Kaufman v. Williams

| N.J. | Jun 17, 1918

The opinion of the court was delivered by

Swayze, J.

The trial judge held that Williams and Mennen were liable as individuals by reason of the provisions of the lease. This could only be if the covenant to return the deposit was a covenant running with the reversion. On no other theory could Williams and Mennen be held liable on Baschs covenant. We think there was a misconception of the legal situation. The true state of the case is that $5,000 was pledged with the landlord as security for the rent. The covenant to repay the deposit did not change its character. It remained a deposit by way of pledge. Later Meyer, the then landlord, and Kaufman, the tenant, entered into a new agreement, either assenting or authorizing the transfer of the pledge by Basch to Meyer, and this transfer was made. Thereby the pledgor substituted Meyer for Basch as pledgee, and Basch having parted with the pledge with the assent of all parties in interest was discharged from further liability. Meyer became liable to Kaufman on his agreement to hold the deposit in accordance with the terms and conditions of the lease, and no contract or conveyance by Meyer without Kaufman’s consent could deprive the latter of his rights. When Meyer subsequently conveyed to Mrs. Mennen, he remained a pledgee and liable to her as such by reason of her becoming entitled to the debt secured, unless he transferred the pledge to her. The only question is, in ease Meyer still holds the pledge, whether under the terms of the lease there is a present liability of Meyer to return the deposit. By those terms it was to he returned at the termination of the lease if the rent had been paid. The lease Las terminated, bnt. the rent has not been fully paid. The suit is, therefore, prematurely brought against Meyer; the judgment in his favor must be affirmed on that ground and on that ground alone.

We cannot agree with the learned trial judge that Mrs. Williams and Mennen can be held individually as owners of the land by reason of the covenants in the lease. The suit is to recover a deposit held in pledge as security for the performance of the covenants in the lease. The pledgee is liable as such, not as lessor. So far as concerns the legal situation, the deposit might as well be made with a trust company. The liability to return the deposit to Kaufman runs not witli the reversion, but with the pledge, if we may use that form of expression. Whether Mrs. Mennen or her estate or devisees can he held by reason of the acceptance of a deed from Meyer subject to all stipulations, agreements or covenants obligatory upon him, is a question not now presented. Even if, upon a proper construction of the deed, it should be held that the language amounted to an assumption of the liability of Meyer or an agreement to indemnify him, Kaufman was not a party to the deed and cannot enforce Meyer’s right in a court of law against the Mennens. Crowell v. Hospital of St. Barnabas, 27 N. J. Eq. 650. The deed contains no covenant in favor of Kaufman. If the Mennen estate can be held at all by Kaufman, it can only be because in the passing of the title the $5,000 deposit was allowed to her as a deduction from the purchase price. If this was done, then she in effect received $5,000 of Kaufman’s money held in pledge, and upon his fulfilling the condition of the pledge she must return it. Whether or not she was allowed this deduction is a question of fact, which must be submitted to a jury. If they find that she received it, judgment should go against her executors. If they find that she did not receive it, judgment should go in favor of her executors. Mrs. Williams and Mennen as individuals are in an event entitled to a judgment in their favor. The present judgment against them must be reversed.

We reiterate, by way of caution, that the judgment in favor of Meyer is affirmed only 'because as to him the suit is prematurely brought. His ultimate liability may be determined hereafter. Technically', perhaps, the suit is prematurely brought against Williams and Mennen, even if they have had the $5,000, since confessedly the rent was not fully paid when the suit was begun; but a credit of the amount of rent against the deposit is in effect payment, and there can be no difficulty in making this credit if Mrs. Mennen has had the money.

For affirmance as to Meyer — The Chancellor, Chief Justice, Swayze, Trenchard, Parker, Bergen, Minturn, Kalisch, Black, White, Heppenheimer, Williams, Taylor, Gardner, JJ. 14.

For reversal — Hone.

For affirmance as to Mennen and Williams — Hone.

For reversal — The Chancellor, Chief Justice, Swayze, Trenchard, Parker, Bergen, Minturn, Kalisch, Black. White, Heppenheimer, Williams, Taylor, Gardner, JJ. 14.