Davis v. Morris , 35 Barb. 227 ( 1861 )

By the Court, Leonard, J.

No liability accrued on the part of Morris from the terms of the assignment of the lease to him. The sixth article of the agreement of March 25, 1861, between Hudson and Morris, prescribes a rule between them for the appropriation and division of the proceeds arising from the rents and income of the building which they thereby agreed to erect. Morris was secured a fund for the refunding to him of his advances for constructing the building, $15,000, or more, if necessarily advanced, with interest. Hudson was secured, as to his interest, against the accumulation of charges on the common property, as well as Morris. It was an agreement for mutual protection and guidance, and a declaration of rights as against each other.

It was not the intention of either party to assume or create any personal liability, except so far as it might arise from a breach of the observance of the contract. Morris did not assume or guaranty to Hudson the payment of any rent, or other charges which might arise against the common property.The agreement was a rule by which they could ascertain when money should be applied to refund the advances of Morris, and when divided between them. There was nothing in this contract which could not be abrogated or released by either party, without fraud or injury to any other person. There was an absence of any intention to assume any liability or payment.

This case is not within the principle of those cases which hold that a grantee, who has received a conveyance subject to the payment of an outstanding mortgage as part of the consideration expressed therein, may be held to the payment of any deficiency arising after a sale of the mortgaged premises. In those cases, the grantee had not paid the full consideration money for the purchased premises. A legal liability exists in such cases, against the grantee, to indemnify the grantor against having to pay his mortgage. The grantor, being the principal debtor to the mortgagee, having a security in the obligation of his grantee to pay the full consideration agreed upon for the premises conveyed, a court of equity will enforce that obligation in favor of the mortgagee, in case the primary'fund, the premises mortgaged, is found to be insufficient for the satisfaction of the mortgage debt. But there is no such grantor, and no such grantee incurring any similar obligation in this case. The assignment of the lease was originally made for the purposes only of the objects contemplated by the agreement simultaneously executed.

The transfer to Morris was partially, certainly to the extent of one half, in the nature of a security for the refunding of the $>15,000 with interest. The title of Morris to the lease was of a qualified nature, subject to the common objects between the parties mentioned in the agreement executed simultaneously with the assignment of the lease. There was manifestly no intention on the part of Morris to guaranty Hudson against his liability on his covenants contained in the lease, and none to assume any liability to Hudson or any body else for the rent reserved thereon.

Assuming- however, that the assignment of the lease from Hudson to Morris, and the agreement simultaneously executed between them, raised an equitable obligation on the part of Morris to apply the rents which he should receive, or so much thereof as would be necessary to meet the ground rent reserved in the lease so assigned, there will still remain insurmountable obstacles to the application in this case of the equitable principles insisted on by the plaintiff.

First: All liability on the part of Morris, arising by reason of any thing contained in the agreement of March 25th, executed simultaneously with the assignment of the lease to him, was released and abrogated by the subsequent instrument of June 10th, 1853.

Second: The summary remedy given by statute, in case of the non-payment of rent, for the expulsion of the tenant, has been exercised by the landlord, and the lease has been thereby terminated, and the defendant Morris has been deprived of the building erected by him at a great expense on the premises thereby leased.

The lessor has obtained his land again, improved and ready for occupation, with a new and valuable building erected thereon, without trouble or expense to him. Of this building and its use and occupation Morris has been deprived by the exercise of the landlord’s strict statutory, although lawful, right.

True the landlord has lost $25,000 rent, for which he has only such remedy as may be afforded by the covenants in his lease or the legal liability of Morris, if he can be held as the assignee of the whole term. But the landlord has obtained a valuable building, the cost of which was about equal to his loss, out of which he may very likely realize his present loss and possibly still more, before the expiration of the term mentioned in the lease.

That summary proceeding was the landlord’s lawful right; but it certainly does not improve the landlord’s right to invoke the interposition of the equitable powers of this court for his further protection. It is doubtful whether the landlord has not already been a gainer by the exercise of his statutory remedy above referred to, or, if he has not already been a gainer, whether he will not be, before the expiration of the term mentioned in his lease.

Certain it is, I think, that Morris, whom he now seeks to mate personally liable for the rent which had accrued and remained unpaid before he was summarily removed from the premises, must be a loser.

In my opinion, no case exists here for aid under the equitable powers of this court.

The complaint has been so framed as to state the present cause of action in two different forms, or, as they were formerly called, counts; one count being so framed as to call for equitable relief, to the extent of the rent collected by Morris from the premises leased, while the other count, although for the recovery of the same rent, calls for the whole sum in arrear, with interest, on the ground that Morris is the assignee of the whole term, and, on common law principles, is to be held liable for the whole rent while the premises are held by him.

It is insisted by the plaintiff, that the instrument of June 10th, 1853, vested in Morris the whole title to the lease in question, and the whole of the term and premises therein mentioned.

The instrument contains a proviso that the right of Morris to surrender the premises, in the manner mentioned in the assignment of the lease to him, is not affected. This clause shows that it was not the intention to convey or release the last day of the term which Hudson had reserved in assigning the lease to Morris. If a surrender is made of a lease, it must be to the landlord, or to some one having some estate in the land or in the term.

The day was reserved in the assignment of the lease from Hudson, without doubt, for the purpose of avoiding personal liability for the rent on the part of Morris. Without the reservation of some portion of the term, Morris would have been liable for the rent to the landlord. By the terms of the assignment, he reserved the right to surrender the lease, after three years, to the person who then executed the assignment thereof to him. On the 10th of June, 1853, after the assignment, the same parties executed another instrument, expressly providing that the right to surrender the premises shall not be thereby affected. If the last day of the term, granted by the lease, which Hudson reserved when assigning it to Morris, was conveyed or released to Morris by the instrument of June 10th, the right of surrender, which the parties agreed to preserve, is affected—it is destroyed—there being nothing in existence between those parties, whereunto a surrender can be made; the proviso would be nullified, and the agreement of the parties defeated.

[New York General Term, September 16, 1861.

The instrument of June 10th, ■ assigns, releases, • &c. to Morris, all the interest of Hudson under the agreement of March 25th, and in and to the premises therein mentioned. There would be no ground for claiming that the last day of the term, reserved in the assignment of the lease, was released or assigned, except for the use of the word “ premises/1 in the instrument of June 10th. That word does not, in my opinion, necessarily refer to the lease or the term thereby granted. The agreement of March 25th had been previously recited. The word premises is often used, in such a connection, to mean the scope or object of the subject referred to.

In my opinion, the proviso that the right to surrender the premises should not be affected, requires us to hold that the last day of the term, reserved by the assignment of the lease, was not affected, conveyed or released, by the instrument of June 10 th, and that Morris is not liable as the assignee of the lease.

The judgment of the special term must be affirmed, with costs.

Clerke, Barnard and Leonard, Justices.]