Herzig v. Blumenkrohn

107 N.Y.S. 570 | N.Y. App. Div. | 1907

Lead Opinion

Scott, J.:

The defendant Blumenkrohn appeals from an interlocutory decree overruling his demurrer to the complaint. The facts are simple. The plaintiff held a leasehold estate in certain premises in the city of Mew York. On July 19,1905, he leased the premises to the appellant Blumenkrohn for a term of years to commence on July 1, 1907, at twelve o’clock, noon, and to end on October 1, 1920, also at twelve o’clock, noon, the lease being duly recorded on April 30, 1906. This lease contained a provision that “the' lessee further covenants not to assign this lease without the lessor’s written consent.” The lease also reserved to the lessor, plaintiff herein, the right to re-enter upon default by the lessee with respect to any of the covenants by him to be performed. On May 16, 1906, and hence before his own term was to commence, the appellant Blumenkrohn, without consent of plaintiff, leased the same premises to the defendant. Crystal for the same term as was conveyed by the lease from plaintiff to Blumenkrohn, for the same rent, by a lease which, except for the date, and the names of the lessor 'and lessee, 'was a precise copy of the former lease from plaintiff to Blumenkrohn. The plaintiff, upon ascertaining the fact of the lease from Blumenkrohn to Crystal, and before the date of the commencement of the term fixed by either lease, commenced this action to have the leases declared void, asserting that, both having been recorded, they constitute a cloud upon his title. His position is that the instrument executed by Blumenkrohn to Crystal, although in form a lease, was in fact and' law an assignment to Crystal of plaintiff’s lease to Blumenkrohn, and that thereby Blumenkrohn violated his covenant not to assign, and he alleges that he has exercised his Option to cancel the lease for such violation, and has so notified both defendants.

