Case Name: MONTANT v. MOORE et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-12-30
Citations: 120 N.Y.S. 556
Docket Number: 
Parties: MONTANT v. MOORE et al.
Judges: 
Reporter: West's New York Supplement
Volume: 120
Pages: 556–566

Head Matter:
MONTANT v. MOORE et al.
(Supreme Court, Appellate Division, First Department.
December 30, 1909.)
1. Equity (§ 24 )—Relief from Penalties—Power of Court of Equity.
Equity has the power to open or disregard defaults or penalties imposed by contract incurred without the fault of the party against whom: the default is sought to be enforced.
' [Ed. Note.—For other cases, see Equity, Cent. Dig. §§ 69-76; Dec. Dig.. § 24. ]
2. Contracts (§ 316 )—Waiver—Penalties and Forfeitures.
A party to a contract to whom a sum of money is payable at a specific-time may waive the right to receive it at such time,' or to enforce anypenaity or forfeiture for nonpayment at the specific time.
[Ed. Note.—For other cases, see Contracts, Cent. Dig. § 1489; Dec-Dig. § 316. ]
3. Contracts (§ 316 ) — Waiver — Penalties and Forfeitures — Customary-
Conduct.
The right of a party to a contract to enforce the forfeiture for failure-of the adverse party to make payments at specific dates subject to forfeiture for nonpayment may be waived' by the parties establishing a custom by which a particular method has been adopted for making such payments, and, so long as such custom is complied with, the adverse party-is not in default.
[Ed. Note.—For other cases, see Contracts, Cent. Dig. § 1489; Dec-Dig. § 316. ]
4. Contracts (§ 227 )—Performance of Condition Precedent—Waiver.
A party to a contract may waive performance of a condition precedent-
[Ed. Note.—For other cases, see Contracts, Cent. Dig. §§ 1038-1041;. Dec. Dig. § 227. ]
5. Landlord and Tenant (§ 112 )—Nonpayment of Rent—Penalties— Waiver.
Where the parties to a lease calling for payment of rent- on designated’ dates, subject- to forfeiture for nonpayment, acquiesced for years in a 'new method of payment, the provision for payment was so far waived' as to prevent a claim that a failure to pay on the day named was a breach of the lease until the lessee had notice of the fact that such custom would, not in the future be continued.
[Ed. Note".—For other cases, see Landlord and Tenant, Cent. Dig. Si-343-349; Dec. Dig. § 112. ]
6. Landlord and Tenant (§ 83 )—Stipulations—Right of Renewal-Waiver of Forfeiture.
A lease for a specified term fixed the times for the payment of rent, and stipulated that the lessee performing all the covenants of the lease-might obtain a renewal. For many years the lessee did not pay the rent on the days designated, but paid the installments thereafter, and then only after receipt of a notice given subsequent to the designated dates-requesting payment. No notice was given as to an installment which became due on a designated date. Held, that the landlord waived payment of rent on the designated dates, and, before the lessee could be held to-have violated the terms of the lease, notice that the rent was due must be given, -and the lessee was entitled to a renewal lease.
[Ed. Note.—For other cases, see Landlord and Tenant, Cent. Dig. § 267 Dec. Dig. § 83. ]
Clarke, J., dissenting.
Appeal from Special Term, .New York County.
Action by Eliza C. B. Montant against Casimir de R. Moore and another. From a judgment for defendants, plaintiff appeals. Reversed, and new trial ordered.
See, also, 61 Mise. Rep. 45, 113 N. Y. Supp. 43.
Argued before PATTERSON, P. J., and INGRAHAM, LAUGH-LIN, CEARKE, and SCOTT, JJ.
Walter P. Vining (Thomas W. Butts, on the brief), for appellant.
Shepard, Smith & Hawkins (William Mason Smith, of counsel), for respondents.
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to Sate, & Rep'r Indexes

Opinion:
INGRAHAM, J.
