Loeser v. Liebmann — 50 N.Y. St. Rep. 382

Majority

p. 382

Frederick Loeser, App'lt, v. Herman Liebmann et al., Resp'ts (2 cases).^[1]

(Court of Appeals,

Filed February 7, 1893.)

Headnote

Landlord and tenant—Lease—Fixtures.

A lease for eleven years of store property required the lessees to erect a certain building and contained a provision “ that all fixtures, counters, shelving, boilers, machinery, elevators, lighting and heating apparatus in said buildings at the expiration of this lease are to become the property of the lessees” in case they should be called upon to erect party walls “at the expiration of this lease or vacating of said premises by the lessees before such expiration,” but in case the lessor shall not demand their erection, then said fixtures, etc., “to become the property of the lessor at such expiration.” Meld, that the lessor could await the expiration of the tenancy before exercising his option to compel the tenants to erect division walls or to retain the premises in their existing condition, and the title to the fixtures, etc., became vested in the landlord “at such expiration,” and the words were not used to limit his right to fixtures only which might not then have been removed from the premises.

Appeal from judgment of the supreme court, general term, second department, affirming judgment of special term of Kings county dismissing plaintiff’s complaint on its merits and granting defendants additional allowance.

On May 1, 1884, the plaintiff executed to the firm of Frederick Loeser & Company, of which firm the plaintiff was a member, a lease of the premises known as numbers 10 and 12 Tillary street, Brooklyn, for eleven years from said date. In 1887, the plaintiff

p. 383

retired from the firm, and the defendants succeeded to the business under the firm name of Liebmann Brothers & Owings, and, with the consent of the plaintiff, became the assignees of the lease.

The firm of Frederick Loeser & Company were dealers in dry goods, and, when the lease of May 1, 1884, was executed, held a lease of premises numbers 14 and 16 Tillary street, which adjoined numbers 10 and 12, from one Emilie Loeser, dated May 1, 1880, for the term of ten years, which the firm occupied for their business.

The plaintiff became the owner of the premises numbers J 2 and 14, and of the lease of May 1, 1880. It was contemplated when the lease of May 1, 1884, was made, that the premises in both leases should be occupied as one store, having no divisions. The lease of May 1, 1880, contained a covenant by the lessees, on the expiration of the lease, to disconnect the buildings, on the premises leased, from the adjoining buildings, by constructing proper walls at their expense, and that all improvements placed by the lessees in the said buildings should be deemed fixtures not to be removed. It is inferable that Frederick Loeser & Company, at the date of the lease of May, 1, 1880, also occupied the adjacent premises numbers 10 and 12.

The lease of May 1, 1884, contains the following provisions, which have given rise to the present controversy:

“ And the parties of the second part (lessees) hereby agree to forthwith demolish the buildings now upon the premises hereby let and leased, and to forthwith erect, at their own cost and expense, thereon, a building as contemplated by the plans and specifications drawn up by Gr. L. Morse, architect, and approved by the parties hereto, and further to erect substantial party walls, at the expiration of this lease or vacating of said premises by the lessees before such expiration, between the buildings now known as Nos. 10,12 and 14 Tillary street, in case the party hereto of the first part so requires and demands, with a separate entrance to each store on Tillary street for ground floors, and a separate stairway leading to upper stories from Tillary street, and with separate gas, water and sewer connections for each building.” “ And it is further mutually agreed between the parties hereto that all fixtures, counters, shelving, boilers, machinery, elevators, lighting and heating apparatus in said buildings at the expiration of this lease are to become the property of the lessees in case the lessees shall be called upon to erect the party walls hereinbefore contemplated to be built, but in case the lessor shall not demand the erection of said party walls, then the said fixtures, counters, shelving, boilers, machinery, elevators, lighting and heating apparatus to become the property of the lessor at such expiration.”

The lessees, pursuant to their covenant above recited, erected a new building on the premises Nos. 10 and 12, and occupied it in connection with the building on Nos. 14 and 16 as a single store, and they placed in the basement of the new building boilers and machinery for lighting and heating the whole premises occupied by them, and placed elevators in Nos. 10 and 12, which connected with all of said premises.

p. 384

This action was brought to procure an injunction restraining the defendants from removing from Nos. 10 and 12 any of the articles specified in the lease, placed there by the lessees, upon the allegation that they threatened, and were about to remove them. The special term rendered judgment dismissing the complaint on the merits, which was affirmed by the general term. Other facts are stated in the opinion.

William G. Wilson, for app’lt;

Freling E. Smith, for resp’ts.

The court found that the defendants had not threatened to remove from the leased premises any of the fixtures mentioned in' the lease. This finding was based on conflicting evidence, and having been affirmed by the general term is not subject to review in this court.

