Daily Development for Thursday, January 3, 2002

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

LANDLORD/TENANT; POSSESSION; EMBLEMENTS: Under the law of emblements, a tenant may remove its trees, nursery, and other farm stock after the lease has ended, without the need to pay rent to its former landlord, unless their lease provides otherwise.

AKC, Inc. v. Joel Opatut Family Trust, 337 N.J. Super. 381, 766 A.2d 1235 (Ch. Div. 2000).

A tenant leased farmland for the purpose of planting and harvesting trees and nursery stock. Upon termination of the lease, its landlord obtained an order removing the tenant from the leased property and compelling the tenant to diligently remove its trees and nursery stock. The landlord and tenant consented to an order enjoining the landlord from interfering with the removal process. Also, it was agreed to stay the issuance of a warrant of removal and the tenant consented to act with due diligence in removing its trees. The tenant employed 20 to 30 men, seven days of week, regardless of weather conditions, and within about two months cleared approximately 32 of its 40 acres. Once the remaining trees and shrubs began blooming, they could no longer be safely removed, and with the onset of fall, digging recommenced.

Even before all of the trees were removed, the landlord sought a resolution of its claim for damages. In particular, the landlord claimed it was unfair that the tenant continued to use the property, "albeit for the purpose of removing trees without the payment of rent." Therefore, the landlord sought an award of damages, based upon the continuation of rent, until all of the trees had been removed. In fact, the landlord also sought double damages on the theory that its tenant was wrongfully holding over after expiration of its lease.

In opposition, the tenant claimed "a legal right, notwithstanding the termination of the lease, to enter the property in order to harvest and remove its trees." The Court identified the "ancient property concept" involved in this case as falling under the "law of emblements." Essentially, "the law of emblements arose and provided the tenant with a right to his crops and their removal after termination of a lease." According to the Court, the most recent prior discussion on the subject appeared in a 1936 case where the facts were quite distinguishable.

Nevertheless, the Court extracted, from that case, the principle that resolution of such disputes must be "based upon two grounds public policy and a natural justice and equity." The Court, however, did not find this to be very helpful because "[w]hat is just or equitable is often in the eyes of the beholder." Reaching back as far as Blackstone, the Court in the 1936 case said, "the encouragement of husbandry ... being a public benefit, tending to the increase and plenty of provisions, ought to have the utmost security and privilege that the law can give it." Further, "that the tenant is justly entitled to gather his crops, even though his term has expired, and without regard to the question whether such crops are to be considered as in a nature of personality or realty," provided the second principle.

The Court also learned from the earlier case that, "the law of emblements is not applicable to one whose estate is terminated by his own act or default." In this more modern case, the Court was faced with a landlord that insisted "it should not have to tolerate the tenant's time-consuming removal of his trees and the tenant ought to be required to pay rent until all of his property is removed." The Court was tempted to consider that in modern times, society may have "a lesser deference for farming," than existed at the time of the earlier cases and was also troubled about its obligation "to follow a legal doctrine simply because it could be found in certain aged cases." Nonetheless, it felt that as a lower court it could not disregard or ignore those precedents, ultimately holding that the "law of emblements described by the older cases cited above not only is still binding upon the trial courts but also represents a salutary and equitable approach to the problem at hand."

Essentially, the Court recognized that the landlord and tenant understood that throughout many of their yearly leases, the tenant would plant thousands of trees and shrubs and that upon service of a notice to quit "it would be practically impossible for the tenant to remove all the trees and shrubs prior to the end of the lease term." The Court pointed out that the parties could have provided expressly, in their lease, for removal of the trees after the lease term, but they did nothing "other than leave the resolution of their present dispute" to common law doctrines.

Consequently, the Court held that the tenant was entitled to remove its crops. It also recognized that the process was taking longer than the landlord would have preferred, but also that there was no suggestion that the tenant was not moving with all deliberate speed. The only suggestion of fault or misconduct on the part of the tenant was that the tenant did not immediately commence removing its trees and shrubs upon receiving the notice to quit. Instead, the tenant, in error, urged that it had a right of first refusal. This incorrect assertion required the landlord to commence a tenancy action, delaying the tree removal for about three months. As a result, the Court crafted a remedy, compensating the landlord for that three month delay, but not for any other part of the extended time period during which the tenant was diligently removing its trees.

Comment 1: To the extent that the doctrine has modern application, it appears to be limited to leases for agricultural purposes. Presumably, parties engaged in arranging such leases know the laws in their jurisdiction concerning these issues. Nevertheless, itis quite common for landowners to "bank" property for future development while leasing it for continued agricultural purposes. Such owners may very well be city slickers (like the Editor) and fail to take into account the special rules that might apply to agricultural leases. As this case indicates, they do so at their peril.

Comment 2: In any event, as the court properly points out, both parties were negligent in entering into a series of one year renewals of the lease without taking into account the potential impact of non-renewal on the tenant's business. Obviously, the tenant would have suffered a great deal had the common law imposed that it requirement to remove the trees immediately upon termination of the lease or lose them. But, had this been the rule, the landlord would have had a problem as well, since a court would have seen injustice and inequitable loss in the application of such a rule here, and likely would have fashioned an approach that did not give the landlord its expectations. Thus, regardless of the underlying law absent lease language, it would have been better for both sides to work this issue out in advance.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1‑6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

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