Wisconsin Court of Appeals rules landlord can't recover from breaching tenant.

• Author: Ziemer, David

Byline: David Ziemer

Where a landlord charged a successor tenant higher rent, and failed to inform the original tenant, who breached the lease, that he was re-letting the premises for the tenant's benefit, the landlord unequivocally accepted surrender of the premises, and cannot recover damages from the original tenant, the Wisconsin Court of Appeals held on Sept. 22.

Susann M. Vander Wielen (landlord) owns a commercial building in Appleton. She leased a portion of the building to Ronald E. Van Asten (tenant) for his laundry and dry cleaning business in 1991. They extended the lease in 1997 through May 31, 2000. The extension allowed for an additional extension if the parties could agree to it by Mar. 1, 2000, but no extension was agreed to before that deadline.

Instead, before the lease expired on May 31, the tenant informed the landlord that he was attempting to sell his business and did not wish to enter into another long-term extension of the lease. The tenant told the landlord that he wanted to stay only until he sold his business.

The tenant continued to occupy the space through June and July of 2000, paying the rent called for in the expired lease for those two months, which the landlord accepted without comment. When the tenant's August rent payment was late, the landlord contacted him. The tenant informed the landlord that he had sold his business and that his successor would be paying the rent thereafter.

The landlord sent the successor a copy of the existing lease and a proposed new lease, to begin in September 2000 for a five-year term at a rent higher than the original tenant had been paying. The successor did not sign the new lease, but he did pay the landlord the higher rent specified in the proposed new lease from September 2000 through January 2001.

The successor vacated in January, and rent was not paid by the tenant or the successor for February through May 2001.

The landlord brought suit against the tenant for the unpaid rent. Outagamie County Circuit Court Judge Dennis L. Luebke agreed with the tenant that he did not become a year-to-year tenant in May 2000 and was thus not liable. In the alternative, even if a year-to-year tenancy was formed, the court held that the landlord accepted surrender of the premises and termination of the lease. The court also awarded attorney fees and costs to the tenant.

The landlord appealed, but the court of appeals affirmed, in a decision by Judge David G. Deininger. The court agreed...