Dolph v. White — 12 N.Y. 296

Majority

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Dolph against White.

Headnote

Where there were two joint makers of a promissory note held by the plaintiff, and one, in consideration of a demise of premises to him by the other; in and by the lease agreed to pay the note in part payment of the rent, and afterwards transferred the lease and his right to the demised premises to the defendant who entered into possession; Meld, that the holder of the note could not sustain an action against the assignee for its amount.

The agreement of .the lessee to pay the note did not run with the estate in the land, and therefore did not bind his assignee.

The plaintiff, not being the grantee of the reversion of the demised premises or of the rent reserved, could maintain no action against the assignee of the lease. There was no privity of contract or estate between them.

What covenants in a lease run with the land and bind the assignee of the term, discussed, Per Marvin, J.

Action in the supreme court by Dolph against Samuel White. The complainant alleged that on the 7th of April, 1851, Jeremiah White and N. R. Stevison made their promissory note for one hundred dollars, payable to one Gilbert or bearer, on the first of April then next, and that the note was transferred to the plaintiff; that in December, 1851,-Stevison, one of the makers of the note, in consideration that White, the other maker, then leased unto him and one Wallace a mill and other premise's owned by the lessor, until the first of May, 1854, “ did in and by the lease and in part payment of "the rent of the demised premises, agree to assume and did assume the payment of said note and did agree to pay the samethat in January, 1852, Stevison, for a valuable consideration, assigned and transferred the lease and his right to the demised premises during the term, to the defendant, who by virtue of the lease and assignment entered into the possession of the premises, and thence held and enjoyed the right of Stevison thereto, whereby the .defendant became liable to pay the note to the plaintiff, and that it remained unpaid.

The defendant, demurred to the complaint on the ground that it did not state facts sufficient to constitute a cause of

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action against the defendant. Judgment was rendered at special term in favor of the defendant, which was affirmed by the court in the 7th district at a general term. The plaintiff appealed to this court.

S. K. Williams, for the appellant.

I. Nathaniel R. Stevison, the lessee named in the lease and the assignor of the defendant, was liable previous to the assignment to pay the note described in the complaint. (Barker v. Bucklin, 2 Denio, 45 , and cases there cited; 4 Denio, 97 ; Farley v. Cleveland, 4 Cow., 432 ; Ellwood v. Monk, 5 Wend., 235 ; Brewer v. Dyer, 7 Cush., 337 , 340; Arnold v. Lyman, 17 Mass., 400 ; Carnegie v. Morrison, 2 Met., 381 , 396, 401, &c.)

II. The defendant, the assignee of the lessee, coming into possession of the leased premises under an assignment from the lessee, is liable upon the agreements and obligations of the original lessee, his assignor, as much as if made by himself. (Taylor's Law of Landlord and Tenant, 76; Provost v. Calder, 2 Wend., 517 ; Childs v. Clarke, 3 Barb. Ch. R., 52; Short v. Wilson, 13 John., 33 ; Verplank v. Wright, 23 Wend., 506 ; Kearney v. Post, 1 Sand., 105; Astor v. Miller, 2 Paige, 68; Matter of Galloway, 21 Wend., 32 ; McKeon v. Whitney, 3 Denio, 452 ; Van Rensselaer v. Bradley, 3 Denio, 135 .)

III. The promise of Stevison to pay the note was an agreement running with the land, and binds the assignee. It was not necessary that the plaintiff should represent the lessor as to the estate; an assignment of the rent by the lessor without the reversion, gives the assignee a right to sue in his own name for the rent subsequently accruing. (Kendall v. Carland, 5 Cushing, 74; Allen v. Bryan, 5 B. & C., 512; Demarest v. Willard, 8 Cow., 206 ; Torrey v. Wallis, 3 Cush., 442 , 446; Willard v. Tillman, 2 Hill, 274 ; 20 Eng. Law and Equity, 264; Wakefield v. Brown, 9 Adolph. and

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Ellis, 209; Walbridge v. Stewart, 1 Crompt. and Mees., 643, 660; Allen v. Culver, 3 Denio, 284 , 295.

J. H. Reynolds, for the respondent.

I. The covenant by Stevison with Jeremiah White tc assume the payment o„f the note, made jointly by White and Stevison to Gilbert, in part payment of the rent of the demised premises, was not a covenant running with the land so as to bind the defendant as assignee of Stevison, the original lessee: (1.) Because the agreement contained in the lease by Stevison to assume and pay the note in question, was to do a thing merely collateral to the land. The note did not concern or touch the thing demised in any way whatever. (Spencer's Case, 3 Coke, 16; Smith's Leading Cases, 43 Law Lib., 75; Cro. Jac., 438; Taylor's Landlord and Tenant, 216; Plymouth v. Carver, 16 Pick., 183 ; Milnes v. Branch, 5 Maule and Selw., 411; Randall v. Rigby, 4 Meeson and Wels., 129.) (2.) By the terms, collateral covenants which do not pass to the assignee, are meant such as are beneficial to the lessor, without regard to his continuing the owner of the estate. (Vernon v. Smith, 5 Barn. and Ald., 11, per Best, J.) (3.) In this case the covenant to pay the note was merely personal to the lessor, and beneficial to him irrespective of his ownership of the demised premises. Being thus personal and collateral and not “ concerning the thing demised,” it does not run with the land. The right of action upon it does not pass to the assignee of the lessor, nor is the assignee of the lessee charged with the obligation to perform it.

