Case ID: misc_83/html/0432-01.html
Source: Caselaw Access Project
Author: {"author": "Seabury, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Jacob Emsheimer, as Executor of the Estate of Julius Flato, Deceased, Appellant, v. Max D. Thorner and Abe Thorner, Doing Business Under the Firm Name and Style of Thorner Paper Box Manufacturing Company, Respondents.
    (Supreme Court, Appellate Term, First Department,
    December, 1913.)
    Landlord and tenant — provisions in lease as to liquidated damages — action for rent.
    Where a lease provided .that the amount of one month’s rent required to be deposited with the landlord and applied as liquidated damages for the tenant’s faithful performance was to be returned to him at the expiration of the lease, said sum was intended merely as security and payable to the landlord as rent for the last month and the amount thereof was not the limit of a recovery in an action for two months’ rent, it being out of proportion to the actual damages sustained By the landlord which were easily ascertainable.
    Appeal by plaintiff from a judgment of the Municipal Court of the city of New York, borough of Manhattan, ninth district, rendered in favor of the defendants.
    Rose & Paskus (Benjamin G. Paskus and Louis S. Ehrich, of counsel), for appellant.
    Louis E. Goldstein (David T. Smith, of counsel), for respondents.
   Seabury, J.

Plaintiff sues to recover rent for the months of April and May, 1913, alleged to he due under the terms of a written lease. The only question in dispute relates to the construction of a clause contained in the lease. This clause provides as follows: The lessee shall pay to the lessor at the time this agreement is entered into, the sum of eighty-three and. 33/100 ($83.33) dollars, (the receipt of which is hereby acknowledged) as one month’s rent to be applied on this lease, as liquidated and stipulated damages for the faithful performance of the term and covenants of this lease, and at the expiration of this lease, the said sum shall be returned to the lessee.”

The court below held that the eighty-three dollars and thirty-three cents referred to in this clause constituted liquidated damages and that this amount was the full'measure of the landlord’s damages regardless of the number of months’ rent remaining unpaid. Such a construction seems to us unreasonable, and in fact works a forfeiture of the landlord’s rights under the lease.

We think that the sum deposited by the lessee was intended as security, and that at the expiration of the lease the sum deposited was to be paid to the lessor on account of one month’s rent. To hold that this sum should constitute liquidated damages for any breach of the covenant to pay rent on the part of the lessees, even if the lessees were to fail to pay the rent during the whole term of the lease, is to arbitrarily fix a given sum as damages which is entirely out of proportion to the amount of damage sustained.

The damages which the landlord sustained were easily ascertainable, and were obviously the amount of the rent reserved for each month for which the tenant failed to pay rent. Where the lease requires the payment of a given sum by the tenant, and provides that in the event of the breach of any of the covenants of the lease by the tenant the amount so deposited shall belong to the landlord, and the damages suffered by the landlord are easily ascertainable, and the amount of the loss is out of all proportion to the amount of deposit, the courts have held that such sum will be regarded as security only and not as liquidated damages. Cæsar v. Rubinson, 174 N. Y. 492.

We think that the same principle should be applied to the facts in this case. Here the amount of the sum deposited is out of all - proportion to the actual loss suffered by the landlord, which loss is easily ascertainable, and the sum deposited should be treated as security only and not as liquidated damages. As in the case of a lease which in terms provides that the landlord shall keep the amount of the tenant’s deposit, which' amount is out of proportion to the damages sustained by the landlord, which are easily ascertainable, the courts refuse to enforce a penalty; so in the case of a lease which in terms provides that the tenant shall treat the sum deposited, which is. equal to one month’s rent, as liquidated. damages regardless of the number of months ’ rent unpaid by the tenant, the courts will refuse to construe such provision so as to work a forfeiture of the landlord’s rights under the lease.

Judgment reversed and new trial ordered, with costs to the appellant to abide the event.

Guy and Bijur, JJ., concur.

Judgment reversed and new trial ordered, with costs to appellant to abide event.