
    LAZARUS v. HEILMAN.
    
      N. Y. Court of Common Pleas; Special Term,
    
    August, 1882.
    Landlord and,Tenant.—Waste.—Equitable Counter-claim.— Lease containing Covenant to Sell.—Specific Performance.—Judgment against Purchaser with Notice.
    In an action against a tenant, for waste, the defendant may set up as a counter-claim, an agreement to sell, contained in the lease, and demand specific performance.
    Where the lessor has sold the premises to one who had actual notice of the lease and contract to sell, such purchaser is the proper party to convey the property, and against whom specific performance may be decreed.
    A contract to sell real property is not void for want of mutuality, because it gives the purchaser an option to take or not to take the property ; and having elected to take, the purchaser may enforce the contract.
    Where a tenant seeks specific performance of a contract to sell, contained in his lease, against a purchaser of the demised premises, with notice, and sets up this claim as a counter-claim in an action by the latter for injuries to the property, the judgment may require the deduction from the purchase-money, of equitable offsets,—in tiiis case including the amount of a mortgage on the premises, the purchaser to pay interest on the unpaid purchase-money, and the owner to pay interest on such mortgage, the purchaser to pay taxes confirmed since the date at which the deed should have been delivered, and the owner to account for rents and profits, including a fair rental for the part occupied by himself, from such date;—and a referee may be appointed to see that such provisions are carried into effect. The judgment may further require the lessee to complete his purchase within a specified time, or in default to pay treble damages for his injuries to the property.
    Isaac Lazarus brought this action against Moses Heilman and Herman Gr. Walthers, alleging in his complaint as follows:
    “That on or about February 4, 1880, at the city of New York the defendant Moses Heilman, hired from one Grustav Ramsperger, who was then the owner of the house and lot No. 331 East Forty-first street, in said city, the said house with the appurtenances, for the term of two years from May 1,1880, upon the terms and conditions specified in a certain indenture of' lease, then entered into between said parties, a copy of which is hereto annexed. That said house with the appurtenances, was constructed as, and used for the purpose of, a dwelling-house or place of residence, and intended to be used as such, and that- the said house forms one of-a row of three-story brown-stone-frónt dwelling-houses in the block in which it is situated, and all the houses in said block are designed and used as private dwelling-houses and places of residence exclusively. That prior to and at the time of the hiring aforesaid the said defendant Moses Heilman was well aware of these facts, and as plaintiff is informed and. verily believes, knew that any use of said house, other than for dwelling purposes, would greatly injure and depreciate the value of said premises, and, as plaintiff is informed and believes, in order to induce said Ramsperger to enter into said indenture of lease, expressly stated and represented to said Ramsperger that he intended to and would use said premises for the purpose of a dwelling for himself .and family only, and the said premises were let to him by said Ramsperger with that understanding, and upon the faith and strength of that representation and not otherwise, and said Ramsperger, as plaintiff is informed and believes, would not have executed said indenture of lease, but for the said representation of said defendant Moses Heilman.
    “ That at the time of the execution and delivery of said lease the plaintiff was in the occupancy of said house as a tenant of said Ramsperger, and said Ramsperger, claiming that the said indenture of lease given by him to the defendant Heilman was an incomplete agreement, and that there was to have been a contract of sale executed by Heilman as a part thereof, and for various other reasons, refused to recognize said lease, and agreed to indemnify the plaintiff, who was then in possession of said premises, against any claim or cause of action under said indenture of lease on the part of said Moses Heilman, and relet said house and appurtenances to the plaintiff for one year from May 1, 1880, and the plaintiff thereupon continued in the possession thereof as his dwelling-house and place of residence for himself and family. That said Moses Heilman thereupon commenced an action of ejectment, based upon his claim under said indenture of lease, against the plaintiff,-in the supreme court of this State, which action was tried before Hon. Miles Beach, Justice, and a jury, on October 28, 1880, at a circuit of said court, in the city of New York, and a verdict rendered in favor of said Moses Heilman against this plaintiff, and possession of the premises awarded arid adjudged to said Heilman, and judgment entered November 1,1880, therefor. That plaintiff, by reason of his said indemnity, had, at the request of said Ramsperger, left the defense of said action to him, said Ramsperger, whose counsel defended the same, and after the entry of said judgment took an appeal therefrom to the general term of the supreme court, and while said appeal was pending this plaintiff purchased from said Rarnsperger, and said Rarnsperger conveyed said house and the lot on which it stands to plaintiff, by conveyance dated April 18,1881, and recorded in the office of the register of the city and county of New York, in Liber 1597 of Conveyances, page 115, April 31, 1881, since which time the plaintiff has been and still is the owner thereof, and has succeeded to all the rights and powers of said Rarnsperger under said indenture of lease.
    “ The plaintiff further alleges that, as he is informed and believes, on or about May 27, 1881, the said Moses Heilman obtained, ex parte, an order from the justices of the general term of the supreme court, affirming the judgment appealed from, and at once, without entering a formal judgment, issued an execution for the possession of said house and appurtenances to the sheriff of the city and county of New York, who immediately executed the same, and forcibly removed this plaintiff from the possession of said premises, and put this plaintiff’s goods and chattels into the street, before he, this plaintiff, was able to serve a stay of proceedings.
