Prince v. Schlesinger

Houghton, J.: The Federal Bank of Hew Y ark was a domestic moneyed corporation and the defendant is its receiver. The action is to recover two installments of rent payable in advance. The plaintiff obtained permission of the court to sue the defendant as receiver, and alleged in his complaint his ownership of the premises in question, the leasing of them to the Federal Bank of New York by written lease, at a stipulated annual rental of $4,000, payable quarterly in advance, beginning the first day of March of' each year, and that on the 1st day of. June, 1904, this defendant was appointed receiver of the lessee bank and of all its property, assets and effects, and duly qualified as such and entered into possession of the premises so leased to such bank, and occupied the same and failed to pay the rent falling due on the first days of- June and September, for which amounts judgment is demanded. The defendant not only admitted the plaintiff’s allegation respecting his receivership, but expressly plead that in an action brought by the Attorney-General on behalf of the People of the State of New York against such bank for a judgment dissolving its corporate rights, privileges and franchises he was by order of the court made and entered in such action on the 1st day of June, 1904, appointed receiver of such corporation, its property and assets, and qualified as such, and became and still is permanent receiver thereof. As a separate defense the defendant further alleged that on the 12tli day of September, 1904, by summary proceedings duly instituted by the plaintiff as landlord against the Federal Bank and himself as tenants, a precept was duly issued requiring removal from the premises in question, which was followed on the 23d of September, 1904, by a warrant duly issued directing the removal of such alleged tenants and all others under the lease in question, which proceedings and warrant of removal were founded upon the alleged non-payment of rent claimed to be due under the lease on the 1st day .of September, 1904; and that by virtue thereof the lease terminated and the relation of landlord and tenant, if it ever existed between the plaintiff and the Federal Bank and this defendant, ceased. ■ — 502 — The proof showed that summary proceedings were in. fact instituted against this defendant as alleged by him, except that the same was founded upon the non-payment of rent due June 1, 1904,. instead of September 'first, and that judgment thereon was taken by# default. The lease was proven and the non-payment of the stipulated rent conceded. ' The trial court held that the judgment in the summary proceed-; ings was.conclusive against the defendant as to the non-payment of rent due on the first of September, but that it did not have that effect with respect to the installment due on -the first of. June, and that that installment was a claim against the bank and not against this defendant. We think he erred in this respect and that the judgment in summary proceedings was conclusive against the defendant as to both installments. A judgment taken by default in summary proceedings for nonpayment of rent, until reversed,- set aside or vacated, is conclusive in an action by the landlord against the tenant to recover the rent, of - the facts alleged in the affidavit and which are required by the statute to be alleged as the basis of the proceedings, to wit, the tenancy, the occupation- by the tenant, the non-payment of rent due, and the holding over after default in payment. (Brown v. Mayor, 66 N. Y. 385 ; Reich v. Cochran, 151 id. 122, 126.) Such- a" judgment, while not conclusive as-to the amount of rent due, is conclusive that some rent is due and unpaid. (Jarvis v. Driggs, 69 N. Y. 143.) The petition of the plaintiff in his summary proceedings alleged' the making of Ja written lease to the Federal Bank at an annual rental of $4,000, and- that $1,000 became due on the first day of June; which'had not been paid, and that on that day the defendant was appointed receiver .of such bank and entered into possession as such of the leased premises, and' held over after default. . The precept recited the same facts,, and required the defendant to-show cause Why he should not remove from the premises. ■ If the defendant desired to establish the fact that he was not a tenant of the plaintiff arid was not occupying under suchdease, or that the bank of which he was receiver had no authority to make the lease,, which he now claims is the fact, or that there was no default in payment — 503 — of rent, he should have appeared and litigated those questions and not have allowed a judgment which established those facts against him tp be entered upon his default. Brown v. Mayor (supra) was an action against the mayor, aider-men and commonalty of the city of New York to recover rent of premises occupied by its poíice commissioners. Summary proceedings had been instituted against the defendant and judgment of removal taken by default. The defense was that the defendant never was a tenant of the plaintiff. After showing that such a defense was untenable because of the conclusiveness of the judgment in the summary proceedings, the opinion of Eabl, J., concludes as follows: “ It is said that these proceedings can only be instituted against a party in possession or claiming possession of the demised premises. This is undoubtedly so. But here the affidavit shows that the defendants hired- and possessed the premises, that the specified amount of rent had become due and had been demanded, and that the defendants had not paid the rent or surrendered the possession of the premises. The same facts are recited in the summons served upon the defendants. They are the facts required by the statute to be alleged as the basis of the proceedings, and the defendants by their default admitted them, to be true.” . The judgment in the summary proceedings which the defendant permitted to run against him by default, therefore, conclusively established that he wras a tenant under the plaintiff; that he had occupied the premises as such, and that some rent was due on the 1st day of June, 1904. While the summary proceedings judgment did not establish the amount of the rent so due, the proof, without contradiction, established that $1,000 was due on that day; hence, the plaintiff was entitled to recover that sum as well as the $1,000 which became due by the terms of the