Case ID: ad_77/html/0094-01.html
Source: Caselaw Access Project
Author: {"author": "O’Bkien, J.: \n      McLaughlin, J. (dissenting):", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Frances J. Storms and Alfred Storms, Respondents, v. The Manhattan Railway Company and The New York Elevated Railroad Company, Appellants.
    Lease— right of a lessee to recover damages occasioned by an elevated railroad constructed with the assent of the lessor — effect of the lessee holding under a renewal provided f or in the original lease—form of conveyance of easements to which the elevated raih'oad company is entitled on paying the damages—violation of a covenant against an assignment of a lease—effect of a consent to one assignment.
    
    May 1, 1872, the city of New York demised certain premises to Francis J. Leggett for a period of twenty-one years by a lease containing a covenant for a. renewal upon terms to be agreed upon by the parties or determined by appraisers or by an umpire. In 1875 the city of New York consented to the construction and operation of an elevated railroad in front of the property. The construction of the road was commenced in 1878 and it was put in operation in 1879. Upon the expiration of the lease, which, by mesne assignments, had passed to Frances Storms, who also owned a building erected upon the demised premises, a renewal lease for twenty-one years was executed to her.
    In an action subsequently brought by Frances Storms and Alfred Storms, who, by assignment from Frances Storms, had acquired an interest in the lease, against the elevated railroad company, to recover damages for the impairment of the easements appurtenant to the leasehold property, it was
    
      Meld, in view of the plaintiffs’ ownership of the building erected upon the demised premises and of the covenant of renewal contained in the lease, that such renewal lease did not involve the creation of a new tenancy, but only the continuance of the existing tenancy and that, consequently, the fact that such renewal was executed after the city had consented to the construction and operation of the railroad and such operation had actually begun, did not deprive the plaintiffs of the right to maintain the action;
    That it could not be successfully .urged that the plaintiffs had suffered no damage from the operation of the road since the renewal of the lease, upon the theory that the rent reserved in the renewal was fixed with reference to the existence of the elevated railroad in front of the premises, for the reason that the injury inflicted upon the lot, apart from the building, was the only element which could be considered in fixing such rent, and also because the lessees’ ownership of the building obliged them to accept the renewal lease upon the best terms they could obtain;
    That the fact that an interest in the renewal lease had been assigned to the plaintiff Alfred Storms, without the consent of the city, as required by a covenant contained in the original lease, did not prevent a recovery by the plaintiffs, for the reasons that the city had consented to several assignments of the lease before the assignment to Alfred Storms, and that the defendants, being trespassers, were not entitled to take advantage of the covenant;
    
      That the defendants, upon paying the damages awarded by the court, were entitled to receive a complete title to the easements which the plaintiffs claimed were appurtenant to the demised premises under the then existing or any subsequent renewal under the terms of the lease, and not simply a conveyance of the right to operate the railroad until the expiration of the then present renewal lease.
    
      Semble, that under a lease containing a covenant against assignments without the consent of the landlord, if the landlord gives a consent to one assignment, the covenant against assignments is satisfied and subsequent assignments may be made without his consent.
    Van Brunt, P. J., and McLaughlin, J., dissented.
    Appeal by the defendants, The Manhattan Railway Company and another, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York, on the 21st day of February, 1902, upon the decision of the court rendered after a trial at the New York Special Term.
    
      Alfred A. Wheat, for the appellants.
    
      Eugene D. Hawkins, for the respondents.
   O’Bkien, J.:

Two actions wrere brought involving the question of damages to the premises Ros. 76 and 78 Park Row in the city of Rew York, by reason of the construction and maintenance of defendants’ elevated railway. This action involved Ro. 78 Park Row which has a frontage of twenty-five feet and a depth of ninety-six feet. The necessity of considering to some extent the two actions together arises from the fact that the premises are used together practically as one building, four stories in height, for a hotel, restaurant and saloon business and have so been used since 1871. The construction of the elevated railroad in front of the property was commenced in 1878 and the road was completed and put in operation in 1879. The premises were leased by the city of Rew York on May 1, 1872, to Francis J. Leggett for a period of twenty-one years at $1,375 a year rent, the lease containing a covenant of renewal upon terms to be agreed upon by the parties or determined by two appraisers or by an umpire, should the appraisers disagree.