    “That said Moses Heilman thereupon and at the same time took possession of said house and premises, and wrongfully intending to injure the plaintiff, caused Herman Gr. Walthers, the' other defendant, who is a pocket-book maker, to occupy the said house with him for the purpose of that business, and both the said defendants, 'wrongfully intending to injure this plaintiff, have wantonly and maliciously damaged and defaced, and are still wantonly and maliciously damaging and defacing, said house and premises.
    “They have without cause torn down and removed the shutters from some of the windows. [The complaint here alleges specifically several acts of injury to the premises.]
    “That the said defendants, as plaintiff is informed and believes, are insolvent.
    [The complaint here alleges increase in rate of insurance occasioned by such use.] And the plaintiff alleges that by the terms of the lease first herein referred to, said defendant Heilman covenanted that he would not occupy or use the said premises, nor permit the same to be occupied or used, for any business deemed extra hazardous, on account of fire, or otherwise, without the consent of the lessor, under the penalty of forfeiture and damages, and that said consent has never been given, and the defendants have been and are still violating said covenant in the respect aforesaid, to the great damage of the plaintiff.
    “ That on or about July 13, 1881, the annexed notice was personally served on each of the defendants [The notice requires defendants to desist from such use of the premises], but they nevertheless still continue to carry on the pocket-book making business at said house, and persist in the improper use and alter tions and structures complained of.
    “ That by the terms of said lease, the defendant Moses Heilman also covenanted that he would not assign said lease, nor let nor underlet the whole or any part of said premises, nor make any alterations therein, without the written consent of the lessor, under the penalty of forfeiture and damages, and, as plaintiff is informed and believes, said Heilman, in violation thereof, sublet part thereof to said defendant Walthers, and was well aware of the use to which said defendant Walthers would put the said premises, before and at the time he let him into possession thereof, and that he let the same to said Walthers for the purpose of said pocket-book making business, and caused the before-mentioned alterations to be made, structures and partitions to be put up, and materially altered said premises, with the wrongful and fraudulent intent to willfully damage or destroy the value of said premises, and to injure the plaintiff thereby, and that these wrongful acts of said defendants were the result of a conspiracy between them to that effect, as plaintiff verily believes, and in respect to said letting or underletting, and in respect to said alterations, partitions, structures and other acts complained of, the same were and are in violation of the terms of said lease, and without plaintiff’s consent.
    “That by reason of these wrongful acts of the defendants the plaintiff has already been damaged to the extent as he believes, of three thousand dollars, and that if the defendants be allowed to continue the aforesaid wrongful use of said premises, he will be irreparably injured, and the said property and his interest therein destroyed.
    “ Wherefore the plaintiff prays judgment that the defendants, and each of them, be enjoined from using the said house and premises, or permitting the same, or any part thereof, to be used for the pocket-book manufacturing business, or making any pocket-books therein or using the same otherwise than as a dwelling house or place of residence, and that they be also enjoined from making any alterations, without the written consent of plaintiff, or allowing the alterations and structures hereinbefore complained of, to remain, and be ordered and adjudged to restore said house to the condition it was in when they respectively entered into the possession thereof, and that the plaintiff recover his damages from the defendants in the sum of three thousand dollars, and have such other and further judgment, order and relief, legal as well as equitable, as may be proper, with costs.”
    The defendant Heilman alleged in his answer that, for a valuable consideration, a lease of the premises in question had been executed to Mm by Ramsperger for the term of two years, which lease contained a provision for the sale of the demised premises to defendant Heilman as follows:
    “And it .is further agreed between the parties to these presents that the party of the first part agrees to sell to the party of the second part, and the party of the second part agrees to buy from the party of the first part, the house and lot herein leased, for the sum of eight thousand dollars, lawful money of the United States, as per special agreement signed in the same time with this lease ; a sale of the property voids' this lease and can be effected at anytime during the term of the lease upon two months’ previous notice given to the party of the first part by the party of the second part, of his intention to effect the sale.”
    He further alleged that said lease had been duly recorded, that plaintiff had full personal knowledge thereof, and had attempted to hire the premises from defendant. That plaintiff and Ramsperger had conspired together to cheat and defraud defendant out of said house and keep him out of possession thereof. The answer then recited the proceedings in the supreme court and their determination in favor of the present defendant; that defendant had always intended to purchase the premises, and that the deed to plaintiff and a mortgage by plaintiff to Ramsperger for §2,500 were both executed to defraud him out of such purchase ; that Ramsperger had executed a prior mortgage on the premises ; that plaintiff had taken the title to the premises merely nominally, to protect Ramsperger against defendant; that defendant duly gave to Ramsperger and to plaintiff, the notice of his intention to purchase required by the agreement in the lease, and is ready to advance the consideration ; that the defendant had been obliged to let the said premises to defendant Walthers by reason of his delay in obtaining possession, and his having meanwhile made other provision for the residence of his own family ; but that he has procured said Walthers to move from said premises. The answer further denies the allegations of injury to the premises and the insolvency of the defendants, and alleges the insolvency of the plaintiff. The answer then prays that the deed to plaintiff be declared void as to defendant Heilman, and for specific performance of the contract to convey the premises, and for other or further relief.
    The answer of the defendant Walthers denied all the material allegations of the comixtaint.
    The plaintiff replied generally to the allegations tending to establish a counter-claim.
    
