First Department, March, 1922.

[Vol. 200 the plaintiff by the perpetration of a fraud. The original owner of the lot, the use of which, for the purpose of dealing in coal, is sought to be restrained, was under contract to sell the same to certain dealers in coal, who had formed a corporation to purchase it and enter into the coal business in competition with the plaintiff. While this contract was pending, and known to the plaintiff's grantors, they procured the contract of September 16, 1916, which burdened the title of the vendor in the contract of sale, not only with the covenant as to its use, but with a second mortgage. The purchaser was, therefore, compelled to reject it. This amounted to a fraud upon the purchaser (Gonzales v. Kentucky Derby Co., 197 App. Div. 277), and this fraud is the origin of the promise of the predecessor in title of the defendant which it is sought, by this action, to enforce as against the defendant. It is not a question whether the other party to the contract has received compensation for the wrong so done it. Conceding that it has, it is none the less true that the right of the plaintiff was conceived in iniquity. It is a struggle between certain coal dealers, whom the defendant represents, on the one hand, and the plaintiff, which seeks to exclude competition, on the other. The plaintiff appeals to a court of equity to aid it, basing its claim to relief on a contract procured by a fraud upon prospective dealers in coal, now represented by defendant. The trial court justly and properly, I think, refused to aid in the consummation of the fraud. (Hocking Valley R. Co. v. Barbour, 190 App. Div. 341; Roberts v. Criss, 266 Fed. Rep. 296.)

Judgment reversed, with costs, and judgment directed for the plaintiff, with costs. The findings are to be modified in the order in accordance with the opinion by KELLY, J. Settle order on notice.

In the Matter of the Summary Proceedings of 507 MADISON AVENUE REALTY CO., INC., Appellant, v. NICHOLAS MARTIN, Respondent, Impleaded with LILLA LARSON and Others, Defendants.

First Department, March 3, 1922.

Landlord and tenant-leases - covenant in lease for its cancellation under certain conditions held to be covenant running with land covenant in lease running with land and covenant personal to lessor distinguished — tenant cannot question landlord's title for first time on appeal nor after admitting title in pleadings.

A covenant in a fifteen-year lease, made by a landlord nearly seventy-three years of age, which provided that after seven years of the term had expired, in case of a sale of the property, the landlord might terminate the lease upon giving the tenant ninety days' notice and paying him $5,000, is a covenant running

App. Div. 146]

First Department, March, 1922.

with the land, although no mention is made of the heirs and assigns of the landlord, especially where the tenant in a letter to the successor in title to the premises evidenced his understanding that the covenant was operative and available to the successor.

It seems, that a covenant in a lease which affects the use, value and enjoyment of the premises is a covenant running with the land, while one which is beneficial to the lessor without regard to his continuing the owner of the premises is a collateral covenant personal to the lessor.

A tenant cannot question his landlord's title in a summary proceeding to dispossess for the first time on appeal.

Admission of the landlord's title by the tenant in the pleadings in a summary proceeding precludes the tenant from questioning the landlord's title at a later stage of the proceeding.

APPEAL by the plaintiff, 507 Madison Avenue Realty Co., Inc., from an order and determination of the Appellate Term of the Supreme Court, First Department, entered in the office of the clerk of the county of New York on the 9th day of June, 1921, affirming a final order of the Municipal Court of the City of New York, Borough of Manhattan, Ninth District, in summary proceedings dismissing the petition of the plaintiff and awarding the tenant possession.

Myers & Sherwin [Francis M. Scott of counsel], for the appellant. Arthur S. Luria [George L. Ingraham of counsel], for the respondent. MERRELL, J.:

This proceeding was instituted to recover the possession of leased premises. The Municipal Court, in which the summary proceedings were instituted, made a final order dismissing the landlord's petition and awarding the possession of the premises to the tenant. An appeal was taken to the Appellate Term, where the final order of the Municipal Court was affirmed. This appeal is by the landlord from such determination of the Appellate Term.

The premises in question are situate at No. 540 Madison avenue, borough of Manhattan, New York city, and are occupied by the defendant Nicholas Martin, as tenant. The proceeding was to remove said tenant upon the ground that he held over after the expiration of his term. By consent the proceeding was discontinued at the trial as against the undertenants, occupants of different parts of the demised premises in the upper floors thereof for living purposes. Martin, the respondent herein, is in the occupation of the ground floor of the premises for business purposes. This appeal involves alone the construction of the lease under which the tenant holds. By consent of the parties, no questions are raised under the statutes of 1920 known as the "Housing Laws."

The lease to the tenant, respondent, was executed in writing on or about December 19, 1912, by Simeon J. Drake, who then

First Department, March, 1922.

[Vol. 200 owned the premises, which consist of a four-story and basement brown stone front building with a brick extension thereto. The tenant, under said lease, entered into the possession of the premises and still remains in possession thereof. Drake, the original lessor, died on October 6, 1914, leaving a will wherein he named Henry B. Browne, Craig F. R. Drake and Simeon J. Drake, Jr., as executors. This will was admitted to probate and letters testamentary thereon were duly issued to said executors, who thereafter qualified and entered upon the discharge of their duties. On or about August 11, 1915, the said executors, under the power of sale contained in the will of Simeon J. Drake, deceased, conveyed the premises, subject to said lease, to the Five-Forty Madison Avenue Corporation, and on March 18, 1920, the last-mentioned corporation made a contract for the sale of said premises to the 507 Madison Avenue Realty Co., Inc., the petitioner and appellant herein.

