I. Tanenbaum Son & Co. v. C. Ludwig Baumann & Co.

184 N.E. 503, 261 N.Y. 85, 86 A.L.R. 102, 1933 N.Y. LEXIS 1259

• Court: New York Court of Appeals
• Decided: January 27, 1933
• Status: Published

Opinions

Lehman, J.

The plaintiff installed a sprinkler system in premises, which were leased to the Brooklyn Furniture Company, under a contract made with that company and with the consent of the landlord. The contract provided that title should remain in the plaintiff and at the termination of the contract or breach or repudiation thereof by the Brooklyn Furniture Company, the plaintiff might, at its own cost and expense, enter upon the premises and remove any or all of the equipment. Though the sprinkler system remained the personal property of the plaintiff, its rights were qualified by the necessity of an actual severance of the chattels and their removal from the real property before it could obtain exclusive possession thereof. So long as the contract continued in existence the plaintiff obtained the benefit of the use of the sprinkler system in connection with those premises. Under the terms of the contract any reduction in the insurance rates upon the property of the Brooklyn Furniture Company, through the protection afforded to the premises by the sprinkler system, inured to the benefit of the plaintiff. The defendant thereafter entered into possession of the premises and purchased and acquired all of the assets of the Brooklyn Furniture Company with notice that the plaintiff had title to the equipment. Then the plaintiff demanded possession of the sprinkler system, and upon the refusal of that demand brought this replevin action. Final judgment was entered in favor of the plaintiff awarding to it possession of the chattels, recovered by it, with its damages and also awarding to the plaintiff the sum fixed as the value of the chattels to be paid to the plaintiff if possession is not delivered to it. The value of the chattels was fixed at the sum of $8,000. The evidence shows that this amount represents the value of the sprinkler system as a whole when affixed to and used in connection with the premises in the possession of the defendant. After removal of the sprinkler system from the premises its value would be much less. Thus, if possession is not delivered to the plaintiff and the defendant is compelled to pay to the plaintiff the amount contingently awarded against the defendant, the plaintiff will be in a much better position than if the defendant had complied with the plaintiff’s demand and permitted the plaintiff to remove the sprinkler system.

If any person had wrongfully taken the chattels from the premises while the contract was still in force, the wrongdoer would have interfered not only with the plaintiff’s right to remove the chattels at the termination of the lease, but also with the plaintiff’s right to enjoy the benefit of the chattels while affixed to the real estate. For damages caused to the plaintiff by such wrong, the plaintiff would have had a right of action against the wrongdoer. The measure of damages would then have been the value of the chattels at the time when affixed to the real property. Those damages could not be measured by the market price which could be obtained for the chattels in a dismembered state when removed from the real property, for such measure would represent merely the gain of the defendant caused by its wrongdoing and not the loss of the plaintiff. The plaintiff’s loss could be measured only by the value of the chattels in the place where the plaintiff had a right to maintain them and from which they were removed. Obviously there could be no market price for a sprinkler system in such position. There the value of the property would be estimated with reference to the most remunerative use by the owner, for which it is adapted. (1 Sedgwick on Damages, § 252; 4 Sutherland on Damages [4th ed.], § 1117; Washington Ice Co. v. Webster, 68 Me. 449; Stickney v. Allen, 10 Gray, 352.)

In such case the real wrong consists in the severance of the chattels and the only reasonable measure of damages must be the value of the property before severance. It is the possession of the plaintiff and not merely its right of possession which has been invaded. That rule has been applied in England where the action was brought in trespass. (M oore v. Drinkwater, 1 F. & F. 134; McGregor v. High, 21 L. T. Rep. 803; Thompson v. Pettit, 11 Jur. 748.) It has been applied in this State where carpets were wrongfully removed from a house occupied by the owner of the carpets. (Starkey v. Kelly, 50 N. Y. 676.) That rule has no application in this case.

