Odell v. H. Batterman Co.

• Decision Date: 09 March 1915
• Docket Number: 174.
• Citation: 223 F. 292
• Parties: ODELL v. H. BATTERMAN CO. In re BARWIN REALTY CO.
• Court: U.S. Court of Appeals — Second Circuit

223 F. 292

ODELL v. H. BATTERMAN CO.

In re BARWIN REALTY CO.

No. 174.

United States Court of Appeals, Second Circuit.

March 9, 1915

William D. Guthrie, of New York City, and Henry A. Ingraham, of Brooklyn, N.Y., for appellant.

Richard Welling, of New York City, for appellee H. Batterman Co.

Corbitt & Stern, of New York City (Arthur F. Gotthold and Ernest J Ellenwood, both of New York City, of counsel), for appellees receivers.

Before LACOMBE, WARD, and ROGERS, Circuit Judges.

ROGERS Circuit Judge.

In 1894 the defendant corporation was organized for the purpose of conducting a general department store. It had an authorized capital stock of $250,000, all of which it issued. On July 11, 1909, it entered into a lease with the Barwin Realty Company, hereinafter designated as landlord, while the defendant corporation is hereinafter referred to as tenant. Under the terms of the lease the landlord agreed to let and the tenant agreed to hire the premises in the borough of Brooklyn, Kings county, city and state of New York, at Broadway, Graham, and Flushing avenues, since occupied by the tenant as a store, together with the store fixtures and furnishings. The lease was to run for a term of 21 years which term was to commence on July 11, 1909, and end on July 11, 1930, at 12 o'clock noon of that day, unless sooner terminated in accordance with its terms. The rent to be paid was $70,000 a year, and in addition the tenant was to make all repairs and pay all taxes and ordinary assessments levied against the property during the continuance of the lease, as well as all water rents and water charges. It was also to keep the property insured, $750,000 on the buildings and $100,000 on the fixtures. The tenth covenant of the tenant is as follows:

'To comply at the expense of the tenant with all rules, orders ordinances, and regulations of each and every department or bureau of the city, county, state, or national government applicable to the said premises and of the New York Board of Fire Underwriters.'

The lease also states that it is specifically understood and agreed between the landlord and tenant that:

'(4) If the tenant shall make default in fulfilling any of the covenants and conditions of this lease, or in making any payments herein provided, or in case the tenant abandons the premises and the same shall become vacant, the landlord may re-enter said premises and remove all persons therefrom, either by any suitable action or proceeding at law or by force or otherwise, without being liable to indictment, prosecution or damages therefor; and in any such case the landlord may give to the tenant five days' notice of its election to end the term under this lease, and thereupon the term under this lease shall expire, and all right of occupation thereunder on the part of the tenant shall end, and the tenant will quit and surrender the said premises to the landlord, and at the option of the landlord it may relet the premises as the agent of the landlord and receive the rents therefor, applying the same first to the payment of such expenses as it may be put to and then to the payment of the rent and other payments which may be or become due according to the terms of the lease, and the balance, if any, at the expiration of the term of this lease shall be paid over to the tenant.'

On March 4, 1914, the fire department of the city of New York issued an order, known as order No. 15,688F, requiring the defendant within 60 days after the service thereof to provide inclosures of fire-retarding material around stairways and additional stairway and hallway in fireproof inclosure. It also issued another order, known as order No. 15,689F, requiring defendant within 10 days from date of service thereof to provide certain fireproof doors, automatic fireproof doors, fireproof inclosures, fireproof covers, and fireproof receptacles with respect to the premises so leased as aforesaid. But the defendant, it is alleged, failed and neglected to comply with the orders, although they were duly served upon it.

The defendant became financially embarrassed having outstanding obligations to the amount of several hundreds of thousands of dollars and being further indebted in large sums for merchandise. Receivers were accordingly appointed under an order made on June 25, 1914, and under the terms of that order all persons were enjoined from commencing any action against the defendant or its receivers. The landlord accordingly applied to the court for permission to commence an action of ejectment in the Supreme Court of the state of New York against the tenant and the receivers, claiming that, inasmuch as the changes directed to be made by the fire department had not been complied with, the lease was subject to forfeiture according to its terms, and the landlord was entitled to recover possession of the premises, having already given the notice required by the lease that it elected to end the term of the lease and demanded that possession of the demised premises be surrendered. While the application for leave to sue was pending the receivers proceeded to complete the work necessary to comply with the order No. 15,689F. But order No. 15,688F still remained unfulfilled. This application for permission to sue in ejectment was denied, unless-- 'the landlord wishes a limited permission to begin such action against the tenant alone, to preserve its alleged rights and with the stipulation that the receivers may intervene and temporarily stay the action, during the period that they may be in possession.'

