Lenco, Inc. v. Hirschfeld

• Decision Date: 10 January 1928
• Citation: 159 N.E. 718,247 N.Y. 44
• Parties: LENCO, Inc., v. HIRSCHFELD.
• Court: New York Court of Appeals Court of Appeals

247 N.Y. 44

159 N.E. 718

LENCO, Inc.,

v.HIRSCHFELD.

Court of Appeals of New York.

Jan. 10, 1928.

Action by Lenco, Inc., against Harry Hirschfeld. From a judgment of the Appellate Division of the Supreme Court, First Department (220 App. Div. 761, 222 N. Y. S. 841), affirming a judgment of the Trial Term dismissing the complaint, plaintiff appeals.

Affirmed.

See, also, 220 App. Div. 822, 222 N. Y. S. 842.Appeal from Supreme Court, Appellate Division, First Department.

E. Crosby Kindleberger, of New York City, for appellant.

Terence J. McManus and Hugo I. Epstein, both of New York City, for respondent.

CARDOZO, C. J.

This action is brought to recover a deposit made by a tenant to secure the performance of the covenants of a lease. The lease was to continue until December 31, 1944. Long before that date, on June 15, 1924, the landlord caused the tenant to be ejected in summary proceedings for nonpayment of rent. The building was a hotel, and the landlord, on resuming possession, continued to run the business until another tenant could be found. After an interval of two years, on June 15, 1926, he relet, at a lower rental, for plaintiff's account. The question is whether the plaintiff may recover so much of the deposit as is left after deducting what was due when the warrant to dispossess was issued.

Two sections of the lease must be quoted and considered before the question can be answered. The first has to do with the effect of a re-entry; the second has relation to the use of the security.

The lease (which covered not only the hotel, but the furnishings and other personal property therein) contains the following provisions as to the effect of a re-entry, whether by summary proceedings or otherwise:

‘In the event of nonpayment by the lessee of any installment of rent, or of any taxes, water rates, or assessments or any other payments herein required, in accordance with the provisions of this lease; or if the demised premises be abandoned or vacated by the lessee during the term hereof, the lessor may forthwith terminate this lease, and have the right to re-enter and repossess the said premises by force, summary or dispossess proceedings, surrender or otherwise, and to dispossess and remove therefrom any and all occupants and their effects, without being liable to any prosecution therefor, and to hold said premises as if this lease had not been made; and in any such case, the lessor may, at its option relet said premises, as agent of the lessee, the lessee remaining liable for loss or damage resulting from such abandonment. The lessee hereby expressly waives, in behalf of itself and all persons claiming under it, all rights of notice to quit or intention to re-enter under the provisions of any statute or of this lease, in case of such abandonment.’

The following are the provisions as to the use of the security:

‘Such security [describing it] is to be held by the lessor as security for the lessee's faithful performance of and compliance with, all the terms, covenants and conditions of this lease on his part. If the lessee fails to comply with the terms, covenants and conditions hereof, and this lease is thereby terminated, then and in that event the said money and securities so deposited shall belong to the lessor, as fixed, liquidated and agreed damages; it being agreed that said deposit shall be treated as liquidated damages because the parties hereto cannot ascertain the exact amount of damage that the lessor will sustain in the event of any breach or violation by the lessee of its undertakings herein referred to; it being expressly understood, however, that said security shall not be considered as payment for any rent due or to become due by reason of these presents.’

[1] The plaintiff insists that the liability for loss of rental has not survived the issuing of the warrant in summary proceedings, except as to rent already owing at that time. The argument is that the right to relet for the account of the lessee is limited to cases where a vacancy exists as the result of a voluntary abandonment, and does not apply where the lessee is put out against his will. This is a construction too narrow to prevail. The lease enumerates many contingencies, including ‘summary or dipossess proceedings,’ in which the landlord may hold possession as if no lease had been made, and then adds:

‘In any such case, the lessor may at its option relet said premises, as agent of the lessee, the lessee remaining liable for loss or damage resulting from such abandonment.’

Liability for a deficiency would follow if the lease had provided for a reletting by the landlord as agent of the tenant, and had stopped at that point. We think it was not cut down by adding a statement of the consequences that would result from an abandonment. This is so whether the word ‘abandonment’be taken...