195 A.D. 756 | N.Y. App. Div. | 1921
Lead Opinion
It is true, as stated in the opinion of Mr. Justice Merrell, that the interest of the plaintiff in the premises- was not specifically shown on the trial. It appears, however, that on the 7th day of November, 1917, she executed a lease of the premises in writing to The 115th Street Garage Company, Inc., for the term of twenty-one years commencing on the 1st day of January, 1918, at the annual rental of $4,200 payable in equal monthly installments, and that the lease was given on the express condition that the tenant at its own expense should forthwith proceed to make the necessary alterations to change the stable then on the premises into a garage and would complete the same on or before the 1st of June, 1918. It further appears that the lease provided that simultaneously with the execution and delivery thereof the tenant should cause to be executed and delivered to the plaintiff the bond of the defendant containing certain provisions identified by reference to another instrument, and that the bond on which the action is predicated was procured to be executed by the defendant and delivered to the plaintiff pursuant to and in conformity with the obligations of The 115th Street Garage Company, Inc., under the lease. Plaintiff alleged that she held a lease of the premises dated September 9, 1916, and that at all times mentioned in the complaint she was and still is the lessee thereof. These allegations were put in issue by the answer and no proof thereof was given other than such inference as might be warranted from the fact that she made the lease of the premises for twenty-one years. The court found at the request of the defendant that the plaintiff was the lessee of the premises and also found that she was lessee “ under a long term lease.” No point with respect to plaintiff’s title or interest was made on the trial. It appears to have been assumed by the defendant in making the bond that the plaintiff was the owner for it is so recited in the bond. It is now claimed by the appellant that the plaintiff was not the owner but it does not claim that her reversion did not give her the right to the use of the premises for such a period as would authorize a recovery under the rule applicable to an owner. In appellant’s first point plaintiff is regarded as the owner and it is argued that her only right as such was to have the alterations made lawfully, if
The plaintiff having exacted as a condition of making the lease that the alterations be commenced forthwith and completed before June 1, 1918, and the lease having been for twenty-one years, it cannot be presumed that the alterations were exacted with a view only to enhancing the plaintiff’s reversionary interest at the expiration of the lease, for if that were her primary purpose it would be reasonable to expect that she would have required the making of the alterations toward the close of the term. It must be assumed, therefore, that the primary purpose of this requirement was security for the performance by the lessee of its obligations under the lease, and to protect the plaintiff in case she should exercise her right of re-entry in the event of a breach by the tenant warranting it. (O’Brien v. Illinois Surety Co., 203 Fed. Rep. 436; sub nom. Illinois Surety Co. v. O’Brien, 223 id. 933; Rock v. Monarch Building Co., 7 Ohio St. 244; 100 N. E. Rep. 887.) It appears that, subject to the approval of the local authorities referred to in the bond, it was well understood what alterations were to be made, for the tenant in contemplation of the making of the lease on the 17th of October, 1917, entered into an agreement with the Thomas Mulligan Construction Company, Inc., for making them and also filed plans and specifications therefor. The plaintiff showed that the reasonable cost of making the alterations would have been $14,435. During the giving of this testimony, no point was made that the agreement with respect to the alteration was indefinite, or that the plans and specifications therefor had not been agreed upon between the plaintiff and the tenant at or before the making of the lease, or that the said local authorities would not approve said plans and specifications, or that they included any changes or alterations not required under the agreement between the landlord and the tenant, or that plaintiff was not the owner, or that her rever
Clarke, P. J., and Smith, J., concur; Page and Merrell, JJ., dissent.
Dissenting Opinion
The action is brought to recover the sum of $4,000, being the amount set forth in a bond given by the Thomas Mulligan Construction Company, Inc., and The 115th Street Garage Company, Inc., as principals, and the defendant, as surety. It is claimed by the plaintiff that the bond was given entirely for her benefit, and was to secure the faithful performance on the part of the principals of an agreement to reconstruct into a garage a building then standing upon the demised premises and used as a stable. Plaintiff claims that she is a lessee of the premises and sublet them to The 115th Street Garage Company, Inc., under a lease containing a covenant on the part of the lessee to alter the building thereon into a garage.
