Burgertown Franchise Corporation v. Earnest Investments, Inc.

Andy leases to Burgertown Franchise Corporation a 10,000 square-foot commercial building under a written lease with a twenty-year term, rent payable an­nually. The lease includes a clause stating that Burgertown is re­sponsi­ble for making all necessary repairs, including rebuilding the structure after its destruction by any cause beyond Andy’s control. The lease does not include a clause concerning its assignment. One day after the tenth rental payment, Burgertown, without Andy’s knowledge or consent, as­signs its interest in the lease to Chicken Hut Restaurants, Inc. Mean­while, Andy dies and Dotty inherits Andy’s interest in the building. Without the knowledge or consent of either Burgertown or Chicken Hut, Dotty sells the building to Earnest Investments, Inc. The next month, the building is destroyed in the flood of a nearby river. Burgertown rebuilds it and files a suit against Earnest for the expense. Earnest responds that the lease has terminated, and it is not responsible. Is Earnest correct? If so, when did the lease termi­nate? If not, is Earnest liable for the cost of re­building the structure? Why or why not? Discuss and explain your answer in detail.