Case Name: The Brooklyn Improvement Company, Appellant, v. Oscar A. Lewis, Individually and as Receiver, etc., Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1910-03-31
Citations: 136 A.D. 861
Docket Number: 
Parties: The Brooklyn Improvement Company, Appellant, v. Oscar A. Lewis, Individually and as Receiver, etc., Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 136
Pages: 861–866

Head Matter:
The Brooklyn Improvement Company, Appellant, v. Oscar A. Lewis, Individually and as Receiver, etc., Respondent.
Second Department,
March 31, 1910.
Pleading ^-demurrer—sufficiency of one of two causes of action—bankruptcy— when receiver liable for rent — court — jurisdiction of State court —failure to give bond — complaint not stating cause of action.
Where a complaint states two causes of action, one against the defendant individually and the other against him in a representative capacity, and there is no demurrer upon the- ground of misjoinder of actions, the complaint will he sustained if it state a cause of action against the defendant in either capacity.
A receiver in bankruptcy -who, after an order of the Federal court requiring him either to vacate or give security for rent of lands leased to the bankrupt, elects to retain possession becomes personally liable for rent accruing from the date of the order.
The courts of this State by taking jurisdiction of an action to' recover rent from such receiver, cannot be charged with attempting to enforce an order of the Federal court; nor is the plaintiff confined to a proceeding in that court to punish the receiver for contempt. This, because the foundation of the receiv- ■ er’s liability is not alone the order of the court but his voluntary election taken pursuant to its provisions.
A complaint stating a second cause of action against such receiver for rent founded upon the fact that on retaining the leased premises he- failed to give security for rent as required by the order of the Federal court, does not state ' a cause of action where it fails to show that the receiver is insolvent or irresponsible, or that a judgment upon the first cause of action for rent due will be unavailing. ■
Appeal by the plaintiff, The Brooklyn Improvement Company, from a judgment of the Municipal Court of the city of Mew York, borough of Brooklyn, in favor of the defendant, rendered on the 14th day .of October, 1909, sustaining the defendant’s demurrer to the complaint.
Raymond Rallantyne, for the appellant.
Charles A. Houston [Edwin M. QMerbourg with him on the. brief], for the respondent. . (

Opinion:
Burr, J.:
The complaint attempts to state two causes of action, and defendant is sued both individually and in liis representative capacity. . It is not attacked upon the ground that causes of action have been improperly united. If, therefore, it states a cause of action against the defendant in either capacity, the demurrer should have been overruled. In the first cause of action the complaint alleges, the ownership by plaintiff of a piece of real property in the borough of Brooklyn, which it describes; that the same was leased to the .Bracken-MeAveney Company, by a written lease to commence on the 1st day of December, 1905, and to continue for a term of five years, at a yearly rental of- $2,400, payable in monthly installments of $200 each in advance, on the first day of each and every month during the said term; that on the oth of Movember, 1908; in a' proceeding then pending in the United States District Court for the Eastern. District of Mew York, entitled "In the Matter of the Bracken-MeAveney Company Incorporated, Alleged Bankrupt," an order was duly made whereby the defendant was appointed receiver of all the property of the said company, with the usual powers and authority of a temporary receiver in bankruptcy; that on the same day he duly qualified as such receiver, and filed his official bond, and entered into possession of all the property of the said company, including the premises thereinbefore described and the leasehold interest of the said company therein. -By the same order plaintiff was enjoined and restrained from molesting or interfering with the temporary receiver in the discharge of his duties, or otherwise interfering with the property, assets, books and effects of the said alleged bankrupt. On the 25th day of November, 1908, upon the application of plaintiff herein, an order was made requiring defendant to show cause why he should not vacate and surrender possession of the premises, or, in the alternative, give security to plaintiff for payment for his use and occupation thereof, and such proceedings were thereupon had that on the 5tli day of December, 1908, the said United States District Court, by its order, required the defendant, before December eighth, to make an election, either to Vacate and turn the aforesaid premises and the lease thereof back to the plaintiff, or in the alternative, if he elected to retain possession of the premises, to give security to the landlord for the payment of the rent of the premises from November 5, 1908, the date of his occupation/ to such time as he of his successor shall quit and surrender, the same. The order further provided that if defendant elected to-vacate the premises, the restraining order theretofore made should be so far modified as to permit plaintiff to take the necessary proceedings to recover possession thereof from the alleged bankrupt.. Thereafter, on the eighth day of December, defendant elected to retain possession of the premises, and so notified plaintiff, and he did retain possession of and actually occupied the same to the fourteenth of December in the same year. The complaint further alleges that no part of the rent for the months of November and December, 1908, has been paid.
