Ernst v. Conditt
390 S.W.2d 703 (1964)

  • Ernst leased a plot of land to Rogers to build a go-kart track. The lease was for one year, did not give Rogers the right to sublet without written approval, and made Rogers responsible for cleaning up the property after he was done with the lease.
  • A month later, Rogers got tired of running a go-kart track and sold the business to Conditt.
    • Conditt and Rogers went to Ernst and modified the lease. It was now for two years, and stipulated that Rogers would remain liable for the lease, if Conditt failed to pay the rent.
  • Conditt paid the rent for three months. He then abandoned the property without cleaning it up. Ernst attempted to hold Conditt to the terms of the lease and recover back rent, but failed. Ernst sued Conditt for the total amount of unpaid rent on the two year lease as well as the cost of removing the go-kart track (about $7k total)
    • Ernst claimed that Conditt was directly liable, since the modification to the lease made Conditt an assignee of the original lease.
    • Conditt claimed that his agreement with Rogers was a sublease and Ernst should go sue Rogers, who was the original lessee.
      • The contract modification did specifically use the word “sublease” and explicitly held Rogers liable.
    • If the contract modification was a sublease, then there was no privity between Ernst and Conditt so Ernst could not sue for breach of contract. Ernst would have to sue Rogers, (who could then sue Conditt). If it was an assignment, then privity exists and Ernst could sue Conditt directly.
  • The Trial Court found that the contract modification was an assignment, and therefore Conditt is directly liable. Conditt appealed.
  • The Appellate Court affirmed.
    • The Appellate Court looked past the plain meaning of the lease and attempted to ascertain the intentions of the parties.
    • Rogers retained no interest in the lease and did not reserve any right of reentry in event of a breach of any of the conditions. Without any interest, the contract modification was an assignment, not a sublease.
      • The fact Rogers agreed to remain liable didn’t give him any interest in the lease.
      • The parties were relatively unsophisticated and probably didn’t comprehend the legal differences between a sublease and an assignment when they wrote the contract.
  • Basically, an assignment occurs when a lessee transfers his entire interest under the lease (including right to possession for the duration of the lease). If the lessee transfers anything less than their entire interest (for example only one year out of a two year lease), then it is a sublease.