Summary
In Derby v. Brandt (99 A.D. 257) the Appellate Division of this department held under similar circumstances that the tenant must answer to the receiver for rent or if tenant claimed a defense against liability under the lease, that the receiver might collect the reasonable value for the use and occupation.
Summary of this case from Gibbons v. WassermanOpinion
December, 1904.
Albert I. Sire, for the appellant.
Joseph Fettretch, for the respondent.
It is not contended that the amount fixed as occupation rental was excessive, but the question upon this appeal is whether the hotel company, claiming an offset against the landlords, could thus defeat the receiver's application to compel the company to pay him an occupation rental.
The answer to this question necessarily turns upon another which is at the foundation of the various contentions, and that is as to whether the receiver stands in the shoes of the landlord, having no other or greater rights as against the tenant. This, in view of our decision in Fletcher v. McKeon ( 71 App. Div. 278), we regard as no longer an open question. A receiver appointed at the instance of a mortgagee, under a mortgage executed and recorded prior to a lease, stands in a very different position to the tenant from that held by the landlord. A tenant under a subsequent lease takes with notice of all the rights which the mortgagee has under the mortgage. So here, the hotel company entered upon the lease and took possession subject to the mortgage, and assumed the risk and danger to be incurred from an enforcement of the remedies which the law accords to a mortgagee.
Therefore, as correctly urged by the respondent, whatever the relations of the St. Paul Hotel Company to its landlord may be, or whatever answer it may have to the landlord's claim for rent, in any event the one occupying real property subject to a mortgage under foreclosure in an action wherein a receiver has been appointed must answer to such receiver for rent which may be due or which may accrue after such receiver's appointment; or, if the occupant claims to have a defense to the landlord's claim for rent as such, then the landlord must pay to the receiver, as custodian of property which is security for a mortgage — and to safeguard such security — a reasonable amount for the use and occupation of such mortgaged premises called "occupation rental" during the pendency of the action.
Here, upon the appointment of the receiver under a mortgage recorded prior to the lease, the tenant, claiming that the landlord had not completed the building or furnished it for the purposes contemplated by the lease, and upon this ground insisting that no rent was due, could elect to follow one of two courses: he could surrender possession of the premises and thus avoid the payment of any rent, or he could remain, which is what was done in the present case, in possession of the premises; but, in this latter event, he would be bound to pay rental to the receiver equal to the reasonable value of the use and occupation of the premises. Whatever claim he may have for damages against the landlord is not relevant or germane to the present action, which is one brought by a mortgagee to enforce his mortgage, executed and recorded prior to the appellant's lease.
In all this there is no violation of the principle of law which the appellant invokes that the courts will not attempt upon affidavits to define and settle rights of litigants, or to render what would be practically a final judgment upon the issues involved in the suit. The plaintiff is proceeding to enforce a legal and equitable right, and as part of his remedy, where the security is inadequate and the terms of the mortgage permit it, he is entitled during the pendency of the action to receive either the rent or the occupation value of the premises upon which his mortgage is a lien; and the rights which the tenant under his lease may have against the landlord are necessarily subordinate to the right and remedies which the plaintiff has under his mortgage.
In other words, the infirmities attaching to the landlord's claim against the tenant for rent, if any, do not affect the receiver's right to recover for use and occupation of the mortgaged premises on behalf of the mortgagee and in aid of his security.
We think the order made was right and should be affirmed, with costs.
VAN BRUNT, P.J., PATTERSON, McLAUGHLIN and LAUGHLIN, JJ., concurred.
Order affirmed, with costs.