On the expiration of this lease, which by mesne assignments came to the plaintiff Frances Storms, a renewal lease for twenty-one years from May 1, 1893, was executed to her. On September 7, 1875, the city of New York gave its consent to the construction and operation of the elevated railroad in front of the property.

The appellants insist that the plaintiffs were not legally entitled to any award; and, if in error in this, then that the amounts awarded as damages are excessive. The sum awarded as damages to the leasehold was $2,750, and the past damages were fixed at the rate of about $400 per year. Thinking as we do that there was evidence to support the amounts awarded, we do not think it necessary to discuss the subject further or to interfere with the conclusions reached by the judge at Special Term.

The more serious questions bear upon the right of the plaintiffs to relief of any kind; and these it will be necessary to briefly consider. It is insisted that the plaintiffs have no title to the easements in the street, as those easements had been extinguished by the city of New York prior to the lease under which plaintiffs claim; and the authority relied upon for this proposition is the case of Herzog v. New York El. R. R. Co. (76 Hun, 486). The distinction to be noted, however, between that case and the case at bar is evident. In the Herzog case the city, as owner of the premises, prior to its conveyance to the plaintiffs, had given its consent to the operation of the elevated railway. In this case the original lease from the city to Leggett was given in 1872, prior to the city’s consent to the elevated railroad; and the present lease is a renewal of that lease, given pursuant to the covenant of the city to renew upon the determination of the ground rent in the manner specified.

The case of Kearney v. M. E. R. Co. (129 N. Y. 80), based on this difference in the evidence between the two cases and showing that a different principle is applicable, we regard as decisive of the question. Therein, as here, it appeared that a lease was made with the privilege of renewal and before the renewal lease was executed the road had been built; and there also the point was made that as the plaintiff took the lease of the premises after the construction of the road, he had no right to subsequent damages or to equitable relief. As stated in the opinion in that case, the first point ignores the fact already pointed out that plaintiff’s title accrued in 1866 and before the construction of the road. The lease of 1884 cannot be deemed a new or voluntary arrangement, but a continuation of the lease of 1863, which the plaintiff may have been obliged to ■enter into in order to preserve Ms existing rights. The plaintiff’s rights under the lease of 1884 are but an extension of the rights acquired under the lease of 1863. He was for all the purposes of this case the absolute owner of the building since 1866, and we perceive no reason why he was not entitled to recover such sum as represented its diminished rental value in consequence of the construction, maintenance and operation of the defendants’ railroad. This is not the case of a tenant under a lease made after the road was built, suing for an injury to his possession, but an owner under title acquired before that time, seeking to recover for loss of rents. As such owner of the building he could also recover such permanent injury as he sustained by the appropriation by the defendants of such easements as were taken and were appurtenant to the house and a part of it.”

In the case at bar the plaintiffs were the owners of the building, -and the destruction of part of the easements in front thereof, which were appurtenant to both the lot and building, necessarily damaged the plaintiffs, and the existence of the lease deprived the city of the right to strip the premises of any of these appurtenant easements as long as its lessees had the right of renewal. The Kearney Case (supra) would, concededly, be a controlling authority were it not that in that case there was no formal consent by the owner of the lot to the construction of the road. The giving of such a consent, however, could not be effective as against the rights of the tenant for the reason that, while the lease was outstanding and with a right to renewal which created in effect a continuous term, the ■city had no power as against the tenant to strip the premises of these easements. As correctly urged by the respondents, “ While the lease is in force neither the title nor the possession, legal, equitable or actual, is in the city, but in the lessee. Any consent the city may have given the defendants subsequent in date to this lease was subject to the rights of the lessee thereunder, or under any continuance or extension of those rights by virtue of any right to the same given by that lease.”

