Fordham Law Review

Volume 17 Issue 1 Article 4

1948

Acceptance of Rent as Waiver of Notice

Thomas J. Snee

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Thomas J. Snee, Acceptance of Rent as Waiver of Notice, 17 Fordham L. Rev. 88 (1948).
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 COMMENTS
ACCEPTANCE OF RENT AS WAIVER OF NOTICE
THOMAS J. SNEEf

Of no little concern to attorneys engaged in handling real estate matters today

is the problem of advising clients who as landlords have served notices to quit
but are confronted with delay in initiating summary proceedings. Where this
delay is occasioned by administrative procedures related to the emergency
rent laws a considerable period of time may elapse in which the landlord Is
unable to institute his action and in such instances the question of accepting
rent from the tenant may well assume real significance. Recognition of the
general problem is seen in the enactment of Section 1410, subdivision 8 of
the Civil Practice Act,1 but that this Section will afford protection to the
landlord who accepts rent after notice but before service of the precept is,
however, questionable. 2 Expressed differences of opinion among members of
the bar as to the effect of acceptance of such rent, together with the apparent
absence of clear authority on the subject, have prompted this analysis of case
law with a view to ascertaining whether an historical approach to the problem
would indicate a sound yet realistic solution.

The Presumption of Waiver

Firmly entrenched indeed is the notion that acceptance by the landlord of
rent after the accrual of a right to repossession constitutes a waiver of that
right. The most rigid application of this presumption is seen in matters re-
lating to the right of entry for breach of covenant. An unqualified acceptance
of rent accruing subsequent to a known breach of condition contained in the
lease is, as a matter of law, a waiver of the right to declare a forfeiture and
re-enter. 3 In like manner have the courts adopted the position that acceptance

t Lecturer in Law, Fordham University, School of Law.

1. Civ. PRAc. AcT § 1410 (8): "The acceptance of rent during the pendency of any
proceeding under the provisions of subdivision one of this section, or after judgment or
an award of possession to the landlord, shall not of itself terminate such proceeding nor
affect any award of possession of the landlord." Goldsmith v. Deitchman, 69 N. Y. S.
2d 148 (County Ct. 1947); Greenberg v. Karnetsky, 188 Misc. 674, 71 N. Y. S. 2d S35
(App. Term 2d Dep't 1947), motion for leave to appeal denied, 70 N. Y. S. 2d 575 (App.
Div. 2d Dep't 1947).
2. Ward v. Ouderkirk, 70 N. Y. S. 2d 421 (Munic. Ct. 1947): "It is elementary that a
notice of termination is not part of a summary proceeding. It does not begin the pro-
ceeding."
3. Westdale Realty Corp. v. Labella, 188 Misc. 738, 73 N. Y. S. 2d 31 (County Ct. 1947);
Conger v. Duryee, 90 N. Y. 594 (1882). Exclusion of testimony offered to show receipt
of rent with knowledge of the breach is therefore reversible error. Stuyvesant 5th Ave.
Corp. v. Fine, 70 N. Y. S. 2d 97 (App. Term 1st Dep't 1947). Distraining for rent like-
wise waived the landlord's right of entry. Chase v. Knickerbocker Phosphate Co., 32
App. Div. 400, 53 N. Y. Supp. 220 (2d Dep't 1898).
1948] COMMENTS
of rent after the normal expiration of the term will generally effect a renewal
of the tenancy.4
The application of the concept of waiver to the notice to quit seems to have
had much support in legal thought even before the case of Goodright ex dem.
Ckzarter v. CordwentP in 1795. With Lord Kenyon's rejection therein of the
contrary position, however, the doctrine of waiver received general recognition.
So in Keith Prowse & Co. v. National Tel. Co.0 it was held that acceptance
by the landlord of rent for but one day following the expiration of the term
and after notice to quit operated as a waiver of the notice. The Goodright
decision received express recognition in New York in the case of Prindle v.
Anderson7 where it was likewise decided that the unqualified acceptance of
rent after the expiration of a notice to quit had the legal effect of a waiver
thereof. Approval of the doctrine is seen also in a dictum in the recent case of
Ferraro v. Trifiros where it was said that the landlord, by accepting rent for
a period subsequent to the time the monthly tenancy would otherwise have
terminated by notice to vacate, recognized the continuance of the tenancy
after the giving of the notice and could not rely on the latter as the notice
required by statute as a prerequisite to initiating summary proceedings.

