Friedland v. Myers — 54 N.Y. St. Rep. 697

Majority

p. 697

Abraham S. Friedland, Resp’t, v. Lewis Myers, App’lt.^[1]

(Court of Appeals,

Filed October 10, 1893.)

Headnote

1. Lease—Covenant of quiet enjoyment—Failure to give Possession-Damages.

If property is leased for a special purpose, which is known to the lessor, and possession is refused because of a prior lease to another party, or of other fault of the lessor, the lessee may recover as damages for breach of the covenant for quiet enjoyment his actual and necessary expenses incurred in preparing for the occupation of the property in the manner contemplated by the parties, such as the construction of fixtures to render the premises tenantable for the purposes for which they were leased.

2. Same—Loss on sale of perishable articles.

But the lessor is not liable for a loss on a sale at auction of a quantity of perishable goods purchased by the lessee in anticipation of commencing business, where such prior purchase was not necessary, but could have-readily been made at the time of entering into occupation.

Appeal from judgment of the supreme court, general term, first-department, affirming judgment in favor of plaintiff, entered on verdict

Lewis Sanders, for app’lt; Benjamin N. Cardoza, for resp’t.

By a written instrument, dated August 26, 1889, the defendant leased to the plaintiff the ground floor of Ho. 26 Canal street, Hew York city, for five years, commencing May 1, 1890.

The plaintiff was a druggist, then doing business in the vicinity, which he intended to dispose of and to re-establish himself in the same business upon the premises leased of the defendant. It was expressly stated that the building was-to be occupied by the plaintiff as a drug store, and there was the usual covenant for quiet enjoyment. When the plaintiff sought to take possession on May 1st, he was kept out by the tenant in possession, who claimed that his term had not expired, and that he was entitled to remain another year under an agreement with defendant which antedated the lease to plaintiff. The defendant immediately began summary proceedings in the district court to dispossess the occupant, and the plaintiff awaited their result. They were unsuccessful, and on May 27th it was adjudged that the occupant was rightfully in possession, because of the former lease to him. The plaintiff then rented another building for a store, into which he removed on June 10th. He has recovered in this action, as damages for a broach of the covenant of quiet enjoyment, a judgment for $1,328. The material facts are not disputed, and the only error assigned, upon this appeal, relates to the rule of damages applied by the trial court. Measured by the difference between the rent reserved and the actual value of the lease, no damages were proven, and there could have been but a nominal recovery on that account. But the plaintiff was permitted to prove, and the jury to consider, the expenditures and losses incurred in preparing to occupy the property and conduct his business there. A short time before the commencement of the stipulated term the plaintiff began preparations to fit the premises for use as a drug store. With the knowledge and assent of the defendant he employed an architect to make the drawings for the cases, counters and other necessary fixtures required in that business, and a cabinetmaker to construct them. The store which he subsequently rented was already furnished,.and the only use which he could make of the fixtures was to sell them at public auction at a net loss of $831. He purchased a stock of drugs to put in the store and was, as be claims, compelled to sell such as were perishable at a depreciation from the cost of $397, not including the proportional part of the auctioneer’s fees and commissions upon the sale, which may be fairly estimated at the sum of ten dollars. He had advanced $100 on account of rent, and these three matters make up the damages allowed.

Anciently, the rule was that, where the lessor was sued for a breach of a contract to give possession, the lessee could, ordinarily, recover only nominal damages and incidental expenses, but nothing for the value of the lease; but this rule was not made applicable to a case like the present, where he had covenanted to give possession when he must be deemed to have known that he had no authority to do so; and the lessor would then be held liable to

p. 699

the lessee for the loss of the bargain under rules analogous to those .applied in the sale of personal property, Mack v. Patchin, 42 N. Y., 171 , and the damages in such cases are now usually measured by the difference between the rent reserved and the actual rental -value of the premises for the stipulated term. Dodds v. Hakes, 114 N. Y., 260 ; 23 St. Rep., 192 . But other damages may also be recovered, provided they are proximate in effect, and are not .speculative or uncertain in character and were fairly within the contemplation of the parties when the lease was made, or might, have been foreseen as a consequence of a breach of its covenants. If the property is leased for a special purpose, which is know.n to the lessor, and possession is refused because of a prior lease to another party, or of other fault of the lessor, the lessee may recover .as damages his actual and necessary expenses incurred in preparing for the occupation of the property in the manner contemplated by the parties. Driggs v. Dwight, 17 Wend., 71 ; Giles v. O'Toole, 4 Barb., 261 ; Lawrence v. Wardwell, 6 id., 428 ; N. Y. Academy v. Hackett, 2 Hilt, 217; Adair v. Bogle, 20 Ia., 238 ; Hall v. Horton, 44 N. W. Rep., 569 ; Poyoskey v. Munkwitz, 68 Wis., 322 ; Jaques v. Millar, L. R., 6 Ch. D., 153; Hexter v. Knox, 63 N. Y., 563 ; Bernstein v. Meech, 130 id., 354; 41 St. Rep., 700 .

