Philip H. McLeod, Appellant, v. Henry C. Miner, Respondent, Impleaded with George J. Kraus and Others

Philip H. McLeod, Appellant, v. Henry C. Miner, Respondent, Impleaded with George J. Kraus and Others. Prospective partner—not liable to one advancing money to the enterpi'ise. One who, upon the repayment of certain money, advanced by him to the lessees of a music hall, secured by a mortgage of the lease and fixtures of th^ music hall, is to become a part owner in the business of the hall, does not, prior to such repayment, occupy the position of a partner in the business and become liable for advances made to the enterprise by a third party under an agreement which contemplated the payment of the mortgage debt by the latter, but which in that respect he fails to carry out; nor can such mortgagee be prevented from enforcing his mortgage. Appeal by the plaintiff:, Philip H. McLeod;, from a judgment of the Supreme Court in favor of the defendant, Henry C. Miner, bearing date the 12th day of July, 1898, and entered in the office of the clerk of the county of New York upon the decision of the court rendered after a trial at the New York Special Term dismissing the plaintiff’s complaint as to such defendant. Thomas P. Wiclces, for the appellant. [MAJORITY — Van Brunt, P. J. :] Van Brunt, P. J. : This action was brought to establish an equitable lien- upon the leasehold and other property constituting the Imperial Music Hall of New York city for moneys advanced by the plaintiff pursuant to an agreement, which moneys were used with the knowledge, acquiescence and consent of the defendant Miner- in completing alterations upon the property. It was claimed that the defendant Miner, being a partner or joint owner of the business and a party to the contract, induced the plaintiff to make the advances, refused to give the security agreed upon, and took the benefit of the moneys advanced, and that by his active procurement, interference, inducement and representation the defendant is equitably estopped from claiming the benefit of his legal rights, which are postponed to the equitable lien of the plaintiff. It appears from the evidence that the defendants Kraus had a lease of premises in West Twenty-ninth street, and Broadway in the city of New York, known as the Imperial Music Hall, and that the ' defendant Miner had advanced to them about the sum of $15,000 for the purpose of making improvements upon said property. The premises were subject to a mortgage to one Ruppert. The defendants Kraus, in order .to secure Miner for the advances which he liad made, gave him a mortgage dated September 10j 1895, upon the lease, fixtures, etc., in said music hall for the sum of $15,000, said sum to be paid by the mortgagors on or before the. 1st of September, 1896, out of the profits of the business conducted in said music hall or otherwise. The mortgage provided that if the defendant Miner should at any time deem his loan unsafe, he might enter upon the premises and foreclose his mortgage. There appears also to have been an agreement between the defendants Kraus' and Miner that, as an inducement to Miner to advance the money, after he should be repaid his loan he was to be entitled to receive one-lialf the profits of the business carried on in the music hall. ■ The advances of Miner not proving sufficient, to carry out the improvements, the defendants Kraus sought other means of raising money, and on the 12th of October, 1895, an agreement was entered into between the Krauses and the plaintiff providing for the forming of a corporation, to be known as the “ Imperial Music Hall,” which should have a capital stock of $100,000, divided into shares of $100 each, all of which was to be issued • for the good will, lease, furniture, etc., of the property known as the Imperial Music Hall, and to be subject only to a mortgage to Jacob Ruppert of not more than $20,000. It was further provided that the1 company should make, .execute and deliver to the plaintiff a mortgage for $20,000, which Was to be subordinate to. the Ruppert mortgage, and the. plaintiff agreed to advance to the defendants Kraus the full sum of $20,000 in consideration thereof, the Krauses agreeing that they would sell and transfer to the plaintiff thirty-five per cent of the entire capital . stock of said corporation for the sum of $1. It was further provided that the plaintiff should, upon, the signing of the contract, pay the sum of $2,500 on account of-said mortgage, and should, on delivery of -the mortgage, pay $2,500 within one week from the date thereof, and the balance (less the amount payable to Miner) within two- weeks; all of which sums were to be .used -in the repairs and alterations then in progress on said music hall. The agreement further provided that the plaintiff should pay to Miner out of said $20,000 the sum which Miner had already advanced, on receipt of which Miner was to satisfy all claims which lie had on said lease, furniture and chattels, and in the meantime was