Nature of the Presumption

While loose statements are not lacking which tend to create the impression
that the presumption of waiver is always a matter of law, the more carefully
reasoned cases indicate that, as with other presumptions, the mere acceptance
of money by the landlord from the tenant should not be considered apart from
its attending circumstances. To some extent this appears even in the cases
of breach of covenant. So the acceptance of rent which accrued prior to the
right of entry will not be held to constitute a waiver of the forfeiture.0 There
is no waiver unless at the time of the acceptance of the rent the landlord has
knowledge of the breach.' 0 Nor will receipt of rent raise the presumption
of a waiver where there is a continuing breach of covenant."' That even in
these cases of forfeiture the courts are occasionally loath to apply the doctrine
as a rigid presumption against a worthy landlord is seen in Manice v. Millent2
where the court assumed the position that the question of waiver of forfeiture
4. Stern & Co. v. Avedon & Co., 194 App. Div. 433, 185 N. Y. Supp. 392 (1st Dep't 1920),
aff'd, 231 N. Y. 546, 132 N. E. 882 (1921); Clarke v. Howland, 85 N. Y. 204 (1881).
5. 6 T. R. 219, 101 Eng. Rep. 520 (1795).
6. r18941 2 Ch. 147.
7. 19 Wend. 391 (N. Y. 1838), aff'd on other grounds without passing on this point,
23 Wend. 616 (N. Y. 1840). See also Paddell v. Janes, 84 Miisc. 212, 145 N. Y. Supp.
868 (Sup. Ct. 1914).
8. 60 N. Y. S. 2d 679 (Munic. Ct. 1946).
9. Bleecker v. Smith, 13 Wend. 530 (N. Y. 1835).
10. Fay v. Kots, 199 N. Y. Supp. 49 (Sup. Ct. 1923); Jackson ex den,. Church v.
Brownson, 7 Johns. 227 (N. Y. 1810).
11. Jackson ex dent. Blanchard v. Allen, 3 Cow. 220 (N. Y. 1824).
12. 26 Barb. 41, 46 (N. Y. 1857).
 FORDHAM LAW REVIEW [Vol. 17

