## Facts

- A commercial lessor and lessee executed two written leases on March 20, 1971, each for a two-year term beginning May 1, 1971.
- One lease covered a one-story garage building and lot to be used for automobile storage; the other covered an adjoining vacant lot to be used for sale and storage of automobiles.
- The two parcels were leased contemporaneously for a single integrated used-car business purpose.
- Neither lease allocated the risk of loss or addressed rent obligations if the building was destroyed.
- On May 1, 1972, an accidental fire completely destroyed the garage building without fault by either party.
- The lessor demolished remaining walls, and the city required barriers that blocked access, impairing use of both the building lot and the adjoining lot.
- The lessee stopped paying rent under both leases, and the lessor sued for breach.

## Issues

1. Whether, absent a lease clause allocating risk of loss, accidental destruction of an essential leased building discharges the tenant’s duty to pay future rent.
2. Whether the tenant’s obligations under an interdependent lease for an adjoining vacant lot are also discharged when destruction and access restrictions defeat the integrated contemplated use.

## Decision

- The Supreme Court of Pennsylvania reversed the judgments for the lessor.
- The court held that complete accidental destruction of the essential building, with no contractual risk allocation, discharged both parties from further performance, including the tenant’s duty to pay rent.
- The discharge applied to both leases because they were interdependent and the destruction and barricading prevented the contemplated integrated automobile business use of either parcel.

## Legal Principles

- A lease may be treated as a contract for purposes of applying impossibility of performance and frustration of purpose.
- When the subject matter essential to the agreed, limited use is destroyed without fault and the lease does not allocate the risk, the parties’ remaining obligations may be discharged.
- Traditional rules requiring rent payment despite total destruction yield where enforcement would impose the entire unallocated loss on the tenant after the landlord can no longer provide the contracted-for premises.
- Separate lease instruments executed for a single integrated commercial purpose may be construed as interdependent so that a supervening event defeating the common purpose can discharge obligations under both.

## Conclusion

The court held that, because an accidental fire destroyed the essential leased building and the leases did not assign the risk of that loss, the integrated commercial purpose became impossible, discharging both landlord and tenant from further obligations under both related leases and relieving the tenant of liability for future rent.


Albert M. Greenfield & Co. v. Kolea, 380 A.2d 758 (Pa. 1977)