Hyperlawhypertext legal database Sprague National Bank v. Erie Railroad 22 A.D. 526

← Cases

Sprague National Bank v. Erie Railroad

22 A.D. 526 Court N.Y. App. Div. English

Delivered by Bradley, J.:

Contents

Majority

p. 526
Sprague National Bank, Respondent, v. Erie Railroad Company, Appellant.

Headnote

Lease given subsequent to a mortgage—effect thereon of the foreclosure of the mortgage — effect of the lessees not being made pa/rties to the foreclosure—remedy of a disseisee.
The lessees in a lease for years, made by a railroad corporation, cannot maintain an action for a breach of covenant for quiet enjoyment contained in the lease, against a corporation which has subsequently acquired the property of the lessor, upon a sale in foreclosure of a mortgage executed by the latter prior to the lease — the purchaser in such case taking title from the date of the mortgage, and there being no privity of contract or estate between the mortgagee or the purchaser at the sale and the lessees.
The fact that the lessees were not made parties to the action for the foreclosure of the mortgage, assuming that by reason thereof their interests under the lease were not affected by the foreclosure, does not entitle them to recover from the purchaser in possession under the mortgage foreclosure sale the value of the unexpired term of the lease.
Remedy of a disseisee at common law considered,
Appeal by the defendant, the Erie Railroad Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 22d day of March, 1897, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 25th day of March, 1897, denying the defendant’s motion for a new trial made upon the minutes.
p. 527
In 1888, the New York, Lake Erie and Western Railroad Company executed a lease of premises owned by it to Charles E. Brown and •R. S. Canfield for a term of ten years with an option for a further term of five years. Brown and Canfield having defaulted in the payment of the sums secured to be paid by chattel mortgages covering their rights under the lease, the mortgages were foreclosed and the mortgagors’ interests sold in 1891 to one Matthews. In 1895, the defendant, the Erie Railroad Company, derived title' to the premises on the foreclosure of a mortgage made by the New York, Lake Erie and Western Railroad Company, and in December uf that year entered upon and took possession of the leased premises. In 1896, Matthews transferred to the plaintiff his rights under the lease, and also the right of action, if any, arising because of the defendant’s acts. The present action is brought to enforce such alleged right of action.
F. B. Jennings and Howard van Sinderen, for the appellant.
Almet F. Jenks and Edward M. Grout, for the respondent.

It is assumed that the covenant for quiet enjoyment in the lease made by the trustee of the New York, Lake Erie and Western Railroad Company to Brown and Canfield would have run with the land and be available against a grantee of the reversion, and that the plaintiff acquired all the rights taken by the lessees by virtue of the lease. The defendant, however, has not the relation of a grantee of the reversion. It derived its title from the sale on foreclosure of a mortgage made hv the New York. Lake Erie and Western Railipad^Company priorJ.0—the lease, and the purchaser on such sale took title as of the date of the mortgage. Bv the foreclosure and sale the equity of redemption of the mortgagor was cut off, and thus the defeasance taken from the mortgagor as of the time the lien of it was,created. (Rector, etc., v. Mack, 93 N. Y. 488 ; Batterman v. Albright, 122 id. 484.) It necessarily follows that, as no privity of contract or estate existed between the mortgagee and lessee, none as between the lessee and the purchaser resulted from the purchase and the master’s deed, thereupon made, to support any action by either against the other upon the covenants in the lease in any event.

p. 528
(M’Kircher v. Hawley, 16 Johns. 289 .) At common law the lease for years was only personal property. (2 Kent’s Coin. 342.) And although still a chattel real, it is in this State, pursuant to statute, an estate in land. (1 R. S. 722, §§ 1, 5.)

Assuming’ that, bv the law of the -State of New Jersey, in which the premises am. sit11n.terl.r...tbe_falhu:e—to make the lessees mfi-action left their interest under the lease* the sale and the conveyance pursuant to it, and that as the-consecpience the defendant, without any lawful right, forcibly entered npon and took possession of the demised premises, it does not follow that the plaintiff is entitled in this action... to recover as damages the value of the nnexnired term of the Hease. In its application to such ouster the doctrine of the common law, as it has existed from an early day, is, that the disseisee, before re-entry, is entitled to recover damages only for the first entry or trespass, and that to permit a recovery of damages for any act or continuance of the trespass of the disseisin the plaintiff must have re-entered and regained possession. (3 Black. Com. 210 ; Case v. Shepherd, 2 Johns. Cas. 27 ; Holmes v. Seely, 19 Wend. 507 ; Wohler v. Buffalo & State Line R. R. Co., 46 N. Y. 686 ; Stockwell v. Phelps, 34 id. 363 ; Welch v. Winterburn, 25 Hun, 437 .) And on such re-entry the disseisee is, in law, deemed to have had the possession during the time intermediate his disseisin and re-entry. (Dewey v. Osborn, 4 Cow. 329 .) The reason of the rule is that the remedy is for trespass, and, in a case of that nature, possession, actual or constructive, is essential to the support of the action. If the party seeking relief in such case cannot regain possession by means of summary proceedings under the statute, he must resort to his action of ejectment, where his right of re-entry may be established. I do not see my way clear to adopt as tenable the suggestion that the defendant, by the exercise of dominion over the land, became charged with the obligation to observe the covenants of the lease, and as. the consequence its acts of dominion constituted a breach of the covenant by the defendant. This would have been the situation if the lease had been executed prior to the mortgage. Then, as against the purchaser on the foreclosure sale, the covenant of quiet enjoyment in the lease would have run with the land, and the

p. 529
relation of the defendant would have become that of the lessor in such sense as to be chargeable for a breach of such covenant. (Bucle v. Binninger, 3 Barb. 391 ; Denman v. Prince, 40 id. 213 ; Pardee v. Stewm'd, 37 Hun, 259 .) But, as has been observed, such were not the relative conditions. Although it took the title granted by the master’s deed, the defendant was a stranger to the lease and its covenants, and for the purposes of the remedy I think the defendant must be so treated. It would seem quite remarkable to attempt to charge a stranger with the value of a term of fifty years for a wrongful entry upon premises and ouster of a tenant of an estate for that length of term. It seems clear that he would not by his wrongful entry have made himself a party to the lease in such sense as to charge him with liability upon its covenants. The views here expressed relate to the claim to recover the value of the unexpired term, which could be supported only by liability of the defendant upon the 'covenant of the lease.

So far as relates to the buildings put upon the premises by the lessees for the purposes of trade and business, a different question is presented. They were not within the grant of the mortgage, and the denial by the defendant of the right of the plaintiff to remove them was properly the subject of action for the recovery of damages. (Schermerhorn v. Buell, 4 Den. 422 ; Bruce v. Welch, 52 Hun, 524 .)

These views lead to the conclusion that the judgment and order should be reversed and new trial granted, costs to abide the event.

All concurred.

Judgment and order reversed and new trial granted, costs to abide the event.

Cases cited