Case ID: ad_163/html/0504-01.html
Source: Caselaw Access Project
Author: {"author": "Laughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Emma J. Eagan, Respondent, v. The Commercial Trust Company of New York, Appellant.
    First Department,
    July 10, 1914.
    Trial — general verdict—landlord and tenant—provisions of lease construed—when occupation under sub-lease does not constitute an assignment rendering alleged assignee liable under original lease — estoppel.
    A judgment on a general verdict cannot be sustained unless the evidence was sufficient to warrant the jury in finding in favor of the plaintiff on all propositions left to them as questions of fact.
    Where a lease made on the 25th day of August, 1903, expressly provides that the premises were granted for a term of twenty-one years ending-on the 1st day of November, 1924, and that the lessee shall be permitted to enter upon the premises upon the date of the lease and hold the same rent free until the 1st day of November, 1903, the lease should be deemed to end on the 1st day of November, 1924, notwithstanding the specification of the term of twenty-one years, and a sub-lease from July 14, 1908, to October 1, 1924, cannot be held to be equivalent to an assignment of the original lease so as to render an assignee thereof who took possession as security for a loan liable for rent and taxes under the original lease.
    As the sub-lease was recorded and was, therefore, constructive notice to the lessor, the assignee was not estopped from denying that it had taken an assignment of the original lease by conversations between its president and the lessor’s agent to the effect that it would take over the lessee’s interest and go on with it and would pay the taxes.
    Appeal by the defendant, The Commercial Trust Company of New York, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 5th day of February, 1914, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 4th day of February, 1914, denying defendant’s motion for a new trial made upon the minutes.
    
      Henry Amerman [Arthur H. Slack with him on the brief], for the appellant.
    
      George E. Morgan, for the respondent.
   Laughlin, J.:

This is an action to recover rent due and owing to the plaintiff under a lease of premises No. 17 West Thirty-fifth street, borough of Manhattan, New York, made between the plaintiff and one Joseph Kornhauser under date of August 25, 1903, and taxes which became due and payable by the lessee, for which rent and taxes the plaintiff seeks to hold the defendant on the theory that it became liable therefor by virtue of having-taken an assignment of the lease and having entered into possession thereunder.

The trial court ruled as matter of law that the defendant was an assignee of the lease for the balance of the term, and left it to the jury to determine whether or not the defendant entered into either actual or constructive possession of the premises, instructing the jury that if it did it was hable. The court also left it to the jury to determine whether or not the defendant led the plaintiff to believe that it had taken an assignment of the lease, and instructed them that if it had and the plaintiff acted thereon to her prejudice, defendant was liable on the theory of estoppel. Only a general verdict was rendered and, therefore, the judgment cannot be sustained unless the evidence was sufficient to warrant the jury in finding in favor of the plaintiff on both propositions left to them as questions of fact.

The ruling of the trial court that the defendant was an assignee of the lease was predicated on an erroneous construction of the lease with respect to the term thereof. It is recited in the 1st sentence of the lease that it was made on the 25th day of August, 1903, and it was expressly provided that the premises were granted, demised and leased to Kornhauser “for the term of twenty-one years commencing on the day of the date hereof, and ending on the first day of November, One thousand nine hundred and twenty-four,” for the yearly rental of $3,500 for the first seven years, $4,500 for each of the following seven years, and $4,851.14 a year for the remaining seven years, “payable in equal monthly payments in advance on the first day of each month in each year of the said term.” It was expressly provided that the lessee should be permitted to enter upon the premises “upon the day of the date hereof and shall hold the same, rent free, until the first day of November, 1903; but the party of the second part shall pay the rent for the said month of November, 1903, upon the execution of this lease.” The lease was not assignable without the consent of the lessor.

I regard it as perfectly plain that the term for which the lease was to end is, as is therein stated, the 1st day of November, 1924, and that the specification of the term of twenty-one years was made with reference to the term for which the lessee was to pay rent; and that the period between the date of the lease and the first day of November of the year in which it was made was covered by the express provision permitting the lessee to enter on the date of the lease and to occupy the premises, rent free, until the first day of November thereafter, when the term for the twenty-one years really commenced. The defendant did not intend -to take an assignment of the lease, and since the lease was not to expire until the 1st day of November, 1924, it is equally plain on the uncontroverted facts that it did not take an assignment thereof. The contention that defendant took an assignment is based upon an erroneous construction to the effect that the term was to expire on the 25th day of August, .1924.

