Finkelmeier v. . Bates

Finch, J. Assuming the position of the appellants, that the covenant of the lessor to pay the value of one-half" of the building erected on the leased premises is an independent covenant, and not conditioned upon the prior payment of rent and taxes during the twenty-one years, there yet remain difficulties which bar a recovery. The payment for the building by the lessor was to be made at the “ expiration of the term.” The meaning of that phrase as used in the contract involves a construction of the agreement to be gathered from its several provisions. The lease, as printed for our use, is divided into separate and numbered paragraphs. That was done for convenience merely, the original instrument having no such subdivisions. By its terms the premises were granted to the lessee for a period of twenty-one years at an agreed rent of $3,000, which the lessee covenanted to pay quarterly in each year, together with the taxes, and if the rent should remain in arrears for ten days, or default be made in any of the lessee’s covenants, a right of re-entry was reserved to the lessor. It was further provided that within two years a building should be erected upon the premises by the lessee. Its general purpose and character was described. It was to be a first-class *178 commercial building, not less than five stories in height, with a front of white marble, yellow stone or iron, and to cost not less than $30,000. It was to be kept insured in the joint names of the parties, and in case of fire was to be restored or repaired out of the insurance money received. At the “ ex- " piration of the term ” the building was to be valued by chosen appraisers, and the lessor.was to pay to the lessee one-half of that appraised value, and upon such payment the building “ should belong wholly ” to the lessor, provided, however, that the latter, at his option, instead of the payment in cash, might make it by giving a new lease for twenty-one years more, at a rental to be agreed upon, or, in case of disagreement, to be fixed by selected appraisers. It is thus apparent in the contract of the parties that the construction of this building was intended to be practically a payment of rent in advance. The rents to be paid quarterly in cash were fixed at such a sum as, with one-half the value of the building at the close of the term, would amount to an adequate rent for the whole term; and the same process repeated during a renewal of the lease for another twenty-one years was to exhaust in the same way the remaining half of the building. It is also apparent that the lessor was never bound absolutely to pay for one-half of the value of the building in cash. He could do so if he pleased, but was not bound to do so.' He was at liberty in lieu thereof to give a new lease for a further term at a rent agreed upon or appraised. This payment was to be made, or the new lease given at “ the expiration of the term.” The appellants construe the word “ term ” as relating not to time, but to the estate of the lessee. It is capable of use in both senses. (1 Washburn on Real Prop. 385, *292.) And whether the one sense or the other is to be attached to the form of expression depends upon the construction of the instrument containing it. Here the estate of the lessee had been terminated by bis failure to pay rent and taxes, and his dispossession by the landlord under appropriate legal proceedings. The appellants insist that upon such termination of the estate the liability of the lessor arose, and the respondents that it did not come into ex *179 istence until the end of the twenty-one years. We think the latter is the true construction. The seventh subdivision of the lease, after providing “ that at the expiration of the aforesaid term ” the building should be appraised, further undertakes to stipulate for the ultimate surrender of the premises by • the lessee in good order and condition, and in fixing the date of such surrender uses the expression, “ on the last day of the said term, or other sooner determination of the estate hereby granted.” The phraseology indicates that the word “ term ” was used in the sense of time as distinguished from the estate granted. The character of the agreement tends to the same result. The lease provided, at the option of the lessor, for paying the value of the building by the tenant’s occupation at a reduced or graded rent for forty-two years; and the lessor reserved a choice at the end of the first twenty-one to pay one-half of the then value of the building. That value at the end of twenty-one years might be very different from the value at the end of five; and the lessor, after twenty-one years receipt of rents, might easily have saved and accumulated from them the means with which to pay, when at the end of five years such payment might be impossible. The contention of the appellants, if sustained, would enable a lessee to change materially, and to the injury of the lessor, the stipulations of a lease by the mere process of repudiating its conditions. He makes default in the payment of rent and taxes, and so obliges the landlord to remove him, and rests upon that fact as the ground for depriving the lessor of a credit or delay of nearly twenty years, and matares the debt by means of his own wrong. We think the counter-claim was properly rejected for that reason. The demand was not due, and the lessor’s option not destroyed. Whether any, and, if so, what right may remain to the lessee in the future, we need not now determine. But another form of the difficulty growing out of the dispossession of those claiming under the lessee remains to be considered. A separate and distinct counter-claim for the value of the elevator, engine and boiler was asserted and also rejected. The engine was supplied to run the elevator, and *180 the boiler was needed to furnish steam for the engine, and for the heating of the building. The boiler was placed in a vault under the sidewalk, upon a brick foundation prepared for the purpose, and protected on each side by a substantial brick wall. It could only be removed by taking up the sidewalk. The engine was bolted to a bed-plate which rested upon a stone foundation built’ to receive it. The elevator extended to' the top of the building, running upon guide-posts attached to the frame. The elevator and steam-heating apparatus are the common conveniences of a first-class commercial building. They were introduced as part of the original construction under the lessee’s contract, and we must assume, in the absence of evidence to the contrary, went to make, up the expenditure of $30,000, which the lessee was bound to incur. There is no evidence and no finding that their cost was in excess of the $30,000. On this state of facts, we think that as between lessor and lessee, under the peculiar contract to which they were parties, the elevator, engine and boiler were a part of the building and of the real estate. They were supplied for its use; were fairly included in the description of a' first-class commercial building; could not be removed without substantial injury to the structure; were within the reasonable contemplation of the contract;. and were a part of the very expenditure which the lessee was bound to make, and the lessor was entitled to receive. If there be doubt whether as between vendor and vendee of a first-class commercial building an elevator and the machinery necessary to operate it are to be treated as part of the realty, it is dissipated in the present case by the peculiar character of the contract, and the nature of its conditions. If the proof had shown that these appurtenances had been supplied by the tenant in excess of the $30,-000 he was bound to expend, and so for his own convenience, and not in part performance of his contract obligation, the question would have been purely one of fixtures. Upon the evidence as it stands, we do not doubt that the articles in question must be deemed a part and parcel of the building, and so cannot serve as the basis of a separate counter-claim. *181 These views of the ease render unnecessary any consideration of the assignments and transfers of title on both sides. The defendants claiming under and through the original lessee can have no other or greater rights than his. The'judgment should be affirmed, with costs. All concur. Judgment affirmed.