Summary
In Otis v. Conway, supra, the New York court suggested this right of creditors of an insolvent lessee to take any moneys due their debtor over and above the amount of rent the debtor was required by his lease to pay to his lessor.
Summary of this case from Shaw v. CreedonOpinion
Argued March 7, 1889
Decided March 19, 1889
John L. Cadwalader for plaintiffs. Eustace Conway for defendant in person.
There is no dispute between the parties as to the facts which lie at the foundation of this controversy.
On January 1, 1881, the plaintiffs leased to Oscar Strasburger property in Broadway, in the city of New York, for the term of five years, at an annual rent payable on the first days of February, May, August and November in each year. In September, 1884, Strasburger was adjudged to be a lunatic and his son Albert was appointed his committee. Strasburger had occupied a part of the leased land for business purposes, and his son, after his appointment as committee, continued the occupation until November 20, 1884, at which time the business appears to have ceased. Pursuant to orders of the Supreme Court, the committee paid to the plaintiffs the rent due on November 1, 1884, and February 1, 1885. In February, 1885, Albert Strasburger was permitted by the Supreme Court to resign and the defendant was appointed as committee in his stead. Upon application by the plaintiff, the Special Term of the Supreme Court ordered the defendant to pay the rent falling due May 1, 1885, but such order was afterwards reversed by the general Term, and upon appeal to this court the order of the General Term was affirmed. ( In re Otis, 101 N.Y. 580.) While this proceeding was pending, the parties entered into stipulations relating to the leasing of the property. Under these stipulations a part of the property was rented during the year 1885, and the fund thus accumulated forms one of the elements of the dispute between the parties.
It also appears that Strasburger, prior to the order adjudging him a lunatic, had leased a part of the property to one Jacob Godhelp, who occupied until January, 1, 1886. Godhelp's rent for the year 1885 has not been paid to either party, but by agreement has been deposited with the American Loan and Trust Company to await the determination of this action, and this sum constitutes the second item of the plaintiff's claim.
We think that the plaintiff's claim to have the Godhelp rent paid to them is well founded. The lunatic's estate is insolvent, and will pay but a small percentage upon the debts conceded to exist against it. Technically, rent is something which a tenant renders out of the profits of the land which he enjoys. Equitably, it is a charge upon the estate, and the lessee, in good conscience, ought not to take the profits thereof without a due discharge of the rent. ( Goddard v. Keate, 1 Vern. 87; 1 Story's Eq. Jur. § 687; Taylor's Landl. and Ten. 659; 2 Platt on Leases, § 185; Riggs v. Whitney, 15 Abb. Pr. 388.)
The creditors of an insolvent lessee can have no moral or equitable claim to the profits issuing from leased land, until after the landlord's claim for rent is satisfied. The defendant argues, however, that this question was settled adversely to the plaintiff, by the decision of this court in the Matter of Otis ( 101 N.Y. 580), and such was the opinion of the General Term. This question was not involved in the case cited. That proceeding arose on a petition of the plaintiffs, in which it was sought to make the rent a preferred debt against the lunatic's estate, on the ground that the committee was an equitable assignee of the lease. No reference was made to the Godhelp rent, and the equitable right to have that applied to the payment of the landlord's debt was not presented to the court. This court held that the committee was not an assignee of the lease, but a mere custodian of the lunatic's estate, and that there was no equitable principle upon which a demand for rent takes preference of other debts, in the absence of a special equity growing out of the circumstances of a particular case. That language was applicable to the case then before the court, but has no application to the present appeal. Godhelp was not a party to the other proceeding, nor had his rent then been deposited in court, and the form of the proceeding and the absence of the necessary parties precluded the award of such equitable relief as is sought in this action.
The rent on the original lease to Strasburger having, however, been paid in full to February 1, 1885, the plaintiffs' right to the rent due from the sub-tenant must be limited to that which accrued subsequent to the last-named date.
As to the other fund the plaintiffs do not assert in the complaint any equitable claim, but base their rights thereto upon the stipulations. The tenants whose rents formed this fund were not sub-tenants of the original lessee, but went into possession under the consent of all parties contained in the stipulations, and, as to the rent accruing from their occupation, the parties have made their own agreement and created the law that must govern its distribution. All the stipulations recite the existence of differences between the parties as to the payment of the rent named in the lease to Strasburger, and that the premises are vacant, and each provides that the tenant named therein may occupy "for the benefit of whom it may concern," and that the assent to the agreement should in no respect alter the legal position of the parties toward each other. All except the first provide that payment of the rent shall be made by a certified check payable to the order of Strong and Cadwalder and Eustace Conway, committee, jointly, and that the same shall be deposited in the American Loan and Trust Company until the final determination of the said controversy; "and that at the determination of the question at difference between the parties, both parties shall join in indorsing to the party held to be in possession of the said premises." The parties thus fixed the time when and the event, which should determine the right to the possession of these checks. It is not disputed that the controversy thus named was the proceeding I have already referred to and which was finally decided in this court, and that the final determination therein was, that the lunatic himself was in possession of the demised premises.
This statement would seem to be sufficient to determine, that the defendant, as the committee of the lunatic, was entitled to have the checks indorsed by the plaintiffs and delivered to him. But the plaintiffs claim that the real meaning of the agreement was, that the party who was defeated in that proceeding should receive the rent paid by the tenants under the stipulation. We can find nothing in the case to justify such a construction. Certainly it could not have been claimed that the plaintiffs were in possession of the premises. They had refused to accept a surrender of the lease, and the various proceedings in this court and in the Supreme Court to obtain payment of the rent from the committee were based on the existence and validity of the original lease.
It is possible that it may have been the purpose of the parties that the plaintiffs were to receive these rents in case they were unsuccessful in the proceeding then pending and referred to in the stipulation, but they expressed no such purpose in the agreement they signed, and we must give effect to the plain language of those instruments. The point in dispute was, was the committee to be regarded as in possession as the equitable assignee of the lease? If he was, then he would be compelled to pay plaintiff the rent reserved in the original lease, and the rents covered by the stipulations would be his. But as this court held the lunatic was in possession, by the plain language of the agreement, the rents are his, and the checks must be indorsed by plaintiffs and delivered to the committee. The first stipulation differs from the other in providing that the rent should be deposited "and finally paid over to the party ultimately entitled thereto." This, we think, referred to the final determination in the proceeding then pending. It had no reference to any equitable claim that the landlord might afterwards assert to the rents from sub-tenants, but provided for payment to the party who ultimately should be decided to be legally entitled thereto. The lunatic is such party, and his estate is entitled to the rent covered by these stipulations.
Our conclusion being different from both of the courts below, the judgment of the General and Special Terms should be reversed and a new trial granted, without costs to either party against the other in this court.
All concur.
Judgments reversed.