to hold the same as security for such payment. Upon the same da5r Miner executed an instrument by which he agreed that he would assign his entire claim against the defendants Iiraus, and all his interest in the Imperial Music Hall, and contracts relating thereto, on payment of the amount advanced by him on or before November 15, 1895. The plaintiff advanced the $2,500 on the execution of the agreement, the company was incorporated, the plaintiff paid other sums of money for the completion of the alterations in the building, but the amount due to Miner was not paid, and it seems to have been impossible for the plaintiff to comply with the provisions of his contract in regard to the payment to Miner. Miner insisted that the amount due to him should be paid at the time agreed upon in the contract signed by him, and notified the parties that if the payment was not made he would elect to declare the contract broken and « proceed therein the same as if no contract had ever existed, and should take such further proceedings in the matter as he was legally entitled to. The amount nqt having been paid, Miner treated the original agreement between himself and the Krauses as subsisting, and claimed the interest in the property which was given to him by the chattel mortgage and the agreement with them. Various negotiations were carried on between the Krauses, the plaintiff’s representative and others, without result. Rent becoming due and not being paid, and dispossession proceedings pending, Miner advanced the amount of the rent, took up the Ruppert mortgage, and took possession of the property in pursuance of the terms of his mortgage. Upon this state of facts we fail to see any ground upon which the defendant Miner has become liable for the advances and breach of contract upon the part of the plaintiff. Miner consented .to" the arrangement between the Krauses and the plaintiff upon the express-condition that he was to be repaid his advances on the 15th of November, 1895. He agreed to- give up all his interest in the property, which agreement he made because of the plaintiff’s promise to repay him his advances at a period earlier than the agreement between himself and the Krauses required such payment to be • made. He was not repaid. He had notified the parties that time ■ was of the essence of the contract, as appears upon its.face; and lie should not be held to his -agreement without performance by' the other parties of their part of the contract. It was upon the faith of the agreement entered into between the Krauses and the plaintiff that the latter- advanced the moneys' for the completion of the ' alterations in the music hall, and- when lie had failed to comply with his part of-the agreement as to Miner it is .difficult to see upon what theory Miner could be prevented from resorting to the securi- • ties which he had already had for the payment of his money. It would seem upon a consideration of the case that it was Miner who was induced to make the . agreement he did because of the . promise of the plaintiff, and not the plaintiff who was induced to - make the advances which he did because of any representations held .out.by Miner. Under these circumstances we know of no principle under which Miner could be compelled to pay the advances made . by the plaintiff because the plaintiff had failed to comply with his contract to pay the advances which Miner had made, and thus release the property. It is claimed that Miner cannot escape his liability as partner and tenant in common of this property, for the advances made. There is no evidence whatever that he ever became a partner in this business. He was to become a part owner upon a contingency which never happened. After his $15,000 had been repaid to him, ■ under his original agreement with the defendants Kraus, he was to have a half interest in the property, but until these advances had been repaid his only interest was that, of mortgagee. It was so understood by all the parties, and as already stated that interest he agreed to give up if the plaintiff caused to be paid to him the advances he had made. The -whole difficulty, so far as Miner is' . concerned, seems to have arisen because the plaintiff failed to comply with that portion of his agreement by which he agreed to discharge the indebtedness due- to Miner; and he having failed in this regard we do not see how Miner can be prevented from attempting- ■ to secure himself by making use of the liens which lie had upon the : property. ■ ■ • . There seems to be no ground, therefore, for holding Miner liable •. for the advances of the plaintiff because the latter, had failed to comply with his agreement to repay the sums advanced by Miner the benefit of which he was to get under his contract. The judgment should be affirmed, but, as the defendants did not furnish the court with any points upon the argument of this appeal, without costs. ' ’ Rumsey, Patterson, O’Brien and Ingraham, JJ., concurred. Judgment affirmed, without costs.