Noel v. Herman Bencke Lithograph Co. — 33 N.Y. St. Rep. 759

Majority

p. 759

Emil R. Noel, Resp’t, v. The Herman Bencke Lithograph Co. and Herman Bencke, Imp’ld, App’lts.

(New York Superior Court,

General Term,

Filed Nov. 3, 1890.)

Headnote

1. Lease—Covenant to pat increase of insurance.

A clause in defendants’ lease provided that they would he responsible for any increase of insurance over a certain rate which might be imposed by insurance companies on the building or the stock and fixtures of any other tenants. At the time the lease was executed, the rest of the building had been let, and cost of insurance fixed, and plaintiff was liable to the other tenants for any increase of insurance caused by the uses for which other parts of the building were leased. Immediately thereafter the rates of insurance were increased on other tenants on account of defendants’ business, which increase plaintiff was obliged to pay. Reid, that the provision of the lease covered such a case, arid that plaintiff was entitled to recover.

2. Same.

At the time of signing the lease plaintiff's agent stated that the only chance defendants run would be about a certain amount. Reid, that this was a mere expression of opinion, and that if defendants wished to limit its liability to a certain amount, the limitation should have been inserted in the lease.

Appeal from a judgment in favor of the plaintiff and against the defendants, appellants, for the sum of $974.85, rendered upon a verdict directed by Judge Truax at a trial term.

p. 760

The action was brought to recover the excess of insurance premiums over one per cent, imposed upon the tenants of a building owned by the plaintiff and part of which was leased to the defendants.

The clause of the lease upon which the defendants’ liability was claimed is as follows: “ Parties of the second part (defendants) hereby agree to be responsible to the party of the first part (plaintiff) for any increase of insurance over one per cent, premium per annum which may be imposed by the various insurance companies on the building or on the stock and fixtures of any of the tenants in the build ing.”

It appeared by the evidence on the trial that the plaintiff, by reason of covenants in leases with B. Sternberg & Co., K. Man-dell & Co. and H. II. Cahn, was liable to them for increases in insurance premiums caused by any extra hazardous risks in the building; that the insurance of these tenants was increased immediately after the entrance of the defendants as tenants; that the increase was caused by the nature of the business (lithographing) carried on by the defendants, and that the plaintiff had paid to the above named tenants the sum of $812.25, being the excess of premiums over one per cent, paid by them.

Blandy & Hatch, for app’lts; Be Lancy Nicoll, for resp’t.

Under this agreement the defendants agreed to be responsible to the plaintiff for any increase of insurance over one per cent, per annum which might be imposed by the various insurance companies on the building or on the stock and fixtures of any of the tenants in the building.

There is no express provision that such increase for which the defendants were to be liable should be caused by the business or acts of the defendants. Nor is the liability confined to the amount that the plaintiff should have to pay either to the assurance companies or to the other tenants. The express agreement is that the defendants should pay to the plaintiff the increase of insurance over one per cent, per annum. Considering the circumstances surrounding the execution of the lease the intention of the parties is clear.

Plaintiff had become liable to other tenants to pay the increased insurance in case other parts of the building should be leased for purposes that would raise the cost of insurance. The building, with the exception of that portion about to be leased to the defendants, was all occupied, the uses to which it was to be put ascertained and the costs of insurance fixed, and the only use of the building that could affect this liability was the use to which defendants would put the part of the building leased by them, and it was clearly to meet such an emergency as has arisen, and to prevent any dispute as to the causes of the increase in the cost of insurance, that the absolute liability for such increased cost was imposed upon the defendants, and having agreed to that liability, I can see no reason why they should not be held to their agreement

Counsel for the defendant conceded that the amount that

p. 761

plaintiff claimed was correct, under the ruling of the court, unless the counterclaim was established.

We agree with the court below that defendant failed to establish the counterclaim set up in the answer, except to the extent that it was allowed.

The statement of the agent of the plaintiff as to the extent of the defendants’ liability under the clause in question was not in the nature of a warranty. The statement was made when defendants hesitated about signing the lease that the only chance defendants would run would be “ about whatever is over one per cent, on $40,000 of insurance.”

It is clear that this was a mere expression of opinion as to the amount of the insurance that would be affected by the business that defendants were about to carry on in the building. If defendants wished to limit the liability to the increased costs on $40,000 of insurance, that limitation should have been inserted in the lease. No request was made to have such a limitation inserted. This is not a case of mutual mistake which would justify the court in reforming the instrument by the insertion of such a clause, as it was never intended by either party that there should be an express limitation of the liability, and the evidence does not show mistake on one side and fraud on the other as would justify a reformation, and I think the parties must be held to the instrument as executed.

We have examined the other question presented, but think there was no error committed that requires a reversal of the judgment. The judgment must, therefore, be affirmed, with costs.

Freedman, J., concurs.