## Facts

- The original lessor leased theatre premises to R.D. Craver for a five-year term, with a covenant prohibiting assignment or subletting without the lessor’s consent and permitting reentry upon specified defaults.
- The lessor later conveyed the fee interest to Childs and others, who became the lessors.
- Craver assigned the lease to Warner Bros. Southern Theatres, Inc.; the lessors expressly consented, and Warner Bros. took possession and paid rent.
- Warner Bros. later reassigned the lease to Carolina Theatres, Inc., which took possession; Warner Bros. had paid rent accrued up to that reassignment.
- The lessors were notified of the reassignment and allowed Carolina Theatres to pay rent directly, but stated they would continue to treat Warner Bros. as responsible under the lease.
- Carolina Theatres entered receivership, and $450 in rent remained unpaid at the end of the term.
- The lessors sued Warner Bros. for the unpaid rent; the trial court entered judgment for the lessors, and Warner Bros. appealed.

## Issues

1. Whether a lease covenant restricting assignment without the lessor’s consent, expressed to bind the lessee’s “heirs and assigns,” binds an assignee of the lease.
2. Whether the lessor’s consent to the first assignment waived the anti-assignment restriction as to later assignments.
3. Whether the original assignee (Warner Bros.) remained liable to the lessors for rent after reassigning the lease to Carolina Theatres.

## Decision

- The Supreme Court of North Carolina affirmed the judgment for the lessors.
- The covenant restricting assignment, drafted to bind “heirs and assigns,” bound Warner Bros. as an assignee.
- Consent to the Craver-to-Warner Bros. assignment did not eliminate the lessors’ right to insist on consent for later assignments under this lease.
- Warner Bros. remained liable for the unpaid rent despite its reassignment to Carolina Theatres and Carolina’s receivership.

## Legal Principles

- A lease covenant restricting assignment without the lessor’s consent, when expressly made binding on the lessee’s “heirs and assigns,” binds assignees who take the leasehold interest.
- A lessor’s consent to an initial assignment does not necessarily waive the requirement of consent for subsequent assignments where the lease’s covenants are structured and expressed to bind assigns.
- An assignee who accepts a lease remains liable to the lessor on covenants running with the leasehold (including rent) unless the lessor releases the assignee; a later reassignment does not, by itself, discharge that liability.

## Conclusion

The court held Warner Bros. liable for the unpaid rent because the lease’s restriction on assignment bound “heirs and assigns,” the lessors’ consent to one assignment did not waive control over later assignments, and Warner Bros. was never released from liability on the lease’s rent covenant.


Childs v. Warner Bros. S. Theatres, Inc., 200 N.C. 333, 156 S.E. 923 (N.C. 1931)