Robinson v. Beard — 55 N.Y. St. Rep. 302

Majority

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Jeremiah P. Robinson et al., Individually and as Ex’rs, Resp’ts, v. William H. Beard et al., Ex’rs, App’lts.^[1]

(Court of Appeals,

Filed November 28, 1893.)

Headnote

Lease—Renewals—Construction.

Defendants’ testator, who was the lessee of certain premises under a lease containing optional covenants for renewal, executed a sub-lease to R. & W., terminating at the same time as his lease, and also containing a. covenant to grant a new lease at its expiration, to contain a covenant, at his option, to pay the value of the buildings or grant another lease. It also contained a provision at the end that any rights or privileges granted at any time to him in regard to the renewal of his lease, or in relation to* the use and enjoyment of said premises, should inure to the benefit of R. and W. The renewal lease when given contained a covenant for the payment of the value of the buildings at the expiration of the term or the granting of a further lease'which lease, “if the party of the first part shall elect to grant the same,” should contain certain covenants, but also contained the last clause of the former lease, ^estator obtained a further lease at the end of that time, but refused to renew the sub-lease, electing to pay the value of the buildings. Held, that the right of election by defendants’ testator with respect to granting a new lease was qualified by the •subsequent and last clause of the lease, and that such clause entitled the sub-lessees to as many new terms of lease as their lessor shall obtain from the owner of the property by virtue of the covenants in their lease to him.

Appeal from judgment of. the supreme court, general term second department, affirming judgment in favor of plaintiffs.

Action to compel the defendants to execute and deliver to the plaintiffs a renewal of a lease, which the defendant’s testator had made to Robinson and Woodruff, the predecessors in interest of the plaintiffs, of property in Brooklyn. The facts found by the trial court are not in dispute; but it is contended that a different legal conclusion should have been drawn.

In 1849 the trustees, etc., of the Brooklyn Benevolent Society leased a certain tract of land for a term of twenty-one years to William H. Beard, by a lease which contained a covenant for a renewal, dependent upon the lessee’s performance of conditions and covenants specified. It was agreed that the second lease should contain the same covenants and conditions, except the

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covenant of renewal; in lien of which a covenant should be inserted giving an election to the lessors, at the expiration of .the term, either to pay the value of the buildings or to grant a new,, or third, lease for a further "term of twenty-one years; which should contain like covenants and conditions, except as to a further renewal; but wherein should be a provision that at the expiration of the term payment should be made of the value of the buildings, or for the giving of a further, or fourth, lease for another term of twenty-one years, and containing the covenants of the existing lease.

' In 1851 Beard made to Robinson and Woodruff a sub-lease of a portion of the leased premises for nineteen years, expiring contemporaneously with the principal lease. Beard agreed that at its expiration he would grant a new lease to his lessees for a further term of twenty-one years, for a rent to be ascertained, and to contain like covenants, etc., except the covenant of renewal; instead of which there should be inserted the optional covenant on the lessor’s part to pay the value of the buildings, or to grant a new lease for a further (third) term of twenty-one years; which lease should contain like covenants, etc., except as to further renewal, and should provide for the payment for the buildings, or for the giving of a new, or fourth, lease, etc., etc. At the end of the instrument was inserted the following clause:

¡ “And it is further agreed and understood .that if any rights or privileges shall at any time be granted by the said The Brooklyn Benevolent Society to the party hereto of the first part (i. e., Beard) in regard to the renewal of the aforesaid lease, made by them to the party hereto of the first part, or in relation to the use or enjoyment of said premises, then the same rights and privileges so granted shall accrue and inure to the benefit of the parties of the second part in the same manner as if they had been herein specifically granted.”

In 1870 Beard executed a new (sub) lease of the premises to his lessees for the term of twenty-one years, with various covenants, among which was one for the payment, at the expiration of the term, of the value of the buildings, or for the granting of alease for a further term of twenty-one years, which lease, “ if the party of the first part shall elect to grant the same," shall contain like covenants, etc.., “except as to the further renewals of the said term as are hereinbefore contained,” and be for a further term of twenty-one years, at a rent to be ascertained, and shall contain a provision, either for the payment of the value of the buildings, or for the giving of a new lease for a further term of twenty-one years and with like covenants, etc., “except the covenant of renewal.” The last clause of this new or sub-lease of 1870 was similar to and in the same language as the one quoted from the first lease made by Beard. In 1891 the defendants were granted a new lease from the benevolent society for twenty-one years. They, however, claiming the right to an option on their.part, notified these plaintiffs of their election to pay them the value of their buildings. The plaintiffs claimed to be entitled to a new lease for twenty-one years. This the defendants refused, and plaintiffs brought this

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action to compel them to do so. The courts below have upheld the plaintiffs’ right to a new lease, and the defendants have appealed to this court.

Henry Hinman, for app’lts ; William G. Choate, for resp’ts.

