Question 1 (50 minutes suggested). Larry Lorton owned a small commercial building in the downtown business area of Erehwon City. The building had previously been rented to various retail tenants for $1,000 per month, but was vacant when Larry was approached by Tom Tennant, who was interested in operating a "Dino's" franchised fast-food restaurant in the space. (Dino's motto: "Eat Like A Dinosaur.") Tom had already paid for the franchise, but was worried about how much revenue he would earn in this new location, since he had never operated a restaurant before and there were no other Dino's stores in Erehwon.
To ease Tom's fears, Larry agreed that a major part of the rent would be based on sales in the restaurant. They struck a deal that Larry expected would generate about $1,000/month in total rent. The two signed the following lease:
January 1, 1995Tennant occupied the premises on January 1, 1995, and opened for business on January 15. However, after an initial flurry of customers, business was slow and Tennant began losing money. He paid the rent as it came due, including percentage rent of $550 for January, $700 for February, and $450 for March. But on April 1 Tennant moved out and turned over possession of the premises to Abner Able, who removed the restaurant equipment and signs and opened "Flying Toasters," a small appliance repair business in the space on May 1. Larry was entirely unaware of this transaction until he received the $200 fixed rent for May in the form of a check from Able. Able also began paying percentage rent as required by the lease. However, Able's gross sales have always been low, and the percentage rent he has paid during the past eight months has never exceeded $300.
Larry Lorton hereby leases to Tom Tennant the building at 120 Main St., Erehwon, for 5 years for use only as a restaurant. Rent shall be $200 per month payable in advance, plus 3% of Tennant's gross sales on the premises, payable 15 days after the end of each month. Tennant shall not sublet without Lorton's prior written consent. [Signatures added]
Larry has consulted you, asking what legal courses of action are open to him. He has no complaints about Able's possession of the space, but is very dissatisfied with the rent he is receiving. He believes the building should continue to generate at least $1,000 in monthly rent as it did in the past. He has no information about the transaction between Tennant and Able, but assumes that Able would supply such information if asked. Tennant remains in the area, although he is reported to be in weak financial condition as a result of his business misadventures. The business district of Erehwon is vibrant and the local economy is strong.
Please advise Larry concerning
the legal actions that he can take, evaluating their probability of improving
his financial posture.
Question 2 (50 minutes suggested). Harry and Wilma Carter were married in 1990. Later that year Harry's mother died. Her valid will stated "I leave to Harry and Wilma Carter, husband and wife, as joint tenants with right of survivorship, my land in the state of Erehwon." The decedent's only land in that state was a tract of 40 undeveloped acres covered with aspen trees. Subsequently the following events occurred.
(a) In 1992 Wilma spent $40,000 of her own funds building a vacation cabin on the land. Harry did not participate in this venture.
(b) In 1993 Wilma and Harry were divorced. The divorce decree made no specific mention of the land in Erehwon.
(c) In 1994 Harry purchased a new house in Erehwon City. Because it needed landscaping, Harry removed approximately 20 aspen trees from the land his mother had left, and transplanted them at his new house. Wilma did not consent to the removal, and was irate when she learned about it. She estimates that the value of the trees removed was $10,000.
(d) Later in 1994, while Wilma was walking on the 40-acre parcel, she noticed what appeared to be a Mason jar lid lying on the ground. She discovered that it was attached to a jar, which was nearly entirely buried in the ground. In the jar she found $5,000 in U.S. currency, all of which was issued prior to 1950. She kept the money and still has it.
(e) In early 1995 Wilma leased the cabin to Tom Tennant (you'll remember him from the previous question) for one year, and Tom has actually used it several times during the year. Tom paid Wilma $2,000 as advance rental for the year.
(f) Just two weeks ago, in December 1995, Harry was killed in an unfortunate accident. Harry left no will, but his brother Fred (who lives in a distant city) is his sole heir and next-of-kin.
Wilma has asked you to review these facts and advise her (1) who owns the 40-acre parcel of land; (2) whether there are any liabilities between her and Harry's estate as a consequence of their acts with respect to the parcel; and (3) whether Wilma is entitled (as against Fred) to keep the $5,000 she found in the jar. Please write your response.