City of New York v. Pennsylvania R. Co.

• Decision Date: 02 July 1975
• Citation: 333 N.E.2d 361,37 N.Y.2d 298,372 N.Y.S.2d 56
• Parties: , 333 N.E.2d 361 CITY OF NEW YORK, Appellant, v. PENNSYLVANIA RAILROAD COMPANY, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 56

372 N.Y.S.2d 56

37 N.Y.2d 298, 333 N.E.2d 361

CITY OF NEW YORK, Appellant, v. PENNSYLVANIA RAILROAD COMPANY, Respondent.

Court of Appeals of New York.

July 2, 1975.

Adrian P. Burke, Corp. Counsel, New York City (Morris Einhorn and L. Kevin Sheridan, New York City, of counsel), for appellant.

Edward D. Burns and Edmund J. Burns, New York City, for respondent.

COOKE, Judge.

In 1888, respondent Pennsylvania Railroad Company erected Pier 77 on New York City owned land. Title to the improvement was to revert to the city upon expiration of the railroad's lease. For more than 70 years the railroad has had sole and exclusive possession, use and occupancy of the pier. From the date of completion to July 1, 1891, occupancy was under permit. For the next 30 years, between 1891 and 1921, occupancy was pursuant to a 10-year lease, twice renewed. The railroad occupied the pier during the following 30 years under annual or semiannual permits which, as did the lease, required that the pier be maintained in good condition. The last permit to be issued was dated July 1, 1949 and expired December 31, 1949. For the next 11 years, until June of 1961, respondent remained in possession and continued to pay rent, but did not execute any new rental agreements.

Three years after the railroad surrendered possession, the city brought suit for failure of the railroad to maintain the pier in good condition and sought $124,256 in damages. The railroad's answer alleged that the city's decision to replace the pier with a new one precluded damages, that the city's cause of action was time-barred, and that the city was guilty of laches. The city's motion for summary judgment was granted, but on reargument the $124,256 judgment was vacated and a hearing to assess damages for breach of a continuing covenant to keep the pier in good repair was ordered. The Appellate Division, in reversing Special Term's order and dismissing the city's complaint, construed the relationship of the parties as one of licensor-licensee, and as such, one to which no prior covenant of repair would attach.

A court in its effort to determine the true character of an instrument must look at the nature of the right rather than to the name that the parties gave it (Greenwood Lake & Port Jervis R.R. Co. v. New York & Greenwood Lake R.R. Co., 134 N.Y. 435, 439, 31 N.E. 874, 875; Williams v. Hylan, 223 App.Div. 48, 53, 227 N.Y.S. 392, 397, affd. Sub nom. Williams v. City of New York, 248 N.Y. 616, 162 N.E. 547; 51 C C.J.S. Landlord and Tenant § 6(1), p. 38; § 202(6), p. 524). If the underlying instrument purports to yield up exclusive possession of premises against the world, including the owner, it is not a license, but creates an irrevocable estate or interest in the land (Williams v. Hylan, supra, 223 App.Div. at p. 53, 227 N.Y.S. at p. 392). When a tenant, such as the railroad, remains in possession on the expiration of a permit granting exclusive possession, it is a holdover and, pursuant to common law, there is implied a continuance of the tenancy on the same terms and subject to the same covenants as those contained in the original instrument (Kennedy v. City of New York, 196 N.Y. 19, 23, 89 N.E. 360, 361; Haynes v. Aldrich, 133 N.Y. 287, 289, 31 N.E. 94, 95; Stern & Co. v. Avedon & Co., 194 App.Div. 433, 185 N.Y.S. 392, affd. 231 N.Y. 546, 132 N.E. 882). Thus, the covenant to maintain the pier remained in force for so long as the railroad remained in possession and, upon surrende a cause of action for breach of said covenant could be timely brought.

An action for the breach of a tenant's covenant to keep the premises in repair may be brought either before or after the expiration of the term. In the recent case of Farrell Lines v. City of New York, 30 N.Y.2d 76, 84, 330 N.Y.S.2d 358, 363, 281 N.E.2d 162, 166, this court spoke to the issue of damages: 'It is well established that when an...