The sole question presented, therefore, is whether or not the instrument executed by Blumenkrohn to Crystal is a sub-lease or an assignment. The distinction between a sub-leáse and an assignment of the original lease has been the cause of much discussion "and of some apparent, rather than real, difference of opinion. It is quite well settled, however, that it is immaterial what form of instrument is used or whether on its face it purports to be a sub-lease or merely the assignment of a lease. The essential distinction between a sublease and an assignment lies in the extent to which the original lessee has parted with his interest. If he has parted with his entire interest he has made an assignment; if he has retained a reversion in himself he has made a sub-lease. ( Woodhull v. Rosenthal, 61 N. Y. 391 ; Stewart v. Long Island R. R. Co., 102 id. 607.) In the desire to avoid forfeitures, the courts have been astute to discover in instruments asserted to be assignments features which implied some, reservation sufficient to justify a finding that the original lessee had reserved to himself some portion of the term. Thus when the instrument, although it disposed of 'the whole term, contained a covenant on the part of the second lessee to surrender to the original lessee on the last day of the term, it was considered that there liad been reserved a reversion of a- part of the last day of the term, and hence the instrument was deemed a sub-lease and not an assignment. (Post v. Kearney, 2 N. Y. 394.) In the present case the instrument executed by Blumenkrohn to Crystal is, as has been s.aid, identical in its language with the lease executed by plaintiff to Blumenkrohn. It covers the same premises; is for the same term; at the same rent, payable on the same days, and contains identical conditions and covenants. Ho such reservation can be spelled out of it as was found in Post v. Kearney (supra), for there the only provision as to the end of the term was that it should be on a certain day, and the covenant as to surrender was that the sub-lessee should surrender to the original lessee. In the present case the end of the time is fixed at a particular minute in a day, to wit, at twelve o'clock noon on the 1st day of October, 1920, and Crystal’s covenant to surrender at the end of the term is not that he will surrender the premises to Blumenkrohn, but that he “shall .quit and surrender said premises in good condition, reasonable wear and tear excepted.” This must be taken to mean that he will surrender possession to whomsoever shall at the end of the term be entitled to demand it, and that person cannot, be Blumenkrohn, because his right to possession will- terminate under his lease from plaintiff at the very moment that Crystal’s' term ends and the obligation to surrender becomes operative. It is clear, therefore, that Blumenkrohn has not reserved to himself any part of the term at its end. • The only possible feature of the case upon which a contention can be based that the instrument was a sub-lease and not an assignment is that the instrument contains the customary clause reserving to Blumenkrohn the right of re-entry for condition broken, and it is upon this fact -that the appellant chiefly relies. It is not to be disputed that there are to be found cases of high authority in which it has been said that the reservation of such a right of re-entry imparts to the instrument containing it the character of a sub-lease rather than that of an assignment, but the better opinion, as we consider, is that the reservation of such a right alone is not sufficient to produce such a result. The principal authority in this State for the proposition contended for by appellant is Collins v. Hasbrouck (56 N. Y. 162), wherein Judge Folger says, “ And again, if there be a right reserved to the lessor to re-enter on breach of conditions, this makes a sub-leáse; ” and he cites as authority for this Doe v. Bateman (2 Barn. & Ald. 168). Whether this case fully supports the rule for which it is cited may be doubted. (See dissenting opinion of Finch, J., in Stewart v. Long Island R. R. Co., 102 N. Y. 618.) It is certain that Collins v. Hasbrotielc is not authority for the proposition that the reservation of-the right of re-entry for condition broken alone characterized the instrument as a sub-lease, for there were many other features of the instrument then before the court which went to fix its character as a sub-lease. It was in the form of a lease; it reserved to the original lessees, rent at a new rate and at a new time of payment and provided for a surrender to the original lessees at the expiration of the term; and finally, although the covenant in the original lease from, plaintiff was against sub-letting, and the court found that the covenant'had been broken and á sub-lease made, the decision went against the plaintiff because the court found that he ■had' waived the forfeiture. In Ganson v. Tifft (71 N. Y. 48) the court followed Collins, v. Hasbrouck, but laid especial stress- upon the fact,, present in both cases, that the sub-lease contained a cove- . nant for surrender to the original lessee at the end of the. term. That case, therefore, cannot be successfully cited for the proposition that the reservation of a right to re-enter for condition broken alone fixes the character of an 'instrument as a sub-léase. On the other hand, there are many authorities for the proposition that such a reservation alone, without any other reservation of a part of the term, does not make an instrument a sub-lease which, otherwise, would be an assignment. This is the rule stated in. Woodhull v. Rosenthal (61 N.Y. 382) wherein Commissioner Dwight cites Bacon’s Abridgment as follows: “ When the whole, term is made over by tlié lessee, although'in- the deed by which that is done the rent and á -poioer of entry for' -non-payment- are reserved, to him . aiid hot to the original lessee, this is an assignment and not an under-lease * * * and this, although new covenants are introduced in the, assignment.” (Bacon’s Abr., Leases, I, 3.) The question was treated with his-usual -thoroughness and clarity by Judge Rapallo in Stewart v. Long Island R. R. Co. (102 N. Y. 607). Speaking of cases like the present where the question has arisen, between the transferee, and the original landlord, he said:, “ In the latter class of cases the rule is well settled that if the lessee parts with his whole term or interest as lessee, or makes a lease for a period exceeding his whole term, it will, as to the landlord, amount to an assignment of the lease, and the essence of the instrument as an assignment, so far as the original lessor is concerned, will not be destroyed by its reserving a new rent to the assignor with a power of re-entering for non-payment, nor by its assuming by the use of the word demise or otherwise, the character of a sub-lease * * *. The fact that the lease to the defendant reserves a'different rent from that reserved in the original lease, with a clause for re-entry, cannot . affect the question as between the parties to the present controversy, of its operating in law as an assignment of the term. These points were expressly adjudicated in the cases of Doe v. Bateman (2 Barn. & Ald. 168), Wollaston v. Hakewell (3 Scott’s N. R. 616).” In commenting upon Collins v. Hasbrouck Judge Bapallo points out that in view of the result reached on the question of waiver the discussion of the effect of the reservation of the right to re-enter for condition broken had been irrelevant, and again states what we deem to be the true rule, citing a great number of authorities in support of his position. To the same effect are the text writers and a number of well-considered opinions in other jurisdictions. (Sexton v. Chicago Storage Co., 129 Ill. 318; Craig v. Summers, 47 Minn. 189. So the right of re-entry is not an estate or interest in the land, nor does it imply a reservation of a reversion. It is a mere chose in action. When enforced the grantor is in through the breach of the conditions and not by the reverter. (Tied. Real Prop. § 277.) “ An assignment as contradistinguished from a sub-lease signifies a parting with the whole term; and when the whole term or more than the whole term, is made over by the lessee, although in the deed by which that is done the rent and a power of re-entry for nonpayment are reserved to himself, and not to the original lessor, yet the instrument amounts to an assignment- and not a sub-lease.” (Woodf. Landl. & Ten. [Am. ed.] 258.) To the same effect are Taylor (Landl. & Ten. [9th ed.] § 16) and Washburn (Real Prop. [6th ed.] § 692 et seq.). To sum up, therefore, the instrument executed by Blumenlirohn to Crystal conveyed the whole term without the reservation of any reversion or reversionary interest, except the right to re-enter for condition broken. This right, of re-entry did not amount to or imply a reservation of any reversion in the term or of any interest in the laud, but merely of a chose in action in case of -a breach of covenant. The instrument, therefore, although in form a lease, was in legal effect an assignment of the lease from plaintiff, and having been made without his'consent, was a breach of the covenant against assignments, and entitled the plaintiff to enforce a forfeiture of the original lease. The judgment must be affirmed,, with costs, with ■ leave to appellant to withdraw his demurrer and answer within twenty days on payment of costs in this court and in the court below.

