
    JAMES C. AYER and FREDERIC AYER, Plaintiffs and Respondents, v. WILLIAM A. KOBBE et al., Defendants and Appellants.
    I. LANDLORD AND TENANT.
    I. Contract, Construction of.
    1. Principle that the circumstances under which the contract was made are to be considered in its construction, applied.
    
    1. When a léase provides that the lessor shall, if the lessees so desire, put in an efficient steam hoisting apparatus in and for said premises, the fact that there was then a hoistway in the premises is to he considered in determining in what portion of the premises the steam hoisting apparatus is to be placed; and so considering that fact, the proper construction of the contract is that it was the intent of the parties that the hoisting apparatus should be placed in the then existing hoistway, and the lessor had a perfect right to place it there, although by so doing the lessees’ only entrance to the building would be seriously obstructed.
    
      a. Sub-lessees. The lessor’s right so to place the apparatus is not at all affected by a subletting of any part of the premises. -
    
      2. When an agreement provides for the doing by a lessor of certain work in a certain place on the demised premises within a reasonable time, the fact that a great deal of time was consumed in negotiating for and obtaining the consent of a person who, claims exclusive control over the place and a right to prevent the work, is not to be taken into consideration in determining whether ■ the work was done in a reasonable time, when such party had in fact no such contract or right, and both contracting parties at the time of making the contract supposed, and acted on the assumption, that the lessor had the absolute right to do the work in the manner and place specified.
    II. Rights of Lessors and Lessees under a Peculiar Agreement.
    1. When the lease contained a clause that if the lessees should so desire, the lessors would put in an efficient steam hoisting apparatus, in and for the demised premises, and in case the same should be put in the lessees would pay for the use thereof 12 per cent, per annum on the cost thereof at the usual quarter days for the payment of rent. Afterwards, the lessees having sublet to the defendants the whole of the premises above the first floor, and given to them the benefit and advantage of the stipulation in the lease in regard to the hoisting apparatus, they agreeing to pay the rent therefor to plaintiff, defendants notified plaintiffs they desired the hoisting apparatus, and plaintiffs proceeded to erect it in the hoistway on the premises at the time of the demise; thereupon plaintiffs and defendants on the 19th o£ March, 1868, entered into an agreement whereby reciting that it would be injurious to the business of defendants to have the work of erecting the apparatus continued until a new stairway and entrance should be provided, and the steam hoistway could be at once substituted for the then hand hoistway, the defendants, Kobbe, Oorlies & Co., agreed “that if said steam hoistway shall be completed and a new entrance in a reasonable time, they will consider the work of completing the steam hoistway as completed from and after Monday, the 33d day of March instant, so far as relates to the covenant in their agreement for a lease to pay for the use of the same at the rate of twelve per cent, per annum.
    Before Barbour, Ch. J., Monell and Van Vorst, JJ.
    
      Decided May 31, 1873.
    The said Kobbe, Corlies & Co., however, hereby require and insist that such new entrance and stairway as aforesaid shall be completed and made ready for the use of themselves and their customers before the work upon such steam hoistway in and above said gangway and present entrance shall be commenced.”
    Amidown, Lane & Co., who had become sub-lessees of the first floor, basement, and sub-cellar, refused to permit a new passage-way to be built on their part of the premises, and the work was delayed in consequence until October 17,1868, when they gave their consent. The work was finally completed about November 1, 1868.
    Held—
    1. The work was not completed within a reasonable time within the meaning of the agreement.
    3. That plaintiffs were not entitled to recover rent for the hoisting apparatus between 35th March, 1868, and the final completion.
    3. That defendants were not entitled to recover damages for the non-completion of the hoistway within a reasonable time.
    Appeal from judgment.
    This action was "brought to recover a "balance claimed to "be due from the defendants to the plaintiff for rent of a portion of a "building, and also for the rent of certain hoisting machinery therein.- "Upon the trial it appeared that in November, 1867, the plaintiffs let to Asa D. Dickinson the whole of the store and premises known as bios. 87 and 89 Leonard Street, at the yearly rent of $26,000. The lease, or agreement to let which in effect operated as a lease, was executed by both parties, and contained, inter alia, the following provision: “The said Ayer & Co. agree that in case the lessees shall so desire they will put in an efficient steam hoisting apparatus in and for the said premises, and in case the same shall be put in the said lessees shall pay for the use thereof twelve per cent, per annum on the cost of the same at the usual quarterly days for the payment of rent, and keep the same in repair, the usual wear and tear excepted.” After that, and in December, 1867, Dickinson underlet to the defendants all of the said premises which were above the first floor, at the yearly rent of $13,000. By that agreement or lease Dickinson gave to the defendants the benefit and advantage of the stipulation above mentioned, in relation to the hoisting apparatus, and the defendants assumed and undertook to pay the rent therefor to Ayer & Co., the plaintiffs. About the first of February, 1868, the defendants notified the plaintiffs that they desired the hoisting apparatus to be put in, and the latter thereupon procured an engine and machinery for such apparatus, and on the 13th of March 1868, had so far put it up that it could have been completed within two or three days thereafter; but on the day last mentioned they were restrained from proceeding therewith by an order of injunction, which had been obtained in an action brought against them by the persons who are the defendants in this action, to restrain them from completing the putting up of the apparatus in the only hall or passage-way through which the occupants of the lofts above the first floor could enter their premises. After that order was served, and probably because of it, an agreement in writing was made on the 19th of March between the parties to this action, which was also signed by the firm who had contracted to.erect the apparatus, as follows:
    