      Kurzman & Teaman, for plaintiff.
    The action of waste may be maintained by the landlord against a tenant and the latter cannot justify on an alleged mere equity. The action is in tort, and the alleged equity arises in contract, and cannot be counter claimed (Code Civ. Pro. § 501; Chamboret v. Canney, 2 Sweeny, 378; S. C., 10 Abb. Pr. N. S. 31; Lehmair v. Griswold, 40 Super. Ct. (J. & S.) 100; Berrian v. Mayor, &c. of N. Y., 15 Abb. Pr. N. S. 207; Classen v. Leopold, 2 Sweeny, 705 ; Smith v. Hall, 67 N. Y. 48; Henry v. Daley, 17 Hun, 210). Defendant did not give sufficient notice of his election. He has no equity. It is res adjudieata. Citing, as to right of action: Code Civ. Pro. §1681; Winship v. Pitts, 3 Paige, 259; Rodgers v. Rodgers, 11 Barb. 595; Williams v. Peabody, 8 Hun, 271. As to injury: Jackson v. Brownson, 7 Johns. 227. As to alterations: Agate v. Lowenbein, 57 N. Y. 604. As to the defense that Heilman had a contract for the premises : Robinson v. Rim, 70 N. Y. 147; Cooper v. Stower, 9 Johns. 331.
    
      George F. Langbein and Albert Cardozo, for defendants.
   Van Hoesen, J.