On the part of the defendant, appellant, it is claimed that the defendant in executing the bond incurred no liability, except under the clause therein contained in which the principal agreed “ to satisfy the owner ” that the garage when built should comply with the rules and regulations of the fire, building and other city and State departments.
The learned trial court has found that the premises in question were “ held by the plaintiff as lessee under a long term lease. * * * That the alteration of the stable into a garage was for the benefit of the plaintiff. * * * That the cost of said alteration is a sum in excess of Four Thousand ($4,000.00) Dollars.” The court then directed judgment in favor of the plaintiff for the sum of $4,000, and costs. I do not think that the findings support the judgment, nor do I think that the evidence supports the findings.
The complaint alleges that the plaintiff was a lessee “ holding a lease on said premises dated 9 day of September, 1916.” The answer puts in issue said allegation and upon the trial the lease under which plaintiff held was not introduced in evidence and no testimony was offered with reference to
“ Fifteenth. That by reason of the aforesaid, the plaintiff was compelled to and did vacate premises hereinbefore leased and was compelled to and did lease other premises for the conducting of her stable business and plaintiff did otherwise suffer damages amounting to Four thousand ($4000.00) dollars.”
No claim is made by the plaintiff that the parties agreed upon any forfeiture respecting any sum mentioned in the bond or that the defendant is liable to the plaintiff on any theory of liquidated damages. The complaint is drawn and the action was tried on the theory that the plaintiff has suffered damages by reason of the alleged default of the parties in failing to alter the demised premises into a garage.
In addition to the question raised by the appellant as to the construction of the bond, it further contends that the dispossess proceedings and the occupancy of the premises by the plaintiff canceled all obligations of the defendant under the bond; that under the express terms of the lease the parties stipulated that in case of default on the part of the lessee the sum of $350 was fixed as liquidated damages, and that no damages were proven.
The plaintiff did not offer in evidence the lease under which she held the premises, nor did she make any proof respecting her title. There is no evidence in the case to show whether the plaintiff had a lease for one year or for one hundred years, or at all. There is, therefore, no basis for an award of damages. The only evidence of damages offered by plaintiff was the testimony of one Nathan Langel, an architect. He was shown the proposed plans and specifications for the alterations which were to be made to the demised premises, and testified, under defendant’s objection and exception, that the cost of such alterations would be $14,435 without an elevator. It was disclosed that the proposed plans had never been accepted by the proper city authorities. There is no evidence in the case bearing upon the value of plaintiff’s reversion, the value of the premises, or what effect the alterations would have had upon the rentals. It is, therefore, clear that the judgment appealed from is unsustained by the evidence and should be reversed.
It is, however, proper to dispose of the other questions raised by the appellant, the most important of which is the appellant’s liability under the aforesaid bond. The important portions of the bond are as follows:
“ Know all men by these presents, That Thomas Mulligan*765 Construction Co., Inc., and The 115th Street Garage Company of New York City (hereinafter called the ‘ Principal ’), and the New Amsterdam Casualty Company, a corporation of the State of New York (hereinafter called the ‘ Surety ’), are held and firmly bound unto Sarah Kanter of 1811 Lexington Avenue, New York City (hereinafter called the ' Owner ’) in the full and just sum of Four Thousand ($4000.00) Dollars, to the payment of which said sum of money, the said Principal and the said Surety bind themselves, their heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents.
“ Signed, sealed and dated this 9th day of November, A. D. 1917;
“ Whereas, said Principal Thomas Mulligan Construction Company, Inc., above mentioned has entered into an agreement with the said The 115th Street Garage Co. above mentioned for the alteration of a stable owned by Sarah Kanter, aforementioned, located at #307-11 East 115th Street, into a Garage according to plans and specifications and in accordance with the rules and regulations of the Fire and Building departments of the City .of New York, and has agreed to satisfy the owner of the property, Sarah Kanter, that all work done thereunder will be in accordance with said rules and regulations of the Fire and Building Departments,
“ Now, therefore, the condition of this obligation is such that if the said Principal shall faithfully perform said contract on his part, according to the terms, covenants and conditions thereof (except as hereinafter provided), then this obligation shall be void, otherwise to remain in full force and effect; ”
As above stated, the appellant contends that it is surety only for the faithful performance on the part of the “ principal ” of the agreement that “ all work done thereunder will be in accordance with said rules and regulations of the Fire and Building Departments.” The complaint states and the lease shows that prior to the execution thereof the lessee had agreed to give the bond sued upon. A copy of this bond was placed in the hands of the lessor’s attorney prior to the execution of the lease, as stated in the body of the lease itself, The
In the bond the parties referred to certain plans and specifications for the alteration of a stable “ owned by Sarah Kanter,” and further provided that “ if the said Principal shall faithfully perform said contract on his (sic) part according to the terms, covenants and conditions thereof * * *, then this obligation shall be void.” It is obvious that the word
It seems to me that the obligation of the bond was threefold: (1) “ for the alteration of a stable owned by Sarah Kanter, aforementioned, located at #307-11 East 115th Street, into a garage according to plans and specifications;” (2) “ in accordance with the rules and regulations of the Fire and* Building departments of the City of New York,” and (3) “ to satisfy the owner of the property, Sarah Kanter, that ah work done thereunder will be in accordance with said rules and regulations of the Fire and Building Departments.”
