Bien v. Bixby

The plaintiff is the receiver of the Casino Company, which was dispossessed from the theater and premises known as the “Casino,” in the city of New York, for nonpayment' of a quarter’s rent, due May 1, 1895, amounting to §3,000. The rent accrued under a lease made to the New York Concert Company, Limited, the assignor of the Casino Company, on December 1, 1891, by the defendant, Robert F. Bixby, individually, and as trustee, for 10 years from May 1, 1892, at the annual rental of §12,000; the tenant to pay the taxes and Croton water rents, and make all repairs upon the building. The Casino Company was dispossessed on May 17, 1895, and the plaintiff, as receiver, was subsequently empowered to conduct, institute, and prosecute any and all proceedings that might be necessary to redeem and recover possession of the property from which the company was dispossessed on account of nonpayment of rent; and accordingly this proceeding was commenced, pursuant to section 2256 of the Code, within a year after the execution of the warrant, the unexpired term of the lease exceeding five years at

The first question presented is whether the tender of $13,500 was sufficient, under the statute. The defendant claimed it was not, because it did not cover, among other things, the taxes in arrear, which had become a lien upon the property, and which the tenant had covenanted to pay, and certain expenses incurred by the landlord subsequent to the proceedings to dispossess, in making necessary alterations upon the premises required by the building department. The provision of the Code as to tender is as follows:

“Sec. 2256. Where the special proceeding is founded upon an allegation that a lessee holds over, after a default In the payment of rent, and the unexpired term of the lease, under which the premises are held, exceeds five years, at the time when the warrant is issued; the lessee, his executor, administrator, assignee, may, at any time within one year after the execution of the warrant, pay or tender to the petitioner, his heir, executor, administrator, or assignee, or if, within five days before the expiration of the year, he cannot, with reasonable diligence, be found within the city or town wherein the property, or a portion thereof, is situated, then to the judge or justice who issued the warrant, or his successor in office, all rent in arrear at the time of the payment or tender, with interest thereupon, and the costs and charges incurred by the petitioner. Thereupon the person, making the payment or tender, shall be entitled to the possession of the demised premises, under the lease, and may hold and enjoy the same, according to the terms of the original demise, except as otherwise prescribed in the next section but one.”

The claim of the defendant is that “the costs and charges incurred by the petitioner” refer to all outlays which the landlord had made, or would have to make, by reason of the failure of the tenant to perform his covenant. In Waters v. Crawford, 2 Thomp. & C. 602, in-construing chapter 240 of the Laws of 1842, the language of which was, “all rent in arrears at the time of such payment or tender, and all costs and charges incurred by the landlord,” it was said that this meant the costs and charges of obtaining possession; and substantially to this effect is Pursell v. Insurance Co., 42 N. Y. Super. Ct. 383 . In using the term “petitioner” instead of “landlord,” the statute refers, of course, to the petitioner in the proceedings to dispossess, and his “costs and charges” obviously refer to his expenses

“Sec. 2259. The person redeeming, as prescribed in the last three sections, or the owner of the property so redeemed, may present to the judge or justice who issued the warrant, or to his successor in office, a petition, duly verified, setting forth the facts of the redemption, and praying for an order, establishing the rights and liabilities of the parties upon the redemption. Whereupon the judge or justice must make an order requiring the other party to the redemption to show cause before him, at the time and place therein specified, why the prayer of the petitioner should not be granted. The order to show cause must be made returnable, not less than two nor more than ten days after it is granted; and it must be served at least two days before it is returnable. Upon the return thereof the judge or justice must hear.the allegations and proofs of the parties, and must make such a final order as justice requires. The costs and expenses must be paid by the petitioner. The final order, or a certified copy thereof, may be recorded in like manner as a deed. A person, other than the lessee, who redeems as prescribed in the last three

sections, succeeds to all the duties and liabilities of the lessee, accruing after the redemption, as if he was named as lessee in the lease.”

