Reich v. Cochran

• Decision Date: 01 December 1896
• Citation: 151 N.Y. 122,45 N.E. 367
• Parties: REICH v. COCHRAN.
• Court: New York Court of Appeals Court of Appeals

151 N.Y. 122

45 N.E. 367

REICH

v.COCHRAN.

Court of Appeals of New York.

Dec. 1, 1896.

Appeal from supreme court, general term, First department.

Action by Lorenz Reich against William F. Cochran to have a lease declared a mortgage, and to cancel the same as usurious. From a judgment of the general term (26 N. Y. Supp. 443) affirming a judgment dismissing the complaint, plaintiff appeals. Affirmed.

Delos McCurdy, for appellant.

Treadwell Cleveland, for respondent.

MARTIN, J.

On the 24th day of February, 1886, the trustees under the will of William B. Astor leased to the plaintiff premises in the city of New York known as the ‘Cambridge Hotel.’ Afterwards, and on or about the 1st day of May, 1887, the defendant loaned to the plaintiff several large amounts of money, to secure the payment of which the plaintiff gave him his bonds, and executed to him mortgages upon such lease. On the 1st day of February, 1888, the plaintiff assigned the Astor lease to the defendant, and thereupon the defendant made and executed a sublease of the premises to the plaintiff. The purpose of this action was to procure an adjudication to the effect that the lease from the defendant to the plaintiff was in fact intended as a mortgage, that it was usurious, and that the assignment by the plaintiff to the defendant, and the lease from the defendant to the plaintiff, should be delivered up and canceled, upon the ground of such usury. On August 1, 1893, the sum of $13,250 rent became due to the defendant, according to the terms of the lease between the parties, which was not paid. The defendant subsequently commenced summary proceedings in the district court of the city of New York in the district in which the premises are situated to dispossess the plaintiff for nonpayment of rent. Upon the return day of the precept the plaintiff herein appeared by attorney. No answer was interposed, and this defendant had judgment, and a warrant issued, but was stayed until the following day, when the plaintiff paid the amount of the judgment. The defendant subsequently served a supplemental answer in this action, setting up the foregoing proceedings and judgment as a defense herein. On the trial a certified copy thereof was introduced in evidence, and a motion was made on the pleadings to dismiss the complaint, when the following stipulation was made in open court: ‘For the purposes of this motion it is conceded that, in August last, a proceeding was instituted in the Sixth judicial district court in the city of New York, whereby this defendant sought to dispossess the plaintiff, on the ground that there was a certain amount of rent due under the lease that is set up in the complaint, and that such proceedings were had on the 17th of August, 1892, [that] a judgment was entered, in favor of the petitioner, that said petitioner have possession of the premises therein described by reason of the nonpayment of the tenant's rent, and that a warrant issue to remove the said tenant and all persons from the said premises, and to put the petitioner in full possession thereof; that, subsequently, this plaintiff paid the amount stated in the petition as claimed to be due for rent.’ After the stipulation, the motion to dismiss the complaint was granted, on the ground that the judgment in the summary proceedings was an adjudication that the relation of landlord and tenant existed between the parties, and that there was a valid lease of the premises described in the complaint from the defendant to the plaintiff, and that, therefore, the plaintiff was estopped thereby from questioning the existence of that relation or the existence of a valid lease.

The correctness of that ruling is challenged by the appellant, and presents the only question involving the merits of this controversy. An examination of the allegations of the petition, and the stipulation of the parties made on the trial, renders it obvious that the judgment entered in favor of the defendant in the New York district court for the removal of the plaintiff as tenant involved a direct adjudication between the parties that they occupied the relation of landlord and tenant, and that the lease from the defendant to the plaintiff was valid. A judgment taken by default in summary proceedings by a landlord for nonpayment of rent is conclusive between the parties as to the existence and validity of the lease, the occupation by the tenant, and that rent is due, and also as to any other facts alleged in the petition of affidavit which are required to be alleged as a basis of the proceedings. Brown v. Mayor, 66 N. Y. 385;Jarvis v. Driggs, 69 N. Y. 143;Nemetty v. Naylor, 100 N. Y. 562, 3 N. E. 497. To authorize a judgment to remove a tenant holding over, the conventional relation of landlord and tenant must exist, and, in such a proceeding, the tenant, under a denial of the facts upon which the summons is issued, may prove that the alleged lease was executed in pursuance of a usurious agreement, and is void, so that such relation does not exist. People v. Howlett, 76 N. Y. 574. The principle of the authorities cited seems decisive of the question under consideration. To establish the relation of landlord and tenant between the parties, and to entitle the defendant to a judgment in the summary proceedings, the existence of a valid lease, upon which rent was due from the plaintiff to the defendant, was necessary. The existence of such a lease was alleged in the petition, and not denied. No cause was shown before the district court why possession of the property should not be delivered to the petitioner. The plaintiff neither alleged nor attempted to prove that the lease was usurious, or invalid for any other reason. The questions whether the lease was intended as a mortgage, and, if so, whether it was based upon an usurious contract, could have been tried in the proceedings in the district court. The determination in that...