Phelps v. Erhardt — 5 N.Y.S. 540

Majority

p. 540

Phelps v. Erhardt.

(Supreme Court, General Term, First Department.

May 24, 1889.)

Headnote

1. Leases—Subletting—Covenants bob Renewal.

Where a lessee under a lease containing a privilege of renewal leases the premises for the full unexpired term, with the privilege of renewal, with no restrictions on the right of his tenant to assign or sublet, the latter, in the absence of anything to show that the privileges granted to him were based on personal considerations, may sublease, granting to his tenant the right to renew the lease, independently of the original lessee’s consent, and it is immaterial that the second lessee by his assignment provides that the renewal shall be without liability on his part to the original lessee.

2. Same—Receivers—Authority.

The right of the third lessee to specific performance of the agreement for a renewal as against the original lessee cannot be affected by the fact that he was a receiver, and in taking the lease exceeded his authority, especially as no such ground of refusal to execute a renewal was given at the time.

Appeal from special term, Hew York county.

Action by Prank Phelps against Joel B. Erhardt, as receiver, to recover the rent of certain premises. Defendant set up a counter-claim asking for the specific performance of an agreement to renew, which was granted by the special term; Ingraham, J., delivering the following opinion:

“ The only question litigated at this trial is what relief, if any, the defendant is entitled to under his counter-claim set up m the answer, which demands judgment that the plaintiff be compelled to specifically perform an •agreement between the plaintiff and the Merchants’ & Miners’ Transportation Company, and assign to the defendant, either by assigning or transferring to this defendant the new grant for a further term of five'years from the 1st of May, 1887, executed and delivered to the plaintiff by the mayor, •etc., of the city of Hew York, or by executing and delivering, in conformance with the agreement, a lease or grant of the premises for a term of five years from May 1,1887. It appears that by an indenture of lease made on the 30th day of April, 1881, the mayor, etc., oí Hew York leased to the plaintiff a certain wharf or pier for a term of five years from the 1st day of May» 1882, •at an annual rental of $9,000, with a further covenant that if at anytime not less than ninety days before the expiration of the term of five years the plaintiff should give the lessors notice in writing of his desire to have the grant renewed, then the lessors will again grant unto the plaintiff for a further term of five years, commencing on the expiration of the term thereby demised, a further grant of five years, such renewed grant' to contain like covenants, except that the rent should be $11,000 per year. On September 30, 1882, the plaintiff sublet to the Merchants’ & Miners’ Transportation •Company the said premises. The agreement is contained in the letter written to the plaintiff and the reply thereto, and the determination of this question depends upon the construction to be given to those letters. This case is a good illustration of the folly of attempting to dispose of large interests without the preparation of formal contracts. By the letter of September 30,

p. 541

1882, the Merchants’ & Miners’ Transportation Company write to the plaintiff: ‘ We are willing to pay $15,000 per year for pier 40, East river, upon condition that we have it for the full term of years, and privileges of renewal, as you have it from the department of docks of the city of New York;’ and to that the plaintiff replied under date of October 13, 1882: ‘ I accept your offer for lease of pier 40, East river, at $15,000 per year, payable monthly, dated from September 18,1882.’ Upon a consideration of these two-letters and the circumstances of the parties, and the contemporaneous construction given to the agreement by the parties at the time it was made, I have come to the conclusion that the construction that should be given to the letters is that the transportation company agreed to hire the pier for $15,000 per year for the full term of five years, and also for the period for which the plaintiff had the privilege of renewal, and that for such a term the plaintiff, in substance, agreed to execute and prepare a lease to the Merchants’ & Miners’ Transportation Company.. There is nothing in the letters whereby it appears that it was the intention of the parties that these letters themselves should be the final agreement. One letter was an offer, the other was an acceptance of that offer, and the very nature of the right transferred would indicate that the execution of the formal papers to carry into-effect the intention of the parties was at the time contemplated. Whether or not the transportation company had a mere option to take a lease for the renewed term, or were bound for the additional five years from May 1, 1887, it is not necessary to determine, as, if it was necessary to give-notice of the acceptance of such an offer, such notice was given. The central idea that appears in both letters is that the transportation company waste pay $15,000 per year for the use of the dock. That is their offer, and the plaintiff accepts the offer for a lease of the pier for $15,000 per annum; and the condition proposed by the transportation company was that they were to have it (the dock) for the full term of years, and for the term for which the plaintiff had a privilege of renewal. If it had been the intention, of the parties that after the term had expired there should be a transfer of the right to-a new léase from the dock department to the transportation company, so that thereafter the plaintiff would have no further interest in the property, I think other and different language would have been used by the parties. The construction before indicated was the construction of the agreement by the parties at the time, as appears from their contemporaneous acts, and I think the construction will best carry out the intentions of the parties so far as can be ascertained. The transfer by the transportation company to the defendant was, I think, sufficient to pass to defendant whatever right or interest the transportation company had in the property or in the lease thereof. The pro vis-ion in the agreement between the transportation company and the defendant, that tire renewal was to be obtained without liability on the part of the company to the lessor under such renewal, was not a limitation upon the transfer of the transportation company’s interests, but was in the nature of a covenant between the transportation company and the defendant, and for a breach of that agreement the transportation company only can complain. I think, therefore, that the defendant is entitled to a decree for specific performance of the agreement contained in the letters of September 30 and October 23, 1883, upon the payment of the amount of rent due and unpaid at the date of the decree, and interest on the same; the form of decree to be-settled on notice. If the parties consent, a final decree can be entered in the action adjudging that plaintiff is entitled to a money judgment for the amount of such rent at the rate of $15,000 per annum, and interest, and for the decree of specific performance before indicated, in which case the plaintiff' will be entitled to the costs of the action. ”

From the decree entered on the decision plaintiff appeals.

