
    The Harrison Bldg. Co. v. Beckerman et al.
    
      Landlord and tenant—Recovery of possession by lessor— Failure of lessee to execute surety bond before possession taken—Sufficient consideration for bond whether executed before or after possession taken—Waiver of surety company bond by acceptance of individual sureties—Uncompensated surety bond construed favorably to sureties— Evidence—Compromise negotiations inadmissible, but independent statements admissible, when—Letter relating to settlement negotiations reciting agreed terms inadmissible, when—Letter admitting concluded settlement admissible, when.
    
    1. Under lease giving lessor right to recover possession on failure of lessee to comply with terms of lease and requiring lessee to execute surety bond guaranteeing performance of terms, failure to execute bond would authorize lessor to regain possession, though lessee had continued in default in failing to furnish bond after taking possession.
    2. Under lease giving lessor right to recover possession on lessee’s failure to comply with any of its terms and requiring lessee to execute bond guaranteeing performance, bond, whether executed before or after lessee’s possession, would prevent lessor from regaining possession for failure to comply with condition requiring bond, and hence was based on sufficient consideration.
    
      3. Under lease authorizing lessor to recover possession on lessee’s failure to comply with its terms, provision requiring lessee to provide surety bond from reputable bonding company guaranteeing performance could be waived by lessor and bond from individual accepted.
    4. Where bond guaranteeing payment of rent by lessee recited execution of lease for period of one year while lease in fact covered three years, but provided that surety bond should be written annually, sureties were only liable for payment of rent accruing during first year, and requested charge that bond guaranteed rent for three years to extent of amount specified was properly refused.
    5. Where sureties on bond guaranteeing performance of written lease received no compensation for assuming liability, bond must be construed most favorably to them.
    6. In action against sureties to recover on bond guaranteeing performance of terms of lease, negotiations between parties for compromise are incompetent as evidence, though independent statements of fact which are material to the issue, made by party while negotiations for compromise are pending, are admissible as evidence.
    7. In action against surety on bond guaranteeing performance of lease, letter written by counsel for defendants relating to negotiations for settlement, reciting terms which had been, agreed upon for settlement, and containing no admission of independent facts, was inadmissible.
    8. If reliance is placed on concluded settlement as ground for recovery, letter admitting such settlement is competent evidence.
    (Decided January 17, 1927.)
    Error: Court of Appeals for Lacas county.
    
      Messrs. Bitter & BrumbacTc, for plaintiff in error.
    
      Mr. Joseph G. Gluch, for defendants in error.
   Richards, J.

The plaintiff in error was the plaintiff in the trial court, and brought the action to recover an amount claimed to be due on a guaranty of performance by the tenant of all provisions of a written lease. The lease was executed between the plaintiff and one Sam Wagner, as lessee, and bears date of September 23, 1924, and by its terms was to be in force from October 1, 1924, for a period of three years. The trial resulted in a verdict and judgment in favor of the defendants, and this proceeding in error is brought to secure a reversal of the judgment.

It is contended that the guaranty was without consideration and therefore created no obligation against the defendants, and this question is the most important one involved in the litigation. The lease, as has been stated, bears date of September 23, 1924, and the guaranty, which was specifically conditioned to secure the faithful performance of all the terms and conditions of the lease, including the payment of rent, bears date of September 29, 1924. While the lease did not become effective until October 1st of that year, yet it appears from the evidence that the lessee did in fact take possession with the consent of the lessor shortly after the execution of the lease, and it is urged that, the transaction having been closed prior to the execution of the guaranty, that instrument was without consideration.

The lease calls for a rental of $2,700 for the first year, and of $3,000 per annum for the second and third years, and contains numerous conditions and requirements. Among others, the lease has a provision that, if any rent shall be in arrear and unpaid, or if the lessee shall fail to keep and perform any of the covenants, agreements, or conditions of the lease, it shall be lawful for the lessor to enter into said premises and repossess the same, as if the lease had not been made. The lease also contains the following condition:

“It is one of the conditions of this lease that the lessee is to provide lessor with a surety bond in the amount of $1,000 from a reputable bonding company satisfactory to lessor, guaranteeing the faithful performance by lessee of all the terms, conditions and covenants of this lease; said bond to be written annually and deposited with lessor.”

