Terwilliger v. Browning, King & Co.

193 A.D. 628, 185 N.Y.S. 17, 1920 N.Y. App. Div. LEXIS 5618

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: November 10, 1920
• Status: Published

Opinions

John M. Kellogg, P. J,:

In Terwilliger v. Browning, King & Company (152 .App. Div. 552), a former action between these parties, among other things, it was determined that the "material facts found in the order of redemption, made under section 2259 of the Code of Civil Procedure, were res adjudicada - and binding upon the parties and that by the fact of tender the tenant became entitled to the possession of the property subject to the lease, but that the defendant owed him no active duty to put him into possession especially where there was an intervening lease. In this action, afterwards brought, the decision (222 N. Y. 47) was made upon demurrer to the complaint that a cause of action was stated if the defendant absolutely and continuously refused to deliver possession or to permit plaintiff to secure possession, or destroyed the property to prevent redemption. This record for the first time puts the actual facts' before the court and the former decisions on demurrer cannot aid. us, except so far as they actually decide a legal question arising upon the facts now appearing. The facts for consideration are changed by the answer and the evidence and present an entirely new situation.

Throughout this litigation the claim that the defendant dismantled the property and destroyed the right of redemption has played an important part and probably has misled the jury. The position is unreasonable and untenable. A part of the bathing establishment leased extended beyond the defendant’s property line and into the vault under the sidewalk. The use of that part of the property was permitted by the city but was subject to its paramount right, and the lease recognized that fact. The Hudson and Manhattan Railroad Company was to pass through a tunnel under the street and under the vault in which a part of the bathing equipment was and the city gave the plaintiff and the defendant written notice of that fact, requiring them to remove their property from the vault, areaway and stairs under the sidewalk and roadway to be so used on or before December 20, 1909, and in default of such removal the railroad company would remove it at their expense. The railroad company served upon each of said parties a similar notice, requiring removal on or before December 21, 1909. At the time the dispossess order was made the excavation in Sixth avenue had reached this property and it was then necessary to enter and use the vault for the purposes stated. It is conceded that the city had the legal right to take and use it. Undoubtedly the lease was made in good faith; it gave to the railroad company no right which it otherwise did not ‘have, and the dismantling of the property, which is so much talked of, was simply the act of the railroad company in using the vault for the necessary purpose of its construction and in removing the leased property therefrom. If the defendant’s engineer assisted in disconnecting some of the pipes, it was undoubtedly to protect the other leased property and was preparatory to the removal of it from the vault. The lease to the railroad company was from March 1, 1910, to November 1, 1910, at $250 per month, and gave the railroad company the right to use the premises leased for the purpose stated, and that company was bound to restore the premises to their former condition. The lease was made subject to plaintiff’s rights as tenant and his right of redemption. It is conceded in the case: “ That after the completion of the construction of the Hudson & Manhattan Railroad Company in Sixth Avenue, that no part of the building and basement and vault thereof of the premises 534-536 Sixth Avenue was taken or occupied by such railroad. That the work of the construction of such railroad commenced on the 3d day of March, 1910, and such work was completed and the premises, basement and vault were restored to their former condition on or about the 1st day of September, 1910.” There was, therefore, no destruction of the bathing establishment. Some of the bathing property was removed from the vault into another part .of the leased premises temporarily and was to be replaced without expense to defendant or the plaintiff.

Section 2259 of the Code of Civil Procedure contemplates that after redemption is made under section 2256 by a tender or payment, either party may petition the court for an order “ establishing the rights and liabilities of the parties upon the redemption ” and that after an opportunity to be heard a final order should be made “ as justice requires.” The order of redemption is part of the complaint and of the answer and was duly received in evidence on the offer of plaintiff. It conclusively established between the parties that there was due the defendant as rental $8,709.12, after giving the plaintiff credit for the rentals received from the Hudson and Manhattan Railroad Company; that the premises had been redeemed by the tender on the 24th day of March, 1910; that the Hudson and Manhattan Railroad Company was in possession of a part of the leased premises under the lease mentioned, and that upon payment of the rental found due and the other sums stated in the order, the plaintiff was entitled to possession of said property subject to the railroad company lease. The words of the order, “ shall be let into possession,” as we held in 152 Appellate Division, 552, mean only that he is entitled to the possession. The order shows on its face that defendant could not put plaintiff in possession. The order means that plaintiff may enter into possession and defendant shall not prevent or interfere with his going into possession. There is no determination in the order that the defendant had refused to allow the plaintiff to go into possession or had kept him from taking possession, subject to the lease. It was, therefore, error for the presiding justice to hold that the plaintiff could still litigate the amount due for rental because the defendant had not alleged estoppel in the answer. The defendant’s exception to that ruling was well taken and the disallowance of the amount as a counterclaim was against the evidence and erroneous.