It has no application because the defendant’s wrong consisted, not in severing and removing chattels from the place where they were affixed, but merely in refusing to allow the plaintiff to take possession of the property for the purpose of removal. For that purpose they must be severed by the plaintiff from the realty. “ In an action for the unlawful taking and conversion of a quantity of household goods, including carpets, upon the question of damages as to the latter, a charge was approved which directed the jury to inquire what would be the value * * * of the labor in cutting, making and putting them down ” (citing Starkey v. Kelly, 50 N. Y. 676), " but when the property so in place can no longer be there used by the owner and he is subject to summary removal its value will be estimated in case of conversion with reference to these facts; it will be estimated with reference to * * * the obligation or necessity of removal.” (4 Sutherland on Damages [4th ed.], § 1114, citing Moore v. Wood, 12 Abb. Pr. 393.) That distinction applies with peculiar force in this case. By transferring possession of the premises to this defendant, the Brooklyn Furniture Company breached its contract with the plaintiff. The plaintiff sued the Brooklyn Furniture Company for the damages caused by that breach and recovered a judgment for stipulated damages of $1,000 a year for each year during the term of the contract between it and the Brooklyn Furniture Company. These damages necessarily included the benefit which the plaintiff would have derived during that term from the use of the sprinkler system through reduction of the insurance rate on the property of the occupant of the premises. Though title to the sprinkler system still remained in the plaintiff and the plaintiff might maintain a replevin action against the Brooklyn Furniture Company or any other person, standing in the same position, who thereafter wrongfully detained the plaintiff’s property, an award fixing the value of the chattels as measured by their use as a sprinkler system would result pro tanto in double compensation to the plaintiff and a double liability on the part of the Brooklyn Furniture Company and any other wrongdoer. The defendant occupies the same position under the agreement that the Brooklyn Furniture Company would occupy if defendant, and the rights of the plaintiff as against this defendant are neither greater nor less than its rights would be if the Brooklyn Furniture Company were the defendant.

The measure of the value of the chattel when affixed to the real property does not apply for the further reason that the action of replevin, like the old action of trover, is founded not upon a claim that there is a wrongful taking of, or antecedent interference with, the plaintiff’s title or right of possession, but solely upon the claim that the defendant wrongfully withholds the property. “ The whole had been placed in the building by, the voluntary act of the appellee, and though they remained his property, it is clear that he could not have the right to possess them, except in the condition they would be in when severed. If he had instituted replevin to recover them, or if the appellant had permitted him to take them, he could possess them only as they would be when severed and removed from the building. It follows that the only measure of damages to which he is entitled, is the value of the articles when so severed, and the jury ought to have been so instructed.” (Walker v. Schindel, 58 Md. 360, citing Ewell on Fixtures, 441.) It is anomalous to base the right to maintain an action for a chattel upon a constructive severance of the chattel from the real property or a right to remove the chattel from the real property and at the same time to give to the chattel a special value which it would have only if it remained on the real property. (Cf. Pennybecker v. McDougal, 48 Cal. 160.) “ In the case of fixtures, however, the mode of valuation may differ materially, according to the form in which the action is brought. In trover, as we have seen, the plaintiff can only recover their value as chattels. But in trespass their actual value as fixtures may be given.” (Mayne on Damages [10th ed.], 399, 400.)

