Bleakley v. Sullivan — 55 N.Y. St. Rep. 383

Majority

p. 383

Rosalie A. Bleakley, Resp’t, v. Timothy J. Sullivan, Impl’d, App’lt.1

(Court of Appeals,

Filed November 28, 1893.)

Headnote

1. Appeal—Stipulations.

Where the parties upon the trial limit the controversy, by stipulation, to the determination of a specific question, the appellate court cannot go beyond the range of inquiry which they have defined.

2. Lease—Covenant in favor of lessor.

A lease of a brickyard gave the lessees the right to take material from the premises, and provided that they should at all times keep on the premises sufficieut brick to pay one quarter’s rent, but contained no provision reserving title to such brick in the lessor. The lessees mortgaged the brick to defendant S., which mortgage was duly filed and possession subsequently taken by S., who paid the rent for the current quarter. Held, that under the lease the brick belonged to the lessees, and a purchaser from them in good faith and for value was not affected by the personal covenant in the lease, except so far as the property purchased was subject to a charge for rent accruing or accrued, and that 8., when he paid such rent, discharged whatever claim the lessor had upon them.

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

Franklin Couch, for app’lt; S. W. Rosendale, for resp’t.

The defendants McGuire and Griswold leased of the plaintiff a brickyard, with the privilege of taking clay and

p. 384

tempering sand for the manufacture of brick from adjoining lands, for the period of five years, at a rent of fifty cents per thousand for all brick manufactured in any year, not less than three and one-half millions, payable quarterly. The lease provided that •after the first quarter’s rent became due, the lessees should keep ■upon the yard bz-iclt sufficient to pay one-quarter’s rent, and if the rent was not paid the plaintiff might either re-enter and take possession of the yard, or she might take from it and sell at market prices sufficient brick to pay the rent due, with the necessary expenses of taking and selling the same. The quantity of brick required to pay one-quarter’s rent may, for the purposes of this action, be deemed to be 125,000. The lease was executed April '28,1890. The first quarter’s rent became due July 1st, which was paid, and also the rent which fell due October 1st. October 20th the defendant Sullivan loaned to the lessees $6,500, which, with previous loans, amounted to $13,500; and the lessees executed to him a chattel mortgage by which they sold to him all the brick then upon the yard to secure the payment on demand of the moneys thus loaned, which mortgage was filed as required by law. The plaintiff’s lease was filed in the clerk’s office of the town where the yard was situated and one of the lessees resided, but not in the city of Albany, where the other lessee lived. When Sullivan took his mortgage he had no actual notice or knowledge of the existence of the condition in the lease. The case does not disclose the precise date when he assumed possession of the property, but it is shown that after giving notice he sold it at public-auction on January 12, 1891, and became the purchaser at such sale. He also paid the rent to' plaintiff which became due on January 1st. Subsequently, and before February 7th, Sullivan began to remove the brick from the yard, when plaintiff brought this action to procure -a permanent injunction restraining him from removing so much of the brick as might be required to pay the rent falling due April 1st, and obtained a preliminary injunction order restraining him from removing 125,000 during the pendency of the action.

By a stipulation of the parties, it was agreed that Sullivan should pay the rent falling due April 1st if it should be legally determined that on February 7th the plaintiff had a lien upon the brick paramount to his title under the chattel mortgage and the foreclosure thereof, and in consideration of this agreement the temporary injunction was dissolved and Sullivan was permitted to remove the brick, leaving only the question of the lien to be decided by the court.

The special term found, as a conclusion of law, from these facts, that the lease secured to the plaintiff a valid equitable lien upon the brick, which was superior to defendants’ right, and she was, therefore, entitled to judgment. The general term affirmed the judgment, not upon the ground that plaintiff had a lien upon the property, but because she had the title to the materials out of which the brick were manufactured, and, therefore, the title to the manufactured product, with which she had never parted, but which, by the terms of the lease, she had reserved to herself.

p. 385

The plaintiff has, we think, precluded herself by her stipulation from raising this question, or relying upon it to defeat the title of the appellant. The parties have limited the controversy, as they might lawfully do, to the determination of a specific question, and we cannot go beyond the range of inquiry which they have defined. H. K. & S. Bk. Corp. v. Cooper, 114 N. Y., 388 ; 23 St. Rep., 787 .

By their agreement it is admitted that the title to this property is in the appellant, and the judgment of the court is sought only upon the question whether that title is subject to a valid and subsisting lien of the plaintiff under the terms and provisions of her lease to the other defendants. It is not, however, to be inferred that we assent to the proposition asserted by the court below, that under this lease the title to a sufficient quantity of brick to pay ■one quarters rent always remained in the lessor until the rent was paid; and inasmuch as even upon the punctual payment of one quarter’s rent there began to accrue, eo instanti, another quarter’s rent, there must, therefore, always be upon the • premises brick enough to pay at least a quarter’s rent. There is not in the instrument any provision reserving the title to these brick in the plaintiff, or stipulating that the title shall remain in her until the last quarter's rent is paid. The case is barren of the feature which has been held controlling in the cases cited by counsel, where there has been an express reservation of the title of personal property leased or transferred, and of everything potentially derivable from it, until the rent or purchase price was paid. Andrews v. Newcomb, 32 N. Y., 417 ; Wisner v. Ocumpaugh, 71 id., 113; McCaffrey v. Woodin, 65 id., 459.

Under this lease the brick, when manufactured, belonged to the lessees; they became invested with the full legal title, including the jus disponendi, and a purchaser from them in good faith, and for value, was not affected by the personal covenants in the instrument, except so far as the property purchased was subject to a charge for the rent accruing or accrued. We think full effect ■can be given to the stipulations in this lease by holding that whatever charge they created was limited to the rent due or accruing at the time the sale of the property took place.

By the chattel mortgage the lessees transferred to the appellant the entire legal title, and when he paid the rent which fell due the first quarter day thereafter, he discharged whatever claim the plaintiff had thereon at the time of the sale to him. On ■January 1, 1891, the lessees had no brick belonging to them upon the premises, and hence there was no property upon which the conditions in the lease could operate. It is manifest that the parties contemplated a continuous manufacture of brick, and the sale of the manufactured product, with a proviso that sufficient should be left on tiie premises during any quarter to satisfy the quarter’s rent.

There is nothing in the language employed or the scope of the instrument which suggests that it was the intention of the parties to create a charge upon the brick which might be manufactured

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during the first quarter which should continue until the last quarter’s term of the five years term should be paid, and which should follow the property into the hands of an innocent purchaser for value.

As the appellant discharged whatever claim plaintiff may have had upon the property at the time of its purchase by him, it is not important to determine the precise character of the plaintiff’s interest in the property. The peculiar provisions of the lease are undoubtedly enforcible as between the parties. How far it may be treated as a chattel mortgage so as to affect the intervening rights of purchasers for value, and without actual notice, is a question which does not admit of easy solution, and it is unnecessary here to decide it. In no view of the situation was the appellant bound to leave upon the yard the brick which he had purchased and paid for as security for any rent accruing later than the first quarter day after the title had become vested in him.

The judgments of the general and special terms must be reversed and a new trial granted, with costs "to abide event.

All concur.

Footnotes

1 Reversing 42 St. Rep., 814 .