Patterson, P. J., McLaughlin and Houghton; JJ., concurred.; Ingraham, J., dissented.

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Dissenting Opinion

Ingraham, J. (dissenting) :

There is not entire accord in the cases which have discussed the question that is presented in this case, which seems to have arisen from the different aspect in which the question has been presented, as a inore stringent rule has been applied when it was sought to construe an instrument which was in form a sub-lease of the premises as an assignment of the lease where the original lessor claimed a forfeiture of the léase,, than in cases where he claimed to be entitled to recover from the sub-lessee the rent reserved by the original lease. In 18 American and English Encyclopedia of Law (2d ed. p. 657) it is said: “ It is immaterial by what kind of an instrument or conveyance the term is so disposed of. Thus, the grantee or nominal lessee becomes an assignee if the lessee * * * executes an instrument purporting to be a lease or demise of the premises for the balance of his unexpired term or a period exceedingdiis term, or conveys the premises in fee simple.” -But on page 658 it is said: “ To constitute the transaction a sub-letting instead of an assignment, it is not necessary that the reversion retained by the original lessee be for any particular time. A reversion of the last day of the term is- sufficient, and where the sub-lessee covenanted to redeliver possession to the original lessee on the last day of the latter’s term,' the transaction was held to be a sub-lease. * *. * The fact that the lessee reserves in the transfer of his term a rent, so called, payable to himself will hot necessarily prevent‘the transaction from constituting an assignment instead of a sub-lease and the same has been held true where he also reserved a power of re-entry for non-payment.” <

The original lease in question contains no covenant against subletting and' it seems to be conceded by Mr. Justice Scott in his opinion that under the authorities of this State if the sub-lease had contained an express covenant by which the sub-lessee agreed to redeliver possession of the premises to his lessor on the last day of the latter’s term, that the transaction would be held to be a sublease. It seems to me that this is the effect of the covenant. It is true that the word “lessor” is not named, but the sub-lessee covenanted and agreed to and with his lessor, liis heirs and assigns, that the said lessee “ at the end or sooner termination of this lease shall quit and surrender said premises in good condition, reasonable wear and tear excepted.” That, I think, is in effect a covenant to deliver to the lessor, the party of the first part to the instrument and with whom the covenant is made. The covenant was made with the lessor that at the end or sooner termination of the lease he would quit and surrender the premises. Certainly this cannot be understood as a covenant to surrender the premises to any one but the person with whom the covenant was made. The lessor in the sub-lease being entitled, as I construe the lease, to repossession of the premises on the last day of the term, it seems.to me that under the authorities in this State the transaction is to be considered as a sublease and not as an assignment of the lease.

In Ganson v. Tifft (71 N. Y. 48) the question was presented and it was there said: “ The instrument referred to contained a provision reserving a right of re-entry for non-payment of rent, or a breach of other conditions; and that at the expiration of the term, or other sooner determination of the demise, the lessees should quietly surrender and yield up possession of the demised premises to the lessor. This constituted a sub-lease of the premises, and not an assignment of the entire term, which transferred any right of action against the defendant.” The cases of Collins v. Hasbrouck (56 N. Y. 157) and Woodhull v. Rosenthal (61 id. 382) were cited and considered. In Stewart v. Long Island R. R. Co. (102 N. Y. 601) the original lease was the lease for fifty years. What was called the sub-leash was a lease for ninety-nine years, and. it was held that that was an assignment and not a sublease, because the original lessee had transferred to the defendant the entire term duringjwhich the original lessee was to hold the demised premises as lessee, and left no particle of that term in the original lessee or in his first assignee. But the opinion in that case recognized the rule established in Post v. Kearney (2 N. Y. 394) and Ganson v. Tifft (supra), that where, in an assignment of a lease or in a demise by the lessee for the same term as that granted by the original lease, there is a covenant to surrender to the assignor, this prevents a sub-lease from operating as an assignment. This has been because the whole instrument, taken together, has been held to reserve to the original lessee some fragment of the original term, although almost inappreciable in point of duration." The question is not free from doubt, but I think when a lessor comes into a court of equity and asks for equitable relief based on a forfeiture, he should present a case free from reasonable doubt, or equity will not interfere but will leave him to his remedy at law.

I think, therefore, this judgment should be reversed, with costs, and the demurrer-sustained, with costs.

Judgment affirmed, with costs, with leave to defendant to withdraw demurrer and to answer on payment of costs.