Argued before Van Brunt, P. J., and Lawrence, J.

p. 542

Thomas B. Roohfort, (Bdward B. Whitney, of counsel,) for appellant. Root & Strong, (Blihu Root and S. B. Clarke, of counsel,) for respondent.

On September 18, 1882, the plaintiff held a lease of pier 40 from the city of New York, to expire May 1, 1887, which lease contained a privilege of renewal for five years on the plaintiff’s giving ninety days’ notice of his desire to avail himself of that privilege. Subsequently in said year the plaintiff let the premises to the Merchants’ & Miners' Transportation Company for the full term of years yet unexpired of the lease, with the privilege of renewal. In September, 1885, the transportation company let to the defendant the same premises for the balance of the original term, and assigned to him the privilege of renewal which said company had, such renewal to be obtained without liability of said company to the lessor on said renewal. Ninety days before the expiration of the lease defendant notified plaintiff that he elected to have the lease from the city to plaintiff renewed, to which the plaintiff replied, refusing to recognize any right or interest which the defendant might have. The plaintiff exercised his privilege to have the original lease renewed, and a new lease for the renewal term was duly executed to him by the city. In April the plaintiff notified the defendant that if he remained in possession after May 1st the rent would be $20,000 a year, to which notice defendant replied that the plaintiff had no power to fix jbhe rent, and on the same day notified him that as soon as the plaintiff gave him the renewal of lease, to which he was entitled, he would pay the rent called for by it. The right of the defendant to a renewal lease was denied by the plaintiff. The defendant remained.in possession, and the plaintiff commenced this action to recover for use and occupation. The defendant, answering, set up, among other things, the right to a renewal lease arising from the facts above stated, and demanded a specific performance of the agreement to give a renewal. The plaintiff replied, denying the right to renew, and upon the issues thus joined the counter-claim was tried at special term, and judgment thereon for the defendant rendered, and from such judgment this appeal is taken.

The grounds which the appellant urges are: (1) That the transportation, company could not assign its covenant for renewal in such a way as to relieve itself of liability to plaintiff; (2) that the assignment actually made by it was not complete, but dependent upon obtaining plaintiff’s consent, which was never obtained; (3) that the defendant had no authority to take the renewal lease.

The answer to the first and second grounds above stated seems to be that there is no provision in the agreement between Phelps and the transportation company that the company would not assign without Phelps’ consent, and there is nothing in said agreement which indicates that it is based on considerations personal to the transportation company. The transportation company had therefore a right to sublet and to assign its right to a new lessee for the renewal term, and such right was not in any way dependent upon the consent of the lessor. Crosbie v. Tooke, 1 Mylne & K. 431. If the plaintiff had desired to restrict this right of assignment he might easily have done so; but, not having done so, he cannot fetter a perfectly legal right by imposing a condition not contained in the original contract. The provision in the assignment to defendant, that the renewal to him should be obtained without liability on the part of the company to the lessor, in no way affects the right to a renewal, as it had the right to do; and the assignee- having because of such assignment become entitled to recover as matter of right from the lessor such renewal, no liability of the transportation company upon the renewal lease could exist. The legal relations of the parties are precisely the same as though the plaintiff had agreed to give a renewal of this lease to the transportation company or its successors or assigns. The words “successors or assigns” are entirely unnecessary to render this right to renewal transferrable.

p. 543

In the agreement to renew—there being no indication that such agreement was made upon considerations personal to. the company—it was just as transferrable as though the word “assigns” had been inserted.

The only remaining ground is that the defendant had no authority to take the renewal lease. It may be doubtful whether this question can be raised under the pleadings, no such issue being presented. In any event, if the defendant exceeded his duty as receiver in taking this lease, it is a matter for him to settle with the court whose servant he was. It in no way concerned the plaintiff. The defendant, as receiver, would be bound to the plaintiff, but whether his disbursements in connection with this lease would or would not be allowed upon the settlement of his accounts depended upon whether the court did or did not approve of his action. Furthermore, no such ground of refusal to execute a renewal was given at the time. If such ground had been stated it was possible for the receiver to remedy it. Where a refusal is absolute, it is a denial of the right under any conditions. The reservation of the right to apply for further instructions was proper, as questions may come up in the execution of the decree which may require the consideration and direction of the courts. The case upon appeal has been very imperfectly made up. Ho judgment roll is printed, and the first, second, third, and fourth pretended findings of fact in no way comply with the requirements of the Code. The judgment appealed from should be affirmed, with costs

Lawrence, J., concurs.