author: By the Court, Monell, J. Robertson, Ch. J.

text:
    James F. D. Lanier, plaintiff and appellant, vs. Luther B. Wyman et al. defendants and respondents.
    1. A written contract can be reformed only when the mistake is mutual. Both parties must understand it alike.
    2. In an action against sureties, to recover rent, the defendants alleged in their answer, and proved that they understood they were to be sureties as for a rent of $900, and that the guaranty was executed by them under a mistake of facts; but it was not averred in the answer, or proved, that the plaintiff had the same understanding of the agreement; Held that neither the matter set up in the answer, nor the proof, was sufficient to authorize a reformation of the contract, so as to conform it to the understanding of the defendants.
    3. The plaintiff, by lease, dated April- 29, 1862, leased certain premises to a tenant for the term of one year from the last day of April, 1862, at a yearly rent of $100, payable quarterly. The defendants thereupon executed an instrument whereby, in consideration of the letting of such premises to such tenant, they covenanted with the lessor that if default should at any time be made by such tenant “in the payment of the rent and performance of the covenants before contained on her part to be paid and performed,” they would pay “ the sum of $800 of the said rent, or any arrears thereof that might remain due, to the lessor to that extent, and no more." On the 14th of March, 1863, the plaintiff again leased the premises to the same tenant for the term, of one year from the 1st of May, 1863, at the yearly rent of $1100, payable quarterly; and the defendants executed another instrument which recited such lease, whereby they covenanted that in case of default by the lessee in the payment of rent, they would “ pay $900, or any arrears thereof that remain due, unto the ” lessor, “ and also all damages ” that might “ arise in consequence of the nonperformance of said covenants, or either of them, without requiring notice of any such default from the ” lessor. The tenant paid three quarters of the rent due on the second lease, amounting to $825. In an action to recover a quarter’s rent, amounting to $275, due on the 1st of May, 1864, not paid by the tenant; Held that the defendants undertook by their covenants, that if the tenant was in default at any time in the'payment of her rent, whether of the whole or only a portion, or for the first or last quarter, they would pay such arrears to the extent of $800, for the first year, and $900 the second. And that consequently the plaintiff was entitled to recover the whole of the rent in arrear at the end of the term, as the sum due did not exceed $900.
    4. The words of a guaranty are to be taken" as strongly against the party giving it as the sense of them will admit; and care should be taken to hold the party bound to the full extent of what appears to be his engagement. Ter Monell, J.
    (Before Robertson, Ch. J., and Monell and Garvin, JJ.)
    Heard June —, 1867;
    decided-, 1867.

      The plaintiff leased to Laura A. Shepherd, by lease dated April 29, 1862, certain premises at Clifton, Staten Island, for the term of one year from the last day of April, 1862, at the yearly rent of $1000, payable quarterly. The defendants signed and delivered to the plaintiff an instrument as follows: -
    “In consideration of the letting of the premises before mentioned to the aforesaid Laura A. Shepherd, we do hereby covenant and agree to and with the party of the first part, before named, or his legal representatives,, that if default shall at any time be made by the said Laura A. Shepherd, the party of the second part, in the payment of the rent and performance of the covenants before contained on her part to be paid and performed, that we will well and truly pay the sum of $800 of the said rent, or any arrears thereof that may remain due, to the party of the first part, to that ' extent and no more.”
    On the 14th of March, 1863, the plaintiff again leased to Shepherd the same premises for the term of one year from the 1st of May, 1863, at the yearly rent of $1100, payable quarterly, The defendants again signed and delivered to the plaintiff an instrument as follows:
    “In consideration of the letting of the premises above mentioned to the above named Laura A. Shepherd, we do hereby covenant and agree to and with the party of the first part, above named, or his legal representatives, that if default shall at any time be made by the said Laura A. Shepherd in the payment of the rent and performance of the covenants above contained, on her part to be paid and performed, that we will well and truly pay $900, or any arrears thereof that remain due, unto the said party of the first part, and also all damages that may arise in consequence of the non-performance of said covenants, or either of them, without requiring notice of any such default from the said party of the first part.”
    Shepherd paid three quarters of the rent, amounting to $825. On the 1st of May, 1864, a quarter’s rent, amounting to $275, became due and payable, to recover which the action was brought against the defendants upon the instrument executed by them.
    The defendants set up in their answer that when the first lease and guaranty were signed, it was agreed between the defendants and the plaintiff that the defendants would become sureties to the extent of the yearly rent or sum of $800, so that they should1 be and become only liable for any deficiency or arrears of rent, upon the basis of such yearly rent of $800; and that their obligation was not to extend beyond the amount of any such arrears or deficiency. That when the second lease and guaranty were signed, it was agreed that the defendants would again become sureties to the extent of the yearly rent or sum of $900; so that, as while between Shepherd and the plaintiff, she was liable to pay the yearly rent of $1100, as between the defendants and the plaintiff, they were to be liable only upon the yearly rent of $900; their liability being limited to making good any deficiency or arrears of said yearly sum of $900; and that they were in no event to be called on to pay any greater sum than the difference between such sum as Shepherd should pay and the sum of $900. That, thereupon, they signed the guaranty which they supposed truly set forth the said agreement; and they aver that so far as said instrument differs or varies from or is inconsistent with the agreement, the same was executed by them under a mistake of facts, and was procured by the plaintiff to be executed by them under such mistake; and that, in so far as said instrument differs or varies from the said agreement, it does not truly set forth the agreement, and should be reformed by the court so as to express the said agreement. The defendants denied any liability to the plaintiff.
    The action was tried before Justice Garvin and a jury.
    The defendants were allowed to prove, against the plaintiff’s objection, conversations between themselves and the plaintiff’s agent, tending or designed to prove the agreement set forth in the answer. And the declarations of the agent were proved to the effect, that the plaintiff had agreed to accept security for a rent of $800, taking the risk of Mrs. Shepherd for $200, for the first year; that the rent was $1000; hut if the defendants would become security in a rent of $800, the plaintiff would rent the premises; that they asked the agent what the guaranty meant, and he said if the defendants would hold themselves liable to the amount of $800, the plaintiff would take the risk of the other $200 from Mrs.. Shepherd. The defendants were allowed further to prove, against the plaintiff’s objection, that on the last year Mrs. Shepherd called on the defendants, with the plaintiff’s agent, saying the rent was increased $100, and wishing them to become security to the amount of a rent of $900, adding $100 to the year previous, which • they agreed to do on the same conditions; that the plaintiff’s agent told them the conditions were precisely the same as the year before, except there was $100 in addition to the rent, and that the plaintiff would require them to become responsible to add $100 to their liability. The plaintiff’s objection's to all the evidence were overruled, and she excepted.
    It was proved by Wyman, one of the defendants, that he read the instrument before signing; Whitney, the other defendant, said that he was in doubt whether he did so.
    The justice charged the jury, that the construction of the surety clause in the first lease, as matter of law, was, that the defendants were liable up to the amount of $800, and no more; when that sum was paid, either by the tenant or by them, no matter how much rent might remain due to the plaintiff afterwards, the defendants were not liable for any further sum. It was submitted to the jury to say whether the defendants read and understood the last paper; they were instructed that if the defendants relied entirely upon the verbal arrangement made between themselves and the plaintiff’s agent, and did not read the paper sufficiently to see that it varied from .the former contract, and supposed it expressed the same thing, then they would be liable for $87.75 only. That if the parties mutually understood what was put down on the paper, and took the printed form and signed it, inserting $900 instead of $800, without considering what its effect would be, believing the contract to be the same in terms as the first one, then the contract should be made to conform to the first one.
    Several requests t® charge were made, substantially the converse of what was charged, which were refused.
    The plaintiff duly excepted to the charge and refusal. He also objected to any evidence in support of the answer, on the ground that it did not constitute a defense. The objection was overruled, and the plaintiff excepted. The jury gave the plaintiff a verdict for $87.75. The plaintiff moved for new trial on the judge’s minutes, which was denied, and then appealed from the order.

      Weeks Forster, for the appellant, plaintiff.
    I. The express admission in the answer concludes the defendants, and it contains no- defense against that admission. No mistake of fact is disclosed, neither is any mutuality of mistake alleged. To entitle a party to a decree of a court of equity reforming ,a written instrument, a plain mutual mistake must be clearly made out, and it must be shown that the part omitted or inserted was omitted or inserted contrary to the intent of both parties, and under such mistake. (Nevens v. Dunlap, 33 N. Y. Rep. 676.) The answer fails in these requirements. The plaintiff’s objections were well taken, and his exceptions should be sustained.
    H. The parol testimony objected to by the plaintiff was incompetent. The contract of guaranty under seal could not be so modified; it would be a violation of the rule as to parol testimony. (Sinclair v. Jackson, 8 Cowen, 543, 588. Alston v. Mechanics’ Mutual Ins. Co., 4 Hill, 341. Durgin v. Ireland, 14 N. Y. Rep. 322. Lamott v. Hudson River Fire Ins. Co., 17 id. 199, note. Norton v. Coons, 6 id. 41. Pattison v. Hull,. 9 Cowen, 754. Halliday v. Hart, 30 N. Y. Rep. 493.)