The appellants’ second contention is that the plaintiffs have suffered no damage, the rent reserved in the lease of 1893 having been fixed with reference to the fact of the presence of the elevated railroad, in front of the premises. This contention has been frequently urged against purchasers of the fee of property after the road was constructed, but even in cases where it appeared that because of the elevated road they paid a smaller price, they were allowed to recover damages. (Korn v. New York El. R. Co., 39 N. Y. St. Repr. 322; Werfelman v. Manhattan R. Co., 16 Daly, 356; Sterry v. New York El. R. R. Co., 129 N. Y. 619; Pappenheim v. M. E. R. Co., 128 id. 436.) And in regard to a lessee this question was considered in Day v. New York El. R. R. Co. (3 Misc. Rep. 616) and Crimmins v. Met. El. R. R. Co. (87 Hun, 187).

Apart, however, from these decisions, we think the reasons which should permit of recovery of damages in favor of a lessee who, under the terms of a lease, was obliged to take a renewal after the road was constructed, are much better and stronger than those which would sustain a recovery in favor of a purchaser who buys after the road is constructed and, in consequence, obtains the property at a lower price, because we know that where a tenant has established a business, with its good will depending to a great extent upon its location, and has erected upon the lot a building, he is to some extent in the hands of his landlord, and must, if he desires to reap the fruits of his industry, accept the renewal- lease on the best terms he can obtain. We again advert to the fact that the plaintiffs here owned the building, and all that could have been considered in fixing the rent to be paid in the renewal lease would be the injury inflicted upon the lot.

The defendants’ third contention is that plaintiffs have failed to show ownership because of the covenant in the original lease from the city against assignments and the assignment without the city’s consent to the plaintiff Alfred Storms. The evidence shows, however, that the city consented to several assignments before the alleged assignment to Alfred Storms; and, furthermore, we do not think that the defendants, who are trespassers, are entitled to take advantage of the covenant, whatever might be the rights of the city. McAdani on Landlord and Tenant (Yol. 1 [3d ed.j, § 239) supports the respondents’ contention that, if the landlord, under a lease contain ing a covenant against assignments without his consent, gives a consent to one assignment, the covenant against assignments is satisfied- and subsequent assignments can be made without his consent. Such assignment in any event did not .render the lease void, but only created a situation under which the landlord could, by taking advantage of it, re-enter. This, however, the city lias not done, but, on the contrary, it appears that the assignment was made in 1882, since which time the city has received the rent for fully twenty years, and in 1893, granted a renewal lease to the plaintiff, who was the assignee of the original lease.

The fourth point urged by the appellants, that the court erred in compelling them to take and pay for a release exposing them to other injunction and damage suits, is well taken. In return for the amount required to be paid, the defendants, by the judgment, were to receive only a release and conveyance of the easements and the right to. operate their road until May 14, 1914, that date marking the expiration of the present renewal lease. As the plaintiffs’ right to damages rests upon the theory that the former lease and the present lease constitute a continuous estate, it would seemingly follow that any subsequent renewals under the terms of the lease would be but a continuation of the old, and not the creation of a new estate. Taking the plaintiffs’ demand for judgment and defendants’ answer, under which both sought for equitable relief similar to what would be obtained by the award of commissioners in condemnation proceedings, we think that upon obtaining, as the plaintiffs have in this action, the equivalent in damages, the defendants are entitled to receive a complete title to the easements which the plaintiffs claim were impaired or destroyed. It follows that the defendants should obtain all the plaintiffs’ rights in and to the easements, not limited by the present lease, but extending to any renewals.

We think the judgment should, therefore, be modified by striking out the limitations as to time, and requiring the plaintiffs to give, upon obtaining the sums awarded, a release and conveyance of all then’ easements, arising by virtue of the present lease or any renewals thereof in the streets affected by the railroad.

Judgment modified accordingly, and as so modified affirmed, without costs.

Patterson and Laughlin, JJ., concurred; Van Brunt, P. J. and McLaughlin, J., dissented.

McLaughlin, J. (dissenting):

I cannot concur in the views expressed in the prevailing opinion. The facts bring the case, as it seems to me, clearly within the principle laid down in Kernochan v. Manhattan Railway Co. (161 N. Y. 339), and, if I am correct in this, then the judgment should be reversed.