Upon this finding the complaint should have been dismissed on the ground that no case had been made for equitable relief.

The complaint sets forth the covenant in the lease of Nos. 10 and 12 Tillary street, Brooklyn, under which the plaintiff claimed that the “fixtures, counters, shelving, boilers, machinery, elevators and heating apparatus ” placed in the building by the defendants could not be removed by them during the term. It was not alleged that the defendants were proceeding to remove the articles mentioned, but the only ground alleged for an injunction was that they threatened such removal, without awaiting the expiration of the lease. This ground having been found not to exist, the whole basis of the equitable action failed, and the proper disposition of the case would have been to dismiss the complaint, without determining the construction of the covenant, but the trial court proceeded to construe the covenant, and held that it extended only to such articles of the kind mentioned as should be in the building at the time of the expiration of the lease, May 1, 1894. In substance the court held that the lessees were entitled to remove the whole of the fixtures at any time prior to the expiration of the term, and that only such fixtures as they should permit to remain on the premises until that time were subject to the operation of the covenant, and directed judgment in favor of the defendants dismissing the complaint on the merits, and judgment was entered in conformity with the decision.

We do not concur in the construction given to the covenant by the courts below. The lease was for a term of eleven years, and contained a covenant by the lessees against assigning or underletting, or making any alterations in the new building without the written consent of the lessor. The lessees were to erect a new building on the leased premises at their own cost, according to plans, which had been agreed upon. It is a clear inference that it was contemplated by the parties to the lease, that for the beneficial use of the combined property embraced in the two leases the lessees were to place in the new building a plant for lighting and heating the whole premises, and elevators communicating with the different floors of the combined buildings. On the termination of the lease the landlord might desire to continue to rent the premises embraced in both lenses as one store, or he might consider it

p. 385

more advantageous that the premises should be divided into separate stores. It is plain that the covenant in question had reference to this situation. The option was, therefore, reserved to the landlord to require the tenants on the expiration of the lease to erect division walls, dividing numbers ten and twelve into separate stores, or to retain the premises in their existing condition, In case the landlord elected to retain the premises as they were, the tenants were to be released from their covenant to build division walls, but in that case the fixtures were to become the property of the landlord, as they would still be required for the use of the premises as a whole. In .case the landlord should require the tenants to build the division walls, then the fixtures were to belong to them, and the right to remove them would necessarily follow. The covenants provided for mutual equivalents. If the tenants were required to build the walls, they were to have the fixtures. If not required to build them, the landlord was to have the fixtures. In the one case the landlord would take the walls in place of the fixtures, and in the other, the tenants would take the fixtures and build the walls.

It is also plain, we think, that the landlord could await the expiration of the tenancy before exercising his option. The tenants had bound themselves to erect the walls “ at the expiration of the lease,” or upon vacating the premises before that time. This covenant is followed by the provision defining the rights of the parties in the fixtures. The construction of the courts below is sought to be sustained upon the words, ‘‘ in said buildings at the expiration of the lease,” which are found in the clause which declares the right of the lessees to the fixtures in case they are required to erect the walls. It is only, as is insisted, fixtures “in the building at the expiration of the lease” which are to become the property of the lessees, and this implies, as is claimed, that only fixtures not removed by the tenants before that time were contemplated as within the scope of the alternative clause.

But the alternative clause which regulates the right of the landlord, in case he elects not to require the erection of the partition walls, declares that in that case the fixtures are “ to become the property of the lessor at such expiration." The words “ at such expiration ” point the time when the title is to become vested in the landlord, and were not used to limit his right to fixtures only which might not then have been removed from the premises. If under the option the tenants became entitled to the fixtures, their rights were protected by giving them the fixtures on the premises at the expiration of the lease, since such as they might have removed before that time they would have had the benefit of already. But the right of the landlord to take the fixtures in lieu of the walls, would have been a barren one if the tenants might rightfully remove them all during the term.

There is a little obscurity in the language of the covenants, but construing them according to their manifest purpose, it was the intention of the parties to subject fixtures placed by the tenants in the building during the term to the exercise of the option

p. 386

of the landlord at the expiration of the lease. This construction does not involve the inconveniences insisted upon. It would not prevent changes and substitutions from time to time by the tenants of new arrangements made in good faith and in the' ordinary course. But they could not, we think, dismantle the premises and remove fixtures to deprive the landlord of the benefit of his option.

We think the judgment should be modified by declaring the complaint dismissed on the ground that no case of equitable cognizance was established, and, as so modified, the judgment should be affirmed, with costs to defendants.

All concur.

The following is the opinion in action No. 2.

We think no case for an injunction was made out, assuming the construction of the lease claimed by the plaintiff to be the true one.

The judgment should be modified as in the case No. 1, between the same parties, and, as modified, it should be affirmed, with costs to defendant.