Mullendore Theatres, Inc. v. Growth Realty Investors Co.

691 P.2d 970 (1984)

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Nature of the Case

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Facts

In 1969, Conner became tenant of a part of the Jones Building in Tacoma under a lease that required a deposit of $22,500 as security for performance of the tenant's obligations. The lease provided should the Tenant default the landlord shall be entitled to apply said deposit on account of any damages, and in the event, the Tenant shall not be in default the deposit shall be returned and paid to the Tenant at the expiration of this lease. The lease also provided that all covenants in the lease would run with the land. Conner assigned to P. At that time, the deposit was reduced to $6,000. Before the assignment, the original landlord had transferred the property, and D acquired it when North Pacific defaulted on a note and deed of trust in 1975. D sold to the City of Tacoma. D agreed to indemnify the City for any liability it might have for the security deposit. P negotiated a new lease with the City. P released any claims it might have against the City for return of the security deposit but purported to reserve its claims against others who might be liable. Thereafter, it brought this action against D. The trial court held that the covenant to refund the security deposit ran with the land and bound D through the indemnification clause in the sales contract between D and the City. D appealed; the covenant did not run.