## Facts

- Jaber leased a Fort Smith commercial building for March 1, 1946 to March 1, 1951 at $200 per month; the lease terminated if the premises were destroyed by fire.
- In 1949, Jaber sold his business and executed an instrument titled “Contract and Assignment” transferring to Norber & Son “the aforesaid lease contract … for the remainder of the term.”
- As consideration “for the sale and assignment,” Norber & Son paid $700 cash and executed five $700 promissory notes payable at four-month intervals.
- Norber & Son agreed to pay the owner the $200 monthly rent; Jaber retained a contractual right to retake possession if rent or notes were not paid.
- The instrument did not address the parties’ rights if the building were destroyed by fire.
- Norber & Son later transferred their interest to Miller.
- Miller could not pay the $700 notes as due; he arranged to substitute fourteen $175 monthly notes (executed with the Norbers) for the remaining unpaid $700 notes.
- On December 3, 1949, the building burned; the owner–tenant lease ended under the fire clause.
- Miller sued to cancel the fourteen notes, asserting the Jaber-to-Norber transfer was a sublease and the notes were rent that ended when the premises were destroyed.
- The chancery court cancelled the notes; Jaber appealed.

## Issues

1. Whether the “Contract and Assignment” transferred Jaber’s leasehold as an assignment or created a sublease.
2. Whether the promissory notes were rent obligations extinguished by termination of the head lease due to fire, or consideration for a sale/assignment enforceable despite the fire.

## Decision

- The Arkansas Supreme Court reversed the decree cancelling the notes.
- The court held the Jaber-to-Norber transfer was an assignment, not a sublease.
- The court held the notes represented deferred consideration for the sale/assignment of the leasehold, not rent.
- Termination of the head lease by the fire clause did not discharge the contractual obligation to pay the assignment consideration absent an agreement to that effect.

## Legal Principles

- The governing test for distinguishing assignment from sublease is the parties’ intent as shown by the instrument and circumstances; transfer of the entire remaining term is strong evidence but not the exclusive determinant.
- Contract language expressly “transferring and assigning” a lease “for the remainder of the term,” especially in a document styled as an assignment, supports classification as an assignment.
- Where consideration is stated as payment for the “sale and assignment” of a lease and the transferee pays rent directly to the owner, promissory notes given to the transferor are treated as purchase-price obligations rather than rent.
- Termination of the underlying leasehold estate under a casualty clause does not automatically void separate contractual obligations to pay consideration for an assignment.

## Conclusion

The court held the transaction was an assignment and the notes were purchase-price payments for acquiring the leasehold, so the assignee’s successor could not cancel the notes based on the fire that ended the head lease.


Jaber v. Miller, 239 S.W.2d 760 (Ark. 1951)