Mayer v. Seril

Lehman, J.

The defendant has leased certain premises at 486 Broadway for the term of two years at an annual rental of $2,750. Before the defendant entered into this lease the plaintiff and the defendant had entered into an agreement that they would each occupy part of the premises for their respective businesses and each pay half of the rental, and about the time when the lease to the defendant was actually executed the plaintiff paid to the defendant one-half of the amount of the rental for the first month. The lease itself provides that the premises are leased to the defendant “for his business as a dealer in cotton goods and not otherwise,” and also contains a provision against subletting. The plaintiff is not a dealer in cotton goods. The plaintiff claims that his agreement with the defendant was that the defendant should give him a sublease of one-half of the store and that the defendant refused to execute such a sublease. He, therefore, brings this action to recover damages for the defendant’s breach of this alleged agreement. The defendant’s answer denied these allegations- and set up as a counterclaim that the plaintiff and the defendant mutually agreed that they would rent certain premises jointly, to be used for the purpose of carrying on their respective businesses, and that it was further agreed ‘ ‘ that each was to occupy one-half of any premises which they would hire and each pay one-half of the rental thereof. ’ ’ That pursuant to this agreement the parties selected the premises at 486 Broadway and leased the same and that the parties agreed that the lease be executed by and to the defendant and that the liability for the payment of the rent and the performance of the covenants of the lease was to be the same, as between the plaintiff and the defendant, as “though the lease were executed by and to the plaintiff and the defendant as lessees thereof, and that each was to pay one-half of the rentals in consideration for which each was to have and occupy one-half of the said premises. That the plaintiff paid one-half of the rent of the first month and the parties to their mutual satisfaction apportioned to each other the exact part of the premises to be occupied by each. That the plaintiff thereafter notified the defendant that he would not carry out his agreement and that as a result the defendant, has been damaged in the sum of $2,750.

At the opening of the trial the trial justice dismissed the complaint on the ground that the oral contract alleged in the complaint was void under the Statute of Frauds. He refused, however, to dismiss the counterclaim, holding in substance, that the agreement therein set forth was in the nature of a joint venture. The defendant then assumed- the affirmative and the question of the nature of the actual agreement between the parties was thoroughly litigated and submitted to the jury, which determined this question in favor of the defendant. I agree that the verdict is not against the weight of evidence. The real question presented on this record is whether, the contract between the parties is void under the Statute of Frauds.

This is not a case where a court of equity is asked to decree specific performance by one party where the other party has partly performed and where the court sometimes intervenes to prevent the statute against frauds being used as an instrument of fraud (Canda v. Totten, 157 N. Y. 281), nor is it a case where the parties had agreed to enter into a partnership to deal in land sharing the profits and losses jointly. Trafhagen v. Burt, 67 N. Y. 30. It is not even a case where two parties entered into an agreement for the joint occupancy of certain premises. The contract in the light most favorable to the defendant was an agreement that he should lease certain premises in his own name and assume personally the status and liability of a tenant as between himself and the landlord, and’ that thereafter as between the parties each should occupy one-half of the store and each should pay one-half of the rent. To my mind the really significant feature of the agreement was that the parties did not contemplate a joint tenancy of the premises but that, as the counterclaim alleges, “ the plaintiff and the defendant to their mutual satisfaction apportioned to each other the exact part of the premises to be occupied by each.”

The defendant, under his lease with the landlord, was the sole tenant and this lease was made in accordance with his agreement with the plaintiff. The defendant agreed that he and the plaintiff were each to occupy a part of the space so leased by the defendant and the plaintiff was to pay to the defendant one-half of the rent. That agreement could not be carried out according to the intent of the parties unless the plaintiff became the defendant’s subtenant in part of the premises. The parties clearly contemplated a subtenancy for two years and such subtenancy cannot be created by parol. The only real dispute between the parties is whether the defendant under the parol agreement was to make a written sublease to the plaintiff or whether under that agreement the subtenancy was to come into existence as soon as the defendant received his lease and the parties apportioned the premises. The oral agreement, however, was in either view intended to result in a sublease by the defendant and not in a joint control of the premises and in either view it comes within the purview of the Statute of Frauds.

As a matter of fact both parties to this litigation seem to have taken this view until the learned trial justice placed a different interpretation on the oral contract as alleged by the defendant. The record shows that when the. defendant moved to dismiss the complaint the following colloquy occurred: “The Court: * * * Isn’t the situation reciprocal here? Does not the yardstick measure apply here? Defendant’s counsel: As to the Statute of Frauds? The Court; Tes. Defendant’s counsel: I think it does. If it applies to one it applies to the other, and I think we are both out of court for that reason.”

After some further discussion the court then granted the defendant’s motion to dismiss the complaint. Thereupon the plaintiff moved to dismiss the counterclaim and defendant’s counsel stated: “ I will consent to the granting of the motion upon condition that the plaintiff will consent to a dismissal of the complaint. ’ ’

Of course the views of counsel as to the legal effect of a contract are not binding on the court and I have cited these views merely to show the interpretation which the defendant placed on his own oral agreement, and that under such agreement the parties contemplated no joint venture but a sublease. Inasmuch as I think that the judgment should be reversed and the counterclaim dismissed I have not thought it proper to consider whether the plaintiff’s absolute repudiation of his agreement does not constitute a breach of the whole contract which would entitle the defendant if the agreement were enforcible to recover full damages in one action.

Judgment reversed, with costs, and counterclaim dismissed, with costs.

Finch, J., concurs.