lease under which he wras occupying on the first day of September following, and while the defendant was still in occupancy. But it is urged that the defendant is liable, if liable at all, not for such payments as fell due under the lease during his occupancy, but for such time only, measured by the terms of the lease, as he was in actual physical occupational the premises, which the proof discloses began on the sixth day of June and terminated o.n the twenty-eighth day of September, when the warrant of dispossession was executed. — 504 — 1 One embarrassment to any proof of ■ defendant’s commencing to occupy at any other time than the first day of June is- the defendant’s answer, to which we have called attention, in which he affirmatively alleges that on' that, day he was appointed and qualified as permanent receiver of all the property and assets of his corporation. The lease from plaintiff was an asset of the corporation, and may or may not have been a valuable one. Whatever it- was, however, the title to it passed to the defendant as receiver upon his appointment and qualification on the 1st day of June, 1904. And on that day he stood in the place of his insolvent .corporation. , He Could surrender the lease and vacate the premises or he could continue to occupy. The judgment in the summary proceedings conclusively establishes that he continued to occupy. . . The confusion that has arisen with respect to liability of receivers for rent under leases made by persons or corporations, for whom they are appointed when they occupy the leased premises has come about ■from a failure to recognize the distinction between statutory receivers, who take title, and chancery or court receivers, who have no title and simply act as the arm .of the court for the preservation of property over which it is' exercising control until some final determination shall be made respecting it. This distinction 'is pointed out- a-nd the cases reviewed by Cullen, J., in Stokes v. Hoffman House (167 N. Y. 554). Chancery receivers, such as those appointed pending the foreclosure of a mortgage or the winding up of a copartnership, are mere officers of the court and take no title to the property which' 1 they receive. (Keeney v. Home Ins. Co., 71 N. Y. 396.) . Statutory receivers, however, such as receivers of corporations' on dissolution, assignees in bankruptcy, and assignees for the benefit of Creditors, take title to the.property coming to them as such. (Decker v. Gardner, 124 N. Y. 334; Matter of Otis, 101 id. 580, 585.) The powers and rights of a receiver of a corporation are analogous to those' of an assignee of an insolvent debtor. (Decker v. Gardner, supra.) An assignee for the benefit of creditors who enters under his assignment into the possession of property leased to his assignor is liable upon the covenants of the lease' during the period of. his own occupation because of' the privity of estate created by such entry." (Walton v. Stafford, 14 App. Div. 310 ;. affd., 162 N. Y. 558; Cameron v. Nash, 41 App, Div. 532.) A receiver of .a corporation by — 505 — taking possession of and occupying the leased property incurs a liability to pay the rent according to the terms of the lease, at least as long as he occupies. (Woodruff v. Erie Railway Co., 93 N. Y. 609; People v. Universal Life Ins. Co., 30 Hun, 142.) In Stokes v. Hoffman House (supra) the case of Woodruff v. Erie Railway Co. is explained, and it is there pointed out that the receiver in that case was not only appointed in a foreclosure action but on a sequestration of the corporation as well, which was answer enough to the soundness of the decision; ' On the other hand, chancery receivers having no title, can create no privity of estate by entry, and if liable at all are liable only for the period of occupancy. (Stokes v. Hoffman, House, supra; Matter of Otis, 101 N. Y. 580.) There appears in the record proof which would seem to point to the fact that the defendant during the period of his occupancy was a temporary receiver only. By his answer, however, he says that he was permanent receiver, and by his brief upon this appeal he insists that he was such, and it would seem that according to the provisions of chapter 60 of Laws of 1902, his corporation being a moneyed corporation, he must have been appointed permanent receiver on his first appointment, and if the court assumed to appoint him a temporary one such a designation was ineffectual. The statute above referred to is one to simplify the procedure, facilitate the settlement and reduce the expenses of receivers on dissolution of moneyed corporations, and it is provided that “ unless the court otherwise directs, the receiver appointed in the first instance shall be permanent receiver of such corporation.” Whatever may be the effect of this statute, however, we have the defendant’s own plea and claim that he was on the 1st day of June, 1904, appointed permanent receiver. -He says, too, that he' qualified on that day, and the presumption is that he went into possession the day upon which he filed his bond. (Wells v. Higgins, 132 N. Y. 459, 462.) The law does not divide days and he, therefore, went into possession the day the installment of rent was due. If it is necessary to make any fine distinctions, the court-can take judicial notice that the clerk’s office where defendant’s bond must .have been filed closed on that day before the landlord had lost his right to demand the rent falling due. There is little occasion, however, to indulge in presumptions or to draw distinctions, because the judgment in sum — 506 — mary proceedings conclusively' established that the defendant as receiver, was tenant on that day and that he continued to occupy thereafter as such. By entering into such possession he became bound to comply with the terms of the lease, and he is liable to pay the rent according to its stipulations. It is urged that the summary proceedings were void because the Attorney-General did hot have notice. Whether notice to him was a necessity or not, concerning which we express no opinion, the defendant can hardly raise that point in the face of his own allegation that the proceedings were “ duly instituted ” and that a precept and warrant were “ duly issued ” therein. The judgment must, be reversed and a new trial granted, with costs to the plaintiff, appellant, to abide the event. Patteeson, P. J., McLaughlin and Laughlin, J J., concurred.