Hibbard v. Ramsdell — 27 N.Y. St. Rep. 843

Majority

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Cyrus D. Hibbard, App’lt. v. Chauncey Ramsdell et al., Resp’ts.^[1]

(Court of Appeals, Second Division,

Filed December 10, 1889.)

Headnote

Lease—Assignment of interest in—No fiduciary relations between PARTIES TO.

Plaintiff sold his interest in a lease limited on the lives of third parties to defendant for $800, payable in installments. Defendant having^ paid two installments obtained a new lease from the assignee of the original lessor through whom plaintiff had taken, the lives upon which the first lease rested not having been in being at the time of the sale by plaintiff, though neither knew it. Plaintiff sues defendant to compel him to assign to him the rights which he acquired under the new lease, to be held by plaintiff as security for the purchase price of plaintiff’s interest in the unexpired term of the first lease. Held, that there were no such fiduciary relations between vendor and vendee as would require defendant to comply with plaintiff’s demand.

This is an appeal from a judgment of the general term, fourth ■department, affirming a judgment rendered at special term directing the dismissal of the complaint.

The action was tried before a judge at special term. The plaintiff asked for equitable relief, that a certain lease dated October 1, 1880, made and executed to the defendant Eamsdell be declared to be made for the benefit of the plaintiff and held as security for the payment of the contract price upon the sale of the premises described in the lease by the plaintiff to the defendant Eamsdell, and that said purchase price be adjudged to be a lien upon the defendant Eamsdell’s leasehold in the premises, and that plaintiff’s interest be declared prior to the interest of the said defendant Eamsdell, and that said Eamsdell be adjudged to account for the income and profits of the premises and that the plaintiff recover judgment for the amount due upon the purchase price of the premises.

From the findings in the case it appears that on the 1st day of May, 1816, John J. Morgan, who was seized in fee simple of the premises described in the complaint and in the lease, on that day executed a lease to Eesolved W. Fenner, during the lives of Christopher C. Fenner, John A. Fenner and Lydia Fenner, and the survivor or survivors of them, at the annual rent of twenty dollars and thereupon said lessee entered into the possession of the premises. At the date of the execution of said lease Christopher C. Fenner was fifteen years of age; John A. seven years of age and Lydia about twelve years of age; that through divers mesne conveyances and assignments the lessee’s interest became vested in the plaintiff Cyrus D. Hibbard; that on the 18th of February, 1879, said Hibbard and the defendant William C. Eamsdell entered into a written contract by which the plaintiff agreed to sell and Eamsdell agreed to purchase the said lease in consideration of $800 to be paid in installments, on the first day of April, 1879, and six ■other installments annually on the 15th day of March, 1880, and subsequent years with interest until fully paid.

At the time of entering into said contract neither party thereto knew that the lives upon which the lease rested were not then in

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being. Under said agreement the defendant entered into the occupation of the premises.

Thereafter, and on May 1st, 1879, and May 1st, 1880, the defendant paid the rent reserved in said lease to the plaintiff, which rent was paid by the plaintiff to the original lessor, his heirs or assigns.

The defendant Eamsdell has paid under said contract two instalments, leaving due thereon some $604.90. At the time of the making of the contract between plaintiff and defendant, it was not agreed between the parties, either in the contract or otherwise, that the defendant should take any renewal of the lease of the land in the name or for the benefit of the plaintiff, nor for himself or for any other.

Prior to 1879 the defendant Morgan Dix succeeded to the rights of the original lessor, John L. Morgan. Said Morgan had been, prior and at the time of the giving the lease in question, the proprietor of some five or six thousand acres of land in Brookfields, Madison county, and said land had been leased to various persons under similar leases as the one under consideration, and that upon the expiration of these leases, if the land was not sold by the lessor, it was the custom to give the tenant in possession, if he was a satisfactory tenant, the first chance to take a new lease for the term of ten years, if he was willing to take the same and pay the rent fixed therefor, which rent was determined by the appraisal of the rental value of the land made by the lessor or his agents; that in June, 1880, the agent of the defendant Dix entered upon the land in company with one Wait Clark, a former agent, and found the defendant in possession, and appraised the rental value thereof at $1,950, and fixed the annual rent at $58.50, and informed the defendant that he must take a new lease for ten years at that annual rent, or that the lessor would lease the land to another person. The defendant made no representations as to the existence or non-existence of the plaintiff’s interest in the premises, or in the original lease, and did not disclose the terms of the contract between plaintiff and himself, nor were the terms called for by the agent, or alluded to in any manner.

