Case ID: ny-super-ct_24/html/0278-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court, Monell, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Joseph Agate, plaintiff, vs. Claudius Gignoux et al. defendants.
    1. The estate or interest of a lessee of real property under a sub-lease made by Mm to third perssons, for a term exceeding one year, with a reservation of a right of re-entry for breach of covenant, is an estate or interest in land, witMn the meaning of the statute of frauds, (2 U. S. 134, §§ 6, 8; 29 Car. 11, c. 3, §§ 1, 2, 3;) and can not be assigned by parol.
    
      2. The fact that such interest was held by partners upon dissolution of whose partnership it was treated as passing with other assets to a new firm which succeeded them, does not take the case out of the operation of the statute, as between the sub-lessfeSs and ail assignee by deed.
    3. Thus, where partners, who had taken a lease of premises, and sub-let a part for a term of years, with the reservation of such right of entry, dissolved' their partnership, and a new firm was formed, which acquired the ownership of their other assets and succeeded to their position under both leases, but without any assignment in writing; Held that a debt due from such new firm to the sub-lessees could not be setoff by the latter against a claim by one who held a subsequent written assignment of the lease from the members of the original firm, for rent accrued after such assignment.
    (Before Moncrief, Robertson, and Monell, JJ.)
    Heard October 20,1863;
    decided November 14, 1863.
    
      The action was brought against Claudius Gignoux, Charles H. Christmas and Tileston Cushing, to recover a quarter’s rent of premises in the city of New York. Cameron, Edwards and Burritt, (Burritt being a special partner,) were the lessees of the store No. 265 Broadway; the lease being to Cameron & Edwards, the copartnership name of the firm. On the 18th of November, 1856, Cameron & Edwards sub-leased the four upper lofts of the store to the defendants, for a term of five years and two months. This sub-lease contained covenants of forfeiture for the non-payment of rent. The partnership of Cameron & Edwards expired by its own limitation on the 31st of December, 1856, when a new firm was formed, composed of Cameron, Edwards, Gilbert and Boyd, under the name of Cameron, Edwards & Co. All the assets of the old firm went into the new firm. The new firm occupied the same store that Cameron & Edwards had occupied, being the lower part of the premises, the upper part of which Cameron & Edwards had leased to the defendants. They collected ' rent from the defendants upon the sub-lease by Cameron & Edwards; and they paid to the original lessor the rent of the whole premises, under the lease thereof to Cameron & Edwards. No written assignment of that lease was made by Cameron & Edwards to the firm of Cameron, Edwards & Co.
    On the 23d of August, 1861, the plaintiff by written assignment became the owner of the interest of Cameron & Edwards in the sub-lease to the defendants ; of which the defendants then had notice.
    Previous to the last mentioned assignment, and in August and November, 1860, Cameron, Edwards & Co. had become indebted to the defendants in upwards of $5000, for money lent, &c. $2000 of which remained due and unpaid on the 1st of November, 1861, the day when the quarter’s rent fell due, to recover which this action was brought.
    The defendants, in their answer, alleged that the firm of Cameron, Edwards & Co. on the formation of that firm on the 1st of January, 1857, became the owners of the lease to the defendants ; and were such owners at the time they became indebted to the defendants ; and they claim the right to set off the said- indebtedness of Cameron, Edwards & Co. to them against the plaintiff’s claim for rent.
    The cause was tried before Mr. Justice White and a jury, on the 15th and 16th of May, 1862.
    The justice charged the jury that “a roritten transfer of the lease from Cameron & Edwards to Cameron, Edwards & Co. is not necessary to invest Cameron, Edwards & Co. with a title to it. They might in fact, with the assent and by the will and act of Cameron & Edwards, and their own will, and without any witness, become the owners of it. If it was transferred to them, and they accepted it and assumed all its liabilities and advantages, they would become the owners of the lease without any writing on the subject.” To these several propositions, the plaintiff severally excepted.
    He further charged, that “ any demand or amount due and payable to Grignoux & Co. from Cameron, Edwards & Co. at the time of their receiving the first notice or intimation that Cameron, Edwards & Co. had parted with their title to the lease* may be set off by them against the claim of the- plaintiff = to this suit.”
    To this the plaintiff excepted.
    The plaintiff made several requests of the justice to charge the converse of the' foregoing propositions, all of which were refused, and the plaintiff excepted.
    The jury rendered a verdict for the defendants. The judgment was suspended, and the exceptions were directed to be heard in the first instance at the general term.
    
      D. E. Wheeler, for the plaintiff.
    I. The law of set off is inapplicable to an assignment of rent.
    1. The Code has not changed the law of set off as to assignors or assignees. The question, therefore, of notice is immaterial unless equities arise between the assignment and the notice, which is not pretended here. (Beckwith v. Union Bank of New York, 9 N. Y. Rep. 211, aff. S. C. 4 Sandf 604.)
    
