154 N.E. 649 | NY | 1926
On November 12, 1921, a partnership known as Miller Bros. was the lessee of premises No. 120 Nassau street, borough of Manhattan, and defendant was the lessee of adjoining premises No. 122 Nassau street where it was engaged in the business of "toys, sporting goods and kindred articles." The parties entered into an agreement that Miller Bros. "will not *17 let any portion of the premises No. 120 Nassau street during the term of their lease to any person for the use of any business of the same or similar nature as that conducted by" the defendant. In consideration thereof the defendant agreed to pay Miller Bros. $300 a month.
The plaintiff sues as assignee of the rights of Miller Bros. under this agreement alleging full performance of all the terms of the agreement to be performed by Miller Bros. and that the same is in full force and effect and a default on the part of defendant in payment of the $300 a month from September 1, 1922, to August 1, 1923, and demands payment accordingly. The answer denies performance of the agreement and that it is in full force and effect. The trial justice left to the jury the question whether there had been a breach of the agreement against letting for a business of the same or similar nature. The jury found for the plaintiff. The Appellate Division held as matter of law that the agreement had been breached, reversed the judgment on the law and the facts and dismissed the complaint.
We are asked to consider whether the agreement between Miller Bros. and defendant was in force for the period covered in the complaint. Defendant contends that the Miller lease was terminated thirty days after September 7, 1922, under the following circumstances: On August 18, 1922, one Hirschberg owned the Miller lease which by its terms expired in 1928. He sublet the premises to Silver Herman, who are the tenants charged with improperly competing with defendant, for the balance of the term, without the landlord's consent, contrary to the express provisions of the original lease. Meanwhile defendant had become the landlord of the premises subject to the Miller lease. On September 7, 1922, it gave notice to Hirschberg that it elected to terminate the lease at the expiration of thirty days thereafter and then instituted dispossess proceedings against him. A jury trial was had in the Municipal Court and the jury disagreed. *18
The proceedings were pending when this case was tried. Hirschberg and his subtenants were still in possession. The agreement in suit recites only that the lease continues "to on or about 1928." The provisions as to the term of the lease are not incorporated in the agreement except by this reference. The lease provided that it might be terminated on notice if the lessee defaulted in the performance of any of the agreements therein contained. If it was terminated on or about October 7, 1922, a recovery could not be had for the full amount sued for. If the lease was terminated as matter of law at the expiration of thirty days after the service of the notice (Miller v. Levi,
The question arises as to the duty of the lessor to enforce the covenant. The lease to the subtenants provided that the premises should be used and occupied as a retail haberdashery, "provided, however, that said tenants do not sell or offer for sale any merchandise similar to that now sold or offered for sale" by the defendant. Plaintiff contends that Hirschberg discharged his duty to defendant when he made this covenant with Silver Herman and that he was not required to do more; that the agreement in suit has not been broken because it was as to letting only and not as to use. Some support for this contention is found in the English case *19
of Ashby v. Wilson (1900) (1 Ch. 66) but by way of dictum merely. The rule stated in University Club of Chicago v.Deakin (
"By the terms of its contract with plaintiff in error it agreed that no other portion of its premises should be leased to anyone engaged in the prohibited line of business, and if it failed to prevent any subsequent tenant from engaging in [such business] it did so at the risk of plaintiff in error terminating his lease."
Properly construed, this is an authority for the plaintiff. A lessor in like case may not rest its duty on mere words and collect $300 a month for putting a clause in a lease when he knowingly permits the violation of the condition. But when the lessor imposed a proper restriction upon the business to be transacted by the subtenant he should not be charged with liability for the sale of overlapping goods without his knowledge or approval. A breach by the tenant irrespective of notice to the lessor was not such a breach as to discharge defendant. The court excluded evidence that no complaint was made by defendant that the subtenant was engaged in the sale of similar goods. The sale of competing articles was a matter for defendant to make a complaint about. Otherwise a secret sale of competing goods would defeat plaintiff's rights. To permit or to fail to prevent the sale of competing goods obviously implies some affirmative act of acquiescence or consent on the part of the lessor either express or implied. (Lucente v. Davis,
Defendant sells $170,000 of goods in a year. The value of the goods which compete with the sale of sporting goods by the subtenants is, however, less than ten per cent of their entire business. Silver Herman have a business of about $125,000 a year. The competing articles *20 amount to not more than five per cent of their sales. The question to be determined on this branch of the case is whether the agreement of Miller Bros. has been violated.
The language of the sublease indicates what was in the mind of the parties thereto. The subtenant was not to "sell or offer for sale any merchandise similar to that now sold or offered forsale by the defendant." The contract sued on, however, uses more general language and thereon the parties hereto must rest. Contrary to the English rule of remedial rights as stated inAshby v. Wilson (supra) defendant presumably might bring an action under the doctrine of Lawrence v. Fox (
The business of haberdashery and the business of selling toys, sporting goods and like articles are not similar although they may in some respects overlap. The same things might be sold in both stores to some extent. The purely incidental and occasional sale thereof would not be a breach of the agreement not to carry on a competing business. (Breck v. Ringler,
"We must use our common sense. I think this case is really one of degree, and the conclusion to which I have arrived is that in the fair meaning of this covenant the defendants are carrying on two businesses, one of which is a grocer's business and the other of which is a coffee-house business, though, perhaps, not a very extensive one. They do not sell everything which coffee-house keepers sell; a coffee-house keeper need not sell all sorts of meats and so forth. He may confine himself to light refreshments such as these. * * * The covenant is applicable."
Here we find no covenant in the agreement sued on against using the premises for the sale of sporting goods. The question is whether the business of the subtenants taken as a whole was of the same or similar nature as that conducted by the defendant. While the subtenants were carrying on what would be generally known as a *22 haberdashery and were also selling sporting goods such sale of sporting goods did not as matter of law transform their business from that of a haberdashery to that of a house for the sale of sporting goods. To a certain extent the business overlapped but the haberdashery did not lose its characteristics as such because it also incidentally carried and sold some articles similar to some of those sold by the defendant.
The question of distinct branch or incidental sales was for the jury. The reversal herein was on the law and the facts.
The judgment of the Appellate Division should be modified so as to grant a new trial and as so modified affirmed, with costs to appellant.
HISCOCK, Ch. J. CARDOZO, McLAUGHLIN, CRANE, ANDREWS and LEHMAN, JJ., concur.
Judgment accordingly.
