Joseph Tate, as Receiver of Round Island Park, Appellant, v. Edward H. Neary, Respondent

Joseph Tate, as Receiver of Round Island Park, Appellant, v. Edward H. Neary, Respondent. Covenant to pay rent—w7ie?i it runs with the land—liability of an, assignee of a lessee, who does not take possession — a right'of forfeiture does not bar an action on the covenant — lease by a corporation for a term beyond its own existence. A covenant in a lease, by which the lessee agrees to pay to the lessor, a land company, “as and for a yearly rent for said demised premises, such amount as may from time to time be fixed and determined as an assessment of the party of the first part (the lessor), of not to exceed five per centum of the original price fixed for said lot,” which “ the said party of the-second part (the lessee), for his executors, administrators and assigns, does covenant, promise and agree to- pay,” and also, all taxes which may be assessed against the lot, is a covenant to pay rent which runs with the land, and is binding upon a person to-whom the lessee, with the consent of the lessor, assigns, his entire interest in the lease, notwithstanding the fact that such assignee never takes possession of the premises, especially where such assignee has acknowledged his liability upon the covenant by paying the stipulated assessment. Where- such a lease provides that the assessment shall be paid within thirty days after notice, and that if-not paid within “one year from the date of said first notice the lease to be forfeited, and the improvements on said land may be sold at public sale,” the remedy of forfeiture is additional to, and not exclusive of, the remedy by action to recover rent. A lease executed by a corporation for a longer period than its corporate life is not invalid, nor will it cease upon the termination of such corporate life. Appeal by the plaintiff, Joseph Tate, as receiver of the Round Island Park, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Jefferson on the 26th day of October, 1899, upon the dismissal of the complaint by direction of the court after a trial at the Jefferson Trial Term. The Round Island Park Company was a domestic corporation of which the plaintiff was the receiver at the time of the commence ment of this action. The said corporation, on the 28th day of September, 1880, leased to one John G. Harbottle lot Ho. 329 of its plot for the period *of ninety-nine years. This agreement provided that the lessee was to pay “ therefor, tó the said party of the first part, their successors or assigns, as and for a yearly rent for said demised premises, such amount as may from time to time be fixed and determined as an assessment of the party of the first part, of not to exceed five per centum of the original price fixed for said lot in October, 1879, at such time or times in each year of said term as the same may be required by said party of the first part, or its successors or assigns; also paying any and all taxes that may be assessed upon said lot by any State courts, township or village authority, or paying the proper pro rata portion of any such tax as may be assessed upon the whole tract of land belonging to said Round Island Park, and of which this lot is a part, subject, however*,-nevertheless, and this lease is granted and accepted according to the Rules and Regulations which may from time to time be adopted and promulgated for the government of said Park, and which are hereby made part of this instrument, as fully, to all intents and purposes, as if they were incorporated herein.” Said lease further provided that “the said party of the second part for- his executors, administrators and assigns does covenant, promise and agree * * * to pay to them the said assessment ” within thirty days after notice of the* same, with the further provision that if not paid within “ one year from the date of said first notice the lease to be forfeited, and the ¡improvements erected on said lot may be sold at public sale by said •corporation,” and provision is also made-for the manner of such sale. On April 6, 1891, Harbottle assigned his title and interest in the lease to the defendant by a written assignment, under seal, and written consent to this transfer was given by the association conformably to its rules. Harbottle acquired from the plaintiff in 1882, by an instrument similar to the foregoing, lot Ho. 330 on said island, and •transferred the same also by written assignment to the defendant in 1883. The defendant also owned two other lots, one of which came ¡to him by lease directly from the association; and the other by .assignment from its lessee, but the rent and taxes have been paid ¡by him on these two lots so they are not in question in this case. Assessments were made from year to year, and during Harbottle’s tenancy he paid as they were levied upon him. The defendant also ■paid the assessments as rent on lot Ho. 330 from the time of the ¡assignment to him in 1883. until the year 1892, and that on lot 329, which he acquired in 1891, he paid for that year. This action was commenced by the receiver Hovember 12, 1897, to recover the rents on these lots, together with the taxes, which are ■provided for in the original lease or agreement. James C. Foley, for the appellant. E. H. Neary, respondent, in person. Sic. [MAJORITY — Spring, J.:] Spring, J.: The proof is clear that the assessments of the five per centum on -the original value of each lot assigned to defendant were made con-iormably 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 -t 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 light 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 tó 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 ai 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 décision. 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 do 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, ofconrse, no answer to an action on a covenant of payment, or other covenant of the défanlting party.” That is, the fact that a forfeit-' ure 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.