On the 8th day of April, 1887, one Mary Elizabeth Moore, the defendants' predecessor in title, leased certain premises in the city of New York to the plaintiff for a term of 21 years from the 1st day of May, 1887, at the yearly rental of $130, payable in semiannual payments on the 1st days of May and November in each year. A copy of the lease is annexed to the complaint. There had been erected upon the said premises a dwelling house which belonged to the plaintiff, who was in possession of the premises under the said lease down to the time of the .commencement of this action in September, 1908. J. M. Wells' Sons, a firm of real estate agents, had represented the defendants to collect the rent for the plaintiffs, and the same brokers were the defendants' agents to collect the rent due from subtenants for 10 years prior to the termination of the lease. These real estate brokers, thus representing both the plaintiff and defendants, were in the habit of sending a notice to the plaintiff when the rent was due, and, upon the receipt of such notice, plaintiff sent a check to the brokers for the rent. Checks were produced for the payments of rent from November, 1894, showing that payments had been made at varying dates from 5 to 25 days after the rent became due and had been accepted by the defendants. No objection was ever made on the ground that' the rent was not paid in time nor had payment on the 1st day of the month when the rent became due been insisted on, and thus a custom had grown up in relation to the method by which the rent should from time to time be paid. This lease contained the usual covenant of re-entry, required the tenant to pay all duties, taxes, and assessments. The lease also contained a provision that:
"If at the end and expiration of the said term hereby granted, there shall be standing on the hereby demised premises, "a good and substantial dwelling house of at least two stories in height, constructed of brick or stone, with fireproof roof, and the said party of the second part, her executors, administrators and assigns shall and will during the whole of the said term, well and faithfully keep all and every the covenants herein contained, on her and their part and behalf, that then the said party of the firti part her heirs or assigns, shall- and will, at such the end and expiration of the said term grant unto the said party of the second part her executors, administrators or assign, at her or their expense a new lease of the said lot of ground for a further term of twenty-one years thence next ensuing, at such reasonable annual rent, to be paid half yearly, as shall then have been agreed upon by the parties, or otherwise settled and ascertained as is hereinafter provided, but not less than the rent reserved by these presents."
Such renewal lease to contain a covenant for a further renewal of the lease for 21 years át a rent to be ascertained -as provided for in the lease, and a further provision that at the expiration of the renewed term the landlord was at her option either to pay to the tenant the just and fair value of the house upon the property to be agreed on or ascertained in the manner provided for or to renew the lease for a further term of 21 years at a rent to be ascertained in like manner. It was further provided that, in the event that the parties were unable to agree as to the rent to be reserved by the renewal lease, the amount of such rent should be ascertained by arbitrators, one to be nominated by the landlord and one to be nominated by the tenant, which nominations were to be made and signified by each party to the other at least one month before the expiration of the term; that, if the two persons to be so nominated and appointed should differ in judgment, they were to appoint a fit and impartial person to be associated with them for such purpose, and the decision of any two of the three persons so chosen to be final and conclusive. There was a dwelling house upon the premises which complied with this provision of the lease. The lease expired on the 1st day of May, 1908. On March 18, 1908, the firm of brokers which had acted as agents for both parties in relation to the premises wrote a letter to the plaintiff, notifying her that the lease held by her would expire on the 1st of May ensuing, and that the landlord was ready to renew the lease as provided in the lease itself for a further term of 21 years at the yearly rental of $425. Plaintiff refused to accept this rental, and about the 15th of April, to which time the appointment had been extended by mutual consent, appointed Mr. Dayton as arbitrator. On the 29th of April, 1908, the defendants wrote a letter to the plaintiff, notifying the plaintiff that he was the owner of the premises described in the lease and that he nominated a Mr. P. A. Geoghegan to act as arbitrator to determine what augmentation of the rent, if any, should take place during the next ensuing term of 21 years from May 1, 1908, and thus both parties prior to the end of the term had appointed the arbitrators who were to determine under the lease the amount that the tenant was to pay as rent for the ensuing, term of 21 years. All questions, having thus been settled as to the renewal of the lease except the amount of rent that the tenant w^s to pay, and the arbitrators who were to determine that amount having been appointed by both parties, all that was necessary for the parties to do to carry into effect the covenant for a renewal had been done.
