
    Guy Witthaus, Respondent, v. Eleanor A. Capstick, Defendant, Impleaded with Robert E. Sherwood, Appellant.
    First Department,
    January 18, 1907.
    Foreclosure — lease by receiver of rents and profits — lease not canceled on summary application.
    When in an action to foreclose a purchase-money mortgage, a receiver of the rents and profits, who is authorized to léase the premises, continues the lease to the tenant then in possession in consideration of an agreement by the tenant to expend money in repairs, the court is without jurisdiction to order_ a summary cancellation of the lease.
    
      'It seems, moreover, that in an action in equity to compel the cancellation of the lease the tenant would be entitled to protection for the amount expended by him in repairs.
    On such summary application to cancel the lease it is immaterial that the receiver" of the rents; though appointed as receiver of only a nine-tenths undivided part of the premises, made a lease of the whole premises.
    Appeal by the defendant, Robert É. Sherwood, from an order of the Supreme Court,, made at the New York Special Term and • entered in the pffice of the clerk of the county of New York on the 30th day of November, 1906, directing the cancellation of a lease made to said defendant by a receiver in foreclosure.
    
      H. Aa/ron of counsel \Parlter c& Aaron,■ attorneys], for the appellant.
    
      Joseph' H. Hayes of counsel [Francis X. Butler, attorney], for the plaintiff, respondent; [ Wray dá Pillsbwryh attorneys], for the respondent Capstick.
   Clarke, J.:

The action was brought to foreclose a purchase-money 'second. mortgage for $51,500 on premises 144 Fulton street in the city of New York, executed by the' defendant Capstick to the plaintiff on her undivided nine-tenths interest in said premises. At the time the mortgage was executed, ownership of the remaining undivided one-tenth interest was considered uncertain. Witthaus, therefore, conveyed only the unquestioned nine-tenths interest to Miss Cap-stick, who gave back the mortgage mentioned, and, under the contract of sale, a partition suit was thereafter begun by Miss Capstick, which resulted in the entry of the interlocutory judgment on October 26, 1906, before the execution of the lease here under consideration, determining that the remaining one-tenth interest was vested absolutely in Mr. Witthaus, subject only to his wife’s right of dower. By agreement between the mortgagor and the.mortgagee final judgment of foreclosure and sale in this action was not to be entered. Final judgment in the partition suit was, however, tó be entered, • an d Miss Capstick was then to pay plaintiff the value of the .remaining one-tenth interest and receive a deed from plaintiff for such one-tenth interest, whereupon plaintiff’s interest in thé premises would cease and Miss Capstick would become the sole owner. The negotiations had proceeded so far that Miss Capstick asked for a loan of $142,000 to carry out the plan as arranged, and-it was while examining the title for such loan that the attorneys for the lender discovered the lease in question.

The summons, complaint and notice of pendency of action were filed in the Mew York county clerk’s office on August 21, 1906. On August 31, 1906, an order was entered appointing a "receiver of the rents and profits of the premises affected by said mortgage, which, among other things, provided: “ That said receiver is hereby authorized, from time to time, to rent or lease, as may be necessary, for a term not exceeding one year, said premises.”

The premises consist of a single lot of ground with a five-story and basement building thereon. When the receiver went into q>ossession, under the above order, he found that the appellant, Robert E. Sherwood, was in possession thereof as tenant and that he had been such tenant since the 20tli of September, 1901, paying a rental of $300 per month which he had theretofore promptly paid and continued to pay to the receiver. On October twenty-seventh Sherwood wrote to the receiver as follows: “ The roof is in a very leaky condition and will have to be gone over with tar before the cold weather sets in. This, together with other necessary repairs, which will have to be done at once will necessitate an outlay by me to the extent of at least $500. All repairs that we deem necessary we are willing to do at our expense, provided we are given a lease for a year, otherwise we will vacate the premises.” Thereafter, on the 3d of November, 1906, the receiver and Sherwood executed a written lease under'seal which was drily recorded, under which the receiver leased the premises for the term of eleven months from the .'1st day of November, 1906,- to the 3.0th day of. September, 1907, at the rent of $300 per month, the same that lie had theretofore beenpaying, the tenant agreeing to make all necessary repairs at his own cpst 'and expense. Thereafter Sherwood proceeded to expend considerable sums, of money for repairs to roof, lead pipes, windows and floorings and had other repairs under way. He made his business arrangements on the basis of such lease. He obligated himself in the shm ■ of $40,00.0-.in the purchase of books, music and stationery in which he dealt for the holiday trade for this year and to provide for a stock of merchandise during'the future months of said lease. ,

On the 19th day of November, 1906,- an order to show canse- was obtained why the said lease should not be canceled, and-upon- the return of said order and upon the motion of counsel for both the plaintiff and the defendant Capstick, the court granted an order canceling and annulling said lease. From said order the tenant appeals.

Whatever control the court may have over the action of a receiver appointed by it, it does not seem that it should extend so far as to authorize the summary cancellation of a written lease, which, under ' the }3roVisions of the order appointing him, the receiver had power . to make. The lease was made_to the same tenant whom he found in possession and who seems'for five years to have been acceptable to the owners at the-same rental, theretófore paid to them. It'was' made -after negotiations,, in - consideration of the condition-of the building as to repairs, upon the statement that if the lease wa!s not made the tenant . would vacate, as he had a right to do, and upon . the inducement that he would expeiid a considerable amount for the ■ repairs. Upon the faith of the lease when made the tenant acted by making the repairs and by obligating himself for large sums of money for the continuance of his business' at the said place. The' court was without power summarily to deprive him'of his property and rights.

- If an .action had been brought in equity to set aside the lease for any reason cognizable in equity the tenant would have, been entitled ' to show the acts done by him in good faith and reliance thereon and to receive equitable consideration in regard to amounts expended and obligations incurred.

Ror does the claim that the receiver leased the whole premises when, by order of his appointment, he was the receiver of only nine-tenths undivided part thereof, appeal to us as a ground for sustaining this order. That may he for consideration between the owners as to the apportionment of the rent. received, but is no ground for a summary cancellation of the lease.

The order appealed from should be reversed, with ten dollars costs and disbursements to the appellant Sherwood, and the motion denied, with ten dollars costs.

Patterson, P. J., Ingraham, Lattghlin and Scott, JJ., concurred.

Order reversed, with ten dollars costs and disbursements to appellant Sherwood, and motion denied, with ten dollars costs. Order filed.  