      IH. The defense claimed a reformation of the guaranty, which was.a matter of equitable jurisdiction, and for the court alone; the rulings on that point were therefore erroneous.
    IV. The single question on which the court left the case to the jury was not in the case. Wyman read the guaranty before he signed it, at his own office. Whitney saw Wyman’s name before he signed it, and he understood that by the first guaranty that they “ were liable for $800 of the rent,” and that the second guaranty added $100 to their liability. There is not a word of representation by Mr. Phillips, or any one else as to the form of the papers. There was no mistake as to that; the only pretense is, that there was a misunderstanding as to the legal effect;- that is the most that can be claimed from the defendants’ testimony. A mistake by a party as to the effect of a transaction, as to the liability he incurs by executing a paper, is only an error of law, and no defense for non-performance. ■
    V. The construction which the court put upon the first guaranty was erroneous. The court should have charged as to. that as secondly requested, that the guaranty was a continuing one. (Gates v. McKee, 3 Kern. 232. Rindge v. Judson, 24 N. Y. Rep. 64.) Had the guaranty been in that form, for $900 instead of $800, the $275 sued for would be within the limitation under those authorities, and the cases cited in the opinion of the Court of Appeals.
    VI. The limitation of the liability of the defendants in the charge, to their understanding of the meaning of the guaranty was error.
    VII. There is no foundation for claiming that the limitation was of the rent to be paid by Mrs. Shepherd, as held by the court below. Where there is a limitation, it is of the liability of the guarantor. So long as the guarantors are not called on to pay beyond the amount limited, they would have the benefit of any payments made., In this case they are only called on for $275, Mrs. Shepherd having, herself paid the first three quarters’ rent. Their guaranty was not only to pay all arrears of the rent, but also all damages arising from the non-performance of any covenant. For the breach of the covenant to pay rent, the unpaid rent is the damages, which they thereby agreed to pay.

      Wm. Allen Butler, for the respondents, defendants.
    ¿ The defendants were entitled .to set up the equitable defense averred in the answer, and to claim as affirmative relief upon the facts therein alleged, the reformation of the contract upon which the plaintiff sought to charge them. (Crary v. Goodman, 12 N. Y. Rep. 266. Auburn City Bank v. Leonard, 20 How. Pr. 193. Traphagen v. Traphagen, 40 Barb. 537.)
    II. In support of the equitable defense interposed by the answer, the evidence of the arrangement between the plaintiff and the defendants, out of which their original contract and liability as sureties arose, and of the facts and circumstances under which such liability was continued, was clearly admissible. (Despard v. Walbridge, 15 N. Y. Rep. 374,178. Hodges v. Tenn. Insurance Co., 8 id. 416. Dobson v. Pearce, 12 id. 156.)
    ITT. The evidence clearly showed that the writing sued upon did not truly express the agreement of the parties; that the understanding upon which their minds met was, that the arrangement of the previous year should be continued in reference to the renewed term with the addition of $100 of liability. The evidence on this subject was uncontradicted, and the verdict of the jury establishes the fact. It is, therefore, a plain case for reforming the contract so as to express the intention of the parties. (Stoddard v. Hart, 23 N. Y. Rep. 556, 562. Bidwell v. The Astor Mut. Ins. Co., 16 id. 263.)
    IV. Under the original agreement subjoined to the lease, dated April 29, 1862, and by its express terms, the defendants were only liable to pay any arrears of the sum of $800 rent of the demised premises, and were not liable to make good any deficiency or arrears of any greater sum, and the court correctly held and instructed the jury that the suretyship of the defendants did not extend to any unpaid rent beyond that agreed sum. The undertaking of the defendants by this agreement was, that the plaintiff should receive $800 of the rent, and whenever the rent paid reached that sum they stood discharged of all liability. This was what all parties understood, and the first writing expresses their intent. .
    Y. Whether the arrangement between the parties was to renew and continue the old agreement, with the increased amount of $900 instead of $800, and whether the defendants in signing the new agreement, relied on the statements of the plaintiff’s agent, and supposed in good faith that the writing presented by him did, as he represented, impose no greater liability than the former writing, were questions of fact which the court properly left to the jury, and there is no reason for disturbing their verdict.
    YI. There was no error in any of the rulings of the court, nor in any of the several propositions of the charge to which the plaintiff excepted.
   By the Court, Monell, J.

So far as the defense depended upon a reformation of the contract to conform it to the understanding of the defendants, of what the agreement was, neither the matter set up in the answer nor the proof given on the trial, were sufficient for the purpose.

A written contract can be reformed only when the mistake is mutual. Both parties must understand it alike. (Pennell v. Wilson, 2 Abb. N. S. 466. Nevius v. Dunlap, 33 N. Y. Rep. 676.) The allegation in the answer is that the defendants understood they were to be sureties as for a rent of $900; and that the guaranty was executed by them under a mistake of facts. The proof was to the same effect. It was not averred in the answer, or proved, that the plaintiff had the same understanding of the agreement. The extent of the evidence was the declaration of the plaintiff’s agent, that the second guaranty was “ precisely the name as the year before, except there was $100, in addition to the rent;” and the plaintiff would require the defendants to become responsible, in case Mrs. Shepherd had the house another year, to add $100 to their liability; and this does not differ from the tenor of the written instrument.

There does not seem to have been any misunderstanding respecting the first guaranty; and the second guaranty would have been satisfactory had it been of the same tenor as the first; and the complaint was that it did not correspond to the first, with an amount of $100 added. This was not, therefore, a case for a reformation of the contract;, and so much of the defense as demanded such reformation, should have been excluded.

As I understand, the learned justice put a different construction upon the two instruments. Upon the first, that the defendants were liable up to the amount of $800, and no more; when that sum was paid. by the tenant or by themselves, no matter how much rent might remain due, the defendants were not liable for it. Upon the second guaranty, his construction was, that by its tenor and effect, the defendants were liable for the full amount of any deficiency of rent at the end of the year, up to the sum of $900. I cannot discern what question there was for the jury. It was not a case for reforming the contract; and it was not proper to vary the contract by parol proof. It was, therefore, to be taken as expressing the intent of the parties. Its construction was for the court, and as construed by the court, the plaintiff was entitled to recover the full amount claimed; and a verdict accordingly should have been directed.

I agree to the construction which the learned justice put upon the second contract or guaranty. It is quite clear that it was an engagement on the part of the defendants, that if Mrs. Shepherd made default in the payment of the rent and performance of the covenants, they would pay $900, or any arrears thereof that remained due, to the plaintiff. They intended to limit their responsibility to $900. The words “or any arrears thereof/'referring to any arrears of the rent, are significant, and favor the construction that the guaranty was of the whole rent, with a limitation as to the amount of responsibility; as if they had said, “ if Mrs. Shepherd does not pay her rent, we will pay all arrearages, but not more than $900 in all.”

The principle of the case of Gates v. McKee, (13 N. Y. Rep. 232,) is applicable. There the guaranty was “ I will be responsible for what stock M. E. McKee has had or may want hereafter, to the amount of five hundred dollars;” and it was held that the limit of $500 qualified the responsibility of the guarantor, and not the amount of McKee’s future transactions with the plaintiff.

To the same effect is Rindge v. Judson, (24 N. Y. Rep. 64,) where the guaranty was, “ I will be accountable to you that Mr. Butler will pay you for a credit on glass, paints, &c. which he may require in his business, to the extent of fifty dollars;” and which was held to limit the responsibility, and not the amount of dealings; so that, putting the defendant’s guaranty in the form of the guaranties in the above cases (a form, I think, stronger for the defendants than the one they signed,) namely, that the defendants would be responsible for the rent of Mrs. Shepherd to the extent of $900, and it is brought directly within the principle decided in those cases.

' What is the reasonable interpretation of the guaranty in this case? It seems to me to be, that the defendants"engaged to be responsible to the amount of $900 for the rent of. Mrs. Shepherd. It could not have been the intention of the plaintiff" that the defendants should be relieved of responsibility if Mrs. Shepherd paid the first three quarters of the rent, which would be about equal to the limit of responsibility the defendants had fixed. Security for the payment of "the last quarter’s rent was needed much more than for the previous quarters. If either of the first three quarters were unpaid, the plaintiff could gain possession of his premises, which right had in it the elements of security. Landlords have more fear of losing the last than any of the previous quarters’ rent; and it is fair to presume that the plaintiff in this case attached more importance to getting security for the last quarter’s rent, than to any of the previous quarters. '

The rule is, that the words of a guaranty are to be taken as strongly against the party giving the guaranty as the sense of them will admit, [Mason v. Pritchard, 12 East, 227; Douglas v. Reynolds, 7 Peters, 113, 122;) and care should be taken to hold the party bound to the full extent of what appears to be his engagement.

I am not able to discover a difference in legal effect between the first and second guaranties, as suggested by the learned justice who tried the action. The first guaranty, as I read it, if anything, is stronger against the defendants than the second. In it, the defendants agreed that if default was made by Mrs. Shepherd in the payment of the rent, &e. they would pay the sum of $800 of the said rent, or any arrears thereof that might remain due; and the words “to that extent and no more,” were intended merely to emphasize the extent of the responsibility.

In short, the defendants undertook that if Mrs. Shepherd was in default at any time in the payment of her rent, whether it was the whole or only a portion, the first or the last quarter, they would pay any arrears to the extent of $800 the first year and $900 the second.

