Bates et al. v. Johnston et al.
(Supreme Court, General Term, First Department.
December 29, 1890.)
Landlord and Tenant—Covenants in Lease—Breach—Improvements.
A lease for a term of 21 years contained covenants by the lessee for payment of rent, and a provision that, in case of non-payment or default in any of the lessee’s covenants, the lessors might re-enter, repossess, and enjoy the premises “as in their first and former estate. ” It also contained a covenant by the lessee to erect a building on the premises, and a mutual eoviwant that at the expiration of the term the buildings should be appraised, and either one-half such- appraised value paid to the lessee, or the lessors would give a renewal lease. The lessee defaulted in payment of rent, and was dispossessed by summary proceedings. Held that, after the expiration of the term, the successors of the lessee were not entitled to one-half the appraised value of the buildings. The covenant for payment thereof was not an independent one. Distinguishing Finkelmeler v. Bates, 92 N. Y. 172.
Appeal from special term, New York county.
Action by Hester Bates, Althea Schmid, and Isaiah Keyset against William H. Johnston, Benjamin B. Johnston, Lucretia Johnston, and Mary Bingham. Plaintiffs and the defendant Mary Bingham appeal from a judgment entered on trial by the court without a jury, dismissing the complaint, and denying the prayer for relief in the answer of said defendant Bingham. The following is the opinion rendered by Patterson, J„ dismissing the complaint:
“The principal question involved in this action, and that which appears to me to be the one on which the cause must be determined, is whether or not the covenant on the part of the lessor to pay to the lessee or his assigns one-half of the value of the buildings at the expiration .of the term of twenty-one years, or to grant a renewal .for an additional term, was dependent upon the cove*404nant made by the lessee to pay the rent and taxes as provided for in the lease. The contention of the plaintiff is that the covenants are independent and separable, and that the lease is, in effect, a contract providing for two distinct subjects. Whether covenants are dependent or independent, or whether performance of one is a condition precedent to the right to enforce the other, does not rest on technical words, * nor does it depend on the position of words, but it rests on the good sense and plain understanding of the contract, and the acts to be performed by the parties, respectively,’ (Barruso v. Madan, 2 Johns. 145;) and such is the statement of the rule by Sergeant Williams, in his note to Pordage v. Cole, 1 Saund. 319, where the subject was discussed on a question of pleading arising on demurrer. The instrument in this action is the ordinary lease made by a land-owner who demises premises for a fixed term to a lessee who obligates himself to erect buildings and pay rent for the premises, and also the taxes or other burdens imposed on the property, and gives the lessor the right to terminate the lease on default in the payment of rent, or failure to perform any other covenant binding on him, (the lessee.) In consideration of the covenants of the lessee, the lessor agrees, at the expiration of the term, to pay half the value of the improvements, or to grant a further term. The nature of the obligation assumed by the lessor shows that his covenant was dependent upon performance by the lessee of those incumbent upon him. The lessor did not positively undertake to pay for improvements. He had an option to do so, or grant a new term; and that option could not be exercised in the latter way if the lessee had no interest or estate in the land to be continued or extended at the time the first term would expire. The lease gave the lessor the power to terminate it for non-perform-once by the lessee of his covenants; and he having failed to perform them, and the lessor having re-entered, the lessee destroyed the lessor’s ability to exercise that option. His default gave to the lessor the clear right to repossess himself of the land, and necessarily of the buildings erected upon it, and thus caused to be terminated the relations existing between the parties under the lease. This view is supported by Bank v. Mitchell, 73 N. Y. 406. In that case the lessee covenanted to pay rent, taxes, and assessments, and in default thereof the lessor was entitled to re-enter. If the lessee erected buildings and performed the other covenants, then the lessor agreed, on expiration of the term, either to grant a renewal or pay for the buildings. The lessee failed to pay the taxes for the year prior to that in which the term expired. It was held that the payment of the taxes was a condition precedent, and the lessor was not bound to pay for the improvements. It is sought to distinguish that case from this because of an express provision in the leáse there under consideration that if the lessee performed the covenants, etc., and if the buildings were standing at the end of the term, the lessor’s covenant should apply. But, as has been stated, no form of words and no express provision is necessary. The ground of decision appropriate in this case, however, has been announced in Kutter v. Smith, 2 Wall. 491, where substantially similar covenants-were considered by the supreme court of the United States. There, land was leased for a term of years, and the lessee erected a house upon it. The lease was terminated, as here, for the non-payment of rent, according to authority contained in the instrument, which also provided that at the expiration of the term the lessor should pay for the buildr ing at an appraised value, or renew the lease. The court says: ‘The agreement to purchase means nothing more than that, in a certain event, the lessor will pay the lessee the value of the building; ’ that is, in case the lease is nob renewed at the expiration of the term. • This contingency has not occurred, and that it can never occur is the fault of the plaintiff and his assignor. This observation is also applicable to the supposed hardship of taking the building, the product of the plaintiff’s labor and money, without compensation. It is from the plaintiff’s own default that the right to do so arises. He *405had his option to pay the rent due the defendant, and retain the right of payment for his building when the time should arrive, or give up his building, and with its loss relieve himself of the. burden of paying the rent. He chose the latter, with full knowledge, and there is no injustice in holding him to the consequence of his choice.’ The complaint is dismissed upon the merits, with costs to the defendants, except the defendant Bingham.”
