This problem is derived from Spaeder v. Tabak, 85 A.2d 654, 170 Pa. Super. 392 (1952). In Spaeder, the court held that a quasi-easement was created by the common owner which ripened into an implied easement upon severance. The degree of necessity needed for the creation of an implied easement was held to be merely "evidently necessary to the convenient enjoyment of the dominant estate" -- not "necessary" in its strict meaning. In Spaeder, there was evidence of payment of a "rental" of $1 per month for the use of the driveway by a predecessor in title of the present holder of the dominant estate. The court held that this transaction alone did not defeat the easement since there was insufficient evidence that the payment evidenced any final intention to abandon the easement.
The result in this question should probably comport with the Spaeder case. The effect of the rental payment, however, is troublesome. It could be considered a kind of accord and satisfaction. After all, the $25 in the question is somewhat more significant that the $1 that was paid in Spaeder. On the other hand, D did not have notice or knowledge of the $25 payment, and that C, by insisting on $50 (rather than $25) is also acknowledging that the $25 agreement is not applicable to D. Consequently, one can reasonably conclude that the $25 rental payment agreement has little or no relevance to D's rights. The important facts are that while A was the owner of both tracts, the old concrete driveway was apparent, its use was continuous, and upon the severance of the unity of ownership, use of the driveway was reasonably necessary for the enjoyment of lot 2. Thus all of the requirements for an implied easement existed, and a court should find in favor of D. This is especially so since courts would normally construe the deed to B (and hence to D) in favor of B, the grantee, and against A, the grantor.
A discussion of a license, while possibly relevant, may not be very helpful. If there is no easement, then the only possible argument for a right to use the old driveway is that D's right is in the nature of a license. Unfortunately, if C granted B a license, it was revokable, since B did nothing to suggest a change of position or expenditure of funds (no estopple). Thus when B sold to D, there was nothing irrevocable in any license given to B to transfer to D. There are no "implied licenses," C doesn't owe D a license. Since C didn't give D a license, D couldn't rely on that non-existent grant to his detriment.
As for advice: both C and D's lawyers ought to advise settling the dispute, as the right-of-way probably isn't worth the cost of any trial over the issue, and certainly isn't worth the combined cost to the parties. Since the outcome isn't certain, unless one is in an "absolute necessity" state, or unless C needs the old driveway for some terribly important use, the gamble isn't worth it - even if one wins, they lose. So, each lawyer ought to figure the worth of such easement (usually not too much, especially since A probably would have included the easement in the deed to B if asked), and negotiate for D to pay some smaller amount to C in exchange for a written, recorded easement. If one or the other refuses to negotiate, I'd make sure to get my retainer up front, before continuing the case.
To see the sorts of arguments courts and commentators have made on this subject, here are copies of some of the comments I put up on our "Virtual Classroom" this semester. Although I've edited out a number, you can see from these that there are very good arguments on both sides of this issue:
Comment: The rationale of the [no mitigation rule] was that the established rule ought not to be changed because parties to real estate contracts bargain with that rule in mind: "Parties who engage in transactions based on prevailing law must be able to rely on the stability of such precedents. In business transactions, particularly, the certainty of settled rules is often more important than whether the established rule is better than another or even whether it is the "correct" rule [citations omitted]. This is perhaps true in real property more than any other area of the law, where established precedents are not lightly to be set aside "
On the other hand, one might argue that residential tenants are not legal experts and cannot practically obtain legal advice in most cases. Therefore, their "established expectations" may not be based upon existing law as much as on a belief that the law will treat them fairly. It is worth asking the question whether the law does treat them fairly when it imposes on a residential landlord no duty to mitigate.
Comment 2: There is a good argument that landlords have the right to believe that they have "sold" their property for that "slice of time" represented by the lease, and that the rent represents the "sale price." In the vast majority of cases, the landlord will attempt to relet rather than hold a tenant liable for the balance of a lengthy lease. Rent money now is better than damages later. Consequently, the most common situation in which the court will find a breach of the mitigation duty is when the court disagrees with the landlord that the best economic solution to the tenant's default was not to leave the premises vacant for a time. Why should the court's judgment be substituted for that of the landlord. If the commercial landlord sees its best economic interests to be to leave the premises vacant, why should the court intervene?
Comment: I find it hard to accept the rationale offered for no mitigation. Why should the LL have the ability to hold the T hostage and increase his damages? I take this view despite the fact that I usually represent LL's but I think that it is unfair, even to a breaching T, if not in a commercial context, then certainly in a residential setting.
Comment: Sure, it's true that some commercially-leased properties are highly unique, but many are quite conventional, too. It's also true that in some cases, an abandoned commercial property may take a long time to relet, or may not relet at all. But none of those facts seem to me to justify the landlord's simply leaving the property vacant and continuing to hold the abandoning tenant liable for the full rent. The landlord ought to have (in both commercial and residential leases) a "duty" to make a reasonable effort to relet. If that effort doesn't result in a new tenant, so be it; the old tenant will still owe the full rent for the remainder of the term. No one is suggesting that the landlord has to remodel the property, or lease to an unacceptable tenant, or lease for an unreasonably low rent. The landlord merely has to be reasonable. What's so unreasonable about that?
Incidentally, I put the term "duty" in quotes above because the only consequence of the landlord's failure to comply with the "duty" is that the landlord may lose some or all recovery of rent from the old tenant. How much? The amount the landlord would have been able to recover from a new tenant if the landlord had acted reasonably. Sometimes that amount will be zero, and the old tenant, as noted above, will continue to be fully liable.
I understand that no one likes the idea of a court second-guessing whether he or she acted reasonably, but all of us are subject to that risk every day, every time we get in our cars, and in every professional service we render. I can't see any reason commercial landlords ought to be exempt.
Dale Whitman (Famous Commercial Law Scholar)
Comments: I have to take exception to Dale Whitman's comments that a landlord of commercial real property ought to have a "duty" to mitigate. I have a difficult time getting over the notion that the tenant's default ought not impose obligations on the landlord.
Reletting the property will usually be in the landlord's best interest, especially if the vacant space will have an adverse impact on surrounding properties of the landlord, as in, for example, a shopping center (especially a small one). However, the landlord will have a host of decisions to make in seeking a replacement tenant, including (i) whether he should invest in remodeling the premises (or offer the prospective new tenant an allowance ) and how that will affect the rent realized on the reletting, (ii) what kind of tenant should be sought for the space (will possibly affect tenant mix and the rent which the prospective tenant is willing to pay), (iii) whether to offer a longer or shorter term lease than the old tenant had (also affects rent), (iv) how the need to find a replacement tenant affects the landlord's plans for future use of the property (may have to offer a longer term lease than those plans allow), (v) whether the market and the other factors mentioned make it advisable to leave the property vacant until the right tenant can be found, etc.
These are decisions which a landlord with a duty to mitigate must make with the prospect of having a court second guess. Since the tenant's default created the situation, why should the landlord be at risk in trying to make the most of a bad situation.
Even if the landlord simply sat on his/her hands and did nothing in the way of reletting, the tenant's maximum exposure is to pay the rent which he/she agreed to pay in the first place.
Unlike a residential situation, where there is not only unequal bargaining strength, commercial tenants (many of whom have bargaining strength far superior to that of their landlords) can negotiate a provision in the lease requiring mitigation, but if he/she does not do so, the law ought not come down on the side of the party whose default set everything into motion in the first place.
I been very pleased with the thoughtful comments from both sides on this unresolved issue. Dale Whitman and I have cheerfully disagreed on this issue and one another's underlying assumptions regarding it for decades, now.
I have the following further points to add.
1) As indicated, few really think it appropriate to let large scale residential landlords out. Why? Partly it's bargaining power arguments. But I think also that there is the issue of fungibility of the product - more akin to the "typical" sale of goods situation. (And aren't laws drawn around the typical situation?)
2) Further, I think if the issue came up, many of those who advocate landlord's freedom not to mitigate would still see a duty on the part of the landlord to permit the tenant to mitigate through the tenant's own efforts. If, for instance, the tenant proposed a substitute tenant at the same rent, the landlord would have an implied duty to be reasonable in accepting it. The landlord would not have to accept if the original tenant was receiving additional compensation in the deal, since then the transfer would not be in mitigation. And the landlord would not have to lower the rent, either, and ought to be able to demand that the new tenant be obligated and able to pay the full rent. (The old tenant could partially indemnify the new one, of course). But if the theory of "no duty to mitigate" is that the landlord has "sold" the slice of time represented by the leasehold estate, then it seems to me that the tenant ought to be able to make some use of it. (I understand that there is a compromise of principle here - but hey! - call me Mr. Equity.)
3) But I do believe that the response to those who argue that this case is "just like the sale of goods case" is that property transactions (at least the central core of property transactions) involve unique interests with unique values and such transactions need not be treated the same as the sale of fifty gross of widgets. If I sell someone land on a time payment plan, and they later fail to pay, it is true I can foreclose on a mortgage if I wish, but in addition I can SUE ON THE NOTE!! I can collect the payments, because I sold the land. Why not view leaseholds in this light?