On the 14th day of July, 1908, the lessee was indebted to the defendant in about the sum of $7,000, and was desirous of obtaining a further loan of $1,236.37 to pay taxes for which he was liable upon the leasehold premises. The defendant evidently desired security, and on that day the lessee executed a sub-lease' of the premises to his wife, Jennie Kornhauser, for the term of sixteen years, two months and seventeen days commencing on that day and ending, according to the express terms of the sub-lease, on the 1st day of October, 1924; and on the same day Jennie Kornhauser executed an assignment of the sub-lease to the defendant as security for a loan of $8,400 to her and to her husband, and as security for any further loan that it might make to him or to her, and authorized it “to immediately or at any time hereafter enter into possession of the premises ” and receive the rents and income thereof or to sell and assign the sub-lease either at public or private sale and apply the proceeds to the amount then due from her to the defendant. The sum specified in the assignment represented the amount of her husband’s indebtedness to the bank together with interest and the amount it was to advance for taxes. On the 17th day of January, 1913, the plaintiff obtained a precept from the Municipal Court of the City of New York, borough of Manhattan, ninth district, addressed to Kornhauser, his wife and to the defendant as tenants, and to certain under-tenants, in the usual form, requiring them to remove or show cause on the 21st of January, 1913, why possession of the premises should not be awarded to the landlord. In the petition for the precept the plaintiff showed that the original lessee was in possession and that the lease expired on the 1st day of November, 1921, and that this defendant had or claimed to have mi interest in the lease by reason of an assignment to it thereof as collateral security for a loan to the lessee and to his wife. The defendant did not appear in the dispossess proceedings and a warrant in the usual form was issued on the return of the precept. This action is for rent and taxes due and owing prior to that time under the lease made by plaintiff to Kornhauser.

The theory of the plaintiff is that the sub-lease was for the entire term and that, therefore, it was equivalent to an assignment, which would render the defendant liable if it took possession of the property or exercised dominion or control over it. (See Stewart v. Long Island Railroad Co., 102 N. Y. 601; Levy v. Long Island Brewery, 26 Misc. Rep. 110.) It was incumbent, therefore, upon the plaintiff to establish, both that the defendant took an assignment of the lease, and that it entered into possession of the property. Since, as we construe the lease, the sub-lease was not for the entire term, it is immaterial whether or not the defendant entered into possession, for its possession, if any, was as assignee of the sub-lease and not as assignee of the original lease. The views already expressed require a reversal; but it becomes necessary to consider the plaintiff’s claim that the defendant is estopped from denying that it was the assignee of the lease in order to decide whether a new trial should be granted.

The alleged estoppel is based on a conversation between the plaintiff’s husband, who was her agent and acted for her in her business matters, and Mr. Moore, the president of the defendant. The plaintiff’s husband was a depositor with the defendant and was acquainted with its president. He testified that in the early part of the year 1908 on an occasion when he was at the bank, Mr. Moore said that the lessee owed the bank money and he had looked at the property and thought well of it and “that he [Moore] would take over” the lessee’s interest “ and go on with it; ” that on a subsequent occasion when the taxes were unpaid he spoke to Mr. Moore about it and the latter said “ it would be attended to,” and that thereafter he received a receipt for taxes showing that they had been paid by the defendant; that in January, 1912, he informed Moore over the telephone that a tenant had notified him that. the premises were without coal, and that he could not remember Moore’s answer. Counsel for the plaintiff then endeavored to show by the witness that acting for plaintiff he relied on these statements made by Mr. Moore and delayed taking dispossess proceedings after rent and taxes were due and unpaid. Some of the questions were answered but the court sustained objections to others. The answers received tended to show that the plaintiff felt secure and expected that the bank would make the payments; but it also appears that the plaintiff’s husband was advised that if she sued the bank it could leave the sub-lessee in possession for the remainder of the term. The testimony given by plaintiff’s husband on the question of estoppel was controverted by the testimony of Moore; but, for the purpose of the question now under consideration, the plaintiff is entitled to the most favorable view of the evidence.

We are of opinion that it was wholly insufficient to constitute an estoppel or to warrant the plaintiff in refraining from taking dispossess proceedings or other action on the theory that the bank had become an assignee of the lease. The original statement was apparently casually made and not in answer to any inquiry in behalf of the plaintiff. The subsequent statements were quite consistent with the position the bank takes now. It had a right by virtue of the assignment to collect the rents and to apply them on the indebtedness for which the assignment was taken as security. The plaintiff had no reason to believe that the defendant had taken an assignment of the lease. She knew perfectly well that whatever its interest was it was taken with a view, not to becoming a tenant, but to secure the original lessee’s indebtedness to it, and she could have so ascertained on inquiry and by examining the records, for the sub-lease was recorded the second day after its date. Inasmuch as there was no evidence to go to the jury upon either theory, the court erred in denying defendant’s motion for a direction of a verdict.

It follows that the judgment and order should be reversed, with costs, and the complaint dismissed, with costs.

Ingraham, P. J., Clarke, Dowling and Hotchkiss, JJ., concurred.

Judgment and order reversed, with costs, and complaint dismissed, with costs. Order to be settled on notice.