Lorillard v. Lorillard

—Mr. Dean, the receiver of certain real estate in this cause, pursuant to an order of the court, in January, 1853, executed a lease of the property on the northeast corner of Broadway and Fulton-street, to E. H. Hudson, for twenty years from May 1, following, unless certain annuitants should sooner die, at the annual rent of $4,500, payable quarterly; the lessee to pay all taxes and assessments, and to erect a building to cost at least $10,000, which was to belong to the owners of the land. The building was erected at a cost of about $30,000, probably including in that cost interest and rent during its erection. Francis Morris advanced to Hudson all the moneys expended by him on the premises, and as his security, took an assignment of the lease, in March, 1853, for the whole term, save only one day. The assignment reserves no rent to the assignor;—is for no consideration but $1;—and has, immediately afte$Jh%?iabmdum, a clause as follows : “ subject, neverthelessj'to, vsnts'^ covenants, conditions and provisions therein also ¡mentioned,” withta proviso that Morris might surrender at the;'eticl-yJ three y^rs. Morris immediately entered into possesion, and na's ¿41^3ct^d all the rents; and he paid the annual rent fo -the,receiver to May 1, 1855, inclusive. He found (as is said)<fchat th’e refits' received by him would not pay the ground-rent and'‘(axes, an^Voffered to the receiver, in May, 1855, to surrender the lease and take a new one, at $8,000 a year; and the receiver is said to have agreed to apply to the court for authority to make such arrangement. In August following, Morris paid $2,000, subject to the completion of such agreement. Since that time he has paid nothing, but has received the rents and retained them. Mr. Dean died soon after that date, and the present receiver, Ezra P. Davis, was appointed in his place. In September last he applied to the court for leave to carry out the arrangement proposed by Morris, so as to take effect as of May 1, 1855 ;—Mr. Morris thus to pay the back rents at the rate of $8,000 a year, and the taxes and assessments.

*215A little more than three-fifths in interest of the owners of the property concur in the application of the receiver; nearly two-fifths in interest oppose it. The referee and the special term have approved it; still it appears to this court inexpedient to give its assent to such an arrangement. The rent of $14,500 was obtained at auction, some persons bidding $14,000, and others running it up from that sum, by $100 at a time, to the last bid of $14,500. There is no evidence that property has since fallen in value, or that if the same trial by auction should be made, the same rent, or one far exceeding $8,000, could not be obtained; except that witnesses estimate the gross annual rents at from $10,500 to $15,000, and the annual expenses at an average of about $3,750. The same witnesses would probably have put the same estimate on the property before it was leased at auction; and yet persons bid against the lessee to $14,000 and $14,400, and Mr. Morris thought then so favorably of the lease as immediately to take an assignment of it for all the term except one day, as his security for nearly $30,000. As Hudson is, and probably was entirely irresponsible, Mr. Morris must have valued the lease as worth to the lessee more than $30,000. Other persons may estimate it in like manner at auction, or at least think that after the $30,000 are exnendefl^¡^*1,1 iti *ru^pises. they can manage it so that it will pay uoMnil. fit auction in 1853, before that money was e»e$fied on it. .* i

Under these circumstances, the court the only fair test of value is an auction.

It is said that Mr. Morris now offers to pay $8,900 per annum, now in arrear for nearly two years, and the taxes and assessments for the same period ; and that for this advantage to the estate the three-fifths owners desire to complete the arrangement with him ; and that he cannot be made liable as assignee, as the whole term was not assigned to him, and he did not covenant to pay the rent.

It is not necessary to decide whether he could be liable as assignee or not, under the circumstances already detailed, and such others as they afford ground to infer. There is just reason to infer that Hudson was the mere instrument of Morris, and that, in fact, no title of any kind was intended to vest in him, Before his term was to commence he had transferred his interest in it to Morris for the whole period, except one day (the *216exception being of no benefit to Mm, and only intended to save Morris from liability as assignee); he never was in possession for a single day, or expended one dollar upon the premises or received one dollar from it. Morris immediately entered into possession, collected all the rents, and paid all such rent as has been paid to the lessor ; he alone offers to surrender the lease; he alone has received and kept the rents since May 1, 1855. Whether liable or not, under these circumstances, in the old common law action, as assignee, it is very possible that he may be liable now in a complaint showing all the facts;—his liability to Hudson, Hudson’s irresponsibility, and that the assignment was expressly subject to payment of the rents. If he could not be made liable after he surrendered the premises, it may be that while he continued in possession of the lands thus received by him expressly subject to the rents, he was bound to Hudson to pay such rents, or, at all events, to apply the rents received by Mm to such payment; and that, under our present system, the lessor could enforce in his own favor that obligation to Hudson.

So far, the rents being unpaid, ejectment lies to recover the lands; and as Morris is the person in possession and collecting the rents, may they not be collected from him in the same action under a claim for the mesne profits ? As he is not a party to these proceedings, the court does not choose to express its opinion definitely on these matters.

To authorize the proposed arrangement would encourage Mr. Morris, and all other persons tenants under a lease sanctioned by this court, first, to refuse to pay their rents; next, to propose to substitute inferior obligations in place of those they had entered into ; and then (as in this case) to urge that, inasmuch as they had taken their measures from the beginning to reap all the benefits of the lease and yet to evade its liabilities, and had kept back rents wMch they had collected and should have paid over, for nearly two years, it became the interest of the' parties to acquiesce; and they might thus force the parties and the court to submit to their terms. If Mr. Morris wishes any favorable terms from the court, he should first pay all the rent in arrear at the rate of $3,000 a year, and all taxes and assessments, and surrónder the lease, promising a surrender from Hudson also ; and as it is understood that the parties interested *217are willing to accept this inferior sum, then he might be discharged from further liability. The receiver then should immediately advertise the premises to lease, for the residue of the term, at auction, on the same terms as are mentioned in the present lease; except that the lease should require the present building to be sustained or a new one equally good to be erected. Security should also be required for the payment of the rent, &e., either by one or more sureties or by a deposit of some Mud.

If Mr. Morris does not consent to this, the receiver should immediately proceed to eject him and the occupants under Mm by an action to recover the lands and their profits, or in such other way as he may be advised. It is not proper now to say whether the court would not give summary relief against him, as one holding under the court and subject to its jurisdiction.

The order appealed from should be modified accordingly.