II. But if it be admitted that the covenant or undertaking to pay the note would bind the defendant as the assignee of Stevison, it is clear that “the action cannot be maintained, either in its present form or in any other which it can be made to assume.” (1.) The plaintiff is a mere stranger both to the contract and estate. There is no privity

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between him. and either the lessor or the lessee. (2.) The covenant does not run with the land, and even if he were the assignee of Jeremiah White, the lessor, he could not maintain the action. (Allen v. Culver, 3 Denio, 284 ; Bally v. Wells, 3 Wils., 25; Spencer's Case, 3 Coke, 16; Vernon v. Smith, 5 Barn. and Ald., 11; Randall v. Rigby, 4 Meeson and Wels., 129 ; Milne v. Branch, 5 Maule and Selw., 411; Plymouth v. Carver, 16 Pick., 183 .)

Assuming that Gilbert, the payee of the note, or the plaintiff, the bearer, could maintain an action against Stevison upon his agreement in the lease from White to him and Wallace, upon the authority of Barker v. Bucklin ( 2 Den., 45 ), and the cases therein cited, it will not follow that this action can be maintained against the defendant, the assignee of Stevison, one of the lessees. If the holder of the note could maintain an action against, Stevison upon his promise in the lease to pay the note, the action would rest upon principles entirely aside from any which relate to lessor and lessee or their assigns.

White and Stevison made the note, and then White demised the saw mill to Stevison and Wallace, and Stevison in consideration thereof agreed to pay the note. It is alleged in the complaint that Stevison did in and by the said lease, and in part payment of the rent, agree to assume and did assume the payment of, and did agree to pay the note. Is this agreement binding upon the defendant as the assignee of the interest of Stevison in the lease ? There is no allegation of any promise by the defendant to pay the note. He is simply the assignee of Stevison’s interest in the lease. What privity is there between him and the plaintiff? The lessor, White, still holds the reversion. He has not granted the premises nor assigned the lease or rents. His note made before the lease is outstanding, and his lessee promised to pay it. If his lessee is liable to pay the note, it is upon the ground of his special promise founded upon

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a good consideration, and if the holder of the note can maintain the action against him, it is upon the ground -that the special promise was for his benefit. Thus in Farley v. Cleveland ( 4 Cow., 432 ), Moon owed Farley by note, and he sold and delivered hay to Cleveland, who in consideration thereof promised to pay the note to the plaintiff, and the plaintiff was permitted to recover upon this special promise of Cleveland. In Barker v. Bucklin (supra), the debtor of Barker sold a pair of horses to Bucklin, the defendant, and he promised to pay the price to Barker, and it was held that Barker could maintain an action upon this special promise. In the present case there was no special promise by the defendant to pay the note, and unless there was such a privity growing out of the lease and its assignment as to create a liability on the part of the defendant to the plaintiff, the action cannot be maintained.

The defendant is assignee of the lessee. An assignee of the term is always liable to the lessor for rent reserved, in the same manner and to the same extent that the lessee was. Rent is defined to be a certain profit issuing yearly out of lands and tenements corporeal. (Co. Litt., 141, g.; 2 Bl. Com., 41.) It is reserved in the demise by proper words, as reserving, rendering, yielding, paying, &c. (Comyn, L. and T., 98), and whoever enters upon the demised premises as assignee of the lessee takes the premises subject to the rent reserved, and while he remains in possession occupies, as to the lessor, the position which the lessee occupied. If the lease contains a covenant to pay rent, and such covenant although not expressed is sometimes implied as from the words yielding and paying, &c., the assignee of the lessee will be liable upon such covenant while he remains tenant. The lessee also remains liable upon all his covenants to the lessor.

The rent must be reserved to him from whom the estate in the land is derived, and it has been laid down as a general rule, that rent cannot be reserved to a stranger. (Comyn,

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Landlord and Tenant, 100.) The covenant to pay the rent reserved to the lessor is a covenant running with the land, and the assignee of the term is bound by it. There was a privity of estate between the lessor and lessee, and this privity continues between the lessor and assignee. The assignee of the .term is liable by statute to the lessor or his grantee of the reversion upon all covenants that run with the land (1 R. S., 747, § 23,); but he is not liable upon those which were collateral or merely personal. ( 13 Wend., 608 ; Comyn, Landlord and Tenant, 257.) The only connection which exists between the grantee of the reversion and the tenant, or the lessor and assignee of the term, is by means of the estate to which both are privy.