On the 1st day of May, when the term expired, six months' rent of the premises was due. No notice was sent to the plaintiff that the rent was due in accordance with the existing custom that had been in force for over ten years, and the plaintiff, relying upon the fact that she would receive the usual notice when the rent was required, did not pay the rent on that day. On the 5th of May, 1908, the plaintiff received a letter from the attorneys for the defendants stating that under the terms and provisions of the lease which expired on May 1st the plaintiff was not entitled to a renewal unless she should have during the whole of the said term well and faithfully kept all the terms and covenants on her part to be performed; that the plaintiff had not kept all of these covenants, having violated, among others,' the covenant to pay the rent; and that the landlord was therefore under no obligation to grant to the plaintiff a renewal, and did not care to do so. Im mediately upon receipt of this letter plaintiff sent to the defendants a check for the rent, which was accepted, and plaintiff received from the defendants' agents a receipt stating that the payment was accepted by the landlord without waiving any right to insist that the tenant's right to a renewal of the lease expiring on May 1, 1908, was terminated for a failure to observe a covenant of the lease. This position having been taken by the defendants immediately after the 1st of May, the arbitrators never proceeded to ascertain the amount of rent to be paid during the new term. It was conceded that the plaintiff was ready, willing, and able to pay the rent reserved under the lease on May 1, 1908. It further appeared that the plaintiff was in poor health at the expiration of her term, and had left the exclusive charge of everything relating to this property with her husband; that the only reason this rent was not paid was because the plaintiff's husband did not think of it, as he relied upon the custom of receiving a notice when the landlord required the rent. It appeared that all the taxes imposed upon the property during the term had been paid by the tenant, and that the tenant had complied with all the other terms and conditions of the lease. The defendant having taken this definite position, and refused to grant a renewal of the lease or recognize the plaintiff's right to a renewal lease in consequence of this default in the payment of the amount of rent due on the 1st of May, 1908, plaintiff commenced this action for a specific performance of the covenant and asked to be relieved from the default, if any.
By the terms of the lease the rent was due upon the 1st day of May, 1908. There was nothing -in the lease which required this rent to be paid to the termination of the demised term. Under the terms of the lease, the plaintiff would have the whole of the 1st day of May to pay the rent before she was in default. The covenant in regard to the renewal of the lease was that:
"If at the end and expiration of the said term, hereby granted, there shall be standing on the hereby demised premises, a good and substantial dwelling house and the said party of the second part, her executors, administrators and assigns, shall and will during the whole of the said term, well and faithfully keep all and every the covenants herein contained, on her and their part and behalf, that then the said party of the first part her heirs or assigns, shall and will, at such the end and expiration of the said term grant unto the said party of the second part her executors, administrators or assigns, at her or their expense a new lease of the said lot of ground for a further term of twenty-one years thence next ensuing."
The position of the defendants is a most technical one. Both parties had appointed their arbitrator to determine the amount to be paid on the renewal; and it is not claimed that up to the time that the lease had terminated on the 1st day of May, 1908, the plaintiff had failed to perform any of the terms and conditions of the lease to be kept and performed by her. She had not paid the rent that became due on the 1st day of May, 1908, but there is nothing in the lease to provide that that rent should be paid before the demised term had terminated, and, strictly speaking, I think it could well be said that, at the time of the termination of the lease, none of the terms or conditions to be kept and performed by the plaintiff had not been kept and performed. But the parties had by their uniform custom established a method of collecting the rent of the premises. Undoubtedly the rent became payable on the 1st days of May and November in each year; but by this custom which had been clearly established before the rent was expected to be paid a notice to or a demand upon the plaintiff for it was made. This method of collecting the rent had hardened into a custom which I think can be fairly said to have become a part of the contract between the parties, so that there would be no default in the payment of the rent which would constitute a failure to comply with the terms and conditions of the lease until a demand had been made or notice given to the plaintiff that the rent was due and payment was required.
The power of a court of equity to open or disregard defaults or penalties incurred without the fault or neglect of the party against whom the default is sought to be enforced cannot be questioned. Nor can there be any question about the right of a party to whom a sum of money is payable at a specific time to waive the right to receive it at such a time or to enforce any penalty or forfeiture because of a failure of payment at the specific date named. And, where a party is entitled to receive payments at specific dates with a forfeiture or penalty imposed for a failure to pay at any date specified, the right to enforce such penalty or forfeiture may be waived by the parties having established a custom by which a particular method has been adopted for making such payments, and, so long as such custom is complied with, the person who is obligated to make the payments is not in default. This principle has been applied to a great variety of conditions, frequently in actions in relation to policies of life insurance. In Toplitz v. Bauer, 161 N. Y. 325, 55 N. E. 1059, the plaintiff was plainly in default both in the performance of the condition of the policy with the insurance company and in default in the payment of the note, for the payment of which the policy had been pledged as security. The court held that it must be conceded that no legal extension for the payment of the note was given, and that the plaintiff could not recover upon the theory that a right to demand and enforce payment of the debt was suspended; but that the extension of the time for the payment of the debt which must be supported by a sufficient consideration must not be confused with the waiver of the right to forfeit the pledge without previous notice to the pledgor or those who represented him, or were interested in the pledge, and that the parties occupied the same relation to each other as prevails between a vendor and vendee in executory contracts for the sale of land where it had been held that a forfeiture of the contract cannot be insisted. upon by the vendor under such circumstances, although the contract containing an express provision that that result would follow a failure to make the payments at the time stipulated. The court then said:
"The same principle has been applied to other contracts, which, 'by their terms, provide for a forfeiture or a loss of the fruits of the contract by the failure to pay a certain sum or to do a certain thing at a specified time."
