Court Opinion

ID: 5240662
Source: CourtListenerOpinion
Date Created: 2022-01-06 17:25:09.753911+00
Date Added: 2024-06-11T08:27:48.106474
License: Public Domain

Rich, J. (dissenting):
I dissent. The tenant, on July 9, 1913, wrote the owner, stating in detail the improvements it desired to make, and asking the owner’s consent. To this letter the owner replied on the same day: “ In reply to your communication of even date giving details of changes and additions you desire to make to the buildings and grounds at Empire City Park and requesting our consent thereto, we beg to say that under the provisions of the lease between us for the use of said Park, dated December 28th, 1912, all such changes and additions are to be made and erected at your expense, and the undersigned is to be held harmless therefrom. Subject to your furnishing us with a satisfactory guarantee of your ability to pay for such changes and additions, and provided the work is completed before August 31st, 1913, we will accord you the following consents under the terms of said lease, to take effect when such guarantee is furnished.” Then follows a detailed statement of the *592proposed improvements consented to and those for which consents were refused.
Prior to the time when these letters were written the tenant had entered into some contracts for materials and had employed some men who had begun to work on the proposed improvements. Upon receipt of the reply to the letter of July ninth a conversation regarding the guaranty was had between tenant’s president and the secretary of the owner, Mr. MacKain, which the latter has detailed as follows: “Mr. Stokes and Mr. Lea called up and asked what kind of a bond we wished and we told them some guarantee company, and they asked which one and I said the National Surety Company would be satisfactory. And Mr. Stokes and Mr. Lea said it would be impossible for them to give it that day, and I asked them how soon they could give one and Mr. Stokes said that he was going back to the National Surety Company in a day or two and he would get it down there, and everybody knew his position there and he could get one very readily there. They asked if [we] would accept a personal bond. Mr. Stokes said that he owned some property valued at $100,000 in Nashville, Term., and was assessed for $50,000, Or $60,000 free and clear and Mr. Lea owned some property in Mississippi and we could take their bond temporarily until he could get a National Surety bond. ”
On July 10,1913, a bond executed by the tenant as principal and Stokes and Lea as sureties was mailed to the Empire City Racing Association, the receipt of which was acknowledged by the latter on July eleventh, as follows: “We beg to acknowledge receipt of your temporary Bond and to say that with the understanding that you will supplement it by July 22nd, 1913, with one issued by the National Surety Company of New York City for $20,000, the same is acceptable to us.” No surety company bond was given, and on August 29, 1913, the day the tenant was adjudged a bankrupt, the parties who later- filed the liens involved in this action had furnished materials and labor in making the improvements under contracts with the tenant. No one of the contractors had seen the lease, or made any effort or inquiry to ascertain the conditions under which the lessee had possession, or whether such lessee had any *593authority or right to do any work upon said premises, with the exception of the plaintiff, whose vice-president testified that he saw and read part of such lease, including its conditions as to repairs and alterations and the procurement of the consent of the lessor, and thereupon made up his mind, and so stated to the lessee, that he would “ gamble ” on being able to hold the owner of the property for the materials he was asked to sell to the lessee. He made no inquiry as to whether the consent had been given.
Appellants contend, among1 other things, that all of the liens are invalid because the owner of the property against which they are filed did not request or consent to the making of the improvements upon which the liens are based, and consequently no valid liens could be acquired upon its property under the provisions of section 3 of article 2 of the Lien Law (Consol. Laws, chap. 33; Laws of 1909, chap. 38). Under the provisions of the Lien Law, which provides that “A contractor, sub-contractor, laborer or material man, who performs labor or furnishes materials for the improvement of real property with the consent or at the request of the owner thereof, * * * shall have a lien for the principal and interest of the value, or the agreed price, of such labor or materials upon the real property improved or to be improved and upon such improvement, from the time of filing a notice of such lien as prescribed in this article,” before the plaintiff could have a judgment enforcing its lien by the sale of the property of the Empire City Racing Association, it was necessary to establish a request or consent of such association for the making of the improvements and alterations to its property. This is conceded, but the plaintiff contends that it established this fact by the lease itself, the terms of which, it is argued, not only provide for alterations and improvements, but require that they be made to the extent of $20,000 within two years, and $50,000 within four years after its execution; and it is argued that this condition brings the case within the principle that, where a lease requires the tenant to make improvements or repairs, the requirement itself justifies the inference of the consent of the landlord owner sufficiently to sustain a lien. While it may be *594conceded that this is the well-established general rule, I think the facts in the case at bar remove it from the operation of that rule. The provisions of the lease fixing the time for making the improvements and alterations must be read in connection with the provisions requiring the lessor’s written consent before any improvements or changes can be made. As so read, there is no obligation resting on the lessee to make any improvements which