Delaware, L. & W. R. v. Sound Transp. Co.

COXE, Circuit Judge. The plaintiff is a New York corporation and the defendant is a Pennsylvania corporation, each transacting business and maintaining an office in the city of New York. On, July 2, 1908, the city, acting through its-commissioner of docks, leased to the plaintiff a wharf situated in Brooklyn on the East River known and described as “the westerly side and surface of Pier Old 34 (Catherine Slip Pier West) and the bulkhead and small pier between Piers Old 33 and Old 34, together with the right to use the sheds owned by the city on said premises,” for the term of ten years from July 1, 1908, at the rent of $8,000 per annum. The complaint alleges that on August 7, 1908, the Sound Company subleased to the Railroad Company all of the property rights and privileges leased to it by -the city, “excepting, however, the bulkhead about 30 feet in length lying between the easterly side of Pier Old 33 and the westerly side of the small pier between .Piers Old 33 and 34, Easts River,” which parcel was thereby reserved to the use of the plaintiff. The complaint alleges further that the sublease was made “pursuant to an agreement wherein the plaintiff did agree to use its endeavor to [315] obtain the consent of the city of New York to the assignment of said lease to the defendant and, upon obtaining such consent, to assign the same, upon the.terms hereafter stated.” It is also alleged that the Sound Company did obtain such consent and did assign the said lease to the defendant and that the defendant entered into a written agreement dated July 9, 1909, wherein it agreed to assume the said lease and pay the rent as therein stipulated, which .obligation the defendant has failed to discharge, to the plaintiff’s damage in the sum of $50,000. The defendant insists that its possession and enjoyment of the demised premises were terminated by a cause other than its default. The testimony shows a complicated situation upon the facts but it clearly appears that the Sound Company possessed valuable rights and privileges in the wharf property heretofore described and known as the westerly side and surface of Pier Old 34. These rights the Sound Company transferred to the Lackawanna Company on August 7, 1908, excepting about 30 feet of bulkhead lying between the easterly side of Pier Old 33 and 34, which parcel was reserved for the use of the Sound ' Company. The Sound Company having obtained the proper consent assigned its lease to the defendant company, which went into possession under the sublease and assignment and incurred the obligation for which judgment was rendered. We are satisfied that the Sound Company possessed a valid and valuable lease of the pier property in question. The defendant wanted this property and with the^co-operation of the city'officials it attempted to acquire all the right which the plaintiff had therein by virtue of the lease.- It could not accomplish this result without fully complying with the law. The railroad company had' assumed the city lease and had agreed to pay to the Sound Company the difference between the rent reserved in the sublease and the rent reserved in the city lease for corresponding periods. The agreement of July 9, 1909, concludes as follows: “But it is expressly understood and agreed that if the possession and enjoyment by the party of the first part of the demised premises, is terminated by cause other than the default of the said party of the first part, before the end of the demised term, the party of the first part shall not be liable to pay the party of the second part such difference in rent, and the said party of the first part shall receive from the party of the second part and shall be repaid by it the proportionate amount paid in advance to the party of the second part, as hereinbefore specified.” The dominating question is — Was the possession of the Railroad Company terminated so as to absolve it from paying the specified rent under its written agreement to do so ? The Sound Company had a valid city lease of Old Pier 34 and this was transferred to the Lackawanna Company upon its agreement to assume the said city lease and pay to the Sound Company on rental days prescribed in the city lease the difference between the rent therein reserved and the rent reserved in the sublease. The District Court construed the agreement of July 9, 1909, to mean that the agreement would be ended if the city of New York terminated the lease by the action of its officers authorized to take such proceedings. If the Lack-awanna Company by affirmative action on its part or by acquiescence in the acts of others made it possible for the city to terminate the lease [316] where otherwise it would not have done so, then the attempt to terminate the lease was not within the intent of the agreement. The notice of October 16, 1913, signed by the commissioner of docks, to the Lack-awanna Company did not operate to terminate the lease for the reason that the plan therein described was not carried out nor was it in contemplation of being carried out The plan of improvement was tentative, unsettled and with no definite plan adopted which was binding upon the parties. The Lackawanna Company whs not deprived of its property or the use thereof by the notice of October 16, 1913, and its possession and enjoyment of the demised premises was not interfered with. It is argued that the Lackawanna Company acting in collusion with the commissioner of docks, procured the notice of termination to be served upon the Sound Company in order to avoid the paymenf of rent. The District Judge found, and we see no reason to doubt the accuracy of his finding, that “there is no suggestion of any conduct lo be characterized by impropriety of either the city or the .railfoad company/' Each party was endeavoring to protect its -own interests in a lawful and legitimate manner but we see no reason to impute fraud to either. It is enough, in our opinion, that when the notice was served, it was not justified either in fact or in law. The judgment is affirmed with costs. Footnotes [1] ■«S^oFor other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes