Realty Advertising & Supply Co. v. Hickson

Laughlin, J.: This action as originally brought was to recover two installments of money alleged to be due and owing from the defendant to the plaintiff under an agreement in writing, specified to be a lease, which it was not (See United Merchants Realty & Imp. Co. v. N. Y. Hippodrome, 133 App. Div. 582), made on the 23d day of June, 1915, by which it was provided that plain — 170 — tiff rented to defendant a definitely described advertising signboard on the building known as No. 500 Fifth avenue in the borough of Manhattan, New York, to be illuminated from dusk until midnight for one year and four months from August first thereafter, for which defendant was to pay a rental of $4,000 for the entire period in equal monthly installments in advance. The plaintiff agreed to paint on the sign an advertisement from copy to be furnished by defendant giving wording and color within three days after the agreement was signed; and it was mutually agreed that if the sign was completed as therein provided before August first, then the obligation to pay rent at the rate specified should thereupon accrue. The defendant agreed not to make any change in the advertisement without plaintiff’s consent in writing. The agreement contained provisions indicating that a general form of contract was used; and it provided for cancellation by the plaintiff at will on five days’ notice, but that in the event of such election defendant’s obligation to pay rent should terminate and that plaintiff should refund pro rata any rent paid for a period beyond such cancellation. It also contained provisions prescribing the rights of the parties in the event that the sign should be damaged or plaintiff should be unable to maintain the illumination. Then come the other provisions of the lease material to the decision of the appeal as follows: “ It is understood and agreed, that should default be made by the tenant in any installment of rent, then and in such event, and at the option of the landlord, all the balance of rent for the remaining period of the lease shall immediately become due and payable; and as security for the payment of the rent herein reserved, it is agreed that in case there shall be a default in the payment of any installment of rent, and the balance of the rent for the remaining period of the lease shall become due and payable as hereinbefore provided, the landlord is authorized to remove the sign of the tenant from such space and to rent said space, or any part thereof, on behalf of the tenant, for the whole or any part of the term, to such person or persons and for such term and upon such conditions as to the landlord may seem best, and to collect the rents thereof and to apply the same to the payment of any moneys which may be due to the landlord from the tenant, and to pay the — 171 — overplus, if any, to the tenant. It being understood that this authorization of the landlord is irrevocable by the tenant during the period of the lease. “ In case of the failure of the tenant to perform any of the terms of this lease other than the payment of rent, or of the violation by the tenant of any of the covenants of the lease, it shall be lawful for the landlord to terminate this lease and re-enter upon said premises by force or otherwise and re-take possession of the same and remove therefrom the advertisement of the tenant and re-let the same or any part thereof for the whole or any part of the term as it may deem best. And in that event the tenant agrees to pay each month to the landlord during the balance of the term remaining after the taking possession by the landlord, the difference, if any, between the amount to be paid as rent as herein reserved and the' amount which shall be collected and received from the demised premises for such month and the landlord may sue for and enforce collection by law for such amount which may be due at the expiration of each month. And the tenant expressly agrees that any such suit shall not be a bar or prejudice in any way to the rights of the landlord to enforce the collection of the amount due at the end of any other future month by like or similar proceedings.” The plaintiff alleged that it performed, excepting in so far as it was prevented therefrom by defendant’s failure to furnish the copy, and that defendant failed to pay the rent due October first and November first, aggregating $500, for which, with interest, judgment was demanded. The defendant admitted its failure to pay but alleged that plaintiff breached the agreement before the rent became due by appropriating the sign to its own use. On the trial it was conceded that defendant did not pay the rent for August and September when due; that in the month of September plaintiff brought an action to recover the rent for those two months and on the tenth of September wrote defendant that he was in default “ in the payments due ” under the contract and that it would endeavor as provided in the contract “ in the event of such default ” to sell the space for his account and hold him for any loss sustained by plaintiff from his “ not having lived up to the terms of — 172 — the contract above referred to.” The contract was therein referred to by its date; but the only terms thereof specified were those with respect to default in paying the rent. The plaintiff next day, without other or further notice to defendant or waiting to hear from him, relet to the Shubert Bill Posting Company for forty-two dollars per week, terminable at will by either party and on the same day commenced painting the Shubert Company’s advertisement on the sign and completed it on the eighteenth of the month. Meantime on the fifteenth of the month the defendant paid the rent for which the action had been brought and the statutory costs and thereupon plaintiff wrote defendant saying it was still without copy for his sign, which it assumed was owing to his not being ready for fall advertising, and that in order to reduce defendant’s liability it had made an arrangement with the Shubert Company for the temporary use of the sign but that it would paint defendant’s advertisement on the sign when he desired it. On September twenty-first defendant wrote plaintiff that he considered the use of the sign, for which he had paid, by any one else a breach of the contract but manifesting a willingness to consent upon being released from all obligations under the contract. To this plaintiff replied September twenty-fourth again asserting. that it had the right to relet for defendant’s account and expressing willingness to permit defendant to use the sign; and defendant answered on the twenty-eighth stating that any use of the sign by another would lessen the value of defendant’s advertisement