Under the terms of this provision, the lessor, upon default of the execution of such a bond as is therein required, would have had the undoubted right to bring proceedings to regain possession of the premises leased; and this is true even though the defendant had continued in default in failing to furnish a bond after he had taken possession of the premises. It seems apparent, therefore, that the precise time of the execution of the bond to secure compliance with the terms of the lease was unimportant, so far as a consideration is concerned. Whenever executed by the lessee and accepted by the lessor, it would prevent an action by the lessor being maintained for the purpose of regaining possession of the premises because of a failure to comply with the condition to give a guaranty bond. Manifestly this was a sufficient consideration for the execution of the bond. This is particularly so in view of the provisions of the lease giving the lessor the right to recover possession upon failing to comply with any of the terms of the lease. Whether there would be a sufficient consideration in the absence of the provision for surrendering possession in the event of a failure to execute an acceptable bond, we need not inquire.

We see no reason, under the state of the record, why the trial judge should not have instructed the jury that the bond admittedly executed by the defendants had a valid and sufficient consideration. It is true that the lease calls for the bond of a reputable bonding company, satisfactory to the lessor, but this was a provision which the lessor could and did waive. It is also true that a surety company had executed a bond prior to the execution of the obligation on which this action is based, but that bond did not make the company liable for the payment of the rent and for this reason the bond was rejected by the lessor, as it had the right to do.

The bond executed by the defendants is in the sum of $1,000, and recites the execution of a lease for the period of one year from October 1, 1924, while the lease in fact covers a period of three years from, that date, but the lease itself provides that the surety bond shall be written annually. In view of the fact that the sureties on this bond received no compensation for assuming the liability, the bond must be construed most favorably for them, and, so construed, it only binds the sureties for the payment of rent accruing during the first year of the lease. The court therefore committed no error in refusing to give plaintiff’s request No. 1, to the effect that the bond of the defendants was a guaranty of the faithful performance of all the covenants of the lease, including rent for the term of three years, to the extent of $1,000.

In the amended petition, the plaintiff claimed $650 as the amount then due and unpaid for rent That petition, in addition to setting forth the execution of the bond and the facts showing liability thereon, pleaded an agreement made between the parties to the action whereby the sum of $750 was to be paid in settlement and discharge of the defendants on the bond. Thereafter a supplemental petition was filed, claiming $350 additional rent accrued, thus making the total amount claimed equal to the face of the bond.

Testimony was offered of conversations between the parties looking toward the settlement of the controversy, but this testimony was later withdrawn from the jury by order of the court, which ruling is assigned .as error. Certainly it is true that negotiations for compromise are incompetent as evidence; yet it is equally true that independent statements of fact which are material to the issue, even though made by a party while negotiations for a compromise are pending, are admissible in evidence. Whatever statements of independent facts were made during the negotiations should be allowed to remain in evidence. Weyant, Adm’x., v. McCurdy, 12 Ohio App., 491. In Kline v. State ex rel. St. Clair, 20 Ohio App., 191, 151 N. E., 802, this court followed the decision just cited.

The trial court excluded from evidence a letter written by counsel for defendants relating to the negotiations for settlement and reciting the terms which had been agreed on for the settlement. This letter contains no admissions of independent facts, and hence would not be admissible on that principle. Yet, if reliance is placed upon a concluded settlement as a ground for recovery thereon, a letter admitting such settlement is, of course, competent evidence.

We find no errors in the record except as indicated, but for these errors the judgment will be reversed and the cause remanded for new trial.

Judgment reversed and cause remanded.

Otjlbert and Williams, JJ., concur.  