Defendant contends, first, that plaintiff cannot maintain an action against him for use and occupation of the premises, since it affirmatively appears that a lease was in full force and effect during the period of his occupancy. (Walton v. Stafford, 162 N. Y. 558.) He further contends that in his official capacity he was a mere officer of the court, charged with the preservation of the property-over which it exercised control until some final determination should be made respecting it; that the position which he occupied was similar to that of a chancery or court receiver in the State court, as distinguished from a statutory receiver therein, and'that as such chancery or court receiver the defendant took no title to the lease, and did not become an assignee thereof. (Stokes v. Hoffman House, 167 N. Y. 554; Prince v. Schlesinger, 116 App. Div. 500; Keeney v. Home Ins. Co., 71 N. Y. 396; Decker v. Gardner, 124 id. 334; Matter of Otis, 101 id. 580.) Even if this were so, we think that defendant, by his own action, made himself personally, liable for the payment of such rent as. accrued under the. terms of the lease' between the 5th day of November, 1908, and the eighteenth day of December-in the same year. If he had gone into occupation óf the demised premises as an individual on the said. fifth day of November, and in the early part of December, after the rent both for November and December had become due, had stated to plaintiff'in response to a demand for either rent or possession, " If you will permit me to remain in occupation of these premises, I will agree to pay the rent from the time that I took the occupation thereof until such time as I shall surrender the same," and defendant, relying upon that, had permitted him to remain, this •would have amounted to an original undertaking, ¡upon his part to pay the rent during that period. (Hegeman v. Moon, 131 N. Y. 462; Hardt v. Recknagel, 62 App. Div. 106,110.) In effect, that was substantially what was done through the medium of the orders of the United States court in bankruptcy which appointed him, and his own voluntary act. The same court which put him in possession of the premises on the fifth of November restrained the plaintiff from taking any proceedings against the bankrupt which would: interfere with liis possession and occupation thereof. When plaintiff applied, in the early part of December, to be relieved from that injunction order, the court in effect sáid to defend_ant, "Unless you elect to retain possession of the premises, the relief asked for by •plaintiff herein will be granted." Defendant thereupon did elect to. retain possession thereof, and deprived plaintiff of the remedy which otherwise it Would have had to recover the same. That this is a fair and reasonable construction of the order is evidenced not only from its language, but from the conduct of the defendamt subsequent thereto. He was required to elect either to vacate and turn the aforesaid premises and the lease thereof back to the lessor, or to retain possession of the same. That the court did not intend that he should retain possession of the premises without becoming liable to pay the rent thereof is manifest from the provision in the order that if he did elect to retain possession he should give security to the landlord for the payment of such rent. Where an order is couched in such language that a person intervening in judicial proceedings has a right to rely upon it and expect the payment of his rent until some other order is made, there would be strong reasons for saying that the receiver appointed in such proceedings would be obligated to pay this rent as it matured. ( United States Trust Co. v. Wabash Railway, 150 U. S. 287, citing Central Trust Co. v. Wabash, etc., Railway, 34 Fed. Rep. 259.)
There is no force in the contention of defendant that this is an attempt to enforce an order of the United States District Court, and that the only remedy for a violation of its provisions is by a proceeding in that court to punish its officer for contempt. The foundation of defendant's liability in this case is not alone the order of the court, but his own voluntary action taken in pursuance of its provisions, by virtue of which he obtained the benefit of it. As a part of the same cause of action reference was made to certain provisions of the lease relative to the payment of taxes. It seems to us unnecessary to consider the effect of these allegations, for the reason that if these taxes did become due as part of the rent reserved under the lease, no part of it became due within the period during which defendant was in occupation of the premises or during the period for which he made himself liable to pay the rent thereof. It follows, therefore, that the demurrer to the first cause of action set up in the complaint was improperly sustained.
The second cause of action, after reciting all the allegations contained in the first cause of action, further alleges that defendant failed and neglected to give the security for payment of the rent, as required by said order, and that as a result of such failure plaintiff has not been paid and is unable to collect the said rent. The provision in the said order with regard to giving security was solely for the benefit of plaintiff, and might be' waived by it if it so desired. It had nothing to do with the liability of the defendant caused by his own voluntary act. There is no allegation in this part of the complaint that defendant is insolvent or irresponsible or that a judgment upon the first cause of action for the rent due from him will be unavailing. It does not appear, therefore, that any injury has resulted to plaintiff by reason of the failure to give the bond required by the order of the United States District Court, and the demurrer to the second cause of action was, therefore, properly sustained. •
The judgment entered in this action should be modified so as to provide as follows : So much of the judgment as sustains the demurrer to the first cause of action is reversed and the demurrer is overruled ; so much of the judgment as sustains the demurrer to the second cause of action is affirmed, neither party to have costs against the other.
Hirschberq, P. J., Woodward, Jenks and Carr, JJ., concurred.
Jndgment of the Municipal Court modified so as to provide that so much of the judgment as sustains the demurrer to the first cause of action be reversed and the demurrer overruled, and that so much of the judgment as sustains the demurrer to the second cause of action be affirmed, neither party to have costs against the other.