thereon later and that it had been well understood that his delay in furnishing copy for the advertisement was due to his inability to procure the trade mark he intended to use. On the sixth of October plaintiff by letter offered to remove the Shubert advertisement then on the sign and hold the sign blank until defendant saw fit to give it copy, provided defendant would make a formal request to that effect and acknowledging his liability for the balance of the term, and stating that otherwise it would not do so. The defendant ignored that request and there was no further correspondence between the parties. The Shubert Company continued to use the sign and paid therefor for the months of October and November, 1915, $423. The plaintiff conceded that defendant was entitled — 173 — to credit for that amount but insists that it is entitled to recover the balance of $77 on the theory that it rescinded the contract on the 11th day of September, 1915, pursuant to the express terms thereof and let the space for the account of the defendant. I am unable to agree with Mr. Justice Smith that the plaintiff had the right to terminate the contract under the last paragraph thereof, which is hereinbefore quoted, for the nonpayment of rent. I am of opinion that the word “ covenants ” as therein used does not embrace defendant's agreement to pay rent. As has been seen, his agreement to pay rent is referred to in the agreement as one of the terms thereof and so it is referred to in the last paragraph. There are other provisions of the contract the violation of which was intended to be embraced in this paragraph as a violation by defendant of a covenant. He had agreed not to change the advertisement without plaintiff’s consent and that he would furnish the copy within the time specified in the contract to the end that plaintiff might have the benefit of those provisions of the contract by which the rent was to commence before August first, in the event that it had the advertisement ready before that time. The preceding paragraph was intended to reserve the only right of the plaintiff in the event of a failure to pay rent, other than the right to sue for the installment and of course other than its right, without assigning cause, to cancel the contract on five days’ notice. (See McCready v.Lindenborn, 172 N. Y. 400, 409; Matter of Hevenor, 144 id. 271.) The right thus to cancel the contract was not exercised and if it had been of course the liability of defendant would have terminated. Nor did plaintiff elect to declare the entire amount of the rent due as provided in the paragraph firstly quoted herein. On the contrary, it recognized the continuance of the agreement by bringing the action thereon for the rent the failure to pay which constituted the default. The sole contention of counsel for appellant is that it elected to and did terminate the agreement pursuant to the last paragraph thereof. After contending that it had a right so to terminate the agreement for non-payment of the rent notwithstanding the fact that it brought an action to recover the rent and accepted payment and would, therefore, be deemed to have — 174 — waived any right it might have had to terminate the agreement on that ground (See Clark v. West, 193 N. Y. 349, 360; Bradley v. McDonald, 218 id. 391), the plaintiff now claims that it also had the right to terminate the agreement for defendant’s breach of the covenant to furnish the copy for his advertisement. If the plaintiff had terminated the contract on this ground before August first its position would, I think, be impregnable for it is manifest that it was entitled to have the rent commence before that time provided it could prepare the sign in accordance with the agreement. It is quite evident, however, that that was the only interest it at any time claimed in having the copy for the advertisement delivered and it at no time contended that it had been prejudiced by defendant’s failure to furnish the copy. Whether or not this was owing to other use of the sign prior to that time does not appear and is immaterial for prior to the time plaintiff assumed to terminate the contract the only complaint it appears to have made is, as shown by its letter to defendant on July 22, 1916, that it would insist on the rent from August first on the ground that it could have had the sign ready at that time had defendant timely furnished the copy. The learned counsel for the appellant presents an ingenious argument to the effect that on defendant’s failure to furnish the copy within the time required by the contract, his client extended defendant’s time for a reasonable time thereafter which did not expire until after the rent for August and September accrued and that thereafter and after the action for the rent for those months had been commenced and on September the eleventh the plaintiff elected to terminate the contract both for defendant’s default in paying said installments and for his default in furnishing the copy. But it does not appear whether the action for the rent was commenced before or after plaintiff’s letter of September tenth and that letter predicated plaintiff’s election to relet solely on defendant’s default in paying the rent. It is now argued without any claim to that effect having been made at any time by plaintiff, and without any evidence in support thereof, that plaintiff was interested in having the sign used. It made no such claim even after its election when defendant insisted that the sign should not be used until he was ready to use it and — 175 — that he was willing to pay for it. Moreover, the plaintiff having waived performance by defendant with respect to the delivery of the copy within the time specified in the contract could not at will and without affording defendant an opportunity of performing by calling upon him to deliver the copy Yfithin a reasonable time, which was not done, claim a default and the right to terminate the contract on that ground. (Schulder v. Ladew Co., Inc., 178 App. Div. 458, and authorities therein cited.) The plaintiff insists that it terminated the contract on September eleventh, and that the only right thereafter remaining to either party under the contract was with respect to the liquidation of the damages as provided in the last paragraph thereof under which if the contract had been terminated pursuant to the provisions thereof this action would lie; but it was not so terminated and, therefore, the liability of the defendant under the contract came to an end when plaintiff unlawfully terminated it. (See Carlin v. Frey, 157 App. Div. 84.) It follows that the determination of the Appellate Term should be affirmed, with costs. Clarke, P. J., Dowling and Page, JJ., concurred; Smith, J., dissented.