Forstmann v. Joray Holding Co.

McAvoy, J. The very important question to resident owners of real property in Manhattan is presented on this appeal — whether or not there is any protection to the privacy of a residence block against the encroachment of business buildings therein in violation of an express covenant forbidding the permitting of the use of the land for any purpose except for a building used as a “ dwelling house for a single family? ” It is a futile argument in justification of nullifying this covenant to say that the neighborhood has changed in character, since the restriction was imposed not to govern a general neighborhood improvement, but was so obviously designed as a block restriction only, as not to need argument to support that view of its purport. The facts, which were uncontested but not found in the formal decision at Special Term, demonstrate that the conclusion below that plaintiffs are not entitled to any relief for this invasion of their privacy is so erroneous as to require reversal on fact and law. A summary of the history of the controversy follows: For many years prior to 1907 the New York Public Library was the owner of the whole square block bounded by Fifth and Madison avenues, Seventieth and Seventy-first streets. It first sold the westerly portion of the block, consisting of the, entire Fifth avenue frontage, running back 175 feet. This plot is occupied by the Frick Mansion. Thereafter when the library disposed of the parcels within the easterly half of the block it imposed upon this latter area the following restrictions; — 137 — “ The said party hereto of the second part, for him (her) self, his (her) heirs and assigns, hereby covenants and agrees to and with the said party of the first part, its successors or assigns, that neither he (she) nor his (her) heirs or assigns, shall or will at any time prior to the first day of January, Nineteen hundred and twenty-nine (1929) erect or permit upon the above granted premises, or any part thereof, any building, except a dwelling house for a single family, and further that neither he (she) nor his (her) heirs or assigns, shall or will at any time prior to the said first day of January, Nineteen hundred and twenty-nine (1929) erect or permit upon the above granted premises any such building, or any other structure, or any extension thereof, or projection therefrom (except partition walls or fences not exceeding twelve feet in height) within ten feet of a vertical plane passing through the centre fine of the block between Seventieth and Seventy-first Streets.” Following the imposition of the restriction a group of dwelling houses was erected on the block in conformity with the restrictions. The photographic exhibits testify to the high-class character of these residences. In 1922 the plaintiffs purchased a plot within the restricted area, on the south side of Seventy-first street, adjoining the corner of Madison avenue, having a frontage of forty-five feet, on which they erected the residence in which they now live. The plaintiffs later bought for their protection the adjoining property situated at the southwest corner of Madison avenue and Seventy-first street, subject to a lease to a Dr. Frederick Tilney. On March 3, 1924, the defendant Finch purchased the plot located at the northwest corner of Seventieth street and Madison avenue, within the restricted area. The deed to him conveyed the property subject to the restriction. On July 1, 1924, he leased this plot to the defendant Joray Holding Company, Inc., subject to the same restrictive covenant. But nevertheless by this lease the tenant was bound to erect a building to be used for stores and offices and the owner in turn agreed to advance part of the cost. The owner, in the lease, also assumed the defense of any action brought to enforce the restriction and waived his rent during the continuance of any injunction against the operation. The court below found that at the time the restrictions were placed on the property, Madison avenue, in that vicinity, was a private residential neighborhood and that at the time of the commencement of this action, and at the present time, it is entirely a business district. There is testimony on behalf of defendants that at the time the restrictions were placed on the property the neighborhood was a — 138 — very fine residential one, and that on Madison avenue the nearest business place to the north of the property was Cassebeer’s drug store, located at the southeast corner of Seventy-fifth street, and that the nearest business place to the south was at Sixty-second or Sixty-third street. The plaintiff’s uncontradicted proof shows that north of Fifty-ninth street and up to Eighty-sixth street along Madison avenue very many properties at that time were occupied for business purposes. The case of Korn v. Campbell (119 App. Div. 401; affd., 192 N. Y. 490), involving property at Seventy-third street and Madison avenue, demonstrates that it was the desire of the owner of that property at that time to make alterations so that his building might be used for business purposes, and further that as early as 1906 business was already feeling its way into Madison avenue in the vicinity of the seventies, and that Madison avenue at the time of the creation of the restrictions here sought to be enforced was not strictly residential. Thus it would seem to be