In and by the terms of said written lease made by Simeon J. Drake, deceased, to the tenant, respondent, Nicholas Martin, it was provided that the leased premises were to be altered and repaired for the use of the tenant according to plans and specifications to be prepared by an architect selected by the said landlord, which plans and specifications were to be approved by both the tenant and the landlord; and that such repairs and alterations should be carried out by a contractor employed for that purpose by the tenant and under his direction, but subject to the supervision of an architect employed for that purpose by the landlord. It was further provided that the cost of such repairs and alterations should be paid by the landlord upon the certificate of the architect to the extent of $5,000; and that if the expenditure in effecting such repairs and alterations exceeded $5,000 such repairs and alterations should nevertheless be carried out and completed in accordance with such plans and specifications and paid for by the landlord; and that six percentum on the amount of such excess should be annually added to the amount of rent during the term of the lease and apportioned in monthly payments and paid by the tenant in advance on the first day of each and every month during the term of said lease.

The lease was for a fifteen-year term, commencing May 1, 1913, and ending May 1, 1928. The repairs and alterations contemplated by the lease were effected, and on or about the 13th day of January, 1915, Drake, the lessor, having died on October 6, 1914, his executors, as such, entered into a written agreement with the tenant, Martin, supplementary to said lease, wherein the provisions of said lease with relation to repairs and alterations upon said leased premises were recited, and wherein it was further recited that the amount

App. Div. 146]

First Department, March, 1922.

in excess over $5,000 of the cost of making such alterations provided in said lease had been ascertained and agreed upon by said. landlord in his lifetime and the tenant, but had never been reduced to writing, and it was thereby and therein expressly agreed between said tenant and said executors that the amount of the cost of said alterations and repairs provided for in said lease in excess of $5,000 was the sum of $6,900, and that interest at six percentum, to wit, the sum of $414 per year should be added to the rent in said lease reserved, and paid in equal monthly installments of $34.50, each and every month during the term of said lease, in addition to and together with the rent therein specifically reserved; and in said written agreement between said tenant and the executors aforesaid it was stated to be expressly understood and agreed that the instrument which they then executed was for the purpose only of stating the agreement of the parties as to the amount of said expenditure and to formally declare the same, and not in any way to alter, vary or affect any of the provisions of the original lease.

The written lease under which the tenant, respondent, is in possession of said premises, by its 12th clause, provides as follows:

"12th. Said Landlord reserves the right to terminate this lease and the term thereof at any time after May 1, 1920, in case of a bona fide sale of the property upon giving 90 days' notice in writing to said tenant, addressed to said demised premises, of his intention so to terminate the same, and this lease and the term thereof shall cease, determine and end at the expiration of 90 days from the day when such notice is given. And thereafter said Landlord may re-enter upon and take possession of the demised premises and every part thereof either by force or otherwise without being liable to prosecution or damages therefor and have and enjoy the said premises as of their former estate free, clear and discharged of this lease and of all rights of the Tenant hereunder. In the event of the cancellation of this lease in the manner herein before provided, the Landlord shall pay to the said Tenant as consideration for the surrender of the said premises the sum of Five thousand ($5,000) Dollars."

On or about May 3, 1920, the said Five-Forty Madison Avenue Corporation served upon the tenant, Martin, ninety days' notice in writing, addressed to the tenant at the demised premises, of its intention to terminate the lease in pursuance of paragraph 12th thereof, above quoted. It is conceded by the tenant that he received said notice on the day of the date thereof, May 3, 1920. Thereafter, by deed dated May 5, 1920, and recorded June 24, 1920, in pursuance of its contract of March 18, 1920, the said Five-Forty

First Department, March, 1922.

{Vol. 200 Madison Avenue Corporation conveyed the said premises to the petitioner herein, 507 Madison Avenue Realty Co., Inc., and thereafter and on June 22, 1920, the said Five-Forty Madison Avenue Corporation formally assigned its said lease and said supplementary agreement to said petitioner.

The facts, as above set forth, are without dispute. Was the covenant giving the landlord, Simeon J. Drake, the right to cancel the lease upon a bona fide sale of the property personal to him, or was it a covenant running with the land and attaching to the reversion thereof and available to the present owner for the purpose of terminating the lease and removing the tenant, respondent, from the premises? Within the narrow compass of the foregoing question is embraced the controversy upon this appeal. Upon the trial in Municipal Court, the tenant offered no testimony, except the deposition of the broker, who negotiated the lease, in respect to alleged conversations between the parties prior to the making of the lease, and which testimony was excluded by the trial court. There is no dispute but that the giving of the formal notice by the present owner of the premises, the petitioner herein, was in conformity with the provisions of the lease, and it is not disputed but that the petitioner offered to pay to the tenant the sum of $5,000, as provided in said 12th clause of the lease, upon the service of the notice terminating the same. Said notice having been given, it limited the tenant's estate and worked an expiration of the lease ninety days after the notice was given. Assuming the soundness of what I have stated, after the expiration of said ninety days' period, the tenant held over after expiration of his term, and summary proceedings were properly invoked for his removal. (Miller v. Levi, 44 N. Y. 489.)

The petition was dismissed herein by the learned trial court upon the theory that the covenant contained in the 12th clause of the lease was personal to the landlord and only enforcible by him (114 Misc. Rep. 315), and right there lies the crux of the question before us. Was this covenant personal to the landlord or did it attach to the realty and follow the reversion still limiting the rights of the tenant? At the time of granting this lease, the original lessor was nearly seventy-three years of age, and it is certainly reasonable to suppose that the landlord and tenant, at the time of entering into the lease, containing the said provision for its termination after the sevenyear period, intended such provision as a covenant running with the land, which might be exercised by others who might succeed to the landlord's title by the death of the landlord or otherwise. It would be unreasonable to assume that they contemplated at that time that a man of the age of seventy-three years would be so