through the acceptance of rent was one of intent: that although from the
payment and acceptance of rent it will ordinarily be inferred that both parties
recognized the lease as still valid, nevertheless the contrary may be shown
by express proof. And, although rare, instances do exist in which the courts
have refused to find in the mere acceptance of rent a waiver of the non-
observance of covenants. 13
The possible effect of clear manifestations of contrary intent upon the
presumption of waiver has received express recognition in the case of holdover
tenancies. Thus in Cole v. Sanford 4 the court observed that the presumption
of renewal of the lease for another year which arises from allowing the tenant
to retain possession and from the acceptance of rent is a rebuttable one and
that the lessor may be able to show that the tenant held over under terms
justifying eviction. The fact that the presumption emerging from the accept-
ance of rent from a holdover tenant is not conclusive but may be overcome
by the attending circumstances has received lucid and forceful treatment in
the recent case of Kennedy v. Kenderian.15
The hypothesis that a receipt of rent after notice to quit inevitably con-
stitutes a waiver of that notice occasioned vigorous and thoughtful challenge
from the very beginning. As early as 1775 Lord Mansfield, in Doe ex dem.
Cheny v. Batten,16 held that acceptance by the landlord of rent accruing after
the expiration date of the notice of termination of a tenancy did not necessarily
constitute as a matter of law a waiver by the landlord of his rights under the
notice, even though the money had been accepted eo nomine as rent. He
suggests instances in which the landlord accepted the rent "under terms" or
with an express declaration that he did not intend to waive the notice and
would still insist upon possession, or that fraud or contrivance existed on the
part of the tenant in making the payment, and then states: 17 "Clearly under
13. Curtis Realties v. Industrial Mill Products, 71 N. Y. S. 2d 781 (App. Term 1st
Dep't 1947) ; Importers and Traders' Ins. Co. v. Christie, 28 N. V. Sup. Ct. 169 (1867).
14. 77 Hun 198, 200 (N. Y. 1894).
15. 187 Misc. 861, 863, 69 N. Y. S. 2d 121, 123 (City Ct. 1946): "It is undoubtedly true
that sentences and phrases can be excerpted from a large number of cases in many juris-
dictions, which, standing by themselves, sustain tenant's position [that by acceptance of rent
for the month following expiration of the term the landlord exercised her option to treat
the respondent as a tenant and that, therefore, the tenancy of the respondent was one
for an additional year]. These statements, taken out of their context, would make It
appear that an acceptance of rent, by itself, irrevocably binds the landlord despite any
other considerations. . . . A careful reading of these cases shows that they do not
actually hold as strongly as tenant contends. The rule, supported by strong authority,
seems to be. . . . 'While . . . the payment by and acceptance of rent from a tenant hold-
ing over is generally held to create a tenancy for another term and to renew all rights
and obligations incident to the relationship of landlord and tenant under the original
lease, the presumption so raised is not conclusive but may be overcome by other circum-
stances attending the transaction which show that such was not the intention of tile
parties.'
16. 1 Cowp. 243, 98 Eng. Rep. 1066 (1775).
17. Id. at 245, 98 Eng. Rep. at 1067.
1948] COMMENTS
such circumstances the plaintiff ought not to be barred of his right to recover:
but all these are facts which ought to be left to the consideration of the jury."
In the same case, Ashurst, J., observed that the question whether the accept-
ance of rent is a waiver of the notice is a matter of intention of the parties
and, therefore, one of fact for the jury. Not only was the correctness of Lord
18
Mansfield's position recognized in Zouch ex dem. Ward v. Willingale, but
9
even in the Goodright' decision, Lord Kenyon conceded that if the tenant
had paid and the lessor received the money as satisfaction for the injury
done in retaining possession of the land as a trespasser, the lessor might, never-
theless, have recovered in ejectment.
In Prindle v. Anderson2 0 Cowan, J., expressly concedes the soundness of
Doe ex dem. Cheny v. Batten, in recognizing the fact that attending circum-
stances may make of the receipt of rent an equivocal act to be left to the jury
to determine whether it was intended as a waiver of the notice to quit, and
observes:21 "Had that been stated as a conditional or special receipt of rent,
in terms saving and reserving all rights under the notice, dearly the latter
would have remained good; for the landlord ought to have his rent for the
wrongful occupation, or rather as it would then stand, his damages, for he
would decline receiving it as rent eo nomidne." To a similar effect is the
holding in Bantjo v. Clark=- that the question whether or not a subsequent
demand by the landlord for rent constitutes a waiver of the landlord's rights
under a notice previously given to the tenant is a matter of intention, to be
determined by the trial court in summary proceedings to oust the tenant. An
intention not to waive was found in Sunkenberg v. Jesperscn:2 After the
expiration of the thirty-day notice, rent which had accrued since the expiration
date was accepted and the receipt therefor marked "without prejudice." It
was held that such payment did not constitute a defense.
18. 1 H. Bl. 311, 126 Eng. Rep. 183 (1790). Gould, J., stated (at 312): "In the mere
acceptance of rent, the quo animq is to be left to the jury agreeable to Lord Mansfield's
doctrine in the case in Cowper."
19. See note 5 supra.
20. See note 7 supra.
21. 19 VWend. 391, 394 (N. Y. 1838).
22. 88 N. Y. Supp. 135 (App. Term 1904).
23. 191 N. Y. Supp. 689 (App. Term 1st Dep't 1922). In Rosenbaum v. Parnes, III
Nisc. 374, 181 N. Y. Supp. 452 (App. Term 1st Dep't 1920), the landlord, after accepting
rent for the month of December, served on December 17 a notice of cancellation terminating
the lease as of December 27th, pursuant to a provision in the lease giving the right to
terminate by the giving of a 10-day notice. In Ginsburg v. Leit, 187 N. Y. Supp. 450
(App. Term 1st Dep't 1921), the landlord terminating a monthly tenancy did so by a
notice of more than thirty days. During the period of the notice the monthly rent be-
came due and was accepted. In both cases the right to maintain summary proceedings was
recognized. See also George Ringler & Co. v. Schmelzeisen, 123 Misc. 394, 205 N. Y. Supp.
419 (App. Term 1st Dep't 1924), and In re Schoelkopf, 54 Misc. 31, 105 N. Y. Supp.
477 (County Ct. 1907).
 FORDHAM LAW REVIEW [Vol. 17

