Ellingson v. Walsh, O'Connor & Barneson

In Ellingson v. Walsh, O'Connor & Barneson, 15 Cal. 2d 673, 104 P.2d 507 (Cal. 1940), a partner who joined a partnership after the execution of a lease agreement contested his personal liability for a breach of the lease. The court, however, found that trying to determine when the obligation of a lease agreement arises, "overlooks the fact that a tenant of real property is not liable for rent solely by reason of the contract of lease. . . . One may become a tenant at will or a periodic tenant under an invalid lease, or without any lease at all, by occupancy with consent. Such tenancies carry with them the incidental obligation of rent, and the liability therefore arises not from contract but from the relationship of landlord and tenant. The tenant is liable by operation of law. . . . Both liabilities exist simultaneously. The lease has a dual character; it is a conveyance of an estate for years, and a contract between lessor and lessee. The result is that dual obligations arise[:] contractual obligations from the terms of the lease, and obligations under the law from the creation of the tenancy." 104 P.2d at 509. Thus, a party that signs a lease agreement is liable not only contractually for the covenants of the agreement by privity of contract, but also for rent under the creation of a tenancy by privity of estate. The court also found that although the original partnership expressly assumed the lease and was, therefore, liable both under the lease contract and as a tenant, the addition of a new partner caused the first partnership to be dissolved and a new partnership came into being composed of the old members and the new partner. "This second partnership did not expressly assume the obligations of the lease, but it occupied the premises. Whether it was liable contractually on the lease is immaterial; it became liable for rent as a tenant." Id.