Haussmann v. Colonial Trust Co.

Per Curiam. The action is one by a bondholder for damages sustained as a result of the cancellation of a lease. The appellant was the lessee under an instrument executed in 1928 leasing the premises subsequently mortgaged. The mortgage and indenture, under which plaintiffs’ rights arise, were executed six months after the execution of the lease. The mortgage indenture provided that the mortgagor would perform all the obligations on the part of the landlord to be performed, and would enforce all obligations to be performed by lessees under any and all leases affecting the mortgaged property, “ to the lien of which this indenture is subordinate,” and that it would not permit any such lease to be amended, altered, modified, canceled or surrendered. [481] The complaint alleges that the appellant’s lease was in all its terms second and subordinate, and subject to the indenture. It further alleges a cancellation of appellant’s lease by agreement with the mortgagor, to plaintiffs’ damage. It is evident that the provisions of the indenture alleged to have been breached relate solely to superior leases, whereas the complaint alleges that appellant’s lease was subordinate to the mortgage. Therefore, there was no violation of the indenture by the cancellation of the lease, and no cause of action is set forth in the complaint. The same view was expressed in the United States District Court for the Southern District of New York, on a motion by Cavanaugh & Dobbs, Inc., a codefendant who had removed the action against it to the Federal court. (Haussmann v. Colonial Trust Co., 23 F. Supp. 213, opinion by Coxe, J.) The order should be reversed, with twenty dollars costs and disbursements, and the motion granted. Present — O’Malley, Glennon, Dore, Cohn and Callahan, JJ. Order unanimously reversed, with twenty dollars costs and disbursements, and motion granted.