      2. At common law there was no right to set-off. When the statute of set off was passed it applied only as between parties to the record. Choses in action not being assignable at law, and the action therefore brought in the assignor’s name, no other protection to demands against the assignor was necessary. No provision was therefore made on the subject. The Code, which requires all actions on assigned choses in action to be brought in the assignee’s name, expressly reserves the right to any set off or other defense existing at the time of the assignment.
    3. The plaintiff here does not claim under the Code, or under any statute, but under the common law, by which an action, for rent, which has been assigned before it is due, must be brought in the assignee’s name. The defendants must, therefore, show some statute or decision at common law, authorizing a claim against the assignor to be set off in such a case, which, it is submitted, can not be done.
    II. Rent not due is not a chose in action, but part of the realty, and incident to the reversion.
    1. The covenant to pay it is a real, not a personal covenant, and runs with the land, for which reason the action for it, when it accrues, is to be brought in the name of the assignee or grantee of the reversion, (Taylor, Landlord and Tenant, § 447, pp. 313, 314; Van Wicklen v. Paulson, 14 Barb. 654; Willard v. Tillman, 2 Hill, 274 ; Moffatt v. Smith, 4 N. Y. Rep. 126 ; Allen v. Bryan, 5 Barn. & Cres. 512 ; Demarest v. Willard, 8 Cowen, 206; Bank of Pennsylvania v. Watts, 3 Watts, 394; Ruckman v. Astor, 3 Educ. Ch. 373,) which shows conclusively that rent not due is not a chose in action; for nothing is better settled than that at common law the assignee of a chose in action could not sue in his own name. (Jessel v. The Williamsburgh Ins. Co., 3 Hill, 88.)
    2. All the cases as to covenants real draw this very distinction, and show beyond controversy that, until breach, they run with the land, but, when broken, become choses in action, and not till then, and are not assignable at law. (Cases before cited. Withy v. Mumford, 5 Cowen, 137. Greenby v. Wilcocks, 2 John. 1. Sharp v. Key, 8 Mees. & Wels. 379.)
    
      III. The law of set off is, by its terms already quoted, applicable only to assignments of things in action. Therefore, “in an action for rent due to an assignee of a lease, and which became due after the assignment, a demand due from the assignor to the defendant before the assignment can not be set off.” (McDonald v. Menaire, 5 N. Y. Legal Obs. 18.) The plaintiff being the owner of the reversion originally, and becoming by assignment the owner of the sub-lease to the defendants, and no objection being made by them, when notified of this assignment, they must. be taken to have consented to hold, from that time, the store as tenants to the plaintiff. It is clear, therefore, that rent which accrued under the lease after the plaintiff became its owner and the defendants had consented to occupy as his tenants, could not be offset by a demand owing to the defendants by their original landlords. (Peckham v. Leary, 6 Duer, 494.)
    The policy of the recording act as to leases,. (1 R. S. 756, 762, §§ 1, 36,) sustains this view of the law.
    IV. There is no proof of a valid assignment to Cameron, Edwards & Co. of the lease on which the suit is brought: (2 R. S. 134, 135, §§ 3, 6, 8. Browne on Stat. of Frauds, §§ 41, 45, 46. Taylor, Landlord and Tenant, § 427. p. 299, 3d ed. Bolting v. Martin, 1 Camp. 317. Rowan v. Lytle, 11 Wend. 616. Doe v. Jones, 9 Mees. & Wels. 372.) On this subject the charge is plainly erroneous ; and s.o were various rulings as to the admission of evidence. (Shindler v. Houston, 1 Comst. 261. People v. Beebe, 1 Barb. 379, 381, 383. Foster v. Beals, 21 N. Y. Rep. 247. Booth v. Swezey, 8 id. 276. Seaver v. Coburn, 10 Cush. 324. Otis v. Sill, 8 Barb. 102, 105, 122.)
    The lease belonged to Cameron & Edwards as tenants in common only in possession of the term, not as a firm. (Coles v. Coles, 15 John. 159. Lawrence v. Taylor, 5 Hill, 107.)
    
      Augustus F. Smith, for the defendants.
    I. As between partners, real estate is treated, to all intents' and purposes, as a part of the partnership funds, whatever may be the form of the conveyance. (1 Story’s Eq. Jur. § 674. Story’s Partnership, §§ 92, 93, pp. 127, 128.)
    II. Cameron, Edwards & Co. could have sued the defendants for the rent in question, had no transfer of the lease been made to Agate and Baudouine. Before the Code they would have filed a bill in equity alleging the title to the lease, that no assignment good at law had been made to them, and would have had a decree. By the Code they were “ the real parties in interest,” and could have brought the suit at law. (Code, § 111, and note d. on p. 76. Voorhis’ Code, 6th ed.)
    
