A Curious Miscellany of Items Philosophical, Historical, and Literary

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Friday, June 12, 2015

Slumlords and Deadbeats

Chancellor James Kent (1763-1847)
I was recently reading volume three of James Kent’s Commentaries on American Law (1826-1830, 4 volumes) — don’t ask — when I came across his chapter on rent. Engrossing stuff. No, seriously. Kent often does not say much on a given topic that is particularly original, but he has a nice, perspicuous way of laying things out. In this case he treated two particular aspects of rent that I’d probably read about in Blackstone and Coke and other places, but for some reason Kent made me pause and think about them more than I did previously.

First, Kent discussed the once-vexed question of whether a tenant must still pay rent if some misfortune befalls him that is no fault of his, but which prevents him from enjoying the use of the property he rents. He cites the case of Paradine v. Jane (1647). During the Civil War, Jane, the tenant, has his lands occupied by Prince Rupert’s forces for three years, during which time it was plundered. His landlord, Paradine, sued for non-payment of rent. Part of the court felt that Jane shouldn’t have to pay for something he didn’t receive, namely the use of Paradine’s land. However, Justice Rolle’s opinion prevailed, which was that Jane was still liable, since he had undertaken to pay the rent, and his misfortune was not the fault of his landlord.

The fact of the matter is, there has been loss. The question was, at whose feet should that loss be placed? Rolle placed it with the tenant, on the grounds that in agreeing to the lease, he was ipso facto assuming the risk that something might prevent him from enjoying the land.

But by the same reasoning, it could have been placed with the landlord, since he too is a party to the lease; it could just as easily be argued that the landlord thereby ipso facto assumes the risk that misfortune might prevent his tenant from paying his rent. This, in conjunction with the fact that the tenant ultimately has not gotten what he bargained for would seem in my mind to tip the balance in favour of the tenant being relieved and placing the loss with the landlord.

Nevertheless, Rolle’s position became the settled law on the matter. Kent agrees with him, but perhaps sensing the inadequacy of the rationale, offers a different reason of his own, a public policy argument based on the concept of what we now call “moral hazard”. He writes,

“The loss of the rent must fall either on the lessor or lessee, and there is no more equity that the landlord must bear the loss of the property destroyed. The calamity is mutual; and there is much weight in the observation… that these losses… may often proceed from the carelessness of tenants; and if they can escape from the rent, which they may deem inconvenient, by leaving the property carelessly exposed, it might very much lessen the inducements to a reasonable and necessary vigilance on their part.” (pp. 373-374)
In other words, even though Jane was not responsible for the waste to the land, tenants too often are responsible for waste, and holding all tenants strictly liable for rent will ensure that they take care of the properties they rent.

This reasoning is specious. For one thing, it relies on an empirical claim that is by no means obvious — that “punishing” a non-negligent tenant with strict liability will somehow discipline negligent tenants into being more conscientious. If anything, it’s just as likely to make the conscientious tenant more negligent, since the law seemingly punishes both conscientiousness and negligence indiscriminately. For another thing, a non-negligent tenant like Jane could rightly question why he must, through no fault of his own, be made a sacrifice to public policy. Let negligent tenants be punished for their negligence; do not punish the tenant who is reasonably conscientious but merely unfortunate.

Given that, as Kent puts it, “the calamity is mutual”, and that the risks and burdens of loss could equally be placed with either the landlord or the tenant, it is somewhat surprising that a third possible doctrine did not do better against these alternatives, namely a division or apportionment of the loss between the two parties. Apportionment makes considerable sense, since neither of the parties can be said to be at fault, and since equally there is no clear rationale for making either party bear the whole loss. I suppose it shouldn’t surprise me that strict liability beat out apportionment, and that the common law is once again found to favour the propertied.

Kent eventually moves from the subject of strict liability to that of distraint (or “distress”), the landlord’s right to seize a tenant’s moveable chattels for non-payment of rent. Here he notes something unusual about the remedy that I’d never stopped to consider before. Think of the typical remedies the law offers to any other kind of contractual breach. Let’s say I agree to deliver a shipment of widgets to Bob, and Bob in turn agrees to pay me on an agreed day after shipment. The agreed day passes, and Bob does not pay up. Can I enter Bob’s property and help myself to whatever articles I find therein to make up my loss? No, in common law that would be trespass and theft. And yet this is more or less what the common law allowed landlords to do when they didn’t get their rent. (Of course, in modern times the severity of this common law remedy has been fenced around and altered unrecognizably by various local statutory regimes, such as landlord-tenant tribunals, etc.).

Kent believed that the anomalous nature of the remedy of distraint was a relic of feudalism:

“The exorbitant authority and importance of the feudal aristocracy, and the extreme dependence, and even vassalage of the tenants, was the occasion of introducing the law of distresses, and which summary remedy is applicable to no other contracts for the payment of money, than those between landlord and tenant.” (p. 378)
Recognizing its severity, Kent notes that the law gradually developed limitations on the landlord’s right of distraint. For example, he could not take the tenant’s tools and implements of work or trade, nor could he seize his beasts of burden if other movables were available, as these would effectively disable the tenant from ever paying his debt. He could not remove distrained goods from out of the tenant’s county or jurisdiction, nor could he seize goods whose value was more than the unpaid rent, etc.

Kent sees these limitations as a softening of feudal law in favour of equality, and to some extent this is probably true. However, some of the “limitations” on distraint aided the landlord as much as the deadbeat tenant. For example, the statute De Districtione Saccarrii [51 Hen. III] allowed a landlord to impound a tenant’s cattle or other animals, but allowed the tenant access to feed them. Was this for the tenant’s sake, or the landlord’s? I suspect the latter. It relieved the landlord of a financial burden. He could not let the beasts starve, since, for the time being at least, they weren’t his to destroy. And if he was ultimately unable to extract the unpaid rent, he’d have to sell off the animals to recoup his losses, which he would have difficulty doing with dead or starving animals. In the meantime, feeding them could be an expensive proposition. Best to download this responsibility onto the already indebted tenant.

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If you ever get the urge to read Kent, I should warn you of the following:

  1. Healthy people do not typically get urges to read such things. You should consider seeking help.
  2. If you are reading the original 1826-1830 edition (or a facsimile thereof), be prepared for at least one typo per page. It was wretchedly put together by blind typesetters. I mean, we’re talking not just about the odd random misspelling. but about upside down types, misnumbered or unnumbered footnotes, mistitled chapters in the table of contents, and a maddening tendency to spell “statute” as “statue”. However, there is a marked improvement in the fourth volume, the result it seems of a change of printers.
  3. He devotes an inordinate amount of space to maritime law, marine insurance, marine loans, and the like. Given that the author was from New York, which at the time was (and still is) America’s centre of commerce, his interest is understandable. But I find such topics boring.