I am, therefore, of the opinion that the plaintiff was entitled tó recover the whole of the rent in arrear at the end of the term; and that the instructions of the learned justice to the jury were erroneous.

The order denying a new trial should be reversed, and a new trial ordered, with costs to abide the event.

Robertson, Ch. J.

I entirely concur with my brother Monell in his views as to the absence of all right by the defendants to a. reformation of the contract in this case. There was no fraud, and no misrepresentation as to the contents of the agreement in question. The rule that all ■prior negotiations are merged in a written contract, would be frittered away by allowing mere mistakes by one party, as to the meaning of such contract to be proved by his own oath, to do away with it, after the other party had acted on the faith of it.

Theré was no difference (except as to the amount) as to the legal effect of the first and second contract of surety-ship, signed by the defendants. ' The first bound them to pay, in case of default of Mrs. Shepherd in paying the rent, $800 of “ or any arrears thereof,” (that is, of the rent,) that might remain due to the plaintiff. The second, in case of like default, to pay “ nine hundred dollars or any arrears ' thereof that remain due unto ” the plaintiff.' So that although in the last one the term “thereof” may be grammatically-confined to the sum so designated and not construed so as to extend to the rent eo nomine, yet, under it, if Mrs. Shepherd should fail to pay any of her rent, the defendants would be liable to the extent of $900, for the part of her rent whieh should remain unpaid, or of so much of that sum as should be Bo payable on that amount, and remain unpaid.

I do not perceive that the parol evidence, when admitted, benefited the defendants at all. It established only that when called upon to sign the first guaranty, they asked the plaintiff’s agent what it meant, and that he said that if they “should hold themselves-liable to the amount of $800, the. plaintiff would take the risk of the other $200 from Mrs. Shepherd,” which was exactly its legal effect. On the next occasion the same agent and Mrs. Shepherd called on the defendants, and upon the latter’s “saying the rent was increased $100, and wishing them to become security to the • amount of a rent of $900, adding $100 to the year previous, which they agreed to do, on the same condition,” such agent said “the conditions were precisely the same as the year before, except there was $100 in addition to the rent, and that the plaintiff would require them to become responsible to add $100 to their liabilitywhich was exactly true, and was what was effected by the second instrument. This is directly adverse to any inference that any such agreement was made as was set up in the answer, in regard to either instrument, as to the amount of rent to be paid by Mrs. Shepherd. There is, therefore, no evidence in the case of any mistake or misrepresentation. The instruction, therefore, to the jury “ that if the defendants relied entirely upon such verbal arrangement, and did not read the paper sufficiently to see that it varied from the former contract * • * they would be liable for $87.75 only,” was clearly, in any view, erroneous. Eor, taking the agent’s interpretation as the law of construction of such agreement in this case, to wit, making the defendants liable for $900, the plaintiff taking the risk of the other $200 from Mrs. Shepherd, the former w.ere liable for so much of the rent reserved which she did not pay as did not exceed $900 (being $275 and interest.)

Oases of guaranties to a certain amount, where the extent of dealings between the guarantee and the party to be trusted is not limited, .are not exactly applicable to cases of this kind, where the extent of the liability of the latter party is fixed and defined, and the portion of it assumed by the sureties is equally so. This presents the case of a definite indebtedness partly secured and partly not. Mrs. Shepherd had a perfect right, if she chose, to pay the money she did on account of the rent, in discharge of the liability of her sureties, leaving her own liability for the unsecured part to remain, and if the plaintiff had accepted it on that account, it would have gone in discharge of their liability pro tanto. Or if she, being bound to indemnify them, had made a legal tender of the whole amount for which they were liable, on their ■ behalf, as their agent, although of her own money, it would probably have been a good defense, since she might prefer to relieve them. But she made no such application of the money, and the plaintiff, therefore, became entitled to apply it as he thought proper, and first to the discharge of the unsecured part of the rent, leaving the defendants liable for the residue. (Clark v. Burdett, 2 Hall, 197.) Moreover, their liability was posterior in time, as it did not arise until default in the payment of the rent by Mrs. Shepherd, and therefore the moneys paid by her were to be first applied to discharge the unsecured liability. (Truscott v. King, 6 N. Y. Rep. 147. Allen v. Culver, 3 Denio, 284. Baker v. Stackpoole, 9 Cowen, 420.

I, therefore, concur in thinking the judgment and order denying a new trial should be reversed, and a new trial granted, with costs to .abide the event.


source: Caselaw Access Project

author: By the Court, Jones, J.

license: Public Domain

text:
    Isaac D. Hammond, plaintiff and respondent, vs. John H. Christie, impleaded, &c. defendant and appellant.
    1. A plea of accord and satisfaction is not supported by proof of a tender made to the plaintiff’s attorney, who declined to accept it as satisfaction.
    2. A payment, by a debtor, of a less sum than the amount of his indebtedness, in satisfaction of a debt due his creditor, although such less sum be expressly received by the creditor in full satisfaction, does not constitute an accord and satisfaction, and does not extinguish the creditor’s right to recover the balance of the indebtedness; unless, perhaps, the transaction is of such a character as to constitute a compromise of an honestly disputed claim. Per Jones, J.
    3. To bring a case within that exception, the circumstances must be such, as to show that the creditor knew the precise objections raised by the debtor to the .claim, and by accepting the lesser sum recognized their validity, and also to show that the objections were made in good faith, and not as a mere cover to give color to a compromise, so as to evade the principles relating to accord and satisfaction. Per Jones, J.

      4. Wallcer v. Millard, (29 N. T. Pep. 375,) and Keen v. Knap, (8 id. 402,) commented on and distinguished from the present case.
    6. Where one employs another as his agent to collect a claim, the latter agreeing to pay the same to his principal when collected, in an action to recover a balance remaining in the agent’s hands from collections made by him on such/ claim, the doctrine applies, that an agent receiving money for his principal is bound to pay it over to him, and cannot be, converted into a trustee for a third person, by a mere notice of his claim; nor can he dispute the title of his principal.

