## Facts

- Antoinette W. Davis leased premises in El Paso, Texas, to Dallas Brewery under a lease requiring rent payments to Davis.
- Dallas Brewery executed a written instrument stating it would “sublet, assign and transfer” the premises to Lewis Vidal.
- The instrument transferred Vidal possession for the remaining lease term and required Vidal to make payments equivalent to the rent due under the original lease.
- The instrument reserved to Dallas Brewery, upon Vidal’s default in rent, the right to cancel the transfer, pay rent to Davis, and retake possession.
- Vidal took possession but failed to pay rent, and Davis sued Vidal directly for unpaid rent, alleging Vidal was an assignee.

## Issues

1. Whether a transfer of the entire unexpired lease term, coupled with a reserved right to retake possession upon default, is an assignment or a sublease.
2. If the transfer is an assignment, whether the landlord may sue the transferee directly for rent accruing during the transferee’s possession.

## Decision

- The Supreme Court of Texas reversed the judgments for Vidal and remanded.
- The court held the Dallas Brewery–Vidal instrument operated as an assignment, not a sublease.
- Because Vidal was an assignee in possession, he was in privity of estate with Davis and could be held directly liable for rent accruing during his possession.

## Legal Principles

- Whether a transfer is an assignment or a sublease depends on its legal effect, not the parties’ labels.
- A transfer of the entire remaining lease term, without retention of a reversionary interest, is an assignment.
- A reserved right of re-entry or termination upon the transferee’s default is a condition subsequent and does not, by itself, create a retained reversion that converts an assignment into a sublease.
- An assignee in possession is in privity of estate with the landlord and is directly liable for covenants running with the land, including rent, for the period of possession.

## Conclusion

The court classified the transaction as an assignment because Dallas Brewery transferred the entire unexpired term to Vidal; the reserved right to retake possession upon default did not create a reversion. As a result, Vidal, as assignee in possession, was directly liable to Davis for rent accruing during his occupancy.


Davis v. Vidal, 151 S.W. 290 (Tex. 1912)