4) Finally, and this is more convincing to me, certainly, than to Dale Whitman and others, is the rubric "If it ain't broke, don't fix it." Leasehold law works just fine. There is no reason to tinker with it. No huge injustices are done in jurisdictions with the "no mitigate" rule. The parties work things out in most cases as reasonable business people can do. The landlord really does want the property back and put to productive use. The tenant really does recognize that the landlord has had to address issues that the landlord had thought were resolved for the term of the lease, and does, or ought to, acknowledge that the tenant should pay a price for this. There is no reason for all law to look like the UCC. In fact, there are plenty of reasons why it shouldn't.
5) Where landlords are vindictive or have malice in their making the decision to leave property vacant, there are, or ought to be, recognized remedies for these sorts of things. They happen less often than they are alleged by those who have suffered a business loss. But they do happen, and we ought to regulate them in order to encourage confidence in the marketplace. (If my proposal under (2) above were adopted, the tenant would have a way to address the issue anyway.)
I agree with Pat that this has been an excellent discussion, but I'm still not satisfied with the anti-mitigation arguments.
1. Many of the arguments have simply been that people should be held to their contracts. But contract law went well beyond that long ago. Much as one may dislike it - perhaps it hastens the ultimate decline of society by, to some extent, relieving people of their obligations - that particular point has long been rejected.
2. The crux of the matter, therefore, has to be whether leases are so different from other contracts that mitigation should not apply. Pat addresses that point as follows:
3) But I do believe that the response to those who argue that this case is "just like the sale of goods case" is that property transactions (at least the central core of property transactions) involve unique interests with unique values and such transactions need not be treated the same as the sale of fifty gross of widgets. If I sell someone land on a time payment plan, and they later fail to pay, it is true I can foreclose on a mortgage if I wish, but in addition I can SUE ON THE NOTE!! I can collect the payments, because I sold the land. Why not view leaseholds in this light?
I'm not convinced. I do have the advantage of never having been involved in sales of goods or in leasing - the good old ivory tower for me - but surely there are many sale of goods cases that are unique in comparable ways - types of goods, particular specifications, unusual quantities - yet mitigation principles would apply on breach. And the court would second guess whether the seller had acted reasonably with respect to his unique situation. To reiterate Dale Whitman's argument, what's so unreasonable about imposing the same duty on the landlord to act reasonably with respect to his similarly unique situation?
Pat also says:
4) Finally, and this is more convincing to me, certainly, than to Dale Whitman and others, is the rubric "If it ain't broke, don't fix it." Leasehold law works just fine. There is no reason to tinker with it. No huge injustices are done in jurisdictions with the "no mitigate" rule. The parties work things out in most cases as reasonable business people can do. The landlord really does want the property back and put to productive use. The tenant really does recognize that the landlord has had to address issues that the landlord had thought were resolved for the term of the lease, and does, or ought to, acknowledge that the tenant should pay a price for this. There is no reason for all law to look like the UCC. In fact, there are plenty of reasons why it shouldn't.
But the law is broke for the breaching tenant who is treated so differently from the breaching purchaser. Economic waste is greater. Landlords have the opportunity to let property sit idle if they are not required to mitigation. Pat says, essentially, that they will mitigate most of the time. Great, but I can just as easily use that point to argue for the requirement as against it.
Pat's point and my response include some empirical assertions about how serious the problem actually is. Does anyone really know those answers? The are crucial to the ultimate choice of law. It seems that the ultimate underpinning of the mitigation requirement is twofold: (1) fairness to defaulters who could be unnecessarily forced to spend money if mitigation was not attempted, and (2) a public policy to avoid economic waste. If, in fact, the total cost of imposing mitigation requirements - with the accompanying litigation costs and judicial second-guessing, would be greater than the economic waste that exists without the mitigation requirement, the second and part of the first justifications would be knocked away. But the assertion that everything works does not amount to a showing of the relative costs. Surely parties to all contracts generally try to work things out. Yet we require mitigation.
*Bill Jordan - University of Akron School of Law
See the discussion in and following the Martinez case (pp. 474-488, casebook). We talked about this in class, at some length, as well. My view is that the degree is clearly "property" in that, among other things, once you have it, the state must give you due process if it wants to take it away. The question of whether it ought to be included as marital property, per se, is much harder. There are valuation questions on the "no" side, and equity questions on the "yes" side, to begin with.