      6. In such an action the defendant is not entitled to he credited with any drafts drawn upon him hy his principal, unless he has either actually paid, or hound himself to pay, them.
    (Before Monell, Garvin and Jones, JJ.)
    Heard May 13, 1867;
    decided-,-,
    Appeal from a judgment entered upon the report of a referee. The plaintiff alleged, in his complaint, that on or about the 1st of May, 1862, at the city of New York, he employed the defendants, (then and still co-partners, under the firm of “ Christie & Stow,”) as claim agents and brokers, to collect from the United States government certain bills for the plaintiff) amounting to a certain sum, ($2146,) which he delivered to them, as such co-partners, and claim agents and brokers, and they undertook to collect the amount of said bills from said United States, and to pay the proceeds over to the plaintiff". That on or about the 18th day of July, 1862, the defendants did collect and receive from said United States government the amount of said bills, and received, as proceeds thereof, a certain sum, ($2146.) That the sum of $100 was a reasonable and fair compensation for the defendants’ services therein. That the plaintiff, at various times in the years 1862 and 1863, at said city, duly demanded from the said defendants payment of the said sum, the proceeds of the plaintiff’s said bill so received by the defendants, less their proper charges and commissions for the collection of said amount. That no part of said sum has been paid the plaintiff, except the sum of $800, and the defendants are now justly indebted to the plaintiff therefor in a certain sum, ($1246,) with interest tnereon from the date of its collection; for which he demanded a judgment against the defendants, with costs.
    The defendants, by their answer, denied most of the allegations in the complaint. It alleged that in or about the month of January, 1862, one William S. Bliss called at the office of the defendants in the city of New York, and represented to them that he was an officer in the military service of the United States, and had a claim against the government of the United States to a large amount, for money expended by him, said Bliss, in recruiting a regiment called the Bliss cavalry; that he, said Bliss, subsequently left with the defendants certain papers purporting to be the expenditures, or an account thereof, in recruiting said regiment; that it also appeared that the plaintiff herein was one of the principal claimants for such expenditure; ■ that in accordance with the representations of the plaintiff and said Bliss, said claim was made out at the sum of $2152.20, and presented to the United States government by the defendants for payment; and the defendants had from time to time collected from the United States govern-. ment portions of said claim, amounting to about the sum last aforesaid; that it was duly agreed by and between said Bliss and the plaintiff and the defendants, that in consideration that the defendants would prosecute and collect said elaim, and would pay all the necessary disbursements therefor, they the defendants should receive and retain from the amount collected the sum of ($500) five hundred dollars over and above their ordinary commissions, and that thereupon said claim was prosecuted and collected by the defendants upon and in pursuance of the agreement aforesaid; that the defendants hadpaidtothe plaintiff, or to or upon his order, and by his directions, at different times, between the 18th day of February, 1862, and the 11th day of December, 1862, on account of the bills or claim in complaint mentioned, the sum of. $1521.39. That the sum so received and collected by the defendants from the United States government, as alleged above, and also the sum so paid to the plaintiff, were so received and paid for the benefit of the plaintiff, and all other persons interested in the recruiting of a certain regiment called the Bliss cavalry, and that the plaintiff furnished certain supplies to said regiment, and he had received from the defendants the whole amount of Ms claim for any supplies so furnished to said regiment; that he is only a nominal party in this action; and that the action (if any) should be prosecuted in the name of said William S. Bliss, as the real party in interest,-and not in that of the plaintiff. For a further defense the defendants alleged that on the' 8th day of August, 1863, the plaintiff, for the consideration of seventy- dollars ($70,) and the further- consideration to be performed, as expressed therein, executed under his' hand, and delivered to the defendants the agreement or release, of which the following is a copy:
    “ I hereby consent to the discbntinuance of the suit in the case of Isaac D. Hammond against Christie & Stow, and the said suit is hereby discontinued, and the cause of action released, in consideration that Christie & Stow pay the costs of said suit, and pay a certain order or draft drawn by me on Christie & Stow for $70, now in the hands of James M. Sheehan.
    New York, August 8, 1863.
    (Signed) Isaac D. Hammond.”
    That the said sum of $70, being .the amount of the order or draft mentioned in said agreement or release, was duly paid to James M. Sheehan, the person therein mentioned, on the 8th day of August, 1863; and at the time last aforesaid, these defendants offered to pay, and tendered to said James M. Sheehan, he being the plaintiff’s attorney in this action, the plaintiff’s costs of said action.
    The referee found the following facts : That the defendants were co-partners in business, as brokers and claim agents, in the city of New York;.that on or about the time stated in the complaint, the plaintiff employed them in their capacity of brokers and claim agents to collect certain moneys due from the United States, arising out of certain claims against the said United States, amounting to the sum of $2146 and upwards, and that the defendants undertook such employment, and agreed to collect the said claims for the plaintiff; that after the collection by the defendants for the plaintiff of the said claims, so placed by him in the hands of the defendants, they recognised the plaintiff as the person to whom they were hound to account for the moneys received by them, by continuing, to transact business with him relative to such claims, and by payments to him on account therepf; that there has been no account and satisfaction between the plaintiff and the defendants in this action, whereby the claim of the plaintiff has been settled and discharged, or this suit discontinued; that the plaintiff in this action is the sole party in interest herein; that the defendants, after their employment by the plaintiff, and the agreement made by them to collect the said claims against the government' for him, collected, as his agents, the sum of $2250; that the defendants have paid to the plaintiff, for and on account of the moneys so collected by them, for him, the sum of $909.66, for which sum they are entitled to be credited in this action; that they are not entitled to be credited on the order on them given by the plaintiff, in favor of William S. Bliss, for the sum of $500, for a larger amount than the sum actually paid by them to Bliss thereon; which was to be $100, and that the retention of the order by the defendants from the said Bliss, in whose favor it was drawn, did not constitute a payment to the plaintiff of the amount of the draft; that there was no agreement between the plaintiff and the defendants, for any specific sum, as a compensation for their labor and services in collecting for him the said claims against the Hnited States; that there were no peculiar circumstances of trouble or complexity in making the collection, and that the defendants a,re not entitled to receive from the plaintiff a larger compensation under the circumstances than the usual brokerage in such cases, which was ten per cent on the actual amount by them collected for the plaintiff, and which compensation amounted to the sum of $225; that after deducting all payments made by the defendants to the plaintiff, or paid by virtue of his orders, and after deducting the amount of commissions on the said collections, to which the defendants are entitled, the plaintiff was entitled to' receive from the defendants the sum of $1115, with interest thereon from the 18th day of July, 1862, amounting to the further sum of $340.08.
    The referee found on the foregoing facts, as conclusions of law: (1.) That the defendants, having undertaken to collect the amount of the claims placed in their hands, for the plaintiff", and in his name and as his agentsj were estopped from denying that he was the party in interest in this action, and from denying their liability to account to him therefor. (2.) That the plaintiff, independent of his interest in the subject matter, had by the payment and advances made by him on the claims collected by the defendants, and by the consent of the parties interested, that the collection should be made in his name, such an interest in this claim as to enable him to maintain this action in his own name, under section 113 of the Code of Procedure. (3.) That the order for $500 given by the plaintiff to William S. Bliss, on the defendants, did not operate as an assignment to that extent of the claim of' the plaintiff in this action, the payee, Bliss, never having consented to accept the responsibility of the defendants for the amount of the order, or to discharge the plaintiff from his liability for a larger sum than the actual amount received thereon. (4.) That from the facts proved the plaintiff was entitled to recover from the defendants the said sum of $1465.08, principal and interest.
    He, therefore, reported in favor of the plaintiff, for that amount, and judgment was entered accordingly, with costs.

      P. J. Pattison, for the appellant.

      Jas. M. Sheehan, for the respondent.
   By the Court, Jones, J.

The plea of accord and satisfaction is not supported by the proof. The only tender was made to the plaintiff’s attorney, who declined to accept it as satisfaction. Consequently one of the essentials to the validity of a plea of accord and satisfaction, viz. an acceptanee, is wanting. It is true, he agreed to and did accept payment of a draft held 'by him, upon the defendants; but he declined to, and did not accept it as a payment made under the agreement of August 8,' 1863, and he wholly declined to accept the costs of suit. (Tilton v. Alcott, 16 Barb. 598. Geary v. Page, 9 Bosw. 290.)

But conceding that the sums stipulated to be paid by that agreement have been paid to, and received by the plaintiffs, in full satisfaction of the whole claim, still neither, the agreement nor the' payment made thereunder would have constituted a defense to this action brought to recover the balance left unpaid.

A payment by a debtor, of a less sum than the amount of his indebtedness, in satisfaction of an indebtedness due his creditor, although such lesser sum be expressly received by the creditor, in full satisfaction, does not constitute an accord and satisfaction, and does not extinguish the creditor’s right to recover the balance of the indebtedness, (cases above cited; also Dederick v. Leman et al 9 John. 333;) unless, perhaps, the transaction is of such a character as to constitute a compromise of an honestly disputed claim. (Palmerton v. Huxford, 4 Denio, 166. Pierce v. Pierce, 25 Barb. 243. Neary v. Bostwick, 2 Hilt. 514.) To bring a case within this exception, the circumstances must be such as to show that the creditor knew the precise objections raised by the debtor to the claim, and by accepting" the lesser sum recognized their validity; and also to show that the objections were made in good faith and not as a mere cover to give color to a compromise, so as to evade the principles relating to accord and satisfaction.

.The proof in this case does not bring it within the exception. It does not appear that at the timé of the agreement the plaintiff knew what objections .were raised to his claim. It cannot, therefore, be inferred that he recognized their validity.

The appellant’s counsel has cited two cases which he deems sustains his defense of accord and satisfaction. They are Walker v. Millard, (29 N. Y. Rep. 375;) and Koon v. Knap, 8 id. 402.) A mere inspection of the first case is sufficient to show that it has no bearing on the principles under discussion. The second case is worthy of a little more attention, because it is possible that its bearing may be misapprehended. On a careful reading, it will be seen that this case decides but two principles: 1st. That a contract agreeing to take a certain sum in full compensation for damages arising out of personal injuries, can be pleaded in bar of an action brought to recover damages for such injuries. This holding does not infringe on .the principle relating to the plea of accord and satisfaction, for those principles apply only to damages arising out of a breach of those contracts, which are capable of being accurately measured according to definite legal rules. Thus the damages arising from not paying a promissory note are, immediately on the breach, adjusted by the law at the amount of the note and the interest thereon, from the date it became due; while in the case of personal injuries there can be no adjustment, except by a verdict, the amount of which, until rendered will, of course, be uncertain.

Now, in the one case the law says it cannot be allowed for you to take advantage of your creditor’s necessity for ready money, and by paying him $50 to relieve yourself from paying $100 which you justly owe him and ought to pay; while in the other it says, as the law fixes no sum which shall be your compensation for a personal injury, and as you are fully as capable of determining what would be a proper compensation as a jury is, it is . perfectly proper that you should agree on the sum which you consider as sufficient compensation, and, after having so agreed, that you should not be permitted to speculate on the probability of a jury thinking your own estimate too low.

The other principle decided by the case of Koon v. Knap, (8 N. Y. Rep. 402,) is that a receipt, which is in its nature ¡a contract, cannot be varied or altered by parol; and that this doctrine applies as well to receipts which are contracts for the compromise of contract debts, as to other contracts. There is no question of the correctness of this decision. But it has nothing to do with the principle applicable to the case at bar. Although such a receipt cannot (except such portion as acknowledges the receipt of a consideration) be contradicted or varied by parol; yet that does not make the contract expressed in the receipt a binding or valid one. The question in the case at bar is whether the contract in question is valid and binding; and for the reasons just given we think it is not.

The appellant, however, further insists that the action is not brought by the real party in interest. The referee has found as a fact, that the plaintiff employed the defendants as his agents, to collect a certain claim, the defendants to pay the same to the plaintiff, when collected. This finding is sustained by the evidence. The suit is brought to recover a balance remaining in the defendants’ hands from collections made by them on their claim. The doc|trine in the case of principal and agent applies, which is: ¡“If an agent receives money for his principal, he is bound to pay it over to him, and he cannot be converted into a trustee for a third person by a mere notice of his claim.” (Story on Agency, 3d. ed. § 217.) Nor can he dispute the title of his principal. (Id.)

