Caesar v. Rubinson

• Decision Date: 28 April 1903
• Citation: 174 N.Y. 492,67 N.E. 58
• Parties: CAESAR v. RUBINSON et al.
• Court: New York Court of Appeals Court of Appeals

174 N.Y. 492

67 N.E. 58

CAESAR

v.RUBINSON et al.

Court of Appeals of New York.

April 28, 1903.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Katie Caesar against Jacob Rubinson and others. From a judgment of the Appellate Division (75 N. Y. Supp. 544) reversing a judgment in favor of plaintiff entered on a verdict, and an order denying a new trial, plaintiff appeals. Reversed.

Moses Feltenstein, for appellant.

J. Charles Weschler, for respondents.

O'BRIEN, J.

This was an action to recover a sum of money which was deposited with the defendants under the following circumstances and conditions: On the 27th of January, 1899, the defendants entered into a written agreement with certain persons, named Goldberg and Goldstein, which took the form of a lease, whereby the defendants, as landlords, undertook to erect upon their lands in the city of New York a three-story brick building, containing stores and a dance hall, with gallery, and lodge and meeting rooms. Goldberg and Goldstein, on their part, agreed to take possession as tenants of the property as soon as the premises were ready for use and occupation, which was to be not later than March 1, 1900, and to continue in possession for a term of 10 years. They were to pay an annual rental of $3,300, in monthly payments of $275 on the 1st day of each month. There was no provision in the lease for any security for the payment of the rent, or for the carrying out of the agreement on the part of the owners, but the instrument contained the following provisions: ‘The said tenants shall deposit, and have deposited, with said landlords the sum of one thousand dollars, the receipt whereof is hereby acknowledged, as security for the faithful performance of this agreement on their part, and in case of any breach thereof by said tenants said amount shall be paid and retained by said landlords as liquidated damages for such breach, but in case the actual damages suffered by said landlords through such breach shall be greater than said sum of one thousand dollars then said sum shall be applied on account of such damage and said tenants be still liable for the balance thereof. Interest at the rate of six per cent. shall be paid and allowed by the landlords to the tenants on said sum of one thousand dollars from the beginning of the term, such interest to be deducted from the monthly rent to be paid as hereinbefore provided; and that this agreement and all covenants thereunder shall be well and faithfully kept and performed by said tenants, then said sum shall be held by said landlords and shall be applied in part payment of the rent for the last four months of the term hereinbefore provided for. * * * The said landlords do hereby covenant that said tenants on paying the said yearly rent and on performing the conditions and covenants hereinbefore provided for shall and may peaceably and quietly have, hold and enjoy the said demised premises for the time aforesaid. And in case said landlords shall fail to erect said buildings hereinbefore provided for, then said landlords shall pay to said tenants the sum of one thousand dollars in addition to the deposit to be returned as the agreed, settled, and liquidated damages.’ Everything appears to have been carried out in the first instance according to the agreement. The building was erected, and the tenants took possession of the same, continued to occupy the premises, and to pay rent until about the 1st of May, 1901, at which time they defaulted in the payment of $45 of the rent for the previous month. Thereupon the defendants, as landlords, instituted summary proceedings against the tenants under the statute, and dispossessed them. The tenants subsequently assigned to this plaintiff the $1,000 which had been deposited pursuant to the provisions of the lease; and this action was commenced to recover that amount, less the $45, balance of rent unpaid at the time the tenants were dispossessed. At the trial, judgment was directed in favor of the plaintiff; but the Appellate Division, upon appeal, by a divided court, reversed the judgment and granted a new trial.

The principal question involved upon this appeal is whether the $1,000 deposited by the tenants as above set forth is to be regarded, under the circumstances, as liquidated damages which the landlords were entitled to retain upon entering into possession of the demised premises. The circumstance that the deposit is described...