Herzig v. Blumenkrohn

Scott, J.: The defendant Blumenkrohn appeals from an interlocutory decree overruling his demurrer to the complaint. The facts are simple. The plaintiff held a leasehold estate in certain premises in the city of Mew York. On July 19,1905, he leased the premises to the appellant Blumenkrohn for a term of years to commence on July 1, 1907, at twelve o’clock, noon, and to end on October 1, 1920, also at twelve o’clock, noon, the lease being duly recorded on April 30, 1906. This lease contained a provision that “the' lessee further covenants not to assign this lease without the lessor’s written consent.” The lease also reserved to the lessor, plaintiff 758 herein, the right to re-enter upon default by the lessee with respect to any of the covenants by him to be performed. On May 16, 1906, and hence before his own term was to commence, the appellant Blumenkrohn, without consent of plaintiff, leased the same premises to the defendant. Crystal for the same term as was conveyed by the lease from plaintiff to Blumenkrohn, for the same rent, by a lease which, except for the date, and the names of the lessor 'and lessee, 'was a precise copy of the former lease from plaintiff to Blumenkrohn. The plaintiff, upon ascertaining the fact of the lease from Blumenkrohn to Crystal, and before the date of the commencement of the term fixed by either lease, commenced this action to have the leases declared void, asserting that, both having been recorded, they constitute a cloud upon his title. His position is that the instrument executed by Blumenkrohn to Crystal, although in form a lease, was in fact and' law an assignment to Crystal of plaintiff’s lease to Blumenkrohn, and that thereby Blumenkrohn violated his covenant not to assign, and he alleges that he has exercised his Option to cancel the lease for such violation, and has so notified both defendants. The sole question presented, therefore, is whether or not the instrument executed by Blumenkrohn to Crystal is a sub-lease or an assignment. The distinction between a sub-leáse and an assignment of the original lease has been the cause of much discussion "and of some apparent, rather than real, difference of opinion. It is quite well settled, however, that it is immaterial what form of instrument is used or whether on its face it purports to be a sub-lease or merely the assignment of a lease. The essential distinction between a sublease and an assignment lies in the extent to which the original lessee has parted with his interest. If he has parted with his entire interest he has made an assignment; if he has retained a reversion in himself he has made a sub-lease. ( Woodhull v. Rosenthal, 61 N. Y. 391 ; Stewart v. Long Island R. R. Co., 102 id. 607.) In the desire to avoid forfeitures, the courts have been astute to discover in instruments asserted to be assignments features which implied some, reservation sufficient to justify a finding that the original lessee had reserved to himself some portion of the term. Thus when the instrument, although it disposed of 'the whole term, contained a covenant on the part of the second lessee to surrender to 759 the original lessee on the last day of the term, it was considered that there liad been reserved a reversion of a- part of the last day of the term, and hence the instrument was deemed a sub-lease and not an assignment. (Post v. Kearney, 2 N. Y. 394.) In the present case the instrument executed by Blumenkrohn to Crystal is, as has been s.aid, identical in its language with the lease executed by plaintiff to Blumenkrohn. It covers the same premises; is for the same term; at the same rent, payable on the same days, and contains identical conditions and covenants. Ho such reservation can be spelled out of it as was found in Post v. Kearney (supra), for there the only provision as to the end of the term was that it should be on a certain day, and the covenant as to surrender was that the sub-lessee should surrender to the original lessee. In the present case the end of the time is fixed at a particular minute in a day, to wit, at twelve o'clock noon on the 1st day of October, 1920, and Crystal’s covenant to surrender at the end of the term is not that he will surrender the premises to Blumenkrohn, but that he “shall .quit and surrender said premises in good condition, reasonable wear and tear excepted.” This must be taken to mean that he will surrender possession to whomsoever shall at the end of the term be entitled to demand it, and that person cannot, be Blumenkrohn, because his right to possession will- terminate under his lease from plaintiff at the very moment that Crystal’s' term ends and the obligation to surrender becomes operative. It is clear, therefore, that Blumenkrohn has not reserved to himself any part of the term at its end. • The only possible feature of the case upon which a contention can be based that the instrument was a sub-lease and not an assignment is that the instrument contains the customary clause reserving to Blumenkrohn the right of re-entry for condition broken, and it is upon this fact -that the appellant chiefly relies. It is not to be disputed that there are to be found cases of high authority in which it has been said that the reservation of such a right of re-entry imparts to the instrument containing it the character of a sub-lease rather than that of an assignment, but the better opinion, as we consider, is that the reservation of such a right alone is not sufficient to produce such a result. The principal authority in this State for the proposition contended for by appellant is Collins v. Hasbrouck (56 N. Y. 162), wherein Judge Folger says, “ And again, if there be a right reserved to the 760 lessor to re-enter on breach of