The only remaining matter urged by the appellant’s counsel is that the defendants should be credited with the • sum of $500, by reason of a draft drawn on them by the plaintiff in favor of Col. Bliss, for $600. Upon this draft the defendants paid Bliss $100. There is evidence tending to show that the balance was paid by crediting it to Bliss’ account for prior advances made to him. . But, on the other hand, there is evidence contradictory of this, and tending to show that no more than $100 has been paid on it. Upon this contradictory evidence, the referee has found as a fact, that no further.payment than $100 has been made on this draft. His finding on this point is conclusive. We have then a draft drawn by the plaintiff on the defendants, in favor of Bliss, for $600, not accepted in writing, and on which only $100 has been paid. For the balance, the defendants are not liable to Bliss. They are not liable as acceptors, because they have never accepted in writing; they are not liable to him as assignee of the plaintiff because the draft in question does not operate as an assignment. Even if the evidence is sufficient to establish a parol promise, made by the defendant to Bliss to pay him the whole amount of the draft, still1 23**6 Bliss could not recover on such promise. (Luff v. Pope, 5 Hill, 413. Winter v. Drury, 1 Seld. 525. Pike v. Irwin, 1 Sandf. 14.)

Thus nothing has changed the original liability of the the defendants to pay this balance to the plaintiff.

Judgment affirmed, with costs.


author: By the Court, Robertson, Ch. J.

text:
    The Importers and Traders’ Insurance Company, plaintiffs and respondents, vs. John S. Christie, impleaded, &c. defendant and appellant.
    1. Where there is no covenant in a lease restricting the use of the premises by the lessee, but only by sub-lessees, such sub-lessees are bound by the covenant, because it runs with the land.
    2. Though possibly an injunction order might be obtained, if applied for before hand, against a sub-letting for occupations forbidden by the lease, if threatened, yet after a sub-lease is executed, the lessors are confined to damages for breach of covenant against the original lessee. He cannot be restrained in his use of the premises, and after he has parted with the right to the possession, it would be useless.
    3. Where a lease contains a covenant on the part of the lessee not to under let the premises, to any one whose business or signs are considered objectionable by the lessor, or without his written consent, an .injunction order is only proper against a sub-lessee in case the business intended to be conducted by him should prove “ objectionable ” J» the lessor, within the meaning of the covenant.

      4. Although a lessee is liable for nominal damages for breach of his covenant as to sub-letting without the consent of the lessor, it is not easy to lay down a . rule of damages therefor, or„for the sub-letting for an objectionable business, if he has done so. Per Robertson, Oh. J.
    5. Where ’ he" is not connected with any acts of the sub-lesseé charged in the complaint, the award of any thing but nominal damages against him is erroneous.
    6. The acceptance of rent due after a forfeiture has occurred by the breach of a condition in the lease as to under letting, after an action has been commenced to recover the demised premises for such forfeiture, is not a waiver of it.
    (Before Robertson, Ch. J., and Barbour and Monell, JJ.)
    Heard April 11, 1867;
    decided October 7, 1867.
    This action, as appears by the demand for relief in the complaint, is brought to recover certain demised premises, by reason of forfeiture of a term therein, for non-payment of rent; also damages for loss of rent; and to prevent the defendants from using the premises in a specified way. It was begun in March, 1866.
    On the 1st of August, 1864, the plaintiffs by a bipartite instrument under seal demised to the defendant Christie the basement or lower floor of the building * * 100 Broadway, excepting and reserving to themselves “the right to pass coal through the front entrance of said basement from the walk, and alongside of the front of their heating furnace, together with the coal and wood bins adjoining . the same; also the right of uninterrupted entrance from the rear of said basement to and the exclusive use of said furnace, and the water closet- * * in the northeast corner of said basement, with the appurtenances, for the term of two years and nine months” from the 1st of August, 1864, at the yearly rent of $450 payable quarterly.
    It was agreed in such instrument that if the rent should he unpaid, or default should he made in any of the covenants therein contained, it should be lawful for the plaintiffs to re-enter such premises and repossess the same. The defendant Christie agreed thereby not to underlet such premises, or any part thereof, to any one whose business or signs should “be considered objectionable by” the plaintiffs, or “without their written consent first obtained.” He further agreed to restore to its then order his water closet in the basement, if he allowed the tenants of the upper floors of such building so to make use thereof, as to overflow or in any other way damage it. It also contained covenants for quiet possession, and surrender in as good condition as reasonable use and wear and damages from the elements would permit.
    In February, 1866, the defendant Christie, without any written consent of the plaintiffs, underlet the whole of the premises to the defendant Lyon and one Peter E. Lyon, who commenced to make alterations therein, prepared a counter for a restaurant, constructed a bar, introduced liquors, and made all the preparations usual for a restaurant; They remained in possession until April, 1866.
    The complaint set forth the execution of the lease to the defendant Christie, and alleged that he proposed on taking the premises to use them for offices, and fitted them up therefor. It also set forth the underletting to the defendant Lyon; his taking possession of the premises and making alterations therein, and alleged that the business he was about to carry on therein would injure the plaintiffs in their business as an insurance company. That Lyon proposed “to change the conductors of heat from the furnace below the basement, through it, in a manner to be seriously detrimental to ” the plaintiffs in their business. The answer of the defendant Christie admitted the execution of the lease, and the occupation of the premises by him until the lease to the two Lyons, and set forth such letting to them, denied any present occupancy or possession by him, and admitted that the sub-lessees intended to use the premises as a lunch room. It denied that their business would injure the plaintiffs in their business, and controverted all other matters alleged in the complaint.
    After the commencement of this action the defendant Christie, on the 1st of May, 1866, paid to the secretary of the plaintiffs,.who accepted it from him, the sum of $112.50, which was the rent due on that day, and the defendant Christie, on the 9th of the same month, put in a supplemental answer setting up the payment and receipt of such rent as a defense, and also that such defendant had ejected his co-defendant from such premises, since the commencement of this action, and was at the time of putting in such answer in possession thereof.
    On the 10th of May, 1866, the plaintiffs filed a supplemental complaint, alleging that since the commencement of this action the defendants debarred the plaintiffs from the use of the furnace on the premises mentioned in such lease, and thereby prevented them from heating their offices for a long time, greatly to their injury and that of their business, but such supplemental complaint contained no demand for relief. The defendant Christie controverted the allegations of such complaint in his answer thereto.
    Only the defendant Lyon answered -the original complaint. In such answer he admitted the making of the lease from the plaintiffs to the defendant Christie, who underlet them to him, but controverted any understanding by such defendant with the plaintiffs as to the use of the building, or want of a consent by the latter to its underletting. It also denied that the business of the defendant would injure the plaintiffs in their business, or that he intended to keep a bar-room or restaurant on such premises, or that he proposed .to make any change in the conductors of heat from the furnace below such basement, through it, or into the plaintiffs’ offices or elsewhere. It averred that the only business he intended to conduct was a lunch room; denied that he intended to cook any food upon such premises ; and alleged that he intended to conduct his business in a quiet, cleanly, orderly and un exceptionable manner. It also averred that the only changes he had made was to remove temporary movable wooden partitions, placed there by the defendant Christie at his own cost, in such a manner as to leave the basement unobstructed, and that he had placed a proper shelving and counters theréin.

      No answer was put in by the defendant Lyon to the supplemental complaint, nor does any action seem to have been taken on .the same against him.
    The issues made in this action were tried before Justice McCuKfisr, in June, 1866, without a jury, who rendered a decision containing findings of fact. The facts found- by such decision were, the making of the lease to Christie, set out in the complaint; a concurrent agreement by him to use the premises as offices; the underletting to Lyon without the consent of the plaintiffs; his alteration of the premises for a restaurant and bar-room business, and putting in fixtures for an oyster cellar and a bar, with liquors, wines and beer; the injury to the business of the plaintiffs from conducting such business; the exclusion of the plaintiffs, by the defendant Lyon, from the use of the furnace in question, and consequent injury to their business ; the payment by the defendant Christie, and the receipt by the plaintiffs, of the quarter’s rent dne on the 1st of May, 1866, but without the knowledge or supposition by either party that such payment and receipt would affect the right of the parties; and that this action was treated at the time of such payment, by both parties, as an existing action.
    The conclusions of law, in such decision, were that the plaintiffs were entitled to recover possession of such premises, and to have such lease determined, also $75 for damages and loss of rent sustained by them, and to have the temporary order theretofore made in the action, restraining the defendants from doing certain acts, made perpetual, and have such defendants perpetually enjoined from using any part of such premises in a manner forbidden by such temporary order.
    Upon the trial the president, (Brokaw,) secretary, (Bal. lard,) and a clerk (Martin) of the plaintiffs, were the only witnesses examined for them. The defendant Christie was examined as a witness on his own behalf.
    Mr. Brokaw testified that the defendant Christie used the premises while he held them for offices; that he let them to the defendant Lyon, who constructed a bar in them and introduced liquors; made all the preparations for, and said he meant to use them as, a restaurant. That such restaurant would affect the plaintiffs’ business detrimentally. That the entrance to such premises was directly under their window. That they were driven from the basement by the defendant Lyon on one occasion, when they went to make a fire in the furnace, and were kept two weeks without heat. That he received the rent from the defendant Christie on the 1st of May, 1866, without understanding that he waived by it, or that it affected, any rights of the plaintiffs. Nothing was said about its affecting this action.
    Mr. Ballard testified that he did not know, in receiving the rent, that it affected the rights of the plaintiffs. Any number of persons going into the basement would obstruct the light of the plaintiffs; their entire bodies would be in the light. The smell of a restaurant would be offensive; its use as a thoroughfare, drinking and smoking, would be detrimental to the business of the plaintiffs, and a nuisance. It is necessary for an insurance company that claims to be respectable, to have every part of its premises respectable, and- the plaintiffs would not consider a restaurant or barroom respectable. He saw the bar and liquors, going down. It would be a nuisance to the plaintiffs, if not any where else. There is a lunch room under The Excelsior Insurance Company, which they let for a restaurant.
    Mr. Martin testified that the defendant Lyon put up a counter, bar, fixtures and the like, and an oyster stand; he told him he was going to have lunch, cold cuts, oysters, raw and cooked, and the like. He saw liquors there in demijohns and bottles. The defendant Lyon prevented his going down to make a fire, and the premises were locked for two weeks afterwards. He did not see any cooking apparatus.
    An affidavit of the defendant was offered in evidence in which he had stated that in pursuance of a covenant of such lease before mentioned, he had paid to the plaintiffs the rent for .one quarter of such premises. The defendant Christie testified that Lyon was in possession until April, 1866; no other evidence was given that the premises had gone back into the possession of the former.
    Exceptions were taken to the admission of the testimony respecting the acts of the defendant Lyon; the understanding of the plaintiffs as to the receipt of the rent; the effect on the respectability of the plaintiffs of having a restaurant in the same building; the refusal by the defendant Lyon of access to the furnace, and the admission of the affidavit of the defendant Christie.
    Exceptions were filed by the defendant Christie to every finding of fact and conclusion of law in the decision, and an appeal was taken by him from the judgment.

