Thayer v. Leggett

• Decision Date: 01 June 1920
• Citation: 128 N.E. 133,229 N.Y. 152
• Parties: THAYER v. LEGGETT et al.
• Court: New York Court of Appeals Court of Appeals

229 N.Y. 152

128 N.E. 133

THAYER

v.LEGGETT et al.

Court of Appeals of New York.

June 1, 1920.

Action by Roy L. Thayer against Joseph A. Leggett and others. From a judgment of the Appellate Division (185 App. Div. 921,171 N. Y. Supp. 1101), affirming a judgment of the Trial Term, jury waived, in favor of plaintiff, defendants appeal.

Judgments of Appellate Division and of Trial Term reversed, and new trial ordered.

See, also, 180 App. Div. 802,168 N. Y. Supp. 64; 186 App. Div. 933,172 N. Y. Supp. 922.

Appeal from Supreme Court, Appellate Division, Third Department.

John T. Norton, of Troy, for appellants.

Isaiah Fellows, of Cohoes, for respondent.

ANDREWS, J.

[1] ‘Those who are in possession of lands under a lease have an interest therein beyond the subsisting term, usually called the tenant's right of renewal. Between the landlord and tenant this interest cannot strictly be denominated a right or estate, but is merely a hope or expectation; there being, in the absence of contract, no way, legal or equitable, of compelling a renewal. But, as between third persons, the law recognizes this interest as a valuable property right, and the renewal as a reasonable expectancy of the tenants in possession.’ Robinson v. Jewett, 116 N. Y. 40, 51,22 N. E. 224, 227. It follows that he who holds a lease in trust for another may not deprive the latter of this interest by taking a renewal or a new lease in his own name (Keech v. Sandford, Selwyn's Cas. in Ch. 61); nor may an executor or administrator holding the lease as a part of the estate of a deceased (Matter of Morgan, 18 Ch. Div. 93); nor may a guardian as against his ward (Milner v. Harewood, 18 Ves. 274). A like rule is applied in many situations where because of his position, or because of the trust and confidence reposed in him, one owes a duty to another. In such cases equity exacts fair dealing and a scrupulous regard for honesty. An officer or director of a corporation in possession of a lease may not secretly for his own benefit take a renewal of it or a new lease to himself (Robinson v. Jewett, supra); nor may a partner as against his firm (Mitchell v. Reed, 61 N. Y. 123); nor an agent as against his principal (Davis v. Hamlin, 108 Ill. 39, 48 Am. Rep. 541). By taking a new lease a tenant for life may not deprive the remainderman of his interest. Holridge v. Gillespie, 2 Johns. Ch. 30, 33; Tanner v. Elworthy, 4 Beav. 487. The mortgagor may not so affect the rights of the mortgagee nor the mortgagee those of the mortgagor. Hughes v. Howard, 25 Bevan, 575; Gibbes v. Jenkins, 3 Sandf. Ch. 130;Slee v. Manhattan Co., 1 Paige, 48, 80. A leasehold may not so be freed of a charge upon it nor may one of joint lessors so dispose of the rights of his joint tenants. Burrell v. Bull, 3 Sandf. Ch. 15, 30. In short, as has been said, no one who is in possession of a lease, or a particular interest in a lease, which is affected with any sort of equity for third persons, can renew the same for his own use only, but such renewal must be considered a graft upon the old stock. Mitchell v. Reed, 61 N. Y. 123, 131,19 Am. Rep. 252.

[2] As between the tenants in common of a lease, at least where they hold their estate through descent, or under a will, or where their interest is created by the same instrument, every principle requires the application of the rule.

‘All the restraints imposed upon cotenants in regard to their dealing between one another in reference to the common property are founded mainly, if not exclusively, upon the theory that, so far as the common subject of ownership is concerned, they are each bound to defend the interest of the other, or, if not to defend, at least not to make any direct or indirect assault upon such interest. The case of tenants in common coming into joint possession of real estate as coheirs or codevisees has always been spoken of as creating special obligations between the joint owners; in fact, as forbidding either to do any act which could be unlawful or improper, if done by a trustee charged with the care and preservation of a trust estate. * * * The renewal of a lease in favor of any of the lessees is governed by the rules established by law in reference to the acquisition of an outstanding title by a cotenant. The new or renewed lease is held by the lessee in whose name it is taken, in trust for his colessees under the old lease, in proportion to their respective interests. The parties in possession under a lease are jointly entitled to participate in the benefits of a renewal.’ Freeman on Cotenancy, §§ 151, 157.

This language is supported by authorities in this state, which hold that one cotenant may not secretly purchase an outstanding title or claim to the exclusion of the others (Knolls v. Barnhart, 71 N. Y. 474); nor may one cotenant instigate a foreclosure so as to obtain the property for himself. He ‘is bound to do nothing with a view to prejudice the interests of the’ others. Carpenter v. Carpenter, 131 N. Y. 101, 29 N. E. 1013,27 Am. St. Rep. 569. There are instances where the rule has been applied to colessees. Palmer v. Young, 1 Vern. 276; Hackett v. Patterson, 16 N. Y. Supp. 170.

Wherever this obligation exists, it is enforced for the benefit of the person injured. It is his equitable rights which are to be protected. The ward, the corporation, the partner, the tenant in common, may ask relief. Not so he who has merely acquired title to the lease from them, in the absence of some contract to that effect. Whatever rights the injured parties had or still have they retain.

[3] Between the assignor and the assignee of a lease no relation of trust and confidence arises. They deal at arm's length. The assignor may bind himself by some agreement or some special equity may exist between them. Bennett v. Van Syckel, 11 N. Y. Super. Ct. 462. Otherwise there is no reason why the assignor may not acquire a renewal for himself. Burgett v. Williford, 56 Ark. 187, 19 S. W. 750,35 Am. St. Rep. 96. Nor is it material whether this renewal was obtained before or after the assignment.

As a landlord is under no obligation to renew, so a stranger is under no obligation to respect the hopes and expectations of the tenant. On him rests no trust or duty. He may, if he can, obtain a lease to himself, and no legal or equitable obligation results, and an undertenant is a stranger within this rule. He has no interest in or lien upon or possession under the original lease. Maunsell v. O'Brien, 1 Jones (Exch.) 184, cited with approval in Mitchell v. Reed, 61 N. Y. 123, 141,19 Am. Rep. 252. It is to be noticed that the elements of actual fraud-of the betrayal by secret action of confidence reposed, or assumed to be...