Herzig v. Blumenkrohn

The defendant Blumenkrohn appeals from an interlocutory decree overruling his demurrer to the complaint. The facts are simple. The plaintiff held a leasehold estate in certain premises in the city of New York. On July 19, 1905, he leased the premises to the appellant Blumenkrohn for a term of years to commence on July 1, 1907, at 12 o’clock noon, and to end on October 1, 1920, also at 12 o’clock noon, the lease being duly recorded on April 30, 1906. This

The sole question presented therefore is whether or not the instrument executed by Blumenkrohn to Crystal is a sublease or an assignment. The distinction between a sublease and an assignment of the original lease has been the cause of much discussion, and of some apparent, rather than real, difference of opinion. It is quite well settled however that it is immaterial what form of instrument is used, or whether on its face it purports to be a sublease or merely the assignment of a lease. The essential distinction between a sublease and an assignment lies in the extent to which the original lessee has parted with his interest. If he has parted with his entire interest, he has made an assignment. If he has retained a reversion in himself, he "has made a sublease. Woodhull v. Rosenthal, 61 N. Y. 391 ; Stewart v. Long Island R. R. Co., 102 N. Y. 607 , 8 N. E. 200 , 55 Am. Rep. 844 . In the desire to avoid forfeitures, the courts have been astute to discover in instruments asserted to be assignments features which implied ■some reservation sufficient to justify a finding that the original lessee Had reserved to himself some portion of the term. Thus, when the instrument, although it disposed of the whole term, contained a covenant on the part of the second lessee to surrender to the original lessee on the last day of the term, it was considered that there had been reserved a reversion of a part of the last day of the term, and hence the instrument was deemed a sublease and not an assignment. Post v. Kearney, 2 N. Y. 394 , 51 Am. Rep. 303 . In the present case the •instrument executed by Blumenkrohn to Crystal is, as has been said, identical in its language with the lease executed by plaintiff to Blumen-Icrohn. It covers the same premises, is for the same term, at the same rent, payable on the same days, and contains identical conditions and covenants. No such reservation can be spelled out of it as was found in Post v. Kearney, supra, for there the only provision as to the end ■of the term was that it should be on a certain day, and the covenant as to surrender was that the sublessee should surrender to the original

“Where the whole term is made over by the lessee, although in the deed by which that is done the rent and power of re-entry for nonpayment are reserved to him and not to the original lessor, this is an assignment and not an underlease, * * * and this although new covenants are introduced in the assignment.” Bacon’s Abr. Leases, 1, 3.

The question was treated with his usual thoroughness and clarity by Judge Rapallo in Stewart v. Long Island R. R. Co., 102 N. Y., 607 , 8 N. E. 200 , 55 Am. Rep. 844 . Speaking of cases like the pres-; ent, where the question has arisen between the transferee and the original landlord, he said:

“In the latter class of cases the rule is well settled, that if the lessee parts with his whole term or interest as lessee, or makes a lease for a period exceeding his whole term, it will,- as to the landlord, amount to an assignment •of the lease, and the essence of the instrument as an assignment will not be ■destroyed by its reserving a new rent to the lessor with power of re-entering for nonpayment, nor by its assuming by the use of the word ‘demise’ or otherwise the character of a sublease. * * * The fact that the lease to the defendant reserves a different rent from that reserved in the original lease, with a clause for re-entry, cannot affect the question between the parties to the present controversy of its operating in law as an assignment of the term. These points were expressly adjudicated in the case of Doe v. Bate-man, 2 Barn. & Adol. 168, and Wollaston v. Hakewell, 3 Scott’s N. R. 616.”

In commenting upon Collins v. Hasbrouck, Judge Rapallo points ■out that, in view of the result reached on the question of waiver, the discussion of the effect of the reservation of the right to re-enter for ■condition broken had been irrelevant, and again states what we deem to be the true rule—citing a great number of authorities in support of his position. To the same effect are the textwriters and a number of well-considered opinions in other jurisdictions. Sexton v. Chicago Storage Co., 129 Ill. 318 , 21 N. E. 920 , 16 Am. St. Rep. 274 ; Craig v. Summers, 47 Minn. 189 , 49 N. W. 742 , 15 L. R. A. 236 . “So the right of re-entry is not an estate or interest in the land, nor does it imply a reservation of a reversion. It is a "mere chose in action. When enforced the grantor is in through the breach of the conditions, and not by the reverter.” Tiedeman, Real Prop. § 277. “An assignment as contradistinguished from a sublease signifies a parting with the whole term; and whenever the whole term is made over by the lessee, although in the deed by which that is done the rent and a. power of re-entry are reserved to himself, yet the instrument amounts to an assignment and not a sublease.” Wood, Land. & Tenant (Am. Ed.) vol. 1, § 258. Tó the same effect are Taylor, Land. & Tenant, vol. 1, § 16, and Washburn, Real Prop. (2d Ed.) vol. 1, §§ 451—474.