      E. J. Pattison, for the appellant, defendant.
    I. The underletting is not a breach of any covenant contained in the lease. (Jackson v. Harrison, 17 John. 66.) Assuming the agreement not to be a separate and independent agreement, it is void against it, because it is hard and onerous, shackles and embarrasses the tenant, and is a perpetual restriction and incumbrance. The court will not enforce a covenant embracing a hard bargain. (Doe v. Phillips, 9 Moore, 46.) With respect to provisions of reentry upon breach of conditions other than for the nonpayment of rent, every doubtful grant shall be construed in favor of the grantee. (Tillinghast's Adams on Eject. 175.)
    II. The receipt of rent accruing since the alleged forfeiture is a waiver by the plaintiff of all rights to re-enter by reason of a violation (if any) of the covenants in the lease. (Willard on Real Estate and Conveyancing, 108. Bleecker v. Smith, 13 Wend. 530. Jackson v. Allen, 3 Cowen, 220.)
    III. The injunction cannot be sustained as against the defendant Christie, there being no covenant or condition in the lease restraining him from carrying on any kind of business; this restriction in the lease applying only
      to such party to whom the defendant Christie may underlet the premises.

    IV. Under this judgment, the plaintiff can object to any business, however reputable, that Christie or his tenant might attempt to carry on, and the first notice of the plaintiff’s objection would be by suit. It places the defendant Christie, the lessee, absolutely in the power of the lessors, and deprives him of the use of the premises, but at the same time holds him for the rent.

      <x. S. Parsons, for the respondent, plaintiff.
    I. The underletting is not denied by the answer, and was proved on the trial. This was clearly a breach of the covenant not to underlet, and worked a forfeiture of the term. (2 Co. Litt. 204 a. Lynde v. Hough, 27 Barb. 415.) The further violations of the covenants by Lyon were sufficient to work a forfeiture.
    IT. Courts of equity will grant an injunction enforcing specific performance, to restrain the violation by a tenant of covenants contained in his lease, (Waterman & Eden on Injunctions, 236;) also, to restrain a breach of covenant against converting a house to a different use from that prescribed or agreed for. (Id.)

    In construing a covenant, the inquiiy always is, what was the intention of the parties. It was evident from all the testimony, that it was the intention of the parties to this lease, that the premises should not' be used for any other purpose than offices, nor in a manner objectionable to the plaintiffs.
    TIT. The evidence which showed for what purpose Christie hired the basement, and how he used it while he held it, was proper. It did not contradict the terms of the lease, but tended to explain them. It also proved that he was guilty of a willful breach of the covenant in so underletting the premises. The same fact was alleged in the complaint, and not denied in the answer.

      IV. It is not competent for the defendant Christie to say now, for the first time, that we are not entitled to the injunction, as against him.
    1. The objection, if valid, relates to what appears upon the face of the complaint, and he should have demurred, or have moved to modify the injunction order in that respect.
    2. The objection was not taken by demurrer, answer or at the trial; it cannot be taken for the first time on appeal. (Pope v. Dinsmore, 8 Abb. 429. Carley v. Wilkins, 6 Barb. 558. Mosselman v. Caen, 34 id. 66.)

    V. The receipt of rent, after the landlord has actually commenced his action for the forfeiture, does not amount to a waiver. (Taylor’s Landlord and Tenant, 4th ed. 361. Doe v. Meux, 4 Barn. & Cress. 606.) Besides, the original lessee who paid the money was not treated as tenant when the rent was paid; he only paid damages which he was personally liable to pay, notwithstanding the forfeiture of the term, (Hinsdale v. White, 6 Hill, 511. Cushingham v. Phillips, 1 E. D. Smith, 416.)
    VI. The doctrine that the acceptance of rent, after forfeiture, is a waiver, is one of intent; it being inferred from •the payment and acceptance of rent that both parties recognize the lease as still valid; but the contrary may be shown. (Manioe v. Millen, 26 Barb. 41.)
    1. The contrary was shown in this case, and the court below so found as matter of fact.
    2. The principal relief sought is to have the lease declared forfeited and ended on account of the breaches of its covenants by both defendants, and the injunction was merely auxiliary; so that by section 148 of the Code the ■objection must be deemed to be waived. (Zabriskie v. Smith, 13 N. Y. Rep. 322.)
    Christie was a stranger to the premises at the time the injunction was issued, having parted with the right to possession, and to the possession and control of the place, and the term having been ended by the wrongful act of the defendant Christie, in underletting as he did, and by the acts of the defendant Lyon, for which the defendant Christie was responsible, the parties were trespassers, and. could properly be enjoined at the suit of the plaintiffs. (Hinsdale v. White, supra.)

   By the Court, Robertson, Ch. J.

The relief demanded in this action by the original complaint was three fold; the forfeiture of the lease by the defendant Christie, and damages for his violation of a covenant therein by him not to underlet the premises, as well as a prohibition against any future use of them in a certain specified manner. The supplemental complaint does not contain any demand for any relief. This action is not a substitute for an action of waste as allowed by the Code of Procedure, (§ 450,) in which both the land and damages can be recovered; because no injury to the demised premises or the reversion is set up, but only to the business of the plaintiffs in the same building.

The covenant for or against a particular use of the demised premises can, of course, be specifically enforced. (Steward v. Winters, 4 Sandf. Ch. 589. Howard v. Ellis, 4 Sandf. 369. Seymour v. McDonald, 4 Sand. Ch. 502.) But in this case there was no covenant limiting the use of the premises by the originallessee, but only by sub-lessees. Such sub-lessees are bound by tiie covenant, because it runs with the land. Possibly an injunction order might have been obtained before hand against sub-letting for the forbidden occupations if threatened. But after the sub-lease was executed, the plaintiffs were confined to damages for breach of covenant against Christie. No injunction lay against him for his_use .of the premises, and after he had parted with the right to the possession it would be useless. The injunction, therefore, was only proper against the sub-lessee in case the business intended to be conducted should prove “objectionable ” to the plaintiffs within the meaning of the covenant in the lease. But' it is not necessary to discuss his liability, as he has not appealed. So far as the judgment covers any use by the defendant Christie of the premises, it is erroneous.

Although, of course, the defendant Christie is liable for nominal damages for breach of his covenant as to sub-letting without the consent of the plaintiff, it is not easy to lay down a rule of damages therefor, or for the sub-letting for an objectionable business, if he has done so. The sum of $75 is awarded for damages and loss of rent, in the judgment ; but for the rent of what does not appear. It could not be of the demised premises upon the ground of forfeiture, because, although mesne profits might be recovered for holding over after it, they must be recovered in a separate action. (Holmes v. Davis, 19 N. Y. Rep. 488.) The plaintiffs undertook to prove damages to themselves, not as reversioners of the demised premises, but as occupants of another part of the same building, and as carrying on therein a peculiar business; which is not referred to in the lease. The only objections they relied upon in evidence were, jirst, the diminution of their respectability by having a restaurant in the same building; second, the nuisance of the odors of cooking and of the eating, drinking and smoking therein, and, lastly, intercepting daylight from their windows by the passage of the bodies of persons in front, descending into the basement. There was no evidence offered of any loss even of contracts of insurance, or indeed of pecuniary loss, by the refusal of parties to deal with the plaintiffs on account of such restaurant. Indeed there is nothing before us from which to make even a conjectural estimate of damages, and the original complaint is entirely for breach of contract, not for a tort. The defendant Christie is not connected with any acts of his co-defendant charged in the supplemental complaint, and therefore no damages could be recovered against him therefor. The award of any thing but nominal damages against him in the judgment, was erroneous.