clear that it was the desire of those interested in the block here affected to restrict its particular territory to dwellings for the duration of the restrictive period. The court below found that the plaintiffs’ premises, at the southwest corner of Madison avenue and Seventy-first street, “ was and is not used or occupied as a dwelling house for a single family, but on the contrary was and is occupied and used by three physicians, to wit: Dr. Tilney, Dr. Howe and Dr. Riley, for the treatment of their patients and the carrying on of their business, one of whom resides with his family and his nephew on the said premises and the other two of whom reside elsewhere and merely have their offices on the said premises.” The building at the southwest corner of Madison avenue and Seventy-first street is, as the photograph thereof indicates, a private residence. It has not been changed one iota in its external aspect. This building was acquired by plaintiffs subject to Dr. Tilney’s lease. On the ground floor of that house are a waiting room and a secretary’s room, the kitchen and laundry. On the next floor are the drawing room, dining room and butler’s pantry. The fourth floor and the top floor are devoted to the living quarters of the family and of the servants. The doctor’s practice is conducted on the third floor. The doctor testified that in the suite of offices which takes up the entire third floor of the house he occupied one room as his consulting room, the second room was used as the examining room, the third room was used as another examining room, the fourth room was used by Dr. Riley and Dr. Howe as an — 139 — office, and the fifth room was used for his secretaries. No patients are ever housed in the building or kept there for observation. Dr. Howe and Dr. Riley pay Dr. Tilney no rent and no monetary consideration passes between them. The privilege of making full charges for the patients whom they treat compensates Dr. Riley and Dr. Howe for the association and for the assistance they render to Dr. Tilney. In Smith v. Graham (161 App. Div. 803; affd., on the opinion below, 217 N. Y. 655) it was said: “ But it would seem to be true that a dwelling, so long as it is used as such, may be also used as a place for carrying on some kinds of business provided such business is of such character as to be no inconvenience to neighboring property holders. As is suggested in Dorr v. Harrahan (101 Mass. 531), such a house 1 might be occupied by a physician, or a lawyer, perhaps by a chemist or photographer, and a portion of it set apart as an office or place of business without any offence or objection. All this would be allowable under the deed.’ * * * ” In Smith v. Scoville (205 App. Div. 112), decided by this court in April, 1923, before the purchase of this property, it was held that the conduct of a boarding house business did not violate a restriction providing that no building should be erected excepting “ first class dwelling houses ” and that no “ trade or business ” whatsoever should be conducted on the premises. In the opinion in that case the opinion of the Fourth Department in Smith v. Graham (161 App. Div. 803; affd., 217 N. Y. 655) is quoted, as follows: “ But it would seem to be true that a dwelling, so long as it is used as such, may be also used as a place for carrying on some kinds of business provided such business is of such character as to be no inconvenience to neighboring property holders.” And in Iselin v. Flynn (90 Misc. 164), an action brought to restrain the conduct of a dressmaking establishment on premises affected by a restrictive covenant confining the premises to first-class dwelling houses, injunctive relief was resisted on the ground that the presence of physicians on the block practicing their professions in their homes changed the character of the occupancy from residence to business. There it was said: "A number of physicians eminent in their profession have taken up residence in the street, and it is claimed that they in fact conduct business which has consequential effects upon the neighborhood. It is not necessary to enter upon an ethical discussion of the difference between a livelihood gained by the practice of a profession and that by a business vocation. The law is practical. It is not concerned with abstractions, but with the actual affairs of men, — 140 — and it recognizes the distinction between the practice of a profession and the conduct of a mercantile business. One is purely personal, depending upon the skill or art of the individual. The other may consist in ability to organize and manage a shop or exchange where commodities are bought or sold. Neither the spirit nor the letter of the restrictive covenant intended or expressed prohibition of the practice of a profession, nor can sophistry pervert the real intent and plain meaning of the word ‘ business ’ to include ‘ profession.’ ” In the case of Booth v. Knipe (225 N. Y. 390), which the respondents say is directly in point, the Court of Appeals said (p. 397): “We cannot doubt that the attempted use is a breach of the restriction. The lease provides that the building shall be ‘ occupied as a sanatorium and not otherwise.’ The evidence makes it clear that it is used as a maternity hospital. By no stretch of language can we say that this is equivalent to use ‘ as a private residence for one family.’ ” A perversion of analogy would result from attempting to hold these cases even approximately similar. Much is made of the fact that at the time of the commencement of the action the plaintiffs were maintaining a wall projecting from their building located at the southwest corner of Madison avenue and Seventy-first street, about sixteen feet high. It should be borne in mind that this was the condition when the plaintiffs acquired the corner to protect their home, and that in the early part of March, 1925, they removed the upper four feet of this wall, so as to bring it within the limit of the restriction, and this was the condition at the time of trial at which period equity finds its facts and molds its decree. The plaintiffs herein did not move for an injunction pendente lite. There is testimony, however, that as soon as plaintiffs learned of the situation, the matter was taken ■ up with the defendant Finch, in the effort to arrive at an amicable settlement. When negotiation failed this action was immediately brought. The defendants proceeded with their structure heedless of plaintiffs’ protest. Plaintiffs justifiedly state there was no occasion for the defendants’ unseemly haste. If unwilling to await this action, they could themselves have brought an action for a declaratory judgment as to their rights and duties (Civ. Prac. Act, § 473; Rules Civ. Prac. rules 210-214) before commencing their building operation, prima facie a breach of a solemn covenant. Certainly they do not, through their precipitate conduct in forestalling legal action, create an equity in their favor. The notion that a defendant warned -against a threatened violation, can obtain immunity from an injunction by paying no attention to the — 141 — warning, is unsound in law. Litigants cannot with impunity thus race with the court’s process. If speed fortifies a defendant’s position in law, all a defendant has to do to escape an injunction is to outstrip the court’s process in point of time. A decent regard for the orderly determination of the rights of the litigants forbids the acceptance of such doctrine. We find that nothing could be less doubtful than that when the restriction was created, it was desired to maintain this particular block as one for private dwellings only. If independent or original judgment was controlling, it would be restrained by our own ruling in Pagenstecher v. Carlson (146 App. Div. 738, 1st Dept. 1911). The plaintiff in that case owned three houses on the south side of West Fortieth street, between Fifth and Sixth avenues, being Nos. 48, 50 and 52. The defendant owned No. 38 West Fortieth street. The restriction affecting these properties was imposed in 1871 upon the holding of a partition sale of about half of the block on the south side of West Fortieth street. The restriction confined the property to private dwelling houses. The defendant threatened to alter her house for business purposes. In rejecting the defendant’s contention that the invasion of business in this district entitled her to alter her building for business purposes in defiance of the restriction, this court, through Mr. Justice Miller, said: “ While it is quite true that the current of business has reached the restricted territory, that of itself does not afford ground for denying equitable relief, for, as was said by Danforth, J., in Trustees of Columbia College v. Thacher (87 N. Y. 311, 319), it is apparent that such encroachment was anticipated. It cannot be said that the encroachments of business have made the property undesirable for private residences. • A fine public building and a park occupy the block on the north side of Fortieth street. The plaintiff says that she wishes to enjoy her property as a private residence. When she purchased it she had a right to rely upon the assumption that the encroachment of business would be stopped at the fine of the restricted territory, and, in our judgment, it is no answer to her claim for equitable relief that the property may be worth more for business purposes. The defendant bought knowing, or chargeable with knowledge of, the restrictive covenant. * * * If the further encroachment of business on the block be prevented, the plaintiff’s premises may remain desirable for residence purposes, and it cannot be said, therefore, that the enforcement of the covenant will harm the defendant without conferring any substantial benefit on the plaintiff.” The respondents urge as factors in their favor the fact that the restriction has to run to 1929 only, and the further fact that in — 142 — 1916 the board of estimate established a business district embracing the location in question. While these are elements which were doubtless considered in the purchase of this corner property, yet they were not destructive of plaintiffs’ or the other covenantees’ privileges, and the purchaser cannot be heard now to claim that he is injured by the enforcement of the restriction. Since he entered the matter apprised of the protest of his neighbor and concluded the restriction was no longer binding, he accepted the hazard. That the result would be adverse to his view was inevitable if the terms of a covenant are to continue to have judicial sanction. The judgment appealed from should be reversed, with costs, and judgment entered in favor of the plaintiffs for the relief asked for, with costs. Dowling and Martin, JJ., concur; Merrell, J., dissents.