Thus a waiver has been implied where there was a covenant in the lease not to sublet without the written consent of the landlord under penalty of forfeiture, where the tenant sublet with the knowledge of the landlord who subsequently received the rent. Ireland v. Nich ols, 46 N. Y. 413. See, also, Gallagher v. Nichols, 60 N. Y. 438, and Dunn v. Steubling, 120 N. Y. 232, 24 N. E. 315. In Lindenthal v. Germania Life Insurance Co., 174 N. Y. 76, 66 N. E. 629, it was held:
"Where an insurance company makes a valid waiver of the punctual payment of premium on the law day without submitting another time of payment, but leaves the matter open and indefinite, it cannot enforce a forfeiture for nonpayment without reasonable notice to the policy holder or person in whose favor the time limit has been waived."
The fact that this is a condition precedent to the right of the plaintiff to a new lease, and not strictly speaking a forfeiture or a penalty, is not material, for a party to a contract can waive the performance of a condition precedent. See Pechner v. Phœnix Ins. Co., 65 N. Y. 195.
We think, therefore, that, where under a lease in which payment of the rent is required upon, a day certain where the parties by a course ofc conduct extending for years have acquiesced in a method by which the rent is to be paid, the provision for payment in the original contract is so far waived as to prevent a claim that a failure to pay upon the day named is a breach of the condition until the lessee has notice of the fact that such a custom will not in the future be continued and payment is required upon the day named in the contract.
The court below found that it was the plaintiff's custom to make payment of the semiannual ground rent to the order of James M. Wells' Sons on behalf of the landlord; that said firm was also the agent of the plaintiff to collect the rent from the subtenant; that for many years prior to May 1, 1908, the plaintiff did not pay the various installments of rent on the very day upon which the installments became due, and plaintiff did not pay any of such installments until from 15 to 29 days after the same, respectively, became due, and then only after the receipt by the plaintiff from the said defendants' agents of a notice given subsequent to the day upon which payment was due that the said payment was overdue and requesting that it be made; that no such notice or any other notice was given with regard to the installment which became due on May 1, 1908, and that said defendants prior to May 1, 1908, always accepted the rental so paid after the second of such notice with question; that plaintiff has been at all times ready and willing to take a new lease of said premises for a term of 21 years from the 1st day of May, 1908, but said defendants have refused and still refuse to execute such renewal lease. Upon the facts the court dismissed the complaint.
We think upon the facts here established that the defendants waived the payment of the rent upon the 1st day of each month upon which it was payable, and that, before the plaintiff could be said to have violated one of the terms or conditions of the' lease, notice that the rent was due must be given or a notice before the day upon which it was payable by the lease must be given that the custom theretofore established would not be continued, and that the landlord demanded the payment of the rent upon the day specified. The plaintiff was not therefore in default, and was entitled to a renewal lease. None of the cases cited by the respondents are in point. People's Bank v. Mitchell, 73 N. Y. 406, which is relied upon by the respondents, was an action at law to recover the value of the building upon the leasehold prem ises, and it was held that such an action could not be maintained where it appeared that the tenant had failed to pay taxes which were imposed upon the premises and which' by the lease he was to pay. There was no claim there that the landlord had waived this breach of the covenant, and the court placed its decision squarely upon the proposition that, until the plaintiff had fulfilled this condition, he had no remedy at law against the defendants. There was no claim that the payment of the rent upon the day specified in the lease had been waived, which is the ground upon which we place our decision in this case.
It follows, therefore, that the judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.
PATTERSON, P. J" and RAUGHLIN and SCOTT, JJ., concur.