Case Name: Sarah Steiger, Respondent, v. Morris Feldman and Max Feldman, Appellants
Court: New York Supreme Court, Appellate Term
Jurisdiction: New York
Decision Date: 1916-03
Citations: 94 Misc. 243
Docket Number: 
Parties: Sarah Steiger, Respondent, v. Morris Feldman and Max Feldman, Appellants.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 94
Pages: 243–250

Head Matter:
Sarah Steiger, Respondent, v. Morris Feldman and Max Feldman, Appellants.
(Supreme Court, Appellate Term, First Department,
March, 1916.)
Damages — actual — liquidated — action for rent — pleading — lease — landlord and tenant — appeal.
Where, in an action for rent and to recover actual damages for the tenant’s breach of covenant to pay rent, plaintiff proves the lease and nonpayment of rent, a judgment for the dismissal “ without • prejudice ” of a counterclaim for the, return of a deposit made to secure the tenant’s performance of the lease and which thereunder was to be treated as liquidated damages in case the tenant was dispossessed from the premises prior to the expiration of the lease, which she had been, will be reversed.
Finch, J., dissents.
Appeal by the defendants from an order of the Municipal Court, borough of Manhattan, second district, denying defendants ’. motion to set aside the judgment and for a new trial.
Alexander Kahn, for appellants.
Jacob Silverstein, for respondent.

Opinion:
Lehman, J.
The plaintiff has recovered a judgment for one month's rent payable in advance on March 15, 1915. The complaint alleges that on March nineteenth a final order was duly made awarding possession of the premises to plaintiff for the non-payment of this rent. The answer besides denials sets np a counterclaim for the return of $500 deposit made to secure the performance of the defendants' covenants under the lease. At the trial the plaintiff proved the lease and the non-payment of rent. The defendants then gave some testimony apparently intended to show an eviction before the rent became due. The defendant, however, has failed to deny the allegation of the complaint that on the 19th day of March, 1915, "a final order was duly made awarding possession of said premises to the plaintiff herein and a warrant was thereupon issued putting plaintiff into possession for the defendants' failure to pay rent for the month commencing March 15th, 1915, which was due and payable on said date. ' ' A judgment taken even by default in summary proceedings for non-payment of rent " is conclusive in an action by the landlord against the tenant to recover the rent on proof of the facts alleged in the affidavit and which are required by the statute to be alleged as the basis of the proceeding, to wit, the tenancy, the occupation by the tenant, the non-payment of rents due and the holding over after default in payment." Brown v. Mayor, 66 N. Y. 385; Reich v. Cochran, 151 id. 122, 126. Such a judgment, while not conclusive as to the amount of rent due, is conclusive that some rent is due and unpaid. Jarvis v. Driggs, 69 N. Y. 143. See Prince v. Schlesinger, 116 App. Div. 500, 502. It follows that the trial justice was correct in holding that as a matter of law the plaintiff was entitled to recover the rent due on March fifteenth.
In my opinion, however, the trial justice erred in dismissing the counterclaim without prejudice. The defendants have concededly deposited $500 under the lease and the plaintiff now holds that sum. The lease contains no covenant on the defendants' part to pay any deficiency in rent after re-entry of the landlord by summary proceedings or any other covenants which survive after the termination of the lease by summary proceedings. The money can, therefore, clearly no longer be held as security under the lease. The only question on this branch of the case is whether the money belongs to the plaintiff as liquidated damages. If it does then the counterclaim must be dismissed on the merits; if it does not the defendants are entitled to judgment on the counterclaim. The lease provides that " the party of the second part has this day deposited with the party of the first part the sum of Five Hundred Dollars as security for the faithful performance of all terms, covenants and conditions in the within lease contained. It being expressly understood and agreed that if the party of the second part surrenders said premises or is dispossessed therefrom prior to the expiration of this lease, then in that event the said sum of $500 shall belong to the party of the first part as liquidated and stipulated damages, and the par- . ties hereto stipulate to treat said deposit as such liquidated damages because they cannot ascertain the exact ' amount of damage which the party of the first part ' would sustain in the event of any breach or violation hereunder." The covenant to pay rent has been broken and has resulted in the defendants being dispossessed from the premises. The exact state of affairs has therefore arisen for which the parties have agreed that stipulated damages should be paid. Such an agreement will, in a proper case, be enforced. See Feinsot v. Burstein, 78 Misc. Rep. 259; 161 App. Div. 651; Peabody v. Richard Realty Co., 69 Misc. Rep. 582, affd., 207 N. Y. 642; and especially Feyer v. Reiss, 154 App. Div. 272. Inasmuch as the defendants have expressly agreed that the sum of $500 shall be retained as liquidated damages in the event that they are dis possessed, they cannot claim that the dispossess proceedings canceled this term of the lease. It must, however, be remembered that the only covenant which the plaintiff claims that the defendants broke is the covenant to pay rent, which resulted in the dispossess proceedings. She is entitled to retain the deposit, if at all, only as damages resulting directly or indirectly for such breach. She has, however, now brought this action for this breach alleging $250 damages. Obviously she cannot claim to recover actual damages and at the same time retain the stipulated damages. The counterclaim for the return of the $500 deposit can be met only by a reply and proof that she has a right to retain this amount as stipulated damages but the plaintiff after bringing an action for actual damages and presenting her proof on this issue cannot, in the same action, raise the absolutely inconsistent claim that she has agreed upon stipulated damages and recover on both issues. The plaintiff's complaint and the defendants' counterclaim read together show that both parties are agreed that the sum of $500 is not stipulated damages for the defendants' breach.
It follows that the defendants are entitled to judgment on the counterclaim. Judgment should be reversed, with $30 costs, and judgment ordered for the defendants in the sum of $250, with costs.