To sum up, therefore, the instrument executed by Blumenkrohn to Crystal conveyed the whole term without the reservation of any reversion or reversionary interest, except the right to re-enter for condition broken. This right of re-entry did not amount to or imply a reservation of any reversion in the term or of any interest in the land, but merely of a chose in action in case of a breach of covenant. The instrument, therefore, although in form a lease, was in legal effect an assignment of the lease from plaintiff, and, having been made with

The judgment must be affirmed, with costs, with leave to appellant to withdraw his demurrer and answer within 20 days on payment of costs in this court and in the court below. All concur, except INGRAHAM, J., who dissents.

(dissenting). There is not entire accord in the cases which have discussed the question that is presented in this case, which seems to have arisen from the different aspect in which the question has been presented, as a more stringent rule has been applied' when it was sought to construe an instrument which was in form a sublease of the premises as an assignment of the lease where the original lessor claimed a forfeiture of the lease than in cases where he claimed to be entitled to recover from the sublessee the rent reserved by the original lease. In 18 Am. & Eng. Ency. of Law (2d Ed.) p. 657, it is said:

“It is immaterial by what kind of an instrument or conveyance the term is so disposed of. Thus the grantee or nominal lessee becomes an assignee if the lessee * * * executes an instrument purporting to be a lease or demise of the premises for the balance of his unexpired term or a period exceeding his term, or conveys the premises in fee simple.”

But on page 658 it is said:

“To constitute the transaction a subletting instead of an assignment it is not necessary that the reversion retained by the original lessee be for any particular time. A reversion of the last day of the term is sufficient, and1 where the sublessee covenanted to redeliver possession to the original lessee on the last day of the latter’s term, the transaction was held to be a sublease. The fact that the lessee reserves in the transfer of his term a rent, so called, payable to himself, will not necessarily prevent the transaction from constituting an assignment instead of a sublease, and the same has been held true where he also reserved a power of re-entry for nonpayment.”

The original lease in question contains no covenant against subletting, and it seems to be conceded by Mr. Justice SCOTT in his opinion that under the authorities of this state, if the sublease had contained an express covenant by which the sublessee agreed to .redeliver possession of the premisés to his lessor on the last day of the latter’s term, the transaction would be held to be a sublease. It seems to me that this is the effect of the covenant. It is true that the word “lessor”' is not named; but the sublessee covenanted and agreed to and with his lessor, his heirs and assigns, that the said lessee “at the end or sooner termination of this lease shall quit and surrender said premises in good condition, reasonable wear and tear excepted.” That, I think, is in effect.a covenant tó deliver to the lessor, the party of the first part to the instrument and with whom the covenant is made. The covenant was made with the lessor that at the end or sooner termination of the lease he would quit and surrender the premises. Certainly this cannot be understood as a covenant to surrender the premises to any one but the person with whom the covenant was made. The lessor in the sublease being entitled, as I construe the lease, to repossession of the premises on the last day of the term, it seems to

In Ganson v. Tifft, 71 N. Y. 48 , the question was clearly presented and it was there said:

“The instrument referred to contained a provision reserving a right of reentry for nonpayment of rent, or a breach of other conditions, and that at the expiration of the term, or other sooner determination of the demise, the lessees should quietly surrender and yield up possession of the demised premises to the lessor. This constituted a sublease of the premises, and not an assignment of the entire term, which transferred any right of action against the defendant.”

The cases of Collins v. Hasbrouck, 56 N. Y. 157 , 15 Am. Rep. 407 , Woodhull v. Rosenthal, 61 N. Y. 383 , Post v. Kearney, 2 N. Y. 394 , 51 Am. Dec. 303 , were cited and considered. In Stewart v. L. I. R. Co., 102 N. Y. 601 , 8 N. E. 200 , 55 Am. Rep. 844 , the original lease was the lease for 50 years. What was called the sublease was a lease for 99-years, and it was held that that was an assignment and not a sublease because the original lessee had transferred to the defendant the entire term during which the original lessee was to hold the demised premises as lessee and left no particle of that term in the original lessee, 'or in his first assignee. But the opinion in that case recognized the rule established in Post v. Kearney, supra, and Ganson v. Tifft, supra, that where, in an assignment of a lease, or in a demise by the lessee for the same term as that granted by the original lease, there is a covenant to surrender to the assignor, this prevents a sublease from operating as an assignment. This has been because the whole instrument taken together has been held to reserve to the original lessee some fragment of the original term, although almost inappreciable in point of duration. The question is not free from doubt; but I think when a lessor comes into a court of equity and asks for equitable relief, based upon a forfeiture, he should present a casé free from reasonable doubt, or equity will not interfere, but will leave him to his remedy at law.

I think, therefore, this judgment should be reversed, with costs, and the demurrer sustained, with costs.