Effect of Emergency Rent Laws

If, then, the presumption of waiver is essentially a matter of intention and
should yield in the face of circumstances evidencing an actual contrary intent,
there is immediately posed the question whether the effect of the emergency
rent legislation upon the relation of landlord and tenant constitutes such
"attending circumstances" as to affect the presumption.
24
A negative answer was given by an English court in Hartell v. Blackler,
25
only to be emphatically rejected in the case of Davies v. Bristow, in which
it was held that, in the case of a tenancy to which the emergency rent laws
applied, the acceptance of rent after the expiration of a notice to quit did not
constitute a waiver of the notice nor create a new tenancy.
The Davies decision was approved by the Court of Appeal in Skuter v.
Hersh,26 and also in the more
28
recent case of Morrison v. Jacobs,27 wherein
MacKinnon, L. J., stated:
"At common law, if at the expiration of a tenancy a landlord has acquired
a right to claim possession against his tenant and instead of exercising that
right he allows him to remain in the house and accepts rent from him as
before, the parties . . . may, with reason, be held to have entered into a new
contract of demise. But the essential factor in those circumstances is that
the landlord voluntarily abstains from turning the tenant out. When the
tenant remains in possession, not by reason of any such abstention by the land-
lord, but because the Rent and Mortgage Interest Restrictions Acts deprive
the landlord of his former power of eviction, no such inference can properly
be drawn. This Is the very obvious and cogent basis of the decision in Davies
v. Bristow."
Recognition by the courts of the twin presumptions of waiver of notice and
of renewal of tenancy arising from the acceptance of subsequently accruing
rent should, therefore, depend upon the basic circumstances that the tenant
has been occupying the premises with the consent of the landlord who at the
time of receiving the rent has freedom to terminate the tenant's possession,
the term of the lease having expired. Where these circumstances do not exist,
no inference of intent may validly be drawn.
What, then, is the situation in New York under the present emergency rent
legislation? An examination of relevant decisions reveals a view of the re-
lation of landlord and tenant resulting from the rent laws in essence identical
with that expressed in Morrison v. Jacobs. So in Stern v. Equitable Trust Co.20
there appears a clear recognition that by suspending possessory remedies and
extending the right of the tenant to retain possession of the premises against
the will of the landlord, the emergency rent laws destroyed that option on the
24. [1920] 2 K. B. 161.
25. [1920] 3 K. B. 428.
26. [1922] 1 K. B. 438 (1921).
27. [1945] 1 K. B. 577 (C. A.).
28. Id. at 582.
29. 238 N. Y. 267, 144 N. E. 578 (1924).
19481 COMMENTS