    III. Had they brought the suit, of course the set-off would be allowed.
    IV. Had Cameron & Edwards brought the suit, though for the benefit of the new firm, it is equally clear that the set-off must have been allowed. (Ferguson v. Lothrop, 15 Wend. 625. Driggs v. Rockwell, 11 id. 504. Platt v. Halen, 23 id. 456.)
    The assignment of the lease can not deprive the defendants of their right to the set-off. The two thousand dollars was due to them not only before notice of the assignment but before the assignment. (2 R. S. 354, § 18, sub. 8. See Code, § 112.) It was not material when the rent fell due, whether before or after the assignment.
    VI. The testimony introduced to establish the title of Cameron, Edwards & Co. to the lease, was not only admissible, but it was uncontradicted and conclusive. (See Collumb v. Read, 24 N. Y. Rep. 505, 511, 513.) Agate, the plaintiff, knew from the payments made to him, the checks given to and the receipts signed by him, that Cameron, Edwards & Go. owned the lease.
   By the Court, Monell, J.

If the instruction of the learned justice to the jury, that no written transfer of the lease was necessary to invest Cameron, Edwards & Co. with the title to it; and that they might become the owners of it by the assent of Cameron and Edwards and their own will, and by assuming its liabilities, was' correct, I think there was sufficient evidence in the case .to go to the jury, and their verdiet in favor of the defendants, establishing a transfer by parol, will not be disturbed.

The case upon this view was fairly placed before the jury, and there is no such preponderance of evidence, against their finding, as would, under the settled practice of the courts, authorize us to set aside their verdict. But as my associates differ with me on this question, it is not necessary for the determination of these exceptions.

It becomes important, therefore, to examine the instruction of the learned justice, that no “ written ” transfer of the lease was necessary to invest title to it in the transferee.

Our statute is, (2 R. S. 134, 135, §§ 6, 8,) that “ Eo estate or interest in land, other than leases for a term not exceeding one year, shall be assigned, unless by act or operation of law, or by deed or other conveyance in writing.”

The statute of frauds, of 29 Car. 11, ch. 3, §§ 1, 2, 3, from which our statute is derived, provides “ that no lease or estate, either of freehold or term of years, shall be assigned, granted or surrendered, unless in writing.”

There is no essential difference between these statutes ; ours being, if any thing, the most comprehensive, the words “ estate or interest in land ” embracing every species and title to real property known to the law.

As rent issues from the land, so, in the absence of any other designated place, in the lease, it is payable on the land. (Livingston v. Miller, 11 N. Y. Rep. 80.) It is incident, though not inseparably so, to the reversion. (Co. Litt. 143.) It passes with a general grant of the reversion, and may pass without the reversion ; and the assignee of the rent without the reversion, may maintain an action for its payment in his own name. (Moffatt v. Smith, 4 Comst. 126.) And a “rent charge” being a rent reserved by deed, when the landlord has no reversion, nor any express power of distress, is regarded as real estate. (Brad. on Dist. 15, 32, 34. People v. Haskins, 7 Wend. 467.)

The lease to the defendants reserved to the lessors the right of entry on the breach of any of the covenants contained in the lease, including the covenant to pay rent. And upon the failure of the lessees to keep these covenants, the lessors might regain, repossess and enjoy their former estate in the premises.

The assignments of a lease containing such a reservation, necessarily carried with it the reversion of the term in the event óf a breach of any of the covenants by the lessees, when the right of the assignee to re-enter would be complete. It was a right to re-enter upon and repossess the estate which had been granted, and was, therefore, necessarily, T think, an estate or interest in land, within the meaning of the statute to which I have referred.

We were not referred on the argument, nor have I been able to find a case, where an assignment without writing, has been held to be sufficient under our statute or the statute of Oar. 2. On the contrary, all the cases under either statute, regard a lease, as well as the assignment of it, either by the lessor or the lessee, as an estate or interest in land, which can be transferred only by a written instrument.

The language of all the statutes, of ours particularly, is too plain to admit of question; and I can not doubt that the lease to the defendants was within the prohibition of a parol transfer.

The defendants counsel, substantially admitting that the lease was real estate, attempt to sustain the instruction of the learned justice, by claiming that the lease was taken in the firm name of Cameron and Edwards, and thereby became partnership property, and is, therefore, to be treated as partnership funds, and passed as assets to Cameron, Edwards & Co.

That in equity, it might have been regarded as partnership property, as between the partners, and as such might have been reached by partnership creditors, or formed a part of their assets subject to distribution among the members of the firm on dissolution, does not take the lease from the operation of the statute, nor furnish a reason for another kind of transfer than the statute requires. There is no description of real-property, whether it be held by partners or individuals, which can be granted or conveyed except by an instrument in writing.

There is only one remaining question.

The money which the defendants claimed the right to set off, became due before the assignment of the lease to the plaintiff; and it is urged, that the defendants can not be deprived of their set off, by a subsequently acquired interest in rents reserved in the lease. The rent, to recover which the suit was brought, became due November 1, 1861, long after the assignment of the lease, and long after the defendants had notice of the assignment.

But the debt was due from Cameron, Edwards & Co., who, as I have endeavored to show, never were the owners of the lease, and therefore, had no interest in the rents, against which the defendants claim the right of set off. Had the loan been made to Cameron & Edwards, before the dissolution of that firm, it might have been otherwise.

Viewing the law as I do, I think the learned judge erred in his instructions to the jury, and that, therefore, the exceptions were well taken, and there should be a new trial, with costs to abide the event.

New trial ordered.