It was added, however, that the landlord might apply to the court below as having present jurisdiction over the entire property . . . 'for a determination as to the landlord's right of entry (subject to the actual occupation of the receivers) and that issue, if raised, may be properly disposed of upon the answering affidavits after a full hearing.'

This amounted to a refusal to allow an action of ejectment to be brought in the courts of the state of New York. An action in the New York courts against the tenant alone would fail as the receivers are in actual possession of the property, and the New York Code of Civil Procedure (section 1502) provides that:

'Where the complaint demands judgment for the immediate possession of the property, if the property is actually occupied, the occupant thereof must be made defendant in the action.'

But even if the receivers were not a necessary party the permission to proceed without them was valueless as the receivers had the right under the authority conferred to intervene and stay the action. And as to the permission to apply to the court below we observe that any determination of the question in that court was to be 'subject to the actual occupation by the receivers. ' The action of the court evidently proceeded upon the theory that the right of the receivers in the premises is superior to the right of the tenant as well as superior to any right of re-entry the landlord may have for the tenant's default.

This makes it necessary to inquire whether the order which the court made denying the request to be permitted to sue the receivers in ejectment is a final order from which an appeal may be taken. If we conclude that it is, we shall then be obliged to inquire whether error was committed in refusing to grant permission to sue. Chief Justice Taney, more than 60 years ago, pointed out in Forgay v. Conrad, 6 How. 201, 205, 12 L.Ed. 404 (1848), that practice in the chancery courts of the United States differed from the practice of the chancery courts in England, in that it was possible to take an appeal to the House of Lords from an interlocutory order of the Chancellor in some cases, while in the courts of the United States the right to appeal was by law limited to final decrees. The authorities concerning the distinction between interlocutory and final decrees were cited and reviewed in an opinion of the Supreme Court of the United States in Keystone v. Martin (1889) 132 U.S. 91, 93, 10 Sup.Ct. 32, 33 L.Ed. 275. The subject was again fully reviewed in McGourkey v. Toledo & Ohio C. R. Co., 146 U.S. 536, 13 Sup.Ct. 170, 36 L.Ed. 1079 (1892), and by Chief Justice White in La Bourgogne, 210 U.S. 95, 112, 28 Sup.Ct. 664, 52 L.Ed. 973 (1908). And see Matter of Farmers' Loan & Trust Company, 129 U.S. 206, 213, 214, 9 Sup.Ct. 265, 32 L.Ed. 656 (1889); Clark v. Roller, 199 U.S. 541, 546, 26 Sup.Ct. 141, 50 L.Ed. 300 (1905); Ex parte National Enameling Company, 201 U.S. 156, 26 Sup.Ct. 404, 50 L.Ed. 707 (1906); Foster's Fed. Practice, vol. 1, Sec. 255.

The rule announced in these cases for determining whether, for purposes of appeal, a decree is final, is whether the decree disposes of the entire controversy between the parties. Under the decisions an adjudication is a final appealable order if it involves a determination of a substantial right against a party in such a manner as leaves him no adequate relief except by recourse to an appeal. In the suit at bar appellant claims a legal right to immediate possession of the premises, and asserts that he is entitled to have that right determined with all reasonable speed. So much of the order appealed from as denied appellant's application was undoubtedly a final order, inasmuch as it definitely and conclusively determined the proceeding which appellant had instituted. The effect of the order as we have pointed out is to leave appellant without relief until the receivership is terminated.

When that will be cannot be predicted. The receivership is a consent receivership and capable of indefinite duration.

In Gay v. Hudson River Electric Power Company, 184 F 689, 106 C.C.A. 643 (1911), this court decided that it was error for the court below to deny a mortgagee the right...