The house, no doubt, needs a thorough overhauling, but the greater part of the repairs that are necessary are required upon those parts of the building that were not injured by the defendants. The house has suffered from shrinkage and other natural causes, and from necessary and ordinary wear and tear. It has also suffered from the acts of the defendants, Heilman and Walthers. From their own admissions, it is evident that many things they did were not consistent with the ordinary care that a tenant should take, and that from their acts there resulted an injury for which, unless Heilman be the owner of the property, Lazarus should recover damages. I throw out of consideration every injury save those for which I think Heilman and Walthers are answerable, and then I think it will require $300 to repair the damage done by Heilman and Walthers; and I am also of opinion that the premises are worth $300 less than they would have been worth if that damage had not been done. For those damages the plaintiff should have judgment, unless the defendant Heilman completes the purchase of the house in the manner to be settled by the judgment. Here is an action for damages, and the person who did the damage says, in substance, “If I did all you say, the injury was committed upon property of which I am the equitable owner, and of which I ask to be declared the legal owner.” If the fact be that he is the owner of the building that he injured, the loss falls on himself and not on Lazarus.

It is objected that in this action the defendant Heilman cannot, by way of counter-claim, demand a specific performance of the contract by which Ramsperger, the plaintiff’s grantor, agreed to convey the property to him, but there is, in my opinion, authority for the pleading of the counter-claim. The case of the Glen & Hall Mfg. Co. v. Hall (61 N. Y. 236), and Carpenter v. Manhattan Life Ins. Co. (22 Hun, 49), go far to show that the Code warrants such a counter-claim, in such an action, as this. Formerly there would have been two actions, an action and a cross action, but the same result would have been reached. The case then is to be regarded as if Heilman were the plaintiff seeking a specific performance of his contract with Ramsperger. Lazarus bouglit the property from Ramsperger, with actual notice of the prior agreement between Ramsperger and Heilman, and Lazarus stands, therefore, in Ramsperger’s shoes. Lazarus is the proper party to convey the property to Heilman (Pomeroy Spec. Perf. § 465, and cases cited).

It is true that the contract may be construed as giving to Heilman an option to take or not to take the property, but that being conceded, it appears that Heilman has elected to take it, and the contract is not to be defeated for a want of mutuality. No objection has been made that the contract is so incomplete that its items cannot be ascertained with certainty, and I think that Lazarus should be compelled to perform it specifically. Heilman is bound to pay $8,000. From this is to be deducted the amount of the mortgage (4 Duer, 86; 51 N. Y. 21). Heilman is to pay interest on $8,000, the unpaid purchase money, and Lazarus must pay the interest on the mortgage. The taxes that have been confirmed, since the time at which the deed should have been delivered, must be borne by Heilman. Lazarus should account to Heilman for the rents and profits of the property, including a fair rental for the part occupied by himself, from the time just designated. From the terms of the contract it appears that Ramsperger had two months in which to execute a conveyance, from the time that Heilman might give him notice of his intention to purchase the property. As this notice was given on July 30, 1881, the date at which the deed might have been delivered, and the date which must therefore be considered as the time at which the transaction should be closed, is September 30, 1881. A general covenant of warranty is required, and a fee simple must be conveyed (Pomeroy Spec. Perf. § 154).

A referee will be appointed to see that these provisions are carried into effect. If, within thirty days after the findings are signed, Heilman places at the disposal of the referee the money required to be paid, and offers on his part to complete the purchase on the terms specified in the findings, a decree or judgment will be entered for the dismissal of the plaintiff’s complaint and for the specific performance by Lazarus of the contract. The costs of the action, with an allowance of $100, will then be awarded to Heilman. No costs will be allowed to Walthers.

If, on the other hand, Heilman should not within the time specified, place the requisite money at the disposal of the the referee for the purpose of carrying out the contract of purchase, in the manner provided by the findings, and offer to complete the purchase, then judgment shall be entered dismissing the counter-claim, and a judgment in favor of the plaintiff against Heilman and Walthers, for $900, treble damages, shall be entered with costs and an allowance of five per cent, on $900 (see 4 Duer, 86).

Heilman has said in his protestation, which forms part of his answer before Judge Nehbbas, that he did not want the property. In this action he professes a desire to buy it, but confesses that he has not means of his own, sufficient to complete the contract; though he proved that some one was willing to lend him the requisite money. That person is not before the court, and is at liberty at any time to change his mind. If Heilman cannot or will not complete his contract, Lazarus should recover compensation for the injury done to the house. If it be Lazarus’ house that was injured, Heilman should pay the damages, and Lazarus’ house it is, unless Heilman completes the purchase.  