As a matter of fact the defendant did not withhold the premises from the plaintiff. The plaintiff never demanded the possession of the property subject to the lease. In contemplation of law, after the tender he was practically in possession as lessee subject to the rights of the railroad company. No action of defendant prevented him from taking possession. A refusal of the tender could not affect the tenant’s rights. A proper tender, although refused, is in itself a redemption. The plaintiff’s evidence shows that plaintiff, his lawyer and the man who owned the money went to the defendant’s place and in substance told the Brownings, who represented the defendant, that they tendered the money, producing it, and wanted the baths. They conceded that the Brownings in substance said that the money looked good to them; they would be glad to take it, but they would call up their lawyer and give them an answer presently; and that they called their lawyer on the telephone and after a consultation with him, returned and said that they were sorry not to take the money but that •the lawyer advised that it was out of their hands and that plaintiff had to go to the Hudson and Manhattan Railroad Company to get possession. That answer is only consistent with the fact that the defendant wanted the money and the only obstacle in taking it was the outstanding lease to the railroad company and their possession under it. It was then the duty of the plaintiff, if he wanted the property, to ask- the possession of the baths subject to the rights of the railroad company. In effect, the defendant offered that right. Thereupon the plaintiff returned the money to the owner, who was there with them. It is significant that they did not call the owner of the money to swear as to the transaction.

The defendant’s version is that when its lawyer, Northrop; was called on the phone he dictated an answer to defendant’s stenographer in substance that they willingly accept the money and turn over the property, but it is subject to the rights of the railroad company under its lease. The plaintiff’s lawyer had the money during the entire interview. He said, “ Then you cannot deliver possession,” and went away with the money. Two of the Brownings and the stenographer in substance swore bo that state of facts. It is improbable that after the Brownings called up, the lawyer, who dictated an answer, they should give an answer directly opposite and state that it was what the lawyer said. The deposition of one of the Browning brothers was read in evidence, he being sick and unable to attend the trial. The deposition indicates that he wrote down the answer dictated by Northrop and then gave it to the stenographer. The plaintiff claims that no dictated answer was read. Northrop was permitted to swear that he dictated an answer to Browning over the telephone. The court did not permit him to say that the paper put in evidence was, in fact, the very matter dictated by him to Browning. The defendant excepted to the ruling. The judgment is so manifestly wrong that it is unnecessary to consider this exception and other .exceptions in the case. The plaintiff’s version is unreasonable. The manner in which the plaintiff got the money and made the alleged tender makes it clear that he did not want the possession of the property. His theory was that the bathing establishment was destroyed immediately after defendant was put into possession and it could not be returned. He evidently thought it was safe to make a tender and it was made in a way to prevent acceptance. The alleged tender was evidently made as the basis of a lawsuit for damages and without any intent to get the property. The owner of the money did not let it out of his sight and it was immediately returned to him.

Plaintiff was not entitled to the possession of the entire property. It knew of the terms of the lease to the railroad company. It demanded too much and it is safe to refuse to comply with an excessive demafid. The defendant treated the matter fairly and stated the fact which the plaintiff knew that it. could not deliver possession on account of the lease. It did not defy or challenge the plaintiff’s right to possession; it did no act to keep the plaintiff from the possession. There can be no doubt of defendant’s good faith in doing what it did, and upon no theory of law can its action be held to be a withholding of the property or preventing the plaintiff from taking possession of it under the lease. The plaintiff by the fact of redemption became the owner of the lease. The defendant did not refuse to turn it over and was not asked to do so. To make a conversion of property by demand or refusal, the refusal must be absolute and unqualified, and, if it was reasonable and made in good -faith, it is not conversion. (McEntee v. New Jersey Steamboat Co., 45 N. Y. 34.) Just what took place at the time of the alleged tender is not very material, because, as we have said, the order for redemption established the fact that there was a tender. This discussion is only .necessary as bearing upon the case generally and tending to show that the alleged tender was in a way fictitious; that there was no bona fide demand for the possession of the property subject to the lease and no refusal.

