## Facts

- A commercial lease (July 1, 1977) leased premises in Lincoln, Nebraska to the original tenant, with rent including a percentage component based on gross receipts.
- The lease prohibited assignment, transfer, or subletting without the landlord’s prior written consent.
- In February 1985, the tenant ceased operating its supermarket chain and sought the landlord’s consent to assign the lease to a proposed assignee, who would sublease to a supermarket operator.
- The landlord did not provide written consent.
- The tenant nonetheless executed an assignment to the proposed assignee, and the assignee executed a sublease to the supermarket operator.
- The landlord notified the tenant, assignee, and sublessee that the lease was in default due to assignment and subletting without consent and served a notice to vacate.
- During the dispute period, the landlord accepted rent payments; the sublessee later argued waiver and estoppel based on that conduct.

## Issues

1. Under a commercial lease requiring the landlord’s consent to assignment or sublease, and lacking language authorizing arbitrary refusal, must the landlord’s refusal be made in good faith and be commercially reasonable?
2. Whether summary judgment was proper given factual disputes about the landlord’s reasons for refusing consent.
3. Whether acceptance of rent after learning of an unauthorized assignment/sublease may constitute waiver of default or estoppel against forfeiture.

## Decision

- The Nebraska Supreme Court reversed the summary judgment for the landlord and remanded.
- The court held that, absent express lease language granting an absolute veto, a landlord may withhold consent only upon a good-faith and commercially reasonable objection.
- The court concluded the lower court applied an incorrect legal rule by allowing refusal for any reason.
- The court held material fact disputes remained as to commercial reasonableness and as to waiver and estoppel from acceptance of rent.

## Legal Principles

- In a commercial lease requiring landlord consent to assignment or subletting, the consent power is limited by an implied duty of good faith and commercial reasonableness unless the lease expressly authorizes arbitrary withholding.
- Leases are construed under ordinary contract principles, including implied obligations governing the exercise of contractual discretion.
- Commercial reasonableness may consider, among other factors, the proposed transferee’s financial responsibility, the suitability and legality of the proposed use, the nature of the occupancy, and required alterations.
- Consent may not be withheld for ulterior purposes unrelated to legitimate property or financial interests.
- Waiver and estoppel issues related to post-breach conduct (including rent acceptance) may present fact questions that can preclude summary judgment.

## Conclusion

The court rejected an absolute-veto interpretation of a bare consent clause in a commercial lease and required the landlord’s refusal of consent to be made in good faith and be commercially reasonable, reversing summary judgment and remanding for fact findings on reasonableness and on possible waiver or estoppel.


Newman v. Hinky Dinky Omaha-Lincoln, Inc., 229 Neb. 382, 427 N.W.2d 50 (Neb. 1988)