part of the landlord which was essential to the existence of the presumption
arising from the acceptance of rent accruing after termination of the lease.
As the court so strikingly puts it: 30
"The tenant does not offer to remain in possession of the premises. He
insists upon doing so. The landlord does not accept his proposition. The law
forces it upon him. The tenant does not offer any proposition to the land-
lord upon which the conventional relation of landlord and tenant . . . can be
inferred. To this extent the landlord is optionless and the tenant stands on
his statutory rights which become the measure of his term and of his liability."
Although the Stern decision involved the rent laws of 1920, the principles
therein expressed have been recognized as equally applicable to tenancies
controlled by the present rent legislation. Thus in Haussynan v. Rowland,3'
the court, in holding that acceptance of rent accruing after the expiration of
the term did not raise an implication of a new tenancy, declared that the
federal rent regulations effecting leases in defense-rental areas had with respect
to hold over tenancies created a situation similar to that under the emergency
rent laws of 1920, and quoted as relevant from the Stern case to the effect
that since the enactment of the emergency rent laws there is no such tenancy
as a hold over as formerly ,understood but rather that a tenant remaining in
possession after the expiration of his term becomes a "statutory tenant."
We see, then, in the New York statutory tenancy 32 exactly the same circum-
stances which caused the English courts to hold that the normally applicable
presumption of waiver of notice through the acceptance of subsequently ac-
cruing rent did not arise: that the right of the statutory tenant to retain
possession of the premises is independent of any consent or option on the part
30. Id. at 70, 144 N. E. at 578.
31. 183 Misc. 654, 53 N. Y. S. 2d 440 (Sup. Ct. 1944). See also Klipack v. Raymar
Novelties, Inc., 75 N. Y. S. 2d 418 (App. Div 1st Dep't 1947); Shelton Bldg. Corp. v.
Baggett, 188 Misc. 709, 71 N. Y. S. 2d 434 (App. Term 2d Dep't 1947); 130 West S7
Corp. v. Hyman, 188 Misc. 92, 66 N\7.Y.S. 2d 332 (App. Term 1st Dep't 1946). But cf.
Irish American Loan Ass'n v. Stanfield, 182 Misc. 363, 50 N. Y.S. 2d 494 (Sup. Ct. 1943);
Ferraro v. Trifiro, 60 N. Y. S. 2d 679 (Munic. Ct. 1946).
32. It is not contended that the mere existence of the emergency rent laws necessarily
affects the presumption of waiver of notice where the purpose of the notice is to ter-
minate a presently subsisting and effective lease before the date of its natural expiration.
If in such a case the right of eviction still exists there is no need, in the absence of
special qualifying conditions, for modification of the general rule. Where, therefore, the
circumstances are such that the rent laws recognize the right of the landlord to re-
moval of the tenant, the presumption may with reason be held to apply to the notice
of termination for breach of covenant. Davies v. Bristow, [19201 3 K. B. 428, 438;
Westdale Realty Corp. v. Labella, 188 Misc. 738, 73 N. Y.S. 2d 31 (County Ct. 1947);
and to the notice served pursuant to a provision of the lea-ce giving the lessor the right,
upon sale of the property, to terminate the lease before the normal expiration date.
Levin v. 123 East 54th Street, Inc., 75 N. Y. S. 2d 792 (App. Term Ist Dep't 1947);
John Melen, Inc. v. Acme Litho Plate Graining, Inc., 69 N. Y.S. 2d 647 (App. Term Ist
Dep't 1947).
 FORDHAM LAW REVIEW [Vol. 17