Argued before Van Brunt, P. J., and Brady and Daniels, JJ.
Putney, Bishop & Slade, (James L. Bishop, of counsel,) for plaintiffs, appellants. Edward M. Burghard, (Lewis Sanders, of counsel,) for defendant Bingham, appellant. Thompson & Eoss, for defendants Johnston, respondents.
Van Brunt, P. J.
This action was brought to recover one-half of the value of buildings now standing on certain lots in the city of Hew York, which the plaintiffs claim to be due to them and the appellant Bingham from the defendants Johnston, the lessors, pursuant to the provisions of a lease of said property for 21 years from the 1st of May, 1867. This lease contained covenants for the payment of rent, taxes, etc., upon the part of the lessees, and a grant in consideration of the covenants contained in the lease for the period of 21 years. It also contained a provision that in case of the non-payment of rent, or default should be made in any of the covenants contained in the lease on behalf of the lessees, that the lessors should have the right wholly to re-enter on said premises, and remove all persons therefrom, and the same to have again, repossess, and enjoy as in their first and former estate, anything therein contained to the contrary thereof in any wise notwithstanding. The lessees covenanted to erect a building upon the premises of certain descriptions and dimensions, and the lease contained a mutual covenant by the parties that at the expiration of the aforesaid term the buildings upon the premises should be appraised, and either one-half of such appraised value paid to the lessees, or the parties of the first part would give a renewal lease. The lessees defaulted in the payment of rent and taxes, and in December, 1879, were dispossessed by summary proceedings. The term of the original lease having expired in May, 1888, the successors of the lessees brought this action to have the value of the buildings appraised, and the sum due and payable to the plaintiffs and the defendant Bingham, under the provisions of the lease, ascertained and determined, etc.
It might not be necessary to add anything to the opinion rendered by the learned judge who tried the cause in the court below; but in view of the claim which is made of the result of the decision in the case of Finkelmeier v. Bates, 92 N. Y. 172, it may not be improper to add one or two suggestions to the views which in said opinion were expressed. It is undoubtedly true that in the case cited, where the covenants of this identical lease were under consideration, the court may have used language which might be construed into an affirmance of the claim of the appellants that the covenant to pay one-half the value of the buildings is an independent one; but no such question was before the court at that time, and the language used by the court was simply an answer to the question which was then before the court for its decision, and in no way was it attempted to forestall Or to decide upon a claim such as is presented in the case at bar. All that was decided in that case was that the time fixed in the covenant to pay for the buildings was the expiration of the term, and that that phrase related to time, and not to the estate of the lessee. The provision of the lease in regard to re-entry was to the effect that, in case of a default upon the part of the lessees, the lessors might re-enter, repossess, and enjoy the premises in question as in their first and former estate. How, if the lessors were under an obligation to pay for these buildings at the expiration of the term mentioned in the lease, and- such obligation was a lien upon these premises, how was it possible for them to re*406enter, have again, repossess, and enjoy as in their first and former estate? Here is a clear intention, shown by the contract itself, that, in case of a default upon the part of these tenants, the whole estate shall revert, unincumbered by anything, that the lessees may have done, to the lessors, who shall hold the premises thereafter as in their first and former estate. This seems to be a clear definition of the rights of these parties; and it seems to us that these covenants were considered by the parties to be dependent, and not independent. The lessees were to enjoy the premises, and to have a right to payment for the buildings, or a renewal of the lease, upon condition of their performing the covenants contained in the lease. This necessarily followed from the fact that continued enjoyment of the premises by the lessees was undoubtedly contemplated, because the covenant for the payment for the buildings is coupled with a covenant to renew the lease, which would be impossible if the. lease had ceased to exist years before the time to claim such a renewal had arrived. All these circumstances show clearly that the condition upon which the tenants were to be in a position to claim payment for the buildings was a compliance with the covenants in the lease. The grant is made in consideration of the rents, covenants, and agreements mentioned in the lease. They were the consideration for the grant; and to say that the lessee may repudiate the consideration which he has to pay, and then claim performance of the covenants on the part of the lessor, does not seem to be equitable or just, and we do not think is the law. We think, therefore, that the judgment should be affirmed, with costs. All concur.