Opinion
Argued October 27, 1910
Decided December 13, 1910
Donald F. McLennan for appellants. William Nottingham for respondent.
The first question presented for decision is whether the stipulation relating to passes is a covenant or a condition. Both grantor and grantee signed the instrument, which provides that "this grant is made and received, and may be enjoyed by the second party, its successors and assigns, subject to the following conditions," and among the "following conditions" was the provision for annual passes. After that provision was a forfeiture clause specifying that in case of failure "to keep and perform the conditions above expressed and each of them * * * the rights and privileges hereby conferred shall revert to the parties of the first part, their successors, heirs and assigns."
A condition as known in the law of realty is "a qualification or restriction annexed to a conveyance of lands, whereby it is provided that, in case a particular event does or does not happen, or in case the grantor or grantee does, or omits to do, a particular act, an estate shall commence, be enlarged, or defeated." (Goodeve on Real Property, 189; Co. Litt. 201a; Anderson's Law Dict. tit. Condition.) Conditions are not favored by the courts, because they tend to destroy estates, and if it is doubtful whether a clause is a covenant or a condition, it will be so construed as to avoid forfeiture. ( Graves v. Deterling, 120 N.Y. 447, 455.) When, however, the intention of the parties is so clearly expressed as to show that the enjoyment of the estate created by the deed was intended to depend upon the performance of a certain stipulation, it is held a condition and not a covenant. ( Cunningham v. Parker, 146 N.Y. 29, 33; 13 Cyc. 689; Devlin on Deeds, § 958.)
The clause in question is expressly named as a condition by the parties, and the right to enjoyment by the grantee, its "successors and assigns," is in terms made subject thereto. There is in addition the right of re-entry for failure "to keep and perform the conditions above expressed," and the stipulation in regard to passes is one of those thus designated. The form, nature and purpose of that stipulation, which was the substantial consideration for the conveyance, show that it is a condition and not a covenant under all the authorities. ( Graves v. Deterling, 120 N.Y. 447; Plumb v. Tubbs, 41 N.Y. 442; Gilbert v. Peteler, 38 N.Y. 165, 169; Cowell v. Springs Company, 100 U.S. 55, 58; Stuart v. Easton, 170 U.S. 383; Reeves on Real Property, 588.) The learned author last cited says on page 1010 that the "mere use of the word condition will not make a stipulation in a deed of conveyance a condition subsequent, unless it plainly appears that the intention of the parties was that the grantor should have the right to re-enter if it were broken by the grantee. The clearest and most emphatic method of showing that intention is, of course, by a statement, in or connected with the words that are meant to create a condition, that the right of re-entry is reserved for its breach."
All conditions are either precedent or subsequent, and as the condition in question was to be performed after the right granted had vested in the grantee, it cannot be termed a condition precedent. Obviously it is a condition subsequent, because the conditional event or the issue of passes was not to happen until after the principal event or the vesting of the right to use and possession. Performance thereof did not create and could not enlarge the estate, but failure to perform would defeat it at the election of the grantors. Hence, it could not be included in the enumeration of covenants and conditions relating to cattle passes, fences, etc., for they are to be "considered as conditions precedent" and also as "covenants running with the land." The terms and conditions which are not both conditions precedent and covenants running with the land, are not mentioned in the classification either as precedent or subsequent, and the parties did not stipulate that the clause in question should or should not run with the land but left that to be determined from its nature.
Conditions subsequent, however, necessarily run with the land because they are attached to the title, which may be lost by the failure to observe them. They "bind one who accepts the deed; a purchaser from the grantor, with notice; and any assignee or grantee of the grantee in whom the estate on condition is vested." (13 Cyc. 694, and cases cited.)
There is not only the condition subsequent, but there is an independent covenant to perform it in these words: "The terms of this agreement shall be binding upon the heirs, successors and assigns of the parties hereto." Clearly said condition is one of the terms of the agreement, which were thus made binding upon the successors and assigns of the original grantee. The old railroad company promised for itself and its assigns, and the new company by accepting a transfer of its rights and entering into possession of the land made the promise its own durante possessione. As the successor and assignee of the old company it is in actual possession and enjoyment of the subject of the grant, and must observe the conditions upon which the grant was made as long as it remains in possession. While the grantors have the right to re-enter, they are not bound to declare a forfeiture and take back the land after it has been rendered worthless for farming purposes or for any use except as a railroad, but they may require specific performance of the agreement at their election. As long as the new company holds, occupies and enjoys under the deed, it stands in the shoes of the old company and performance to the same extent and of the same nature can be required from it as from its predecessor.
While the grant in question is not a lease in the ordinary sense, because it has no term of years, still it is in the nature of a lease reserving a perpetual rent. The consideration, as recited in the deed, is "one dollar * * * and the covenants and conditions herein expressed to be kept and performed by the said second party." Aside from the conditions which the law requires a railroad company to perform when the right of way is acquired by condemnation, the provisions relating to fences and the stoppage of cars to receive freight and passengers, which are perpetual, and that relating to passes, which is for an indefinite period, are the main consideration for the right granted. Obviously the other covenants and conditions are comparatively slight in value. Rent is the compensation for the use of land and is payable either in money or in services, cattle, grain and the like according to agreement. Many early leases in this state were in the form of grants with rent reserved, payable by acts of service or in specific articles of the kind mentioned. While the rent reserved in the case before us was perpetual in part and indefinite as to the rest, still the reservation was in a conveyance not for a term of years, or for life, but forever. All the rent was perpetual in principle because the deed was perpetual. "Perpetual rents are covenants real which run with the land, and are binding upon the heirs and assigns of the covenantor successively during their respective ownerships." (Fowler's Real Property Law, 189, 197.) The grant in question falls within the principle of the noted Van Rensselaer cases which the learned author cites to support the proposition quoted, and which he says "are among the most interesting and instructive in our judicial history, and justly entitled to be regarded as among the most wisely decided cases of any age or country." ( Van Rensselaer v. Snyder, 13 N.Y. 299; Van Rensselaer v. Ball, 19 N.Y. 100; Van Rensselaer v. Read, 26 N.Y. 558, 564; Van Rensselaer v. Slingerland, 26 N.Y. 580; Van Rensselaer v. Barringer, 39 N.Y. 9; Bradt v. Church, 110 N.Y. 537.)
Whatever form of payment may be prescribed, the law regards rent as issuing out of the land, and, hence, the land cannot be held and enjoyed by the grantee or lessee, or by the assignee of either, without paying the rent reserved. The defendant is the grantee and assignee of its predecessor, and as such owns its rights under the instrument in question. While an assignee may escape future liability by assigning the lease and surrendering possession, he is liable for all the rent which accrues while he is in possession as such. The defendant is liable for all conditions broken while it was in possession, and the failure to pay the rent by issuing passes is one of those conditions. As was said by Judge DENIO in Van Rensselaer v. Read ( 26 N.Y. 558, 564): "The covenants entered into by the grantee of the lands, in behalf of himself, his heirs and assigns, are covenants real which run with the land, and are binding upon the heirs and assigns of the covenantor, successively as to all breaches of such covenants which occur during their respective ownership of the lands." While the condition needs no covenant to support it, as the condition runs with the land, the covenant to keep the condition runs with it also.
The judgment should be reversed and a new trial granted, with costs to abide the event.
CULLEN, Ch. J., GRAY, HAIGHT, WILLARD BARTLETT and COLLIN, JJ., concur; HISCOCK, J., not sitting.
Judgment reversed, etc.