No. 359.

144 S.E.2d 636 (1965)

265 N.C. 570

Willie KEARNEY v. Gladys Aycock HARE.

Supreme Court of North Carolina.

November 10, 1965.

Attorney(s) appearing for the Case

Sasser & Duke, by John E. Duke and J. Thomas Brown, Jr.; Langston & Langston by W. Dortch Langston, Jr., Goldsboro, for defendant appellant.

Dees, Dees & Smith, by William L. Powell, Jr., Goldsboro, for plaintiff appellee.

LAKE, Justice.

It is the contention of the lessor-defendant that by holding over after the expiration of the original one year term on 15 November 1963, even though the rent for the full second year was paid on or before 9 December 1963, the lessee-plaintiff had only a tenancy from year to year, with no right of extension beyond 15 November 1964, other than that which is inherent in a tenancy from year to year, because he did not give to the lessor-defendant, at least thirty days prior to the expiration of the original term, written notice of his intent to extend the lease to a second year.

In the absence of a provision in the lease for an extension of the term, when a tenant under a lease for a fixed term of one year, or more, holds over after the end of the term the lessor may eject him or recognize him as a tenant. Murrill v. Palmer, 164 N.C. 50, 80 S.E. 55. If the lessor elects to treat him as a tenant, a new tenancy relationship is created as of the end of the former term. This is, by presumption of law, a tenancy from year to year, the terms of which are the same as those of the former lease in so far as they are applicable, in the absence of a new contract between them or of other circumstances rebutting such presumption. Williams v. King, 247 N.C. 581, 101 S.E.2d 308; Murrill v. Palmer, supra; Holton v. Andrews, 151 N.C. 340, 66 S.E. 212; Harty v. Harris, 120 N.C. 408, 27 S.E. 90. Such a tenancy may be terminated by either party at the end of any year thereof by giving notice of his intent so to terminate it thirty days before the end of such year. G.S. § 42-14.

On the other hand, where the lease provides that the tenant may, at his option, extend the term without requiring him to give notice of such intent, if the tenant holds over after the end of the original term and pays rent as provided in the lease, the presumption is that the option to extend the term of the lease has been exercised and the tenancy continues to be that created by the lease, the rights conferred by it continuing into the extended term. First-Citizens Bank & Trust Co. v. Frazelle, 226 N.C. 724, 40 S.E.2d 367. That is, the existence of the right to extend the term is a circumstance which rebuts the presumption of a tenancy from year to year.

When the lease provides that the tenant may extend its term by giving notice of such intent in a specified manner or by a specified time, or both, the giving of such notice is a condition precedent to the extension of the term and if it is not so given by the specified time the right to extend the term is cut off and cannot be revived by the unilateral act of the tenant. Elm & Greene Streets Realty Co. v. Demetrelis, 213 N.C. 52, 194 S.E. 897; Merchants Oil Co. v. Mecklenburg County, 212 N.C. 642, 194 S.E. 114. A holding over by him, without having given the required notice, nothing else appearing, has the same effect as if the lease had contained no provision for an extension of the term. Duke v. Davenport, 240 N.C. 652, 83 S.E.2d 668. The provision for notice of intent to extend the term being for the benefit of the lessor, he can waive notice. See: Merchants Oil Co. v. Mecklenburg County, supra; Holton v. Andrews, supra. However, his mere acceptance of rent subsequent to the expiration of the original term, even though at the same rate as provided in the lease, is not such a waiver. Elm & Greene Streets Realty Co. v. Demetrelis, supra.

Except as otherwise provided in the lease, the notice is not required to be in any particular form, it being sufficient that it shows a definite determination of the tenant to exercise his option to extend the term. Orr v. Doubleday, Page & Co., 223 N.Y. 334, 119 N.E. 552, 1 A.L.R. 338; Anno.: 1 A.L.R. 343; 32 Am.Jur., Landlord and Tenant, § 979; 51 C.J.S. Landlord and Tenant § 62c(2). In construing provisions of the lease relating to renewals and extensions the tenant is favored. First-Citizens Bank & Trust Co. v. Frazelle, supra.

In the present case the lease provides that the tenant may extend the term of the lease by giving the lessor "written notice of his intention to do so not later than thirty (30) days preceding the termination of this lease." We are brought, therefore, to the questions of whether he gave such notice and, if not, whether the lessor waived it.

It is stipulated that not only was the rent for the first year, 1963, paid, but "at the request of the lessor" the rent for the entire second year, 1964, was paid in the summer and fall of 1963, the final payment being on 9 December 1963. As early as 22 May 1963, at the lessor's request, the tenant and the lessor together signed a note to the Branch Banking & Trust Company for $500, all of the proceeds of which went to the lessor and which was paid in full by the tenant 1 November 1963 "out of the rents which otherwise would have been paid to the lessor for the crop year 1964." There being nothing to indicate the contrary, it must be inferred that this was the agreement of the parties when the note was made in May. Again, on 30 August 1963, three and a half months before the original term of the lease expired, the tenant "at the request of the lessor" gave the lessor his check for $100 as a payment on the rent for the second year, 1964. The check was a written instrument. Under the circumstances, it could not have been understood by the parties otherwise than as a definite declaration by the tenant of his intent to occupy the land for the following year, which he had the right to do by extending the term of the lease.

Even if the check be not regarded as a notice in writing of the tenant's "intention" to extend the term of the lease, we think the facts stipulated show clearly a waiver of further notice by the lessor. See, 32 Am. Jur., Landlord and Tenant, § 980. This is not the case of a landowner accepting a payment for the use of his land after the original term has expired and when the tenant has already lost his right to extend the lease and the lessor has acquired a right to be paid for the use of the land during the holding over. Here, the lessor requested the tenant to pay the second year's rent before the lessor was entitled thereto and while the tenant still had the right to give the notice specified in the lease. By requesting and accepting payment of rent for the second year under those circumstances, the lessor lulled the tenant into the belief that the extension of the term through the second year was an accomplished fact and so cannot, after the expiration of the time for giving notice, be heard to say that this condition precedent to extension has not been met.

The lease was extended to 15 November 1964 by this conduct of the parties and the extension carried with it the right to renew, year by year, for 1965, 1966 and 1967, by giving for each year the specified notice. Having that right at the time of the agreement of 30 July 1964 concerning the sale and retention by the commissioners of the $2,400, the plaintiff-lessee is entitled to have those retained funds paid to him.



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