conditions, this makes a sub-leáse; ” and he cites as authority for this Doe v. Bateman (2 Barn. & Ald. 168). Whether this case fully supports the rule for which it is cited may be doubted. (See dissenting opinion of Finch, J., in Stewart v. Long Island R. R. Co., 102 N. Y. 618.) It is certain that Collins v. Hasbrotielc is not authority for the proposition that the reservation of-the right of re-entry for condition broken alone characterized the instrument as a sub-lease, for there were many other features of the instrument then before the court which went to fix its character as a sub-lease. It was in the form of a lease; it reserved to the original lessees, rent at a new rate and at a new time of payment and provided for a surrender to the original lessees at the expiration of the term; and finally, although the covenant in the original lease from, plaintiff was against sub-letting, and the court found that the covenant'had been broken and á sub-lease made, the decision went against the plaintiff because the court found that he ■had' waived the forfeiture. In Ganson v. Tifft (71 N. Y. 48) the court followed Collins, v. Hasbrouck, but laid especial stress- upon the fact,, present in both cases, that the sub-lease contained a cove- . nant for surrender to the original lessee at the end of the. term. That case, therefore, cannot be successfully cited for the proposition that the reservation of a right to re-enter for condition broken alone fixes the character of an 'instrument as a sub-léase. On the other hand, there are many authorities for the proposition that such a reservation alone, without any other reservation of a part of the term, does not make an instrument a sub-lease which, otherwise, would be an assignment. This is the rule stated in. Woodhull v. Rosenthal (61 N.Y. 382) wherein Commissioner Dwight cites Bacon’s Abridgment as follows: “ When the whole, term is made over by tlié lessee, although'in- the deed by which that is done the rent and á -poioer of entry for' -non-payment- are reserved, to him . aiid hot to the original lessee, this is an assignment and not an under-lease * * * and this, although new covenants are introduced in the, assignment.” (Bacon’s Abr., Leases, I, 3.) The question was treated with his-usual -thoroughness and clarity by Judge Rapallo in Stewart v. Long Island R. R. Co. (102 N. Y. 607). Speaking of cases like the present where the question has arisen, between the transferee, and the original landlord, he said:, 761 “ In the latter class of cases the rule is well settled that if the lessee parts with his whole term or interest as lessee, or makes a lease for a period exceeding his whole term, it will, as to the landlord, amount to an assignment of the lease, and the essence of the instrument as an assignment, so far as the original lessor is concerned, will not be destroyed by its reserving a new rent to the assignor with a power of re-entering for non-payment, nor by its assuming by the use of the word demise or otherwise, the character of a sub-lease * * *. The fact that the lease to the defendant reserves a'different rent from that reserved in the original lease, with a clause for re-entry, cannot . affect the question as between the parties to the present controversy, of its operating in law as an assignment of the term. These points were expressly adjudicated in the cases of Doe v. Bateman (2 Barn. & Ald. 168), Wollaston v. Hakewell (3 Scott’s N. R. 616).” In commenting upon Collins v. Hasbrouck Judge Bapallo points out that in view of the result reached on the question of waiver the discussion of the effect of the reservation of the right to re-enter for condition broken had been irrelevant, and again states what we deem to be the true rule, citing a great number of authorities in support of his position. To the same effect are the text writers and a number of well-considered opinions in other jurisdictions. (Sexton v. Chicago Storage Co., 129 Ill. 318; Craig v. Summers, 47 Minn. 189. So the right of re-entry is not an estate or interest in the land, nor does it imply a reservation of a reversion. It is a mere chose in action. When enforced the grantor is in through the breach of the conditions and not by the reverter. (Tied. Real Prop. § 277.) “ An assignment as contradistinguished from a sub-lease signifies a parting with the whole term; and when the whole term or more than the whole term, is made over by the lessee, although in the deed by which that is done the rent and a power of re-entry for nonpayment are reserved to himself, and not to the original lessor, yet the instrument amounts to an assignment- and not a sub-lease.” (Woodf. Landl. & Ten. [Am. ed.] 258.) To the same effect are Taylor (Landl. & Ten. [9th ed.] § 16) and Washburn (Real Prop. [6th ed.] § 692 et seq.). To sum up, therefore, the instrument executed by Blumenlirohn to Crystal conveyed the whole term without the reservation of any reversion or reversionary interest, except the right to re-enter for condition broken. This right, of re-entry did 762 not amount to or imply a reservation of any reversion in the term or of any interest in the laud, but merely of a chose in action in case of -a breach of covenant. The instrument, therefore, although in form a lease, was in legal effect an assignment of the lease from plaintiff, and having been made without his'consent, was a breach of the covenant against assignments, and entitled the plaintiff to enforce a forfeiture of the original lease. The judgment must be affirmed,, with costs, with ■ leave to appellant to withdraw his demurrer and answer within twenty days on payment of costs in this court and in the court below. Patterson, P. J., McLaughlin and Houghton; JJ., concurred.; Ingraham, J., dissented.