It seems very clear that upon default of the principals in respect of any of the acts above mentioned the defendant was obligated to respond in damages to the plaintiff and that this court should hold that the defendant is liable to the plaintiff in such damages as the plaintiff is able to show were suffered by reason of the failure of the principal to make the alterations agreed upon in the lease and the aforesaid plans and specifications.
The appellant asserts, as above stated, that it is not hable under the bond because the lease was canceled either by the dispossess proceedings or by the acceptance of the surrender of the premises and the occupancy thereof by the plaintiff. It was admitted at the opening of the case by defendant’s counsel that “ the tenant went into possession on February first.” It appears, however, that the actual possession was postponed by agreement between the parties until March first. After that date summary proceedings were instituted to evict the tenant who had never actually taken possession. No warrant, however was issued, although the tenant made default and the plaintiff thereafter moved back into the demised premises. While the plaintiff was clearly -authorized to retain the $350 paid in advance under
In the case of Kidd v. McCormick (83 N. Y. 391) the plaintiff sought to reach certain trust funds which had been deposited for the security of the plaintiff who had sold certain lots under an'agreement that the vendees should build dwellings upon them. The vendees having defaulted before the dwellings were fully constructed, it was necessary for the court to determine what damages the plaintiff was entitled to receive by reason of the vendees’ default. The opinion of the Court of Appeals was written by Chief Judge Folger, and it was held that the plaintiff’s damages were “ the difference in the value of the premises, as they were with the houses unfinished, on the 1st of September, 1877, from what the value of them
The facts under consideration in Kidd v. McCormick are quite similar to the facts in the case at bar. The Court of Appeals in deciding Appleton v. Marx did not in any way overrule Kidd v. McCormick or similar cases which do not involve the narrow question of ordinary repairs. Kidd v. McCormick is cited with approval in Comey v. United Surety Co. (217 N. Y. 268). The question involved in Comey v. United Surety Co. was one growing out of a construction contract and was brought on a surety bond given. for its faithful performance on the part of the principal. The principal defaulted and suit was brought against the surety. The court held that the plaintiff had a cause of action to recover damages for the abandonment of the contract, citing Kidd v. McCormick (supra). The court further held that the language of the bond was that of the defendants, and that words of doubtful meaning should be construed in favor of the plaintiff.
In Sutherland on Damages (Vol. 3 [4th ed.], p. 3164) the learned author says: “The measure of damages for failure of a lessee to erect a building upon premises during the term as agreed is such a sum as with legal interest would equal the fair cost of the building at the end of the term.” (Citing Wentworth v. Manhattan Market Co., 218 Mass. 91.)
While the rule stated by Sutherland has never been authoritatively adopted in this State, it is founded upon good logic, for in no event can a landlord who leases his property to another under a covenant to make improvements or alterations receive any benefit therefrom or enjoyment thereof until after the expiration of the term. For this reason a landlord can
A case very similar to the one at bar is that of Illinois Surety Co. v. O’Brien (223 Fed. Rep. 933). The plaintiff . in that action held a ground lease for ninety-nine years which had run two years. The premises were sublet for ninety-
The judgment appealed from should be reversed and a new trial granted, with costs to appellant to abide event.
Concurrence Opinion
concurs.
Judgment affirmed, with costs.
