Opinion
May Term, 1900.
James C. Foley, for the appellant.
E.H. Neary, respondent, in person.
The proof is clear that the assessments of the five per centum on the original value of each lot assigned to defendant were made conformably to the rules and regulations of said association, and that proper notice thereof was received by the defendant.
The original agreement expressly covenanted that the manner of paying rent by the lessee was to meet the assessments which were limited to five per centum of the value of each lot as fixed and determined by the association in 1879. This was, therefore, a covenant to pay rent and hence ran with the land. ( Bedford v. Terhune, 30 N.Y. 453, 460; Frank v. N.Y., L.E. W.R.R. Co., 122 id. 197, 201; Dolph v. White, 12 id. 296, 301; Wood Landl. Ten. § 336; Fennell v. Guffey, 155 Penn. St. 38.) Consequently the defendant as assignee became chargeable with its payment. (Taylor Landl. Ten. § 450; 1 Washb. Real Prop. [3d ed.] 438; Real Property Law, § 193 [chap. 547, Laws of 1896].)
The lessee assigned his lease to the defendant in its entirety, not reserving a fragment of the time or any of the rent to himself. This created a privity of estate between the lessor and the defendant, and that was recognized by the latter as he attorned directly to the original lessor. He did not assume to deal with his assignor, and the latter apparently made no claim to any interest in the lots. The defendant's substitution for Harbottle was complete, and this constituted an adequate basis for causing a direct liability to inure to the association. ( Stewart v. Long Island R.R. Co., 102 N.Y. 607.)
It is urged, that because defendant never went into possession, he is not liable for rent within Demainville v. Mann ( 32 N.Y. 197). In that case the defendant Mann was the assignee of an undivided two-thirds of the demised premises while one Hatch was the assignee of the remaining one-third, but had never been let into possession. The assignee of the larger share occupied the entire leased land to the exclusion of Hatch, enjoying all the fruits of the premises, and the court held that the occupant alone was chargeable with the payment of the rent. In that case Hatch got a mere naked right and the possession which it was incumbent upon his assignor to vest in him did not accompany the assignment. He could not oust the occupant as he was confessedly in lawful possession, for his tenancy extended to an undivided two-thirds of the land. An important distinction in the present case lies in the fact that here the assignment was for the entire term, and where that is its character possession is not essential for liability to be incurred on the part of the assignee. He stands for his predecessor in interest and that creates the requisite privity. As was said in Wood's Landlord and Tenant, section 335: "A person who has accepted a valid assignment from the lessee, although he has not taken possession of the premises, becomes liable for rent subsequently accruing, and for breaches committed subsequently to the assignment, of such of the lessee's covenants as run with the land." (See, also, Chaplin Landl. Ten. § 351.)
The following is from the opinion in Walton v. Cronly (14 Wend. 63, 64): "So where the lessee makes an absolute assignment of the whole term, the assignee and his representatives are liable upon all the covenants which run with the land; and that whether the assignee took the actual possession of the premises or not." ( Pingry v. Watkins, 17 Vt. 379; Babcock v. Scoville, 56 Ill. 461; Tate v. McCormick, 23 Hun, 221.)
So far as I have been able to find, the cases which make the liability of the assignee of a lease dependent upon possession have in them some other controlling circumstance. There exists either a reservation of part of the demised estate in the assignor, the inability of the assignee to obtain possession, or the instrument was merely designed as collateral security, or a kindred significant fact dominates the decision. I have been unable to find any authority to the effect that, where there is an assignment of the entire estate, ratified by the lessor, and where actual occupancy rests wholly with the lessee, he must in fact go into possession before he can be made to pay rent to the lessor. The moment he accepts an absolute assignment of the entire estate he is liable to the lessor on the covenants in the original lease.
But in this case we need not be driven to that rule to attach liability to the defendant. He has paid rent on every one of the lots transferred to him, and pursuant to assessments made in compliance with an agreement identical with the one referred to. He not only accepted the assignments but recognized the method adopted by the association for arriving at its yearly rent. After this manifest acknowledgment of his obligation to pay rent according to the covenant in the lease, he certainly cannot expect to be absolved from his self-assumed liability because he voluntarily refrained from going into the actual possession of the premises. That would enable him to keep a leash on his right to this long tenancy if it should prove valuable, but to sever it the moment the burden exceeded the benefits, although retaining the nominal leasehold title in himself.
Again, the point is pressed that, because the agreement provided for a forfeiture in the event of non-payment of the rent, no other remedy is available to the lessor. By the covenant in the agreement the lessee unconditionally agreed to pay the yearly rent as fixed by the party of the first part. The right of forfeiture is another remedy and an additional security to the lessor. The rent must be paid within thirty days after notice. The lessee, "for his executors, administrators and assigns, does covenant, promise and agree * * * well and truly to pay" said assessment. After the expiration of that period the lessor could enforce payment by suit. The debt then becomes due. No forfeiture of the lease occurs and no public sale of the improvements by reason of such forfeiture can be had until one year has elapsed from the date of such thirty days' notice. The notice requiring payment within the thirty days is of no significance unless it can be followed by an enforcement of the rent. The lessee might withhold payment and defy collection until the date of the forfeiture is close at hand if there is not an existing debt after the thirty days have expired. If forfeiture had been the only remedy the agreement would have made the date one year from the notice of the assessment without any provision exacting payment within the thirty days. The vesting of the title or interest in the lessee was immediate and did not depend upon the payment of rent as a precedent condition. The contract in the case of Wing v. Ansonia Clock Co. ( 102 N.Y. 531), upon which the respondent relies to support his contention, is radically different from the present one. In that case the plaintiff and one of the defendants were patentees of certain manufacturing instruments which the defendant company agreed to manufacture and sell. The company agreed to pay as royalties to the patentees $4,000 annually "or else forfeit the right to manufacture" under their license, if the patentees "shall so elect by a notice in writing to that effect within ten days after the close of any year in which less than $4,000 is paid." It was held that the manufacturer had the right to pay the sum stated or forfeit the right to manufacture. But it was expressly held that "a mere right of forfeiture attached to a contract is, of course, no answer to an action on a covenant of payment, or other covenant of the defaulting party." That is, the fact that a forfeiture is provided for does not annul an unqualified promise to pay; the two remedies may be correlative and they are not inconsistent. In the case cited there was an alternative liability against the defendant, but the option rested with it to determine which horn of the dilemma it would take, and it made the election. Usually the forfeiture is at the election of the party for whose benefit it is made, and that is the intention of the parties to this agreement.
The fact that the lease to Harbottle extended beyond the stipulated life of the corporation does not invalidate the agreement. ( Nicoll v. New York Erie R.R. Co., 12 Barb. 460, 465; affd., 12 N.Y. 121, 128; People v. O'Brien, 111 id. 1.)
The title of the association was absolute, and even though its life terminated it could not cut short the period of tenancy.
The judgment is reversed and a new trial ordered, with costs to the appellant to abide the event.
All concurred.
Judgment reversed and a new trial ordered, with costs to the appellant to abide the event.