It is so doubtful whether any prejudice of the business entered upon by the defendant Lyon to the mere peculiar business of-the plaintiffs, rendered the former objectionable within the meaning of the covenant in the lease as to make it a cause of forfeiture, that its consideration may be laid aside. If it were so, as the covenant runs with the land every subsequent grantee of the reversion might object to the business of any sub-lessee which interfered with his own, although it might not with that of the plaintiffs, and the prejudice might not depend even ( upon their being in the same building.

But as the premises were sub-let without any written consent of the-plaintiffs, the original lease became forfeited, unless the forfeiture was waived. The only waiver pretended is that set up in the supplemental answer, of the acceptance of rent due after the supposed forfeiture. But that was paid in satisfaction of the covenant, which is a contract, and not affected by a forfeiture of the land, which is a condition of the estate. Its obligation remains, although the relation of landlord and tenant is gone; and the receipt of rent voluntarily paid does not re-establish it; there is no unlawful act of the landlord done, which would defeat the claim for rent, but the forfeiture is produced by a failure of the tenant to do, what he was bound to perform. It was, besides, not for non-payment of rent; but for another cause. No one is prohibited from agreeing to forfeit an estate for a particular act or omission, and yet pay rent reserved, and Christie did that precisely in this case. (Hinsdale v. White, 6 Hill, 511.) He, in fact, agreed to pay the rent, not for an indefeasible estate, but for one liable to be defeated by his non-performance of his covenants.

None of the evidence objected to in this case related to the question of forfeiture; it all related to those issues on which a right to an injunction and damages depended. It is easy, therefore, to separate the facts found upon the strength of it, from those on which the right of forfeiture rests, as they are set out in tiie decision of the court. The want of a written consent to underlet was admitted; the judgment of eviction was therefore proper; and neither such evidence nor any exceptions to the same affect it. It is unnecessary, therefore, to pass upon such exceptions, which affect only the question, of damages and the injunction, as to which the defendant Christie is entitled to have the judgment reversed or modified.

There was no evidence to connect the defendant Christie with the trespass set forth in the supplemental complaint, and he is therefore entitled to judgment on that issue. But the plaintiffs, upon the basis of an accidental finding of a fact which is contained in the decision of the court, although not put in issue by the pleadings, or sustained by any evidence, claim that the, defenüant Christie, under a separate (parol) agreement made between him and the plaintiffs, concurrently with the delivery of the lease, bound himself not to use the demised premises except for offices. If any such agreement was ever made, it could hardly have remained binding after the lease was executed; that demised the premises free from any restriction as to their use or enjoyment, except by sub-lessees of the defendant Christie, and then only as to the affixing of signs, or some other use “ objectionable ” to the plaintiffs, (whatever that meant,) the remedy for which was their dispossession in consequence of forfeiture of the lease thereby. There were also certain reservations in such lease, and a covenant for the surrender of the demised premises in good order at the end of the lease. It •would seem, therefore, that the parties had embodied in such lease all the restrictions upon the enjoyment or use of such premises, to which they had intended to agree, or which they required. And although a concurrent separate parol agreement upon matters not disposed of by a sealed instrument, and not interfering with rights thereby granted, may be enforced, yet it is extremely doubtful whether such an agreement as that supposed could interfere with the unlimited right of use and enjoyment of the premises conferred by the lease; and also whether the parties, not having deemed it worth inserting in the more exact, durable, reliable and solemn written evidence of their compact, it is not to be classed among those preliminary understandings which are considered as merged in the final written contract. The enforcement of specific performance of such a collateral loose agreement would be of still more doubtful propriety.

But such agreement, if made, would not authorize an injunction against the defendant Christie after (as in this case) he had sub-let the premises to others. If their use of it was imputable to him, as his, under such an agreement, an injunction against him could not reach his sub-lessees', and it was therefore entirely nugatory. It would have been a mere personal contract resting in damages after the defendant Christie parted .with the right of possession of the premises, and his sub-lessee or assignee could not be enjoined from a use, of the restriction upon which, they knew nothing.

As, however, I have already stated, no agreement of the kind found appears in the pleadings. The complaint merely alleges that the defendant Christie, when taking the lease, proposed to use the premises for offices and actually fitted them as such. This is far different from an agreement never to use them for any such purpose, and created no obligation; and there is no pretense of any fraudulent representation. Even that statement, however, is controverted in the defendant’s answer, and no evidence of it or of the supposed agreement, as found in the decision, was offered on the trial. The only reference to offices, in the evidence, is that in the testimony of the president of the plaintiffs, (Brokaw,) who testified that the defendant Christie used the premises as offices. Although such injunction may not have caused any damage, it should not be retained.'

There was no evidence in the case that the defendant Christie excluded the plaintiffs from the use of the furnace. Their right to such use was a mere reservation in the lease, and those who interfered with it were, of course, liable as trespassers.

In order to avoid all questions as to the power of the court to modify the judgment as rendered, it must be reversed, and a new triaTkad, unless the plaintiffs consent to a modification of it by reducing the damages against the defendant Christie to a nominal sum, striking out the continuance of the injunction against him as to the use of the premises, giving judgment in his favor on the supplemental complaint, and striking out the costs against him, as he succeeded on one issue. In such case it may be so modified, without costs of the appeal to either party.


author: Barbour, J. Robertson, Ch. J.

text:
    Thomas B. Tweddle, plaintiff, vs. George Hoffman and another, defendants.
    Where one of the defendants originally received $1000 from the plaintiff to pay his subscription for stock of an oil company, which such defendant did pay, and the plaintiff'subsequently delivered the certificate of stock obtained by him on such subscription to the defendants jointly, to be by them applied to his subscription for the purchase of certain silver mines in Mexico, and took' from them their receipt for $700 in gold as received from him for his subscription to such mines, and such certificate was so applied, but the enterprise was abandoned. Held that the plaintiff could not recover the $1000 originally deposited by him with one defendant, nor the certificate of oil company stock, nor its value, nor the value of $700 in gold.
    (Before Robertson, Ch. J., and Barbour and Garvin, JJ.)
    Heard January 18, 1867;
    decided October 7, 1867.
    This action was brought to recover the sum of $1000, which the plaintiff deposited with the defendant Hoffman, on the 20th February, 1865. He took Hoffman’s receipt for it, by which it was to be applied as a subscription to a company about to be organized by the defendant Hoffman, to be known as the Hoffman Oil Company, which was so done. Subsequently the defendants solicited the plaintiff to change and put his money into the Rosiaro and Valencia silver mines, which the defendants represented they were about to purchase. The defendant Rose was acting for himself and Hoffman in what he did. The plaintiff gave up his first receipt taken for the $1000, and his certificate of stock in the oil company to a Mr. Seldon, and took the receipt set out in the complaint, under the specific agreement, that the $1000 he had subscribed for the oil company, should be changed and used for the purchase of the Rosiaro and Valencia silver mines. After this agreement with Rose, the receipt taken from Hoffman was given up to them, and the receipt set forth in - the complaint was given to the plaintiff. The Rosiaro and Valencia silver mines were abandoned by the defendants.' The plaintiff demanded the return of the $1000, which the defendants declined to return, and this action was brought to recover it.
    After the evidence was in, the judge directed a verdict for the defendants, subject to the opinion of the court at general term. The plaintiff requested him to submit the question to the jury whether or not the contract was to put the $1000 subscribed to the oil company into the silver mine. Also all the questions in the case. Also, to direct a verdict for the plaintiff, which the court refused; to which refusal the plaintiff1 excepted. Other facts appear in the opinions delivered.

      Ira JD. Warren, for the plaintiff.
    I. If the agreement between Tweddle and the defendants was that this $1000 should be invested in this silver mine, the plaintiff was entitled to recover. He never had any stock in the oil company; he had simply a receipt for $1000 given before the company was organized, the de-fendant (Hoffman) having the money in his hands. The agreement to take the oil receipt for cash, or change the subscription to another and different company, was an agreement the defendants were perfectly competent to make, and they were personally bound by it. The plaintiff, after that, had no more to do with.the oil receipt than if he never had-had it. He stands as though he had paid $1000 to Hoffman and Rose, and they not having paid it for the silver mines were bound to return it to him. They have returned all the cash subscriptions they received on this enterprise from other parties. They now claim that notwithstanding, they made this agreement to put Tweddle’s $1000 in the silver mine, enterprise, all they are bound to return to him was the oil receipt. We claim that this is not so, for the following reasons:
    1. The defendants were acting for the owners.of the Rosiaro and Valencia silver mines, and were paid by them a per centage on the subscriptions, for their services. They were distinctly authorized to receive any security satisfactory to them. They did receive this oil receipt as cash, one of the defendants having previously had the money. They cannot now refuse to carry out the purchase of the mine, and pay the plaintiff back his $1000, by a return of the oil receipt, which they allege was worthless, for the reason that there was- no agreement made that in case the Rosiaro and Valencia enterprise failed they should have the right to return him the oil receipt.
    2. It was an absolute and unconditional sale of the oil receipt to the defendants for'$700 in gold, to be paid for in shares of a silver mine, which was worth the amount of $700 in gold. The plaintiff is entitled to his interest in the silver mine or the money, no reason being shown why they gave up the purchase of the silver mine. The defendants having failed to give him the interest in the silver mine, and having given up the purchase of it without the plaintiff’s consent, are bound to pay him its value, $700 in gold, or $1000, the amount represented by it. The defendants aver that they had no “ right or power to give up such purchase,” and yet Hoffman swears that “ they gave up the purchase,” and that they had returned to the subscribers the cash subscription.
    3. It is conceded that one of the defendants had the-money from the plaintiff. It was competent for them to change its destination from one company to the other; and whether they did this, or by agreement took the original receipt for the money, as cash, it is money in their hands belonging to the plaintiff, precisely as though originally deposited for the silver mining enterprise. On this case the court should have directed a verdict for the plaintiff.
    4. If, however, there is any conflict of evidence between the plaintiff and Rose as to what the agreement was, it should have been submitted to the jury, as requested by the plaintiff, as they were the only witnesses who testified upon that subj ect.

