Van Schaick v. Third Avenue Railroad

I concur in the above judgment, upon the ground that the defendants were not in existence at the time the lease was executed, and cannot, therefore, be made liable for the covenants in the lease without some act accepting the lease as made for their benefit. This may be either directly, by resolution, adopting the liability as the cestui que trust, or by a course of conduct that would warrant the court in finding that they had, by such condxict, given their assent to the same, and adopted it as made for their benefit. The evidence will not warrant either conclusion, as the case now stands. The defendants are nothing more than the assignees of the lease, and their liability only extends to the period during which *461they held the lease, and ceased with their relinquishment of interest therein. It may be, on a new trial other facts may be shown to change the relation of the defendants with the lessee.

Judgment should be reversed, and a new trial ordered.

Dissenting opinion.

It is beyond dispute that Henry Van Schaick was the mere trustee of the unincorporated company in receiving this lease, who were, in fact, though not technically, according to the common law, the original lessees of the term. It is also clear that this company, at the time this lease was taken for their benefit, contemplated becoming an incorporation—their condition then being merely preparatory to the ultimate design, (see articles 8 and 15 of the association.) They agreed, while unincorporated, that they and the company thereafter to be formed (meaning the incorporation) would assume, and thereby the association did assume, the performance of all the covenants in the lease. The intentions indicated by all the arrangements made, and the provisions in the articles of association, manifest an intention of making the incorporation, in all respects,* identical with the association. It had the same object, the same business, the same plan of operation, the same property, and the same liabilities. It had the same members generally, although some of the members of the association did not become members of the incorporation; but this change of members would not have affected the identity of the former, as in the case of an ordinary copartnership. According to article eight of the articles of association, it is expressly provided “ that the company shall not be dissolved by the death or act of any member, but his successor or successors in interest shall stand in his place.” The incorporated company, then, is as much the same body in fact, as if the'- association had continued unincorporated. *462The incorporation under the general law was resolved upon merely for the convenience of business and the protection of its members from unlimited liability—not for the purpose of adopting’ a new character, and changing its relations to those with whom it had previously entered into engagements or transacted business. Any attempt now upon the part of the corporation to get rid of the liabilities of the association on the technical ground that it is a different person in law—one artificial person instead of many natural persons—is just such an attempt as a court of equity, regarding all the circumstances, should intervene to defeat and prevent. It will deal only with the substance and real facts of the case, and forbid the employment of a technical rule, and, I may say, a metaphysical conception, to work palpable injustice. It is eminently a case for the interference of a court of equity. When we also consider the testimony of Reynolds, the president of the association, and also of the same body in its incorporative state, it is apparent that the incorporation recognized this lease as taken for their benefit, and that it was held in trust by H. Van Schaick for them. To be sure, he says he could not find the resolution by which the lease was accepted ; but it was accepted, and used by them; they continuing in occupation of the premises precisely in the same manner as the company. I agree, therefore, with the justice who presided at the special term, in saying that the defendants are the real owners of the lease, and that H. Van Schaick held it for their benefit.

The case comes within the principle stated by the Lord Chancellor in Walters agt. Northern Coal Mining Co., (5 De Gex., McNaughton & Gordon, p. 629,) that if there was a previous contract between the cestui que trust and the landlord, that they should accept and he should grant the lease, the landlord would be entitled to the relief sought.

The judgment should be affirmed, with costs.

The liability of the defendants for rent ceased, at law, when they assigned the lease and terminated their occupation. Nor can the defendants be held for the rent, in equity, as cestui que trusts. (Walters agt. The Northern Coal M. Co., 5 De Gex., M. & G., 640 to 642.)

Had there been any previous agreement between the landlord and the defendants for taking a lease in the name of a trustee for the use or benefit of the defendants, the case might have been different, under the authority just referred to. But no agreement or liability could have existed between the landlord and the defendants prior to or at the time of making the lease in question, because the defendants were not incorporated till several months afterwards.

The knowledge of the directors of the incorporation, or some of them, that the lease had -been taken by the lessee some months before they became incorporated, for the benefit of or in trust for such corporation thereafter to be formed, was not sufficient to create any liability on the part of the defendants, (the corporation,) legal or equitable.

If the individuals composing the corporation were the same as those composing the association for whom the lease was taken, the plaintiff’s action would nevertheless fail, without some act on the part of the' defendants that could be deemed equivalent to an agreement or promise to become liable as lessees, or as indemnitors of the lessee named in the lease.

The act of receiving an assignment of the lease, subject to the rents, &c., although an agreement, existed between the lessee and certain individuals who previously owned the railroad, declaring that the lease had been taken by the lessee in trust for the defendants when thereafter incorporated, devolved no extraordinary or equitable liability on the defendants.

*460The receipt of the lease by assignment, in the absence of any resolution or agreement to incur or undertake other liability, involved only the usual legal liability in such cases on the part of the defendants.

By the agreement referred to between the lessee and the former owners of the railroad, the lease was to be assigned to the defendants when incorporated, only on request, by virtue of a resolution. I think it may be stated that a resolution of that character was never adopted. True, Mr. Reynolds testifies that the lease was assigned to the defendants by their order or resolution, but on examining the records immediately afterwards, he admits that he cannot find it, as he understood it to have been passed. No further evidence being given on the subject, it is fairly inferable that Mr. Reynolds recedes from his first statement.

There is no evidence to sustain a contract, express or implied, either as between the plaintiff and the defendants, or as between the defendants and the lessee named in the lease.

The judgment is reversed, and new trial ordered ; costs to abide the event.