A04-1063

Jerry Cullen,

Respondent,

vs.

Gene Eder,

d/b/a Splat, You’re Out,

Appellant.

Filed March 29, 2005

Affirmed

Kalitowski, Judge

Anoka County District Court

File No. C7-03-6280

Joseph A. Wentzell, Suite 201 Anthony Place, 2855 Anthony Lane South, St. Anthony, MN 55418 (for respondent)

Kenneth M. Wasche, 14735 Highway 65 Northeast, Suite 300, Ham Lake, MN 55304 (for appellant)

Considered and decided by Klaphake, Presiding Judge; Kalitowski, Judge; and Peterson, Judge.

U N P U B L I S H E D O P I N I O N

KALITOWSKI, Judge

Appellant Gene Eder, d/b/a Splat, You’re Out, claims that the district court erred in granting summary judgment in favor of respondent Jerry Cullen for the amount of $15,000 in unpaid rent, which appellant contracted to pay respondent for use of leased premises during November and December of 1999. We affirm.

D E C I S I O N

“On appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the lower courts erred in their application of the law.” State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).

A motion for summary judgment shall be granted when the pleading, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to a judgment as a matter of law. On appeal, the reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted.

Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).

Appellant and respondent entered into a lease for a commercial retail property located in Blaine, Minnesota, on September 9, 1999. Appellant agreed to pay respondent $7,500 per month on the first of the month for a term of three years starting October 1, 1999. The next day, appellant and respondent entered a second contract in which appellant agreed to pay respondent $2,500 immediately and $5,000 on October 1, 1999. Additionally, appellant agreed to pay respondent $15,000 for rent accrued in November 1999 and December 1999 on October 1, 2002. It is undisputed that appellant never paid respondent the $15,000 for rent owed for these two months.

Appellant argues that because respondent subsequently mortgaged the property and assigned appellant’s lease payments without reservation to his bank, respondent may not now assert a claim for the unpaid rent. We disagree. Respondent’s assignment of the rents only served as additional security for respondent’s mortgage. And Minnesota law provides that “[a] mortgage of real property is not to be deemed a conveyance, so as to enable the owner of the mortgage to recover possession of the real property without a foreclosure, except as permitted in subdivision 2.” Minn. Stat. § 559.17, subd. 1 (2004).[1] Further, “[a] mortgagor may assign, as additional security for the debt secured by the mortgage, the rents and profits from the mortgaged real property [subject to certain conditions].” Id. at subd. 2 (2004).[2]

Here, the assignment of rents as a security did not affect the lessee’s obligations to pay rent to the lessor absent the lessor’s default on an obligation secured by the rents. And it is undisputed that appellant continued to pay his rents directly to respondent after the assignment. Thus, we conclude that respondent’s assignment to his bank as security for his mortgage did not affect appellant’s obligation to pay respondent rents.

Appellant also argues that because respondent sold the property before the $15,000 became due on October, 1, 2002, respondent cannot assert a claim for the rent based on the defense that unaccrued rents run with the land. Appellant notes that after respondent’s sale to the third party, appellant was directed to pay all future unaccrued rents to the third party.

Appellant is correct that his obligation to pay the $15,000 did not arise until it became due on October 1, 2002. See Ambrozich v. City of Eveleth, 200 Minn. 473, 483, 274 N.W.2d 635, 640 (1937) (stating “[t]here is no obligation to pay until the rent is due according to the terms of the lease”). But once appellant enjoyed the use of the premises in November and December 1999, rent accrued to respondent. See Wilder v. Peabody, 37 Minn. 248, 249, 33 N.W. 852, 852 (1887) (stating “rent does not accrue to the lessor as a debt or claim, unless payable in advance, until the lessee has enjoyed the use of the premises”).

And once rent has become past due, it is a chose in action, or personal demand for money due, and it is not an incident of ownership of the land. Orr v. Bennett, 135 Minn. 443, 447, 161 N.W. 165, 166 (1917). Minnesota law allows landlords to initiate a civil action to recover rent due. Minn. Stat. § 504B.125 (2004).[3] Thus, after October 1, 2002, the rent owed became past due, and respondent was entitled to assert a claim for the past due rent as a personal demand for money due. We conclude that no genuine issues of material fact exist and the district court did not err in its application of the law.

Affirmed.

[1] Appellate courts generally apply the law as it exists at the time they rule on a case, unless a change in the law affects rights that were vested before the change. See Interstate Power Co., Inc. v. Nobles County Bd. of Comm’rs, 617 N.W.2d 566, 575 (Minn. 2000). Because there is no such change here, this opinion cites the current version of this statute.