Court Opinion

ID: 5208027
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:06:35.560669+00
Date Added: 2024-06-11T08:27:19.421241
License: Public Domain

Houghton, J.:
-On the 6th day of June, 1895, the plaintiff and coexecutors leased to one David S. Hammond the premises known as the Murray Hill Hotel in the city of Hew York for the period of ten years beginning the 1st day of July, 1896, at a stipulated rental, payable monthly, in addition to the payment of taxes and water rents. The lease contained a provision that Hammond should not sublet thé premises for any purpose other than the ordinary hotel business, and that he should not. assign the lease “except to such person or persons as may become partners or associates in business with /him in the management or profits of said hotel, or to a corporation consisting mainly of himself and his associates in business.”
In consideration of such letting, defendant’s'testator, William *564Ottmann., by an instrument in writing contained in the same cover with the executed lease, covenanted and agreed with the plaintiffs, “ their successors and assigns that if default shall at any time be made by the said David S. Jlammond on the payment of the rent (including taxes), or the ■ performance of any of the covenants within contained on his part to be paid and performed, that I will well and truly pay the rent- and taxes or any arrears thereof and any and all other sums of money required to be paid by the said David S. Hammond under the terms of the within lease ” on a diminishing scale which limited his liability as surety to the sum of $100,000 during the last five years of the term.
Ottmann died in September, 1895, and in June, 1896, before the lease went into effect, Hammond assigned it and all his rights -under it, without reservation, to the' Murray Hill Hotel Corporation, organized for the- purpose of carrying on the hotel, and consisting mainly of Hammond and his associates in business..
The corporation entered into possession of the premises, and the lessors accepted rent from it and looked to it for payment of the rent, ánd recognized it as the tenant in possession.
During the last five years of the term the corporation was in default in a sum greater than $100,000 of the stipulated rent, and this action is brought to recover'that amount from the defendant because of the guaranty signed by his testator. The issues were referred to a referee to hear and determine and resulted in a judgment dismissing the complaint upon the merits, from which the plaintiff appeals.
We are pf the opinion that the absolute assignment of the lease by Hammond before it went into effect, without any .reservation as to him or to the lessors, and the recognition of the hotel company as the tenant in possession under the lease, discharged the surety of ■ Hammond from liability. It is true the lease provided that' Hammond might assign it to the kind of corporation to which the assignment vras made, but that was.an agreement between the lessors and the lessee. The surety was careful in the paper which he signed to guarantee only against the default of Hammond himself. Throughout the agreement of guaranty Hammond alone is mentioned. If the lessors should convey the property and transfer the lease, the surety stipulated that he would be bound to théir “ assigns,” but he *565makes no such stipulation as to the assignee of Hammond. The surety graduated his liability and made it less as the term of the lease progressed: While this shows intent on the part of the surety to remain liable until the end of the term, it throws no light on his intention to become liable for the default of an assignee.
In bur opinion, in view of the express language of the contract of guaranty to become and remain liable for the default of. Hammond alone, the provision in the lease permitting its assignment cannot be read into the guaranty. To do this and thus interpret the contract of guaranty as applying to- an assignee of the lease would do violence to the plain terms of the agreement which. defendant’s testator entered into.
While there are some expressions in the opinion in Morgan v. Smith (70 N. Y. 537) to the effect that a surety is presumed to know the terms of the lease and that a provision for its assignment may, under some circumstances, be read into a contract of guaranty and thus make the surety liable for the default of- the assignee, the precise holding of that case is far from being an authority compelling ' that to be done and continuing the liability of a surety after assignment is made. The so-called assignment in that case was construed to be a mere permission to underlet with a proviso that in no case should the lessee be discharged or the relation of landlord and tenant affected. This limited holding of the case is especially -pointed but in Spies v. National City Bank (174 N. Y. 222, 228), and in the opinion of Mr. Justice Ingraham in the same case in 68 Appellate Division, 70, 74.
There are other grounds urged by the respondent to sustain the judgment, but it is unnecessary to discuss them in view of our conclusion that the one adverted to is sufficient.
The judgment should be affirmed, with costs.
Ingraham and McLaughlin, JJ., concurred; Clarks and Scott, JJ., dissented.