The appellants’ counsel, in contending that it was absolutely optional with his clients to grant an additional term to the respondents, has made an ingenious argument, which he bases ■upon the apparent incompatibility of a construction of the last clause in the lease which would make their right to elect contingent upon what the owners might elect in respect to a new lease to them, with the right to elect previously given to them in the body of the lease to terminate the tenancy in 1891. We think the inconsistency is more apparent than real, and that a careful consideration of the lease to the plaintiffs, in connection with the principal lease by the society, and with all the circumstances, renders it sufficiently clear that the last clause was intended to qualify the option which had preceded. Beard’s lease, in 1849, from the society gave him an absolute right to a renewal of that lease, if he had complied with the agreements therein on his part, but left it optional with the society, at the expiration of such renewal term, to grant a further, or third, lease, and again, at the expiration of the third term, to grant a further, or fourth, term. Thus Beard was assured of forty-two years of lease, and might possibly hold the premises for eighty-four years in all, if the owners did not elect to terminate the holding and pay him the value of his improvements. Two years after obtaining his lease Beard carved -out of the leasehold estate a lesser leasehold estate in favor of Robinson and Woodruff, providing in the lease to them for a first term of nineteen years, and agreeing that they should have a further term of twenty-one years, if they shall have complied with the conditions and covenants of the lease. The coterminous periods -of time and a similarity in provisions with the original lease exhibit a plan to substitute his lessees in his place in respect to that portion of the leasehold estate, which the final clause, expressly extending to them such rights and privileges as he shall, at any time, acquire from the owners, makes indubitable. The leases are drawn with great precision and prevision in the arrangement of the future relations of the parties and in the definition of their relative obligations and duties; and it is very evident that in drawing the first renewal lease of 1870 to Robinson and Woodruff Beard’s draughtsman followed as his model for covenants and conditions the first lease of 1851. In this way, doubtlessly, occurred inadvertently the insertion of the exception as to further renewals, when providing for a new lease with like covenants, etc., as were thereinbefore contained; when there was no prior covenant for renewal.

The premises leased by the society consisted of lands bordering upon and under water, which were to be improved and reclaimed by the lessees. The lessors were benefited by an arrangement under which their waste lands would be made profitable to them; while to the lessee was assured such a quality and certainty of in-

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Merest as to warrant the investment of his capital in the improvement of the land. In the execution of .his projects he makes a lease to others of a portion of the estate; which contemplates the improvement of the property by his lessees, and which apparently secures to them the same quality and certainty of interest as has been assured to him in the enjoyment of his estate. Considering the circumstances alluded to, in the situation of the land, and the scheme of the lease, by which a profit was contemplated through a very long leasehold, it is perfectly evident that Beard intended to give to Robinson and Woodruff the same advantages and opportunities with respect to the property as he possessed, and gave legal expression to that intention by a clause which practically substituted them in his place under any grant of rights and privileges in relation to renewals, or to use, which the owner of the property might at any time make. If we deny to that emphatic clause the force which its plain reading conveys, it seems absolutely useless. The appellants’ counsel says that because the language used is “ rights and privileges in regard to a renewal of the lease” a renewal was not intended, and that the lessor must be deemed to have referred to the terms, conditions, or compensation to govern if he should permit a renewal of the lease. We cannot agree to so refine away its meaning. The agreement therein expressed is as to “ any rights or privilege at any time granted * * * in regard to the renewal of the aforesaid lease * * or in relation to the use and enjoyment of the said premises.” This language is not ambiguous. Its reasonable construction is to give to it a two-fold reference; the expression of the intention that not only shall the grant by the owners of the future terms inure to the benefit of the sub-lessee, but, also, any future enlargement by them of the right to use and enjoy the property. Such a construction is not only reasonable, but is in accord with that just view of the transaction which seeks to give effect to every fair agreement of the parties, and deduces their intent from a consideration of the circumstances and a fair reading of the instrument. Hor does such a construction of this last clause in the lease operate to nullify the option previously given to Beard in his lease to refuse a further term and to pay the value of the buildings. It operates to qualify it, so that if Beard should obtain from his lessors the grant of another term of lease, he could not elect to terminate his sub-letting to Robinson and Woodruff. If his lessors should elect to determine their lease to him, then Beard could exercise his election to terminate the holding of his sub-tenants, pay them the value of their buildings, and obtain from his lessors that value, in addition to the other values they would be liable to pay as a condition of the termination of the tenancy. The lease might have been drawn in clearer terms in these respects, but that is no reason for refusing to give effect to an agreement on the lessor’s part so obviously desirable and beneficial to'the lessees as to suggest that it was a dominant inducement for the lease. It is right that the construction should be strictly against the lessor in such a case, for thereby a perfectly

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just result is reached, which is in accord with the circumstances- and probabilities of the case. In the construction of this, as of every other instrument, it is not a question of whether better and apter language could have been used to express the intentions of the parties, but whether they are so clearly inferable from the whole instrument as to outweigh the difficulties arising from the inartificial and possibly inadvertent use of words and phrases and a nicety of reasoning to prevent their effectuation.

From a careful consideration of the lease to the plaintiffs’ predecessors in interest, we think the only and proper construction is, that the right of election in Beard with respect to granting a new lease to plaintiffs was qualified by the subsequent and last clause-of the lease. That must govern the relations of the parties and entitles the sub-lessees to as many new terms of lease as their lessor shall obtain from the owners of the property by virtue of the covenants in their lease to him.

A more elaborate discussion of this case is unnecessary.

In our judgment, the conclusions of the court below were right, and the judgment appealed from should he affirmed, with, costs.

All concur.