App. Div. 146] First Department, March, 1922. certain of living seven years longer that the privilege to cancel the lease after the expiration of seven years would be of great benefit to him. Unquestionably the landlord and tenant understood at the time that this provision in the lease might be availed of, not only by the landlord, but by his successors and assigns. The rights of the tenant were amply protected by the covenant that in case such option be exercised by the owner of the premises, the tenant should be paid the sum of $5,000. Under all the circumstances, I cannot but believe that the provision in question was a covenant running with the land and inured to the benefit of the successors in title of the original landlord. The right to thus terminate the lease was a valuable right attaching to the lease itself. It seems to me the real test by which we are to determine whether the right to terminate the lease was a covenant running with the land or merely a provision for the benefit of the lessor and personal only to himself, is as to whether that provision was alone beneficial to the original landlord, regardless of his continued ownership of the property, or whether such a provision was beneficial to the reversioner as such. The rule is well stated in McAdam on Landlord and Tenant (4th ed. p. 418) as follows: "There are certain principles, aside from tenure, by which a covenant may be tested in order to determine whether it is merely personal or attached to the realty. In Vernon v. Smith (5 Barn. & Ald. 11) BEST, J., said: 'By the terms collateral covenants, which do not pass to the assignee, are meant such as are beneficial to the lessor without regard to his continuing the owner of the estate. This principle will reconcile all the cases.' The same judge in Vyvyan v. Arthur (1 Barn. & Cress. 417) said: 'The general principle is that if the performance of the covenant be beneficial to the reversioner, in respect to the lessor's demand, and to no other person, his assignee may sue upon it; but if it be beneficial to the lessor without regard to his continuing owner of the estate, it is a mere collateral covenant upon which the assignee can not sue.' The case of Hadley v. Bernero (97 Mo. App. 314) seems directly in point. It was there held that a stipulation providing for the cancellation of a lease and a sale of the premises was a covenant running with the reversion and available to the grantee of the property. It was claimed in that case that such covenant was personal to the original lessor and was to be exercised by him alone and was not available to his grantees. Reviewing such claim, the court said: "Covenants which affect the use, value and enjoyment of the premises, whether they relate to physical changes to be made thereon, or the use of the term or of the fee, go with both the reversion and the land; while stipulations in leases by which the First Department, March, 1922. [Vol. 200 parties to those instruments bind themselves to do acts which in no way affect the use or enjoyment of the premises are merely personal obligations between themselves." In the case at bar there can be no question but that the covenant permitting the termination of the lease ran with the land and became available to any subsequent grantee of title. The privilege of canceling the lease was for the benefit of whoever might own the land at the time such cancellation was desired. Can there be any question that had Drake, the original lessor, parted with title to the premises prior to the expiration of seven years, such act would have terminated his interest in the premises, and would have ended his right to cancel the lease? Can it be reasonably claimed that, in the contemplation of the parties to the lease, the right to terminate it under the 12th clause was likewise at that time to end? I think not. A covenant in a lease providing for a renewal of the lease by the tenant is a covenant running with the land inuring to the benefit of the assignee of the lease. (Kolasky v. Michels, 120 N. Y. 635.) If a covenant providing for the renewal of a lease, and which, in effect, is an agreement to extend the term of the lease, runs with the land and is available to an assignee, I can see no reason why the corresponding covenant giving the owner of the reversion the right to curtail the term and repurchase the unexpired portion thereof for so substantial and stipulated a consideration as $5,000 should not also be held to run with the land and be available to an assignee or grantee of the reversion. It is suggested in support of the final order of the Municipal Court that under the terms of the lease the heirs and assigns of the original lessor are not mentioned. I do not think there is any force to this position. When the petitioner became the owner of the fee, it took the same subject to the existing lease, and there can be no question of its right to institute summary proceedings to regain possession of the premises, providing the lease has terminated. Section 223 of the Real Property Law provides: "The grantee of leased real property, or of a reversion thereof, or of any rent, the devisee or assignee of the lessor of such a lease, or the heir or personal representative of either of them, has the same remedies, by entry, action or otherwise, for the nonperformance of any agreement contained in the assigned lease for the recovery of rent, for the doing of any waste, or for other cause of forfeiture as his grantor or lessor had, or would have had, if the reversion had remained in him." The effect of such statute is to give to the owner of the reversion as grantee through mesne conveyances from the original lessor all App. Div. 146] First Department, March, 1922. of the rights which his grantor had in the premises and in the lease. (Proctor Troy P. Co., Inc., v. Dugan Store, Inc., 191 App. Div. 685. See, also, Kernochan v. Murray, 111 N. Y. 306.) Furthermore, it seems to me that the tenant, by his acts, has recognized the continuance and force of the covenant in question. On February 5, 1920, shortly before the expiration of the seven years when the privilege of terminating the lease became available, the tenant, respondent, wrote the Five-Forty Madison Avenue Corporation, which had then acquired title and was the owner of the premises, apparently seeking a waiver of the cancellation clause in the lease for the balance of his term, as follows: "" THE 540 MADISON AVENUE CORP. "February 5th, 1920. "1 Madison Avenue, "New York City: "DEAR SIRS.