is created by the lease alone. Its agreement to make the improvements is conditioned upon the lessor’s consenting or directing changes and improvements. If the lessor refused to consent to the proposed improvements and did not itself direct specified improvements, no obligation rested upon the lessee to make them. The clause requiring the consent of the lessor was undoubtedly to protect it from liability for labor or materials furnished in such work not consented to or directed by it, and to relieve it from compulsory liability for improvements of any kind, and unless such consent or direction was given the provisions of the lease protected it and its property from such liability. I can find no words in the lease which can be construed as a consent or direction requiring improvements or alterations, except those connected with and part of the express requirement that the consent or approval of the lessor must be procured before proposed changes or improvements could be made by the lessee. Such provisions do not of themselves establish the consent (Mitchell v. Dunmore Realty Co., 126 App. Div. 829), and it is a written consent given after the lease became operative that must be found to validate the liens upon the property of the lessor. Such a consent, the plaintiff contends, is established by the letters passing between the lessor and lessee. The improvements are specified in the letter of July 9,1913, from the lessee to the lessor, and two letters from the lessor to the lessee, dated July ninth and eleventh respectively. It is clear that no consent had been given prior to the writing of the letter of July ninth. In its answer of July ninth the owner stated that it would consent to the making of the improvements designated therein upon being furnished with a satisfactory guaranty. The language used, “Subject to your furnishing us with a satisfactory guarantee * * * we will accord you the following consents * * * to take *595effect when such guarantee is furnished,” repels any inference of an intention on the part of the lessor or understanding on the part of the lessee to give an absolute consent. Following an oral inquiry as to the nature of the guaranty required and an assurance that the National Surety Company bond demanded would be given in the near future and as soon as it could be arranged for, and that in the meantime a temporary personal bond would be given, such a bond was sent to the lessor, who acknowledged its receipt in a letter stating “ with the understanding that you will supplement it by July 22nd, 1913, with one issued by the National Surety Company of New York City for $20,000, the same is acceptable to us.” This acceptance was conditional and never became operative as a consent, because the condition was never performed. In other words, the conditional consent impliedly arising from the acceptance of the temporary bond became operative only when the surety company bond was given. It never having been given, such conditional consent never became operative. The respondent further contends that an implied consent is evidenced by proof of knowledge by the owner that the proposed improvements were being made by the lessee. This contention rests upon testimony that on two or three different occasions the president of the lessor (and possibly one of its other officers) was seen by workmen driving or walking past the place where they were working. That testimony is insufficient to sustain the contentions. (Lloyd v. Kilpatrick, 71 Misc. Rep. 19; Rice v. Culver, 172 N. Y. 60; De Klyn v. Gould, 165 id. 282; Garber v. Spivak, 65 Misc. Rep. 37.) In addition, the consent necessary to authorize the lessee to proceed with the proposed improvements was to be in writing, which made affirmative action on the part of the lessor necessary, and this requirement is not met or satisfied by proof of knowledge of some of the officers of the lessor that work was being done upon the property. The debts incurred in consequence of the alterations were those of the lessee, to whom credit was extended, and the creditors took the risk of non-payment. The property of the lessor became liable for the payment of such debts only in the event that it took affirmative action in directing or consenting that the proposed improvements be made. The work pro*596ceeded without any request or direction having been made, or consent given by the lessor; and it follows that its property was not liable for the liens which the plaintiff and the lien defendants attempted and assumed to impose upon it.
The plaintiff and the respondents relied solely upon the responsibility of the lessee in extending the credit, except that the plaintiff, with knowledge of . the lease, preferred to “ gamble ” upon results rather than ascertain whether the consent had been given.
Under the circumstances, I think the lienors must be held to have taken all the risk involved in extending credit to the lessee and to be limited in their recovery to their debtor and its property. As was well said in a similar case (Hartley v. Murtha, 36 App. Div. 196): “The requirement that the plans and specifications should be submitted before any consent on the part of the landlord should become operative was not technical but was substantial in its nature, and an important protection to her rights and interests. As it was utterly disregarded, it is plain that the work proceeded without her consent, and that her property is in no way liable for the lien which the plaintiff has attempted to impose upon it. The plaintiff cannot complain of this result.”
I must vote to reverse the judgment, with costs to each of the appellants, and I think that the complaint ought to be dismissed upon the merits as to the defendant Empire City Eacing Association, and dismissed as to the other defendants, without prejudice to the bringing of an action against its debtor, the .National Fair and Exposition Association, if the plaintiff shall be so advised.
Judgment affirmed, with a bill of costs to each of the seven attorneys who have appeared for respondents on this appeal, such costs to be taxed one-half against each appellant.