The ease was a lease for two years, giving an option to renew at the expiration of the term to the party of the first part, the court held (page 658):

“The remaining point necessary for consideration presented by appellants is that the language in the lease, giving it the effect of extending the option to the second party, was a contract for a renewal and not an extension of the lease. With this contention we agree.”

In the case of Doe Dem Kingston Building Society v. Rainsford, 10 Upper Canada Queen’s Bench Reports, page 236, the same construction was placed upon a covenant to renew at the end of the term.

Upon examination of the case of Swetland & Sons Co. v. The Broynx Realty Co., 17 O. C. C. (N. S.), page 247 (which was affirmed without opinion, 86 O. -S., 313), we are of the opinion that the same question was decided in .the same way by that court. They had before them a lease which was for three years with an option to the tenant to renew or extend the time for another like period; and upon examination of the case found in 162 Mass., Section 473 they state:

“Nor do we perceive any reason for holding that the demise of the term is invalidated by annexing thereto the additional agreement to lease property for an additional period.”

On the whole we are of the opinion .that the demurrer to the petition in Case No. 46452, and the demurrer to the petition in Case No. 46480, should be overruled, and an entry may be drawn accordingly.  