of the landlord; that, in fact, no option exists. Like those of the English
courts, our decisions have recognized that in such a situation the accept-
ance of rent after the expiration of the term creates no presumption of a new
tenancy. Yet the presumption of a waiver of notice traditionally arose on the
same inference: that by the acceptance of rent after the notice the landlord
was recognizing a new tenancy and thereby electing to create in himself and
in the tenant the rights and liabilities of such tenancy. 33 But if under the
emergency rent laws an acceptance of rent without a notice to quit gives rise
to no such presumption of consent to a new tenancy, certainly it would border
on the absurd to maintain that receipt of rent after a notice to quit does
raise such an inference.
Conclusion
A sound approach on the part of the courts to the problem of waiver of
notice through the acceptance of rent must, therefore, take into consideration
the facts upon which the presumption is predicated: that in a free economy
the rights of landlord and' tenant are determined by contract, express or
implied; that the right of the tenant to remain in possession of the demised
premises ends either by natural expiration or, in a periodic tenancy, by
notice to quit; that the notice to quit has, therefore, the effect of terminating
the rightful possession of the tenant and of causing him to assume the status
of a trespasser; that this status of trespasser was essential to the initiation by
the landlord of an action in ejectment or of summary proceedings. The notice
being revocable, and a receipt of rent eo nomine without reservation being in-
consistent with a contention that the tenant continues in the status of tres-
passer, there exists every, reason, under such circumstances, to hold that the
receipt of rent raises an implication or presumption of waiver of the notice.
But if those facts and circumstances upon which the theory of waiver is
predicated do not exist, adherence to the rule is unrealistic. And they do not
exist. Under the emergency rent laws, the tenant, at the expiration of the
term provided in his lease is not a trespasser. He is in rightful possession,
a possession not determined by or related to the will of the landlord. And
once the statutory tenancy has arisen, the notice to quit terminates nothing.
It does not convert the tenant into a trespasser. It affects no rights or lia-
bilities of the tenant. Its sole legal purpose would appear to be that of com-
pliance 34 with statutory requirements designed to control possessory rights
during periods of normal economy. Nor, finally, is there any inconsistency
between the service of a notice to quit and the recognition, through the receipt
33. And it most assuredly was this creation of mutual rights and obligations which
historically caused the courts to recognize the presumption. Under the present situation,
however, while an actual waiver of the notice might deprive the landlord of a right It
will create no rights or liabilities in the tenant since the latter are controlled by the
relevant rent regulations.
34. But on this point see Lewittes & Sons v. Spielmann, 73 N. Y. S. 2d 552 (App. Term
1st Dep't 1947), to the effect that compliance with the provisions of Real Property Law,
§§ 228 and 232-a is not necessary.
1948] COMMENTS
of rent thereafter accruing, that until the termination of the summary pro-
ceedings, the statutory tenant has, by reason of the emergency rent legis-
lation, a lawful right to occupy the premises.3 5
In the recent case of Boynzton v. Bassford the emergency rent regulations
prevented the landlord from commencing summary proceedings for several
months following the expiration date specified in the notice of termination
and the court held that since "he had no choice in the matter, no conclusion
as to an intent to waive the notice or renew the tenancy can be drawn from
the fact that he accepted rent during those months."3 7 Although in its refer-
ence to the absence of choice the court was probably thinking particularly
of the matter of time of initiating the proceedings, the decision, is, nevertheless,
sound and should be followed, but, it is submitted, on the broader ground
that in a statutory tenancy the nature of the holding and the status of the
landlord relative thereto make unwarranted the implication of such intent
from the mere fact of the acceptance of rent.

CORPORATIONS-STOCKHOLDERS' CONTROL BY AGREEMENT

Group business enterprises are conducted under various forms: the corpora-
tion, the partnership and unincorporated business associations such as the joint
stock company and the business trust. The really distinctive feature about
the corporation is that it is entirely the creature of the state.1 The other forms
of business endeavor result from the common law agreement of the members
even though the state may require certain acts on their part not actually affect-
ing their being.2 For certain purposes the federal and state governments and
the courts may even assimilate these business groups into the category of cor-
porations; 3 yet the outstanding characteristic of the corporation is that the
35. In Morrison v. Jacobs, [19451 1 K. B. 577 (C. A.), Scott, L. J., states (at 581):
"The true view is that the landlord takes the rent, knowing that the tenant is granted
a statutory tenancy by the Rent Restrictions Acts and that his right to gain possession
of his dwelling-house depends entirely on his establishing that he brings himself within
the conditions laid down by the Acts."
36. 188 Misc. 188, 67 N. Y. S. 2d 369 (App. Term 1st Dep't 1947).
37. Id. at 188, 67 N. Y. S. 2d at 370.

1. People ex rel. Winchester v. Coleman, 133 N. Y. 279, 287, 31 N. E. 96, 98 (1892).

In pointing out the distinction between a joint stock association and a corporation, Judge
Finch remarked: ". . . the one derives its existence from the contract of individuals, the
other from the sovereignty of the state." Chief Judge Cullen, writing for the court
in Ripin v. United States Woven Label Co., 205 N. Y. 442, 447, 98 N. E. 855, 856 (1912),
speaks of the certificate of incorporation as the instrument "by which the corporation
got life." In Benintendi v. Kenton Hotel, 294 N. Y. 112, 121, 126, 60 N. E. 2d 829,
832, 835 ((1945) (dissenting opinion), Judge Conway conceded that "Since corporations
are creatures of statute, their charters and by-laws must conform to the wlh of the cre-
ating power."
2. See, e.g., N. Y. GEN,. Ass'xs LAw § 4; N. Y. P-ax; LAw § 440-b.
3. "The term 'corporation' includes associations, joint-stock companies, and iniurinc