In receiving the rent for 1879 and 1880, the name of the plaintiff was entered upon the rent book as the person who paid the rent. At that time said Clark was an agent of the defendant Dix, kept the books with the receipt of rent, and knew the relations-between the plaintiff and the defendant in respect to said land under said contract. Shortly after the time when defendant’s agent and said Clark made the appraisal and fixed the annual rent at $58.50, he drafted a lease of said premises, reserving an annual rent of $58.50, and determinable in ten years from its date, and sent it to the defendant, and the same was duly executed by the defendant Ramsdell and the defendant Dix.

Some time after October 1, 1880, the plaintiff in this action learned of the execution of the lease from Dix to the defendant Ramsdell, and in 1882 demanded that the defendant Ramsdell pay the installments past due and unpaid upon the contract, and that said defendant Ramsdell assign to him the lease of October 1,1880?

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-as security for the performance of said contract, which demand the defendant refused to comply with, but offered the plaintiff $100 in discharge of further sums due upon said contract, or offered to submit their differences to an arbitration. These offers the plaintiff declined and insisted upon his demand.

The plaintiff in March, 1882, tendered to the defendant the rent which he had paid under the new lease, with interest thereon, which tender the defendant declined to accept The action was commenced June 20, 1882; the trial judge found, as conclusion of law, that at the date of the contract, February, 1879, the plaintiff had no leasehold interest in the land, at the date of the execution of the contract, and transferred no estate to the defendant Eamsdell, and that the plaintiff is unable to transfer to the defendant the leasehold which he contracted to sell. That no fiduciary relations existed between the parties to this action in respect to the land of May 1, 1816, with the original lease, or the lease of October 1, 1880; that the plaintiff is not entitled to a judgment declaring the lease of October 1,1880, a renewal of a lease of 1816, or that the defendant held it as trustee for the plaintiff, and directed a judgment in favor of the defendant Eamsdell against the plaintiff, dismissing the complaint in this action, with costs, and also a judgment against the defendant Dix, but without costs.

John G. Gibson, for app’lt; Henry T. Utley, for resp’t Ramsdell; Loton S. Hunt, for resp’t Dix.

We do not deem it necessary in disposing of this appeal, in view of the very able opinions delivered by the special and general terms of the court below, to enter into a very full or elaborate discussion.

The judgment of the court below might well be affirmed upon the views presented in those opinions. It was held upon a consideration of the facts found by the learned trial court in this action, that there were no confidential, fiduciary or trust relations between the plaintiff and the defendant, at least none that should require the defendant to assign to the plaintiff the lease the defendant Ramsdell entered into with the defendant Dix, as security for the installments owing to plaintiff under the contract of purchase and sale as demanded by plaintiff.

The appellant’s counsel has cited upon his brief a large number of cases establishing and illustrating relations of trust and confidence between partners, lessees, executors and trustees. I have examined most of the cases referred to and they do not hold or determine, as it seems to me, that the relations between the plaintiff and defendant under the contract between them, for the sale and purchase of the premises, are of that character.

In this statement I assume there was no agreement, express or implied, that the defendant would apply for or take a new lease of the premises for an additional term, either for the benefit of the defendant, or of the plaintiff, or at all. Ho such agreement is alleged in the complaint, and the trial court has found there was no such agreement in fact.

The plaintiff is therefore compelled to rely for the existence of

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the fiduciary relations which he invokes to give him the right to-the renewal lease between the defendants Ramsdell and Dix, upon the contract of sale and purchase.

Now it seems to me that the relations created between plaintiff' and defendant Ramsdell by virtue of that contract are not at all those of landlord and tenant, or of trustee and cestui que trust,. but are those, or are analogous to those which exist between vendor and vendee. By the express terms of the contract the plaintiff agrees to sell to the defendant Ramsdell all the farmer’s “ right, title and interest to the premises embraced in the old lease, or original lease;” said “interest consists of a leasehold purchased by and assigned to the defendant Ramsdell, upon payment of $800,” in installments with interest; said Ramsdell was also to pay the rent reserved in the original Morgan lease to plaintiff, and upon payment of said purchase money the plaintiff agreed to execute and deliver an assignment of the original, Fenner, lease to the defendant Ramsdell. This was but a contract by plaintiff to sell and by Ramsdell to purchase plaintiff’s right, title and interest under the original lease. When this contract shall have been executed it will be simply a quit claim deed without any covenants.