The tenant desiring to redeem the premises is required to apply to the court for an order, and the court is required to make an order which shall “establish the rights and liabilities of the parties upon the redemption,” and it must be “such a final order as justice requires.” This clearly confers upon the justice the broad powers formerly vested in chancellors to make a complete adjustment of all the equities between parties. On the one hand, for instance, arrears of taxes unpaid, and premiums of insurance, and the cost of complying with provisions of public departments concerning repairs and alterations, and the expenditure for the repairs, all as required by the lease, can be allowed the landlord, and, as an offset, any excess of rent that the landlord has, or ought to have, received in the interim, over and above the rent reserved in the lease, can be allowed to the tenant,— in this case an important item, as the rent reserved was evidently ground rent; and, if the difference between these allowances is in favor of the landlord, the tenant may be required to pay the difference, whether more or less than his tender, as a condition of being admitted to possession. Such powers are, it is true, most extensive and important, and the conferring of them upon the justices of district courts is somewhat of an advance upon the general legislative policy of withholding equitable jurisdiction from those courts, but the language of the statute is too plain to be mistaken. While some of the expressions in the section in question might indicate that the redemption is accomplished by the tender alone, and that the tenant is entitled to possession upon making the tender, such an inference is inconsistent with the main purpose of the section, in requiring the parties to the redemption to submit their rights and equities to a court, and providing for a final order “establishing their rights and liabilities upon the redemption.” This provision indicates that the order is to be deemed contemporaneous with the redemption itself. It would, moreover, be incompatible with the character of the order which the justice is to make, viz. “establishing the rights and liabilities of the parties,” and “such as justice requires,” if it could be inferred that the tenant was entitled to possession upon simply making-the tender. Were an insolvent tenant, in arrears for large amounts, —taxes and other expenses which he ought to have discharged, and distinguished from rent proper,—to be reinstated in possession upon his payment of rent alone, the order of the justice establishing the rights and liabilities of the parties would be wholly without effect. This would be especially true in the present instance. The tenant could not be removed again by summary proceedings for nonpayment of taxes and assessments, owing to a provision in his lease providing for summary proceedings for nonpayment of rent, which provision was held to exclude dispossession for other defaults. Bixby v. Casino Co., supra. The tenant, after a temporary dispossession, would go back to the enjoyment of property largely enhanced in value by the addition of fire escapes, fireproof curtains, partitions, and the like improvements, made by and at the expense of the landlord, in com

The next question is whether it was necessary for the receiver to keep good the tender, he had made, by paying the money into court, or otherwise. Where the effect of a tender is to discharge a debt, the money must be deposited so as to be at all times within reach of the creditor whose debt has been thereby discharged; but where the effect, of the tender is not to discharge a debt, but only to change in some manner the rights or remedies of the parties against each other, —as, for instance, extinguishing a lien upon some specific thing,— the money need not be deposited. Kortright v. Cady, 21 N. Y. 343 ; Cass v. Higenbotam, 100 N. Y. 253 , 3 N. E. 189 . The effect of the tender in a redemption proceeding is not to discharge the landlord’s claim for any part of the rent, but only to enable the tenant to obtain a standing in court in order to have his rights and liabilities and those of his landlord adjusted with a view to compliance with a final order to be made as justice requires. The tender does not give the absolute right to possession of the property. Much less does it discharge the debt. It has no substantial effect, to be measured in dollars and cents, to stop interest or prevent costs, as in the cases cited in Halpin v. Insurance Co., 118 N. Y. 165 -178, 23 N. E. 482 , 486. It is to be distinguished from tenders made as a basis of affirmative relief sought in equity, where by reason of the tender a lien is treated as extinguished, and where a decree to that effect is demanded without any further payment or tender of payment. Tuthill v. Morris, 81 N. Y. 94 ; Halpin v. Insurance Co., supra. It is not governed by the rules in equity, being purely statutory, and having a formal effect only.

The objection that the receiver has not power to maintain this proceeding is not well taken. This receiver was appointed under section 1784 of the Code, in an action for sequestration of the property of the corporation. He was a temporary receiver, and by section 1788 oí the Code it is declared that such a receiver “has power to collect and receive the debts, demands, and other property of the corporation; to preserve the property, and the proceeds of the debts and demands collected.” This general authority would seem to be enough for the purpose of the present proceeding, but, in addition, special authority was conferred upon him, under section 1789, by an order of the supreme court, to conduct, institute, and prosecute any and all proceedings that may be necessary to redeem the property from which, the Casino Company was dispossessed.

Finally, it is objected that the Casino Company should have been joined as petitioner with the receiver, as it is still in existence. No authority is cited to sustain this objection, and there seems no reason why a corporation whose functions are suspended during the continuance of a temporary receivership should be deemed an indispensable party. If the assets should prove more than sufficient to liquidate the liabilities, the excess would go to the corporation; and so the receiver acts for both the corporation and the creditors, and, as the representative of both, he may maintain this proceeding alone.

The final order should be reversed, and the proceeding remitted to the justice for his further action, under section 2259 of the Code. All concur.