Under this rule, we think the actual expenses paid or incurred by the plaintiff in the construction of the necessary fixtures to render the premises tenantable for the purposes for which they had been leased were'properly proven and submitted to the jury for their consideration in estimating the quantum of damages recoverable. The loss of these expenditures may fairly be considered as naturally arising from the default of the defendant according to the usual course of things. The plaintiff was restricted by the lease in the use of the premises, and he could not underlet without the written consent of the defendant. If the plaintiff had deferred the work of preparation for the occupancy of the property until possession had been obtained, some portion of the term would have been practically lost before the necessary equipment for his business could have been furnished and made available. The lessor must have known that a prudent business man would, so far as practicable, cause the necessary fixtures to be constructed and in readiness for use at the commencement of .the term, so that he might then promptly enter upon the successful prosecution of the business which it was the object of the lease to secure to him. But the evidence discloses that the defendant had actual knowledge that these expenditures were contemplated and encouraged the plaintiff to make them. An architect was employed by plaintiff to furnish the drawings and .specifications of .the fixtures, and the occupant of the store refused to allow him to make the required measurements for that purpose. The plaintiff informed the defendant of the situation and requested to know what he should do, saying that he did not wish to lose time after May 1st in procuring this work to be done, and stating the amount which he intended in this way to expend. The defendant then went with the plaintiff t»

p. 700

his own architect, who had the plans of the store, and directed, him to furnish plaintiff’s architect with these plans in order that he might make the plans for the fixtures, which was done. If the-plaintiff had then been notified by his lessor that possession of the demised premises could not be given as covenanted in the-lease, or that it was even doubtful whether it might be, it is not probable that these expenditures would have been incurred, or, if they had been, the loss could not have been imputed to the lessor’s broken covenant. The defendant must then have known-that if he failed to give possession, as agreed, the plaintiff might, suffer damage to the extent of the cost of the fixtures. As late-as April 14th the defendant made another written lease with the-plaintiff to rent him for the same term the second floor of the; building, to be used in connection with the drug store, and agreed to construct an iron stairway between the floors in the-rear of the store. The conduct of the defendant throughout was such as to invite these expenditures, and was equivalent to-an assurance to the plaintiff that they might be incurred with, safety.

' It need not be questioned that the defendant acted in good faith. He evidently misjudged as to the legal effect of the transaction with the occupant, and did not understand that it. created a tenancy for another year; but it was so adjudged in the proceedings brought to dispossess him, and the consequence of the defendant’s mistake must be borne by him, and cannot justly be visited upon the plaintiff.

But we fail to discover any sound principle upon which the defendant can be made responsible for the plaintiff’s loss upon the sale of his stock of drugs. The defendant could not have anticipated the purchase of a large invoice of perishable drugs by the plaintiff before the commencement of the term of the lease. This purchase in advance was not necessary in order that plaintiff might have the benefit of the full term in his business. The market, or place of purchase, was in the same city, and the plaintiff would have sustained no special loss if he had deferred their purchase until he had acquired possession. They could have been delivered on the same day when ordered, or the following day, in the usual course of the trade, and no material delay would have resulted. It would seem to have been the part of ordinary business prudence to have waited until he bad obtained control of a place where they could be stored and offered for sale. The plaintiff, unquestionably, had the right to purchase-his stock of goods before he was entitled to the occupation of the-store. But if he did, we think he assumed the risk of their depreciation in value, in case the defendant failed to give him possession. The rule might be different if he had been compelled to send to a distant market to make his purchases, and a long time-must intervene before they could be delivered.

The defendant’s exceptions are sufficient to present this question upon appeal. The evidence showing the purchase and depreciation in value-of the drugs was duly objected to when offered, and an exception taken. The court was requested to charge the-

p. 701

jury that the difference between the purchase price and that realized upon the sale was not the measure of plaintiff’s damages. This was refused, except as already charged, and the defendant excepted. The court had previously charged upon this point that if they found there was a breach of the covenant in the lease .it was their duty to consider the item of loss upon the sale of the drugs, and if they considered that the loss was really sustained by the plaintiff they might award him that amount as compensation. Both by the exception to the evidence and by the exception to the charge, we think the question is fairly presented for review.

The judgment and order must be reversed and a new trial granted, costs to abide the event, unless plaintiff stipulates, within thirty days after the filing .of the remittitur in the court below, to deduct from the judgment entered the sum of $407.-48, and interest from December 18, 1891, and five per cent extra allowance thereon ; and if the plaintiff so stipulates, then the judgment, as so modified, is affirmed, without costs to either party in this court.

All concur.