- Will you kindly let us know as to what are the possibilities of having the cancellation clause in our lease waived for the balance of our term. "Thanking you in anticipation, "Yours very truly, "(Sgd) NICHOLAS MARTIN." The significance of this letter is at once apparent. It evidences the tenant's understanding at that time that the covenant was still operative and available to the Five-Forty Madison Avenue Corporation, which had succeeded to the title of said property, and constituted a practical construction of the covenant by the party to be bound by it. Such practical construction is persuasive as to the intention of the parties concerning the meaning of the instrument. (Sattler v. Hallock, 160 N. Y. 291; Smith v. Taranto, 140 N. Y. Supp. 794; affd., 158 App. Div. 912.) It seems to me that the determination of the Appellate Term and the final order of the Municipal Court, construing the right to terminate the lease in suit as a personal one which terminated when the original lessor parted with the ownership of the real property, cannot be sustained. The covenant was one running with the land and inured to all subsequent owners of the fee during the life of the lease. The tenant, respondent, upon this appeal for the first time questions the title of the petitioner to the leased premises or its right to maintain summary proceedings for his removal. In support of such contention it is urged that, while Simeon J. Drake, the original lessor, having died without having conveyed the premises, but leaving his said last will and testament, which was duly admitted to probate, and wherein he appointed executors to whom letters First Department, March, 1922. [Vol. 200 testamentary were issued, it does not appear either that said real property was devised by said testator to his executors in trust or otherwise, or that they were empowered by his said will to sell real property which the decedent left. This belated contention of the respondent may be answered in three ways: First, his point is raised for the first time upon this appeal. Had he questioned the authority of the executors to convey upon the trial, they would have had an opportunity of producing the will showing their authority. (Goodwin Car Co. v. American Steel Foundries, 189 App. Div. 631; Littlejohn & Bull, Inc., v. Deutsch, 182 id. 759.) Second, it is alleged in the petition, and admitted by the tenant, respondent, by his failure to deny the same in his answer, that the said executors, on or about August 11, 1915, "by virtue of the power and authority conferred upon them by the said last will and testament of said Simeon J. Drake, deceased, duly transferred and conveyed the said premises as executors of said will, subject to said lease, Exhibit A, to FiveForty Madison Avenue Corporation." Third, it is expressly alleged in the answer of the tenant, respondent, "That the said Simeon J. Drake died on or about the 6th day of October, 1914, and thereafter under the terms of his will his executors sold the property and duly conveyed the same by a deed dated the 11th day of August, 1915; * that after such conveyance this tenant attorned to the purchaser of the said premises from the executors of Simeon J. Drake, to wit: a corporation known as 540 Madison Avenue Corporation." (Italics are the writer's.) Therefore, because for the first time raised upon this appeal and upon the pleadings, there is no virtue in respondent's attack upon the petitioner's title to the real property in question. The determination of the Appellate Term should be reversed, with costs of this appeal, and the final order of the Municipal Court should be reversed, and a final order should issue removing the tenant from the premises, together with costs to the appellant in all courts. CLARKE, P. J., LAUGHLIN, MERRELL and GREENBAUM, JJ., concur. Determination appealed from and final order of Municipal Court reversed and final order directed removing tenant from the premises, with costs to appellant in all courts. App. Div. 155] First Department, March, 1922. L. FRANCIS RAY, Appellant, v. ELSIE B. FOWLER and Others, Defendants, Impleaded with PERCY N. POWERS and Others, Respondents. First Department, March 3, 1922. Wills construction will providing for life estate and trust with power of sale of real property in trustees with remainder over held to vest legal title in remaindermen subject to power of sale — action maintainable against remaindermen for debt of decedent — equity - doctrine of equitable conversion not applicable to relieve remaindermen from liability. Under the will of a testator which devised one parcel of the realty to his wife for life or until she should remarry, and devised the remainder of the realty to trustees to collect the income and pay it over to the wife during her life or until her remarriage, and provided that, upon the termination of the life estate and trust for the wife, said realty, together with the personalty, should pass to the testator's children, and gave the trustees power to sell said realty during the life of the wife and, "until such sale," to collect and pay over the income, and, without express provision for the trustees to receive rents and profits after the wife's death, directed that, if the trustees deemed it unwise to sell the realty immediately upon the termination of the trust for the wife, they should use their discretion as to the time of sale, but that the sale should not be postponed longer than ten years after the termination of the trust, the surviving trustee had no title to the realty after the death of the wife, but, subject to the power of sale, the legal title was vested in the remaindermen, the devisees under the will. Hence, an action brought pursuant to section 101 of the Decedent Estate Law and sections 1844-1860 of the Code of Civil Procedure (now Decedent Estate Law, §§ 176-193) to fix liability on said devisees for an alleged debt of the testator is maintainable. The contention of the devisees that it was the intent of the testator to convert his realty into personalty and that they have no interest in the realty as such cannot prevail, as the same persons take the property, whether it be considered realty or personalty; and equitable conversion is a mere fiction of equity resorted to only when necessary to determine ownership and to obtain equitable results. Moreover, under section 97 of the Real Property Law, the interest of the devisees is to be considered realty and passes as such, even though the power of sale be exercised. APPEALS by the plaintiff, L. Francis Ray, from orders of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 27th day of September, 1921, sustaining several demurrers to the complaint, and from judgments of the Supreme Court in favor of the defendants Harry L. Powers, individually and as surviving executor and trustee of Jesse W. Powers, deceased, and Elizabeth H. Powers, entered in the office of the clerk of the county of New York on the 10th day of October, 1921, dismissing the complaint, and also from an order entered in said clerk's office on the 27th day of September, 1921, denying plaintiff's motion for the extension of an existing receivership. |