On the 1st of May, 1872, the premises in question were leased by the city of New York to Francis J. Leggett for a period of twenty-one years. The lease contained a covenant to the effect that at the expiration of the term the lessee, “ his executors, administrators and assigns,” had the privilege of renewal, upon such terms and conditions as might then be agreed upon. The words of the lease, so far as the same related to renewal, were as follows: That it shall be “ upon such rents and other terms and conditions as shall be agreed upon between the parties, or as shall be determined by two sworn appraisers, one of whom to be chosen by each of the said parties, or as shall be determined by a sworn umpire who shall be chosen by such appraisers in case they cannot agree, unless the said premises, or some part thereof shall, at the expiration of the said term hereby demised, be required for public purposes, in which case the said term shall not be renewed.” On the expiration of the lease a renewal lease for twenty-one years from May 1,1893, was executed to Frances J. Storms, one of the plaintiffs, and she and her husband, the other plaintiff, now hold all of the interest for which the award of damages in this case has been made. In 1875 the city of New York gave its consent to the construction, maintenance and operation of an elevated railroad in front of the premises described in the complaint, and in pursuance of which the elevated railroad, which it is claimed caused the plaintiffs’ damage for which the award has been made in this action, was completed in 1879 and has since been operated. It was in operation when the plaintiffs took the new lease of 1893. The rent was then fixed by agreement between her and the sinking fund commission, the representatives of the city of New York, and, in the absence of evidence to the contrary, it must be assumed that if the construction, maintenance and operation of the defendants’ railroad injured the leasehold interest, that that fact was taken into consideration in fixing the rent; in other words, if the defendants’ road had damaged the property, the rent was fixed at a lower figure than it otherwise would have been. I say this must be assumed in the absence of evidence to the contrary, because it is the only natural conclusion which can be drawn from the acts of intelligent persons. Intelligent people do not pay an increased rental of real estate for the purpose of recovering prospective damages in an action to be thereafter brought, and if this should be done, it might then well be seriously questioned whether a court of equity would permit its powers to be exercised for the purpose of permitting an agreement of that kind to bear fruit. The Kernochan case is much like this one. The reason there assigned for an affirmance of the judgment necessarily leads to a reversal here. Judge Gray, during the course of the opinion delivered in that case, said: “ But when, at the expiration of that period, in 1890, it became necessary under the provisions of the lease, to readjust the rent, the situation was that arbitrators were ‘ to determine what would be a reasonable yearly rent for the said piece of ground hereby demised during the next succeeding period of twenty-one years.’ This language would seem, fairly, to import, as the duty of the arbitrators, that they should exercise their judgment as to a reasonable rent to be exacted of the tenants for the new rental period upon which the parties were about entering. Of course, the demised estate under this lease was all that the lessor could grant in the use of the res / which included all incidental easements. But, if its usable value is diminished, from an obviously changed condition of affairs, due to the acts of the authorities, or of those acting by delegation of the authorities, are the arbitrators not to consider it ? Will they not, naturally, be presumed to consider it in viewing the property? They must fairly appraise the value of the land as it stands. All the facts relating to the situation of the pi*operty and the facilities for its enjoyment must, necessarily, be considered in determining its value. (Livingston v. Sage, 95 N. Y. 289.) I think it would be a violent presumption that the arbitrators determined upon the rent to be paid for the premises for the ensuing period of time by valuing their use without the presence of the railroad structure, and upon the supposition that it would be removed during the term. The court has found that the defendant’s railroad is a permanent structure, and that fact is not disputed by the appellant; which only insists that it was not a fact which was admissible, or which may be legally presumed to have influenced the determination of the arbitrators in fixing the future rent to be paid by the lessee. * ' * * If, where a lease is made at a time subsequent to the construction of the elevated railroad, the lessor recovers damages because of the presumption that the rent reserved is based upon the reduced value of the property, the same principle should be applicable to a case like this, where during the lease the parties have stipulated that the rent to be paid for stated periods shall be determined by the arbitrators. There is a similar presumption that the appraisal for rental purposes is based upon the reduced value of the property.”

I am of the opinion that the judgment appealed from should be reversed and a new trial ordered, with costs to the appellants to abide the event.

Van Brunt, P. J., concurred.

Judgment modified as directed in opinion, and as modified affirmed, without costs.