Thus it appears there were no covenants creating fiduciary or confidential relations, and the true relations, as it seems to me, are those which spring from the relation of vendor and vendee. From this relation the plaintiff claims that he is entitled to the second or renewal lease; or in other words, that the defendant Ramsdell was, in taking the new lease, the plaintiff’s trustee or agent, and made the new lease for the benefit of the plaintiff.

I do not think the defendant Ramsdell owed the plaintiff any allegiance or duty of that character. In Watkins v. Holman, 16 Peters, U. S., 54, it is said by the court in discussing such relations that “the relation of landlord and tenant in no sense exists between vendor and vendee.” Osterhout v. Shoemaker, 3 Hill, 513 -518, “ The grantee takes the land to hold for himself and to dispose of it at his pleasure; he owes no faith or allegiance to the grantor, and he does him no wrong when he treats him as an utter-stranger to the title.”

It has been often held that the grantor in fee may purchase in an outstanding or hostile title to his grantor and fortify his own defective title and thus make good to himself what his grantor’s deed with its covenants failed to do. Kenada v. Gardner, 3 Barb., 589 .

Was it ever claimed that a grantee under a deed containing the fullest covenants, but which conveyed no title to him because the-grantor had none, could be compelled to give the title which such grantee had purchased from another to his grantor, who took his money but gave him nothing for it? Or to state a case more nearly resembling the case under consideration, that a grantor who had no title and so conveyed to his grantee none, might nevertheless compel such grantee to convey to him the title he purchased of another, so that the grantor might have good security for the payment of a mortgage which the grantee

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had given to his grantor to secure the purchase money but whose deed conveyed nothing to the grantee?

It was found and not disputed, indeed it was alleged in the complaint, that at the time the plaintiff assumed to contract to sell the premises to defendant, the former lease had expired and that there was no legal right in the lessee or assigns to compel a renewal and that the renewal depended upon the option of the lessor and that option depended upon such terms as to the amount, of rent and character of the lessee as should suit the landlord, though preference was generally given the tenant in possession if he had the qualifications and would assent to the terms dictated by the landlord as to the amount of rent and duration of the term of the new lease. If any duties spring from a contract in these circumstances, I should expect that one of them would be that the vendor who held the lease and must have known that it had expired or nearly so, and had sold it for eight hundred dollars, should himself have undertaken to have it renewed.

But if the vendor was not disposed to do this he should at least have reminded his vendee, who had no knowledge or means of knowledge at hand, as to the termination of the lease and should have induced the defendant, the vendee, to procure the renewal of the lease. But the plaintiff took no agreement from the defendant to do so, but waited until the defendant had obtained a new lease at a rent more than double that of the old lease and for a term of only ten years, and then demanded that the defendant should assign it to him to secure the payment of the purchase price.

I am not unaware that there are a class of cases, from which the appellant has collected a large number, where the renewal of a lease upon the same terms will be held for the benefit of a mortgagee of the first leasehold estate, or one partner has obtained a renewal in fraud of the rights of his copartner under certain circumstances. The reason of the rule in the case of a mortgagee is because in the mortgage it was covenanted, or the law implied a covenant of title, and thereafter the mortgagor would be estopped from claiming that the title he had expired. But these principles are not applicable to this case.

I am not unmindful in the expression of these views that in one respect the relation between vendor and vendee entering under a contract to convey is analogous to the relation between landlord and tenant, and that is this: that neither the tenant nor such vendee will be heard to deny the title under which he entered into the possession of the premises.

That relation is based upon the principle of estoppel in the one case and in the other upon the principle that a party cannot rescind his contract without restoring what he has received under it, viz., possession.

When, however, either the tenant or such vendee has surrendered his possession, he may contest his landlord’s or his vendor’s title in an action of ejectment by showing a better title derived from another, or by any other legitimate defense.

But that principle is not involved in this case. The action is-

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brought not to recover the possession of the premises contracted to be _ sold, but mainly to compel the defendant to assign to the plaintiff the rights which the defendant acquired under the new lease, to the end that plaintiff may hold and wield it as security for the payment of the purchase price of plaintiff’s interest under the expired lease.

This is the equitable relief sought by the plaintiff in this action, and I do not think he has shown himself entitled to it.

The judgment should be affirmed, with costs.

_ All concur, except Follett, Ch. J., and Haight, J., not sitting.