The verdict is peculiar in form. It awards to plaintiff $6,200 per year with interest from August 1, 1910, until the end of the lease, thereby determining in substance that the rental of the property was worth that amount more than the rent to be paid. Concededly by all the experts there had been no change in value of property in the locality for the better since the lease, unless it was a moderate improvement within the last year or two. All the experts give the value of the premises for one year and then repeat the same value for the succeeding years. There was no evidence that the rental value of this property was substantially in excess of the rent to be paid. The plaintiff called two real estate experts, neither of whom had any knowledge of or experience with Turkish or Russian bath property or their rental value. Concededly there are no similar basements in that locality which are rented separate from the stores. Neither had any particular knowledge of the property and in giving an answer to a hypothetical question, one fixed its rental value as a bathing establishment at $24,670; he valued the basement without the baths at $13,736. The other apparently in a! like manner and with like knowledge fixed the basement rental at $11,600, but fixed the rent as a bathing establishment at $21,020. To the basement value he adds interest on $50,000, which was the approximate cost of installing the baths, $3,000; depreciation on baths $2,500 per year; extra costs of engineer $1,300; extra cost of coal $900. It needs no argument to show that these items have no bearing upon the rental value of this establishment. The defendant’s expert gives the rental value of the entire property at about one-half of the plaintiff’s experts’ estimate for the basement. Evidently the Brownings are competent business men. Three years before the lease to the plaintiff they, through Levy, made the basement into a Russian and Turkish bath establishment at an expenditure of about $50,000, with a lease to him for a long term of years for $10,000 per year. After figuring the interest on the cost of the equipment, proper depreciation, the extra cost for an engineer and coal, which items, according to plaintiff’s experts would aggregate about $7,700, would leave about $2,300 per annum as the rent of the basement. It is absurd to say that any man permitted to be at large would make the basement into a bathing estabment with a rental of $11,000 per year if the basement alone, without the $50,000 expenditure, could command a rental of upwards of $11,000. It. is apparent from the subsequent history of the property that the improvements were made in an effort to make the basement rentable and produce some net income. Plaintiff’s experts furnish no evidence which should influence a court of justice in fixing the rental value of this bathing establishment.

Levy, who equipped the baths under his lease and used them for three years at a rental of $10,000 a year, found the business unprofitable. There were no customers for the baths except those who followed him from another locality. The question was, how much the bathing equipment enhanced the rental value of the basement property. No man was more competent to speak upon that subj'ect than Levy, who had been in the business and who installed the equipment and had rented and used the place for three years. It was error to exclude his testimony as to the rental value and that for three years there was but little transient trade from the locality. The evidence indicated that the rental he agreed to pay defendant could not be earned by the property and he voluntarily surrendered the long term lease which he had. He lost many thousand dollars in the business. The plaintiff’s experience in the property for the time he used it was that there was no real value to it as a bathing establishment. In January, 1909, he obtained a concession on the cash rental to be paid on the ground that the business was poor and unprofitable. On .July 6, 1909, he wrote the defendant a letter, as follows: “Dear Sir.— The bath business for the last two months has been very poor. I was doing fairly well until Mr. Fleischmann began to give out free tickets again. Since that time I have done practically nothing. We must make different arrangements for rent during July, August and September as there are a great many bath repairs which must be done this summer, and I don’t think it possible for [me] to raise any more cash before fall,” and was given another concession on the rent. The fact that the place had been rented twice and it did not earn the rental is substantial evidence on the rental value. The bathing equipment was a detriment to the property unless a bathing establishment could be successfully carried on. There was no real basis for fixing the rental value of the property in the absence of a knowledge as to whether or not a profitable business could be carried on there. The defendant after plaintiff was dispossessed made an earnest and continued effort through agents, placards and otherwise to rent it for a bathing establishment and otherwise but without success, and for many years thereafter could not rent it for any purpose. It has been dead property. Concededly the history of the property as a bathing establishment and the inability to rent' it for any other purpose overwhelmingly establishes the fact that the property was not worth to exceed the rent agreed to be paid.

The verdict is against the law and evidence and a new trial should be granted, with costs to appellant to abide the event.

H. T. Kellogg, J., concurs; Cochrane, J., concurs in the result on the ground of erroneous rulings in proving damages and also on the ground that there should be credited to the defendant against such damages the amount fixed by the Municipal Court order of July 30, 1910; Kiley, J., dissents, with an opinion in which Woodward, J., concurs.