## Facts

- A landlord leased to a tenant, for a term of years, an entire building consisting of multiple apartments or units.
- The written lease contained no express provision requiring the landlord to place the tenant in possession on the commencement date.
- On the lease start date, some units were still occupied by other tenants and were not delivered to the tenant.
- The tenant took possession of only part of the building on the commencement date after the landlord represented and agreed that the remaining units would be delivered within a few days.
- The landlord failed and refused to deliver complete possession of all units.
- The tenant vacated and sued to recover (1) rent paid, (2) repair expenses she incurred, and (3) anticipated profits allegedly lost from the business she intended to operate from the full premises.
- The trial court awarded the tenant rent and repair costs but excluded evidence of anticipated profits and did not submit that claim to the jury.
- The landlord appealed the damages award; the tenant cross-appealed the exclusion of anticipated profits.

## Issues

1. Whether a lease of an entire multi-unit building implies a covenant that the lessor will place the lessee in peaceable and undisturbed physical possession of the entire building on the commencement date, and whether failure to do so is a material breach.
2. Whether anticipated lost profits are recoverable when the claimed profits relate to a business that was not established.
3. Whether the trial court erred in refusing the landlord’s requested jury instructions concerning the landlord’s duty and damages.

## Decision

- The court affirmed the judgment for the tenant awarding recovery of rent and repair costs.
- The court held that, where an entire multi-unit building is leased and the lease is silent on delivery of possession, an implied covenant requires the lessor to place the lessee in peaceable and undisturbed possession of the entire building at the commencement of the term.
- The lessor’s failure to deliver complete possession at the start date, and failure to honor the promise to deliver the remaining units shortly thereafter, was a material and entire breach of the implied covenant.
- The court affirmed the exclusion of evidence of anticipated profits because the alleged profits were from a business that was not established.
- The court held the instructions given correctly stated the law and the trial court did not err in refusing the landlord’s requested instructions.

## Legal Principles

- When a lessor leases an entire building consisting of several units and the lease contains no express covenant on delivery of possession, the lease implies a covenant to place the lessee in peaceable and undisturbed possession of the entire building on the lease commencement date.
- Partial delivery of possession on the commencement date, based on the lessor’s assurance that the remaining units will be delivered shortly, does not satisfy the implied covenant if complete possession is not delivered.
- Failure to deliver full possession under this implied covenant constitutes a material and entire breach.
- Anticipated profits are recoverable for interruption of a business only when the business is established; profits from a proposed or unestablished business are too speculative.
- A trial court does not err by refusing requested instructions when the instructions given correctly state the governing law.

## Conclusion

The court affirmed that a landlord who leases an entire multi-unit building must deliver actual, undisturbed possession of the whole premises at the start of the term absent an express lease provision to the contrary; failure to do so is a material breach supporting restitutionary damages, while anticipated profits are unavailable when the claimed business is not established.


Dieffenbach v. McIntyre, 254 P.2d 346 (Okla. 1952)