Apparently all the members of the court are agreed that these principles would ordinarily determine the measure of the value of a chattel, but a distinction is urged, based on some vague theory of justice such as is embodied in the doctrine that a wrongdoer may not profit by his own wrong. The final judgment is enforcible by execution and “ where the judgment awards a sum of money, if possession of the chattel is not delivered to the prevailing party, the execution must require the sheriff, if the chattel cannot be found within his county, to satisfy the sum so awarded * * * out of the property of the party against whom the judgment is rendered.” (Civ. Pr. Act, § 1126.) If the chattel can be found within the county then the sheriff “ must replevy it forthwith by taking it into his possession ” (Civ. Pr. Act, § 1100), at least if the plaintiff furnishes the required undertaking. The defendant is not given the option of delivering the chattel or paying the award. The plaintiff is entitled to the possession of the chattel if the sheriff can find it in the county and take it into his possession. Only if the defendant can successfully obstruct the plaintiff or the sheriff in taking the chattel into his possession would the plaintiff be entitled to enforce the contingent award of its value, but we are told that in such event, however improbable, the plaintiff should receive the value of the chattels as measured by the most profitable use to which the defendant could put them. That was the situation also in the cases above cited. The owner in each case was entitled to the possession of a chattel detached from real property and removed from that property. The judgment awards the owner possession of that chattel only, and the value fixed by the jury is the value of that chattel and nothing else. In this case we have, in addition, the fact that the plaintiff has already recovered a judgment in an action against the Brooklyn Furniture Company which includes damages for deprivation of any right it may have had to maintain the chattels in the position in which they were at the time of the plaintiff’s demand as well as at the time of the trial.

The doctrine that a wrongdoer may not profit by his wrong has been applied where the wrongdoer’s profits might have been enjoyed by the plaintiff except for such wrong. In Allen v. Fox (51 N. Y. 562) the court referred to a rule of damages which worked out that result. There the plaintiff in a replevin action obtained possession of a horse which the defendant claimed belonged to him, and retained that possession for a year and three months until the trial of the action. At the trial the jury found the title to the horse to be in the defendant and assessed its value at $175 and damages for its detention by the plaintiff at $75. The value of the horse was, of course, fixed at the time of the trial. The horse may have and probably did depreciate in value while detained and used by the plaintiff. The court held that six per,cent on the value of the horse did not measure the loss suffered by the defendant during the period of its detention by the plaintiff. By the wrongful detention of the plaintiff, the defendant had been deprived of the usable value of the horse and that constituted the measure of damages which the court held should be applied. Again in Suydam v. Jenkins (3 Sandf. 614) the court said that the value of a chattel which is wrongfully detained includes the profits which the wrongdoer has obtained by the sale of the chattel, or has in his power to obtain by a sale thereafter; for the same profits which the wrongdoer has realized or can realize could have been obtained by the plaintiff but for the wrong for which the plaintiff is entitled to damages. A careful search has disclosed no case in which the rule that a wrongdoer may not profit by his own wrong has been applied where such profits have no relation to the value of the chattel to the plaintiff or to the profits which the plaintiff might have obtained if the plaintiff had not wrongfully been deprived of title and possession to the chattels.

It is said that courts of other jurisdictions have adopted the principle applied by the trial court in this case. (Blake-McFall Co. v. Wilson, 98 Ore. 626; Smyth v. Stoddard, 203 Ill. 424.) Those cases present, however, a different problem. There title to chattels affixed to real property passed as fixtures to a purchaser for value of the real property, though they were installed under an agreement with a previous owner of the property that title should remain in the plaintiff. As between the plaintiffs and the previous owners there was a conversion of the chattels when they were sold as part of the real estate. The plaintiffs had no remedy against the purchasers, and could not bring actions for replevin. They sued the previous owners in conversion for the value of the chattels at the time of such sale. Though for the purposes of the conversion action the chattels were personal property, the owners, of the real property in converting those chattels had obtained their value as real property through an increase of the purchase price of the real property to which they were annexed. Otherwise the plaintiffs might have sold the fixtures to the purchaser of the real property at the same price. In principle, the cases are not different from one where value is shown by an actual sale instead of by market value, and the owner was deprived of an opportunity to use his chattels in the manner most profitable to him. That is a very different situation from the one presented here, where the plaintiff has brought an action to compel the delivery of chattels but claims a value for those chattels which the chattels could not have by reason of any use to which the plaintiff could put them if actually delivered to it.

It follows that the judgment of the Appellate Division and that of the Trial Term should be reversed and a new trial granted, with costs to abide the event.