      L. 8. Qhatfield, for the defendants.
    I. The complaint does not set forth a cause of action, and no recovery could be had upon the facts contained in it. It shows on its face that the money was deposited with Hoffman as trustee of a joint enterprise, and was intended as a subscription by the plaintiff to that enterprise, This money could not be recovered from the trustee in violation of the contract under which it was delivered.
    II. There were several fatal variances between the proof and complaint.
    1. The complaint alleges that the plaintiff deposited $1000 with George Hoffman. The proof is, that he did not deposit any thing with George Hoffman.
    2. The complaint alleges that the plaintiff deposited $1000, equal to $700 in gold. The proof is that he did not deposit any thing with Hoffman or Rose, and that what he left in exchange was a certificate of stock in the Hoffman Oil Company, and not money, and that was left with one Selden.
    8. The complaint alleges that the defendant Hoffman gave the plaintiff a receipt, &c. The proof is that Selden gave him the receipt.
    4. The allegation proceeds on the hypothesis that the plaintiff had deposited money with the defendants to purchase certain silver, mines. The proof shows that the plaintiff exchanged one certificate for another, and that no money entered into the transaction. This is a variance of substance, and fatal to the action. (2 Cowen’s Treatise, 378, 378, 379, 382.)
    TIT. The defendants were trustees under a special contract, by the terms of which the plaintiff was bound. Until the contract was mutually given up by the contracting parties, the trustees were subject to its provisions. Mr. Stearns was the party on one side, and could require its performance, and he had an interest in the money deposited with the trustees. There is no evidence that he ever'agreed to give up the contract, or his right to the money paid in, and until he' did, or in some way forfeited his right, the plaintiff could bring no action to recover back his subscription money.
    IV. The trustees, as such, had no power to contract or to ' abandon the purchase. They were mere naked depositaries, with ho power except to receive, and pay over the money according to the contract. In law, the contract has not been given up, and Stearns may still enforce it and call the money subscribed out of the hands of the trustees.
    V. If the contract for the purchase of the mines was abandoned and at an end, the parties were remitted to their original condition. The plaintiff, on surrendering the certificate he received from the defendants, was entitled to the oil stock certificate which he exchanged for it, and to nothing else. This was offered to him when he made the demand, and the offer was a full and complete answer to his claim. He could not, by refusing to accept it, turn it into gold.
    VI. The demand was not sufficient to sustain the action. It was a demand of money, but whether $700 or $1000, is not shown. The specific and right sum should have been named. But a demand of money was no demand in this case; the thing deposited, should have been demanded, and if that was refused, its value in money might have been recovered. As against a mere depositary the thing deposited must be demanded before a right of action can accrue.

      VH. The purchase of these mines was a joint enterprise, to which the defendants, the plaintiff", and many others, were parties. One of these parties cannot sue another to recover a portion of the joint fund, nor to recover a demand against the whole. An account in equity may be required, but an action at law cannot be maintained.
    VIII. There was nothing to go to the jury, The action had entirely failed, and there was no question for them to decide. There was no proof to sustain the first request, to submit to the jury. The books of the Hoffman Oil Company showed Tweddle to be an original subscriber of that company, and he held a certificate of stock in that company for $1000. This certificate was handed to Selden in exchange. There was not, and could not be any $1000 subscribed by him to the stock of the oil company, to be put into the hands of the trustees by Tweddle, by way of exchange, or for any purpose. It was absorbed in the capital of the old company, and all he could have to represent it was his stock, and this he confessedly handed oyer to Selden. Rose and Tweddle had no power to negotiate about the money paid in as capital to the oil company. It was and had been for a long time beyond their reach.
   Barbour, J.

This case comes before us upon one motion by the plaintiff, upon exceptions and the evidence, for judgment in his favor, (non obstante veredicto,) or for a new trial, and another, in behalf of the defendants, for a judgment upon the verdict rendered by the jury at trial term.

The action was brought to recover the value of $1000, in gold, alleged in the complaint to have been deposited by the plaintiff with the defendants to be expended for the purchase of certain silver mines in Mexico, and which, it is averred, they have failed so to expend, or, on demand, to return. The receipt of the defendants, which is the evidence of the obligation or trust, is in the following words:

$700 in gold. • “New York, October 6, 1865.
Received of Thomas B. Tweddle seven hundred dollars in gold, being the amount subscribed by him for the purchase of the Rosairo and Valencia Silver Mines in Chihuahua, Mexico, which will entitle him to seven hundred dollars subscription. George Hoeemah,
M. H. Rose, Trustees.
$700 subscription.”

The answer denies that any funds were received by the defendants in their individual capacity, or otherwise than as trustees; and avers, among other things, that no money was delivered to them by the plaintiff, but only a certificate of stock of the Hoffman Oil and Land Company, amounting, nominally, to $1000; that steps have been taken by the defendants to complete the purchase of the mines, but that sufficient time has not yet elapsed to enable them to do so; and they express their readiness to return such certificate of stock upon the surrender to them of their receipt for .the $700 in gold.

The evidence shows that the defendants were negotiating with the owner for the purchase of the Mexican mines, on behalf of such persons as were or should become subscribers to the fund for that purpose, for the price of $150,000 in gold, but for a portion of which such owner had agreed to receive in payment certificates of stock of the Oil and Land Company at the rate of $1000 in such stock for $700 in gold; that, pending such negotiations, the defendants applied to the plaintiff, and advised him to become one of the subscribers to such contemplated purchase, and informed him that they would receive his stock and apply it in the making of such purchase, in lieu of, and as representing $700 in gold, and that, thereupon the plaintiff delivered to them his certificate of stock, and took from them the receipt set forth in the complaint.

As evidence was given upon the trial tending to prove that the project of purchasing the mines had been abandoned, sufficient to have authorized a finding by the jury to that effect, tbe single question is, whether the plaintiff is entitled, merely, to the return of the certificate of stock which he delivered to the defendants, or to recover, in this action, the value of the gold mentioned in the receipt.

The receipt, of itself, unconnected with the evidence in the case, neither expresses nor implies any trust to be performed by the defendants, nor any obligation to return the gold therein mentioned. If, therefore, the defendants are bound to account in this action for the value of, such gold, that obligation must be found in the facts proven upon the trial. How, the testimony shows that no gold whatever was received by the defendants, but that the plaintiff delivered to them, without any transfer of the title or ownership thereof, a certificate of stock in the Oil and Land Company, of the nominal value of $1000, to be by them applied to the purchase of the Mexican mines, for the plaintiff’s benefit, as well as that of the other subscribers who were, or were to be, associated with him in such purchase. It was, probably, a power in trust that was thus conferred upon the defendants, which would have enabled them to transfer the title to the stock if the purchase had been completed; but, as no purchase was made, and the' negotiation has been abandoned, the power in trust has ceased, and the plaintiff will be entitled to the possession of his certificate, upon demanding the return thereof. But no obligation or duty was assumed by the defendants, either by the delivery to them of the certificate, or the. giving of the gold receipt, except to apply the certificate to the purchase of the mines, or to return it to the plaintiff.

The claim of the plaintiff that the money originally paid by him to the defendants, or one of them, for the certificate of stock in the oil company, is the $1000 mentioned in the complaint, has not a shadow of merit. That transaction was not connected in any manner with this, but was entirely closed by the transfer or assignment of stock in the oil company, in consideration of such payment, some time before the certificate was delivered to the defendants.

Judgment should be entered for the defendants upon the ^verdict, with costs.

Garvin, J. concurred.

Robertson, Ch. J.

The terms of the receipt set out in the complaint, were capable of being disproved, and it clearly appears by the testimony that the statement in the complaint as sworn to by the plaintiff, that he deposited any money for the purpose therein set out, was untrue. He had paid $1000 to the defendant Hoffman, and claimed and took from him therefor a certificate of stock in an oil company. This he subsequently exchanged with a third person (Mr. Selden) for a subscription for the purchase of certain mines in Mexico, apparently with the intent of having it delivered to the seller of such mine as payment of such subscription. At all events, such seller received it as such, and the title to the mine was thereby secured.

The testimony of the defendant Hoffman, that the subscribers “ gave up ” the contract, is clearly not to be understood as implying a rescission of it, because he says “ nothing was done about it” and that “ the title to the mine had been secured.” He, undoubtedly, meant to speak of a failure to prosecute the enterprise on account of the war. The defendants, therefore, did what by the terms of their arrangement with the plaintiff, they agreed to do, to wit, acquired for him an interest in the mines to the extent of the amount mentioned in the receipt. I, therefore, concur in overruling the exceptions and ordering judgment for the defendants.