A covenant running with the land has a relation to the land. Some of them are specified by Jewett, J., in Allen v. Culver ( 3 Den., 295 ; and see Comyn, Landlord and Tenant, 257, et seq). In the 2d resolution in Spencer’s case, it is said if the thing to be done be merely collateral to the land, and doth not touch or concern the thing demised in any sort, then the assignee shall not be charged; as if the lessee covenants for himself and his assigns to build a house upon the land' of the lessor, as to a stranger, it shall not bind the assignee, because it is merely collateral and in no manner touches or concerns the thing demised or that is assigned over, and therefore the assignee of the thing demised cannot be charged with it, no more than any other stranger. (3 Coke R., 16; Smith’s Leading Cases, 22.) In Webb v. Russell, Kenyon Ch. J., said: il It is not sufficient that a covenant#is concerning the land; but in order to make it run with the land, there must be a privity of estate between the covenanting parties.” In that case the covenant to pay rent was to one, who, it was held, had no legal interest in the land, and it was held that the covenant was collateral.' It is added, “ though a party may covenant with a stranger to pay certain rent, in consideration of a benefit to be derived under a third person, yet such a covenant cannot

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run with the land.” (And see Shep. Touchstone, 176; Bac. Abr. Covenant, C.) Sheppard says, if the lessee doth covenant with his lessor and his heirs to pay a sum of money in gross, or to make him a feoffment, or the like, and then the lessor doth grant the reversion, the grantee shall not take advantage of this covenant, &c. In the present case Stevison, the lessee, promised to pay a note made by the lessor. This promise was merely collateral to the land demised, and his assignee is not bound by it.

There is another fatal objection to the plaintiff’s right of action against the defendant. The plaintiff does not represent the lessor. He is not the grantee of the reversion, nor the assignee of the rent. Kendall v. Cleveland, ( 5 Cush., 74 ) Allen v. Bryan, (5 B. and C., 512) and Demarest v. Willard, ( 8 Cow., 206 ) cited by plaintiff’s counsel, have no application. The note was made prior to the lease and without any reference to it. It had and has no reference to or connection with the land demised. Even the grantee of the reversion can only take advantage of such covenants as run with the land. So has the English statute, of which ours is a. substantial transcript (1 R. S., 747, § 23), been construed. (See Comyn, Landlord and Tenant, 266.) Best, J., in Vernon v. Smith (5 Barn. and Ald., 11), says : “ By the terms, collateral covenants which do not pass to the assignee, are meant such as are beneficial to the lessor without regard to his continuing the owner of the estate.” In the present case White, the lessor, made provision for the payment of the note, and its payment would be beneficial to him without regard to his continuing the owner of the estate. The law touching lessor and lessee, and their grantees or assignees, has no application whatever to the case.

The judgment should be affirmed.

The complaint shows that the note in question was held by the plaintiff as a perfected contract prior to the execution of the lease with which it is

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now proposed to connect it. Under these circumstances, if the defendant had expressly covenanted with Stevison, the maker, to pay the demand at maturity, it is not claimed that an action upon that covenant could have been sustained by the plaintiff. There would be no privity between the holder of the note and the covenantor. Nor could it be said that the agreement, in any legal sense, had been made in behalf of or for the benefit of the plaintiff; but merely to relieve the covenantee from the obligation incurred by him as one of the makers. I do not perceive how the relation of the parties is changed by incorporating such a covenant in a lease. The plaintiff' was no party to the demise, nor could the nature of his demand against Stevison be altered from a negotiable promissory note against the latter into an agreement to pay rent, by any contract between the maker and a third person. Should it be granted, which is saying a great deal, that the defendant, as assignee of the lease, became thereby personally liable to Stevison, upon the covenant to pay this note, he was not liable to the plaintiff. The latter was neither assignee of the reversion or of the rent, but the owner and holder of an independent contract made with him by other parties. The note did not issue out of the land demised, nor was the money thereby secured the compensation for the use of the premises ; but both existed as parts of a complete contract before the lease was made or even contemplated. If the defendant had been evicted during the term by a paramount title, it would have discharged him from his covenant and Stevison also ; but it would not have affected the remedy of the plaintiff against the latter upon the note. If, however, it was a part of the rent reserved for the use of the demised premises, it certainly could not have been enforced after the tenant had been ousted from the possession. There was, therefore, no privity between the parties to this suit, and the action cannot be sustained for that reason.

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The note also was collateral to the thing demised, in every sense, and the covenant to pay it did not, consequently, run with the land. (Spencer's Case, 3 Coke, 16; Taylor's Land. and Tenant, 316.) The mistake, which has probably led to this action, consists in supposing that the defendant could not be made responsible to the assignor, even upon an express covenant of this kind, until the latter had paid, or in some manner satisfied the note of the plaintiff. In other words, in looldng upon the covenant to pay the demand in question as a covenant of indemnity merely, whereas it was, if anything, an affirmative engagement to perform a stipulated duty; upon non-compliance with which an action could have been maintained by Stevison, and the amount of the note and interest would have constituted the measure of damages. (Gilbert v. Wiman, 1 Comst., 562; 1 Hill, 145 ; 3 Denio, 321 .)

The judgment of the supreme court should be affirmed.

Judgment affirmed.