The claimant is the defendant's mother. The defendant took a lease by a written contract of the 23rd August 1960 of a house property in N inclusive of furnishings and fittings "for commercial use in accordance with the special provisions issued by the competent authorities". The property was and is a house situated in the old town in N which for a long time now has provided accommodation for prostitutes, who are under the control of the Health Department in the town of N.

The defendant, who at the time of the conclusion of the contract lived in M and only later moved to N or F to be precise) left the administration of the property almost exclusively to the claimant until early in 1964. The claimant arranged for a substantial part of the net income to pass to the defendant. In March or April 1964 the defendant took over the administration herself. In the ensuing period disputes arose about the division of the income. Attempts to reach a settlement by calling in lawyers fell through.

The claimant has argued that the leasing contract had only been formally concluded in the name of the defendant; the rents therefore belonged to her. At the least however a partnership relationship existed, which gave the same rights to her as to the defendant. Besides this, the defendant had obliged herself to pay 1,500 DM monthly even after taking over the administration. In her claim, the claimant demands payment of 1,500 DM monthly from the 1st September 1965 to the 1st October 1966 inclusive: 21,000 DM altogether.

The defendant is of the view that she alone was the lessee of the premises and there was neither a partnership law relationship nor had she obliged herself in 1964 / 1965 to pay sums to the claimant.

The Landgericht rejected the claim and the Oberlandesgericht rejected the appeal. The claimant's appeal in law led to quashing and reference back.

Grounds:

I.

1. The appeal court held the view, in contrast to the Landgericht, that an agreement by the parties about the administration of the property and about the division of the net income was not void under § 138 (1) of the BGB because of violation of good morals. This income, so the appeal court states, was not income from the business of a brothel, but income from the letting of rooms. The fact that the tenants of the rooms paid the rent out of means which came to them from their activity as women of easy virtue was not sufficient in itself alone to deprive the agreement by the parties of its legal effectiveness. The rent could not be regarded as excessive, especially as it was indisputably subject to surveillance by the authorities. The tenants were completely independent and were not in any way bound to carry on their activity.

2. These observations, which are not challenged by the appeal in law as they are favourable to it, are not to be objected to on legal grounds.

The mere granting of accommodation to persons who have completed the 18th year of their lives is not punishable under the further prerequisites of § 180 (3) of the StGB (Criminal Code) even if besides this the prerequisites of § 180 (1) of the StGB (procuring) are fulfilled. This facilitates the provision of accommodation for prostitutes in which they can practice their trade, in order to prevent them being driven on to the street, into the family or into unsupervisable hiding places (references omitted). Freedom from punishment or toleration by the authorities admittedly does not exclude the immorality of a legal transaction (see, for a loan for the purpose of gambling [reference omitted]). But the goal pursued by the declaration that the mere granting of accommodation is free from punishment would only be imperfectly attained if legal effectiveness to letting contracts with prostitutes were to be denied. The recognition of contracts establishes a certain order. It assists the general public by creating better possibilities of surveillance. The letting contracts therefore do not violate good morals (§ 138 (1) of the BGB) in so far as, for instance, the person to whom the dwelling is granted is not exploited by the level of the rent or by special agreements, or the letting contracts are associated with the person's recruitment for or encouragement to commit prostitution. In this connection, it does not make any difference whether the house owner lets the dwelling directly to the prostitutes or whether this occurs through a tenant by way of sub-letting.

In this context, the decisive issue is that on legal effectiveness of the letting contracts concluded between the house owners or tenants and the prostitutes, the prostitution is not promoted but rather that social evils are avoided.

According to the findings of the appeal court, the level of the rent is monitored by the authorities and cannot be regarded as excessive. The tenants are completely independent and are not in any way bound to carry on their activity. Accordingly the parties are entitled to the privilege of § 180 (3) of the StGB. Therefore the legal effectiveness of the letting contracts between them and the occupants of the property cannot be denied on the ground of violation of good morals under § 138 (1) of the BGB.

The same also applies for agreements which the parties have made about the administration of the property and about the division of the income. Nor, contrary to the view of the Landgericht, can anything different be derived from the "27 girl clause" in the draft contract. This is because the clause only sets a yardstick for the division of profits which could, in other cases of room or apartment lettings, be agreed in the same way and which as such has no relation to the activity of the tenants.

II.

In relation to the central issue the appeal court states thatit was not proved that the claimant had been co-lessee of the property in the relationship of the parties to each other and possibly still was today. (Further details on this follow)...

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