Thorley v. Pabst Brewing Co.

179 F. 338, 102 C.C.A. 522, 1910 U.S. App. LEXIS 4643
CourtCourt of Appeals for the Second Circuit
DecidedMay 2, 1910
DocketNo. 235
StatusPublished
Cited by6 cases

This text of 179 F. 338 (Thorley v. Pabst Brewing Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thorley v. Pabst Brewing Co., 179 F. 338, 102 C.C.A. 522, 1910 U.S. App. LEXIS 4643 (2d Cir. 1910).

Opinion

NOYES, Circuit Judge.

The principal contentions of the defendant, based upon his assignments of error, are that the trial court erred:

(1) In refusing to submit to the jury the question of the ambiguity in the lease.

(2) In excluding testimony tending to show the intention of the parties in executing the lease.

(3) In charging that the plaintiff was entitled to recover as damages the difference between the rent resérved and the value of the lease for the remainder of the term, together with the value of the improvements.

We have carefully considered the first two contentions of the defendant and are satisfied that the action of the trial court was right in the instructions and rulings complained of. In view, however, of our conclusions with respect to the third contention, we deem it unnecessary to do more than thus state the result of our examination of the others.

The third contention presents the question of the measure of damages in an action for breach of the covenant of quiet enjoyment in the lease. This question must be determined by the law of real estate. And the law of real estate which this court is bound to regard is that established by the course of decisions of the courts of the state in which the land is located — the state of New York. If the law be not settled and established, it will be our right and duty to exercise our [340]*340own judgment. But, if it be settled, we must accept the established rules as authoritative declarations of what the law is. When this case was before this court before, it was said:

“Inasmuch as the question presented relates to the rights and title to the real estate and things having permanent locality, it is to be determined by the decisions of the courts of last resort of the state of New York, so far as they determine the questions herein.”

So our inquiry here is whether the courts of the state of New York have established a rule of damages in actions of this nature and, if so, what that rule is.- It is quite probable, and quite as immaterial, that we may regard the rule which we find settled as opposed to the weight of authority elsewhere and contrary to the soundest principles. It is equally immaterial that, if this case were before the New York Court of Appeals, that court might modify in favor of the plaintiff the rule now established. The plaintiff has brought its suit affecting land in this court, and we must follow settled rules, not change them. Our only duty is to take the law as we find it, and as we find it apply it.

Two theories have long been adopted by the courts in different jurisdictions in determining the- rule of damage for breach of the covenant of quiet enjoyment in a deed. In some of the states the covenant —like the covenant of warranty — is assumed to take the place of the ancient warranty of the feudal law, under which, if the vassal were evicted by a better title, he received from his lord other lands of equal value to those which he lost; such value being computed as of the time of the warranty. As that which is now recovered is money instead of land, the same idea is carried out by giving to the party who has lost his land the monéy he paid for it and thus restore him to his original condition. In other states, and now in England, the covenant is regarded as one of indemnity, and the rule of damages is to restore to the grantee that which he loses by the failure of the grantor to keep his covenant and, consequently, the measure of damages is the value of the property at the time of the eviction without regard to the consideration paid. The first theory is the earlier one; the latter, the one now more generally adopted. 3 Washburn on Real Property, p. 531; 4 Kent’s Com. p. 475.

The same theories have been followed in the case of leases. The rent is the consideration paid for a lease, and as a tenant who is evicted is relieved of the rent, it is held in some jurisdictions that he is entitled to recover nothing for the value of his léase or for improvements. Rent paid in advance is, of course, a consideration paid and recoverable. On the other hand, it is held by many courts, upon the principle of indemnity, that such a tenant may recover the value of his lease — ■ the difference between the rent reserved and the value of the term, and also, provided there be no double recovery, expenditures for improvements.

Coming, then, to the decisions in the state of New York, we find that in Staats v. Ex’rs of Ten Eyck, 3 Caines, 111, 2 Am. Dec. 254, decided in 1805, it was held by the Supreme Court that under a covenant for peaceable enjoyment the vendee, if evicted, can recover only the consideration paid and nothing for the increased value of the [341]*341property nor for improvements. Chief Justice Kent reviewed the origin of the rule that, in the absence of fraud, “purchaser is not entitled ±o damages for the fancied goodness of his bargain. The return of the deposit money, with interest and costs, was all that was to be expected.”

In Pitcher v. Livingston, 4 Johns. (N. Y.) 1, 4 Am. Dec. 229, decided in 1809, the Supreme Court again laid down the rule of Staats v. Ex’rs of Ten Eyck, supra, upon the authority of that decision and early English cases. In Bennet v. Jenkins, 13 Johns. (N. Y.) 50, decided in 1815, Baldwin v. Munn, 2 Wend. (N. Y.) 405, 20 Am. Dec. 627, decided in 1829, and in several intermediate cases the same rule was reaffirmed and approved.

In Kinney v. Watts, 14 Wend. (N. Y.) 38, decided in 1835, the rule governing the covenant of quiet enjoyment in deeds was applied to leases. The court said (page 41):

“A vendee, when he purchases, may insist upon special covenants, which will secure to him a perfect indemnity for any expenditures or improvements upon the premises, in case of eviction; but if he takes the general covenants of warranty and quiet enjoyment, he has no right to complain that the law does not afford him' full compensation for the loss and injury which he has sustained by eviction. If he resorts to an action upon this covenant, he must take the rule of damages which the law has established for a breach of it. A lease, where no purchase money is paid by the lessee, does not differ in principle, in this respect, from an ordinary conveyance in fee for a valuable pecuniary consideration. As the lessee has paid no purchase money, he can recover none back upon eviction; and in respect to the improvements which he may have made upon the premises, and the money expended upon them, he stands precisely upon the same footing with a purchaser, who recovers nothing for improvements or expenditures; nor can a lessee, upon the ordinary covenant for quiet enjoyment.”

In Kelly v. Dutch Church of Schenectady, 2 Hill, 105, decided in 1841, the same rule was again stated and applied in the case of a lease, and a lessee evicted by a paramount title was held entitled to recover nothing for improvements or rise in value. The court said:

“Under a general covenant for quiet enjoyment, the rule of damages is settled in relation to a purchaser who has been evicted. He recovers back the consideration money paid for land, with interest on the amount for a period not exceeding six years. The price agreed upon by the parties is taken as the true value of the land without any reference to the actual value. Following that analogy, the rents reserved in a lease, where no other consideration is paid must be regarded as a just equivalent for the use of the desired premises.

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Cite This Page — Counsel Stack

Bluebook (online)
179 F. 338, 102 C.C.A. 522, 1910 U.S. App. LEXIS 4643, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thorley-v-pabst-brewing-co-ca2-1910.