      “ It is hereby agreed between Messrs. Kobbe, Corlies & Co., of ¡New York, and Thomas F. Burgess & Co. and James B. Ayer & Co., of Lowell, Massachusetts, as follows:
    ‘ ‘It being inconvenient and injurious to the business of the said Kobbe, Corlies & Co., that the work of erecting the hoistway in the building numbers 87 and 89 Leonard Street, so far as relates to that part of the same in the present entrance, gangway, and above the first floor of said building, should be continued till a new stairway and entrance is provided, and the steam hoistway can be at once' substituted for the present hand hoist-way. The said Kobbe, Corlies & Co. agree that if said steam hoistway shall be completed, and a new entrance, within a reasonable time, they will consider the worh of completing the steam hoistway as completed from and after Monday, the 23 d day of- March instant, so far as relates to the covenant in their agreement for a lease to pay for the use of the same at the rate of twelve per cent, per annum.
    
    “And if the said Burgess & Co. on suspending the work of erecting said hoistway in said gangway, and above the same at this time, shall be compelled to return from Lowell to New York and incur further expense in completing said work than would now be incurred, they, the said Kobbe, Corlies & Co., will pay such increased expense.
    “ The said Kobbe, Corlies & Co., however, hereby require and insist that such new entrance and stairway as aforesaid, shall be completed and made ready for the use of themselves and their customers, before the work upon such steam hoistway in and above said gangway and present éntrance shall be commenced.
    “Dated, New York, March 19th, 1868.
    “ Kobbe, Corbies & Co.
    “ J. C. Ayer & Co.,
    “By Lttotek Birdseye.
    “ Thomas F. Burgess & Co.”
    
      At the time that agreement was made, the firm of A midown, Lane & Co. had "become the lessees, under Dickinson, of the first floor, "basement, and sub-cellar of the "building, and they afterwards refused to permit the plaintiffs to "build a new passage-way over their portion of the premises unless they were paid $2,500 dollars therefor. About the 17th of October, however, they agreed with the plaintiffs to give their consent to the construction of the new passage-way in consideration of $1,000, and thereupon the plaintiffs built the same, and completed the erection of the hoisting apparatus about the 1st of November, 1868, being over seven months after the making of the agreement of March 19th, above set forth. The plaintiff claimed to recover the balance of rents upon the building as assignees of Dickinson, and the rent for the hoisting apparatus by virtue of the agreements. The defendants denied the alleged indebtedness, and counter-claimed for the damages alleged to have been sustained by them, by reason of the plaintiffs’ failure, to complete the hoisting apparatus within a' reasonable time. The referee directed a judgment for the entire amount of the plaintiff’s claim, and the case comes here on appeal from that judgment.
    
      D. & T. McMahon, attorneys, and D. McMahon of counsel for appellants.
    Birdseye, Cloyd & Bayliss, attorneys, and Lucien Birdseye, of counsel for respondents
   By the Court.—Barbour, Ch. J.

As there was but one hoistway in the building at the time the lease to Dickinson was executed, and that one extended through every floor from the top to the sub-cellar, it may well be assumed, in the total absence of evidence tending to show the contrary, that both parties to that instrument designed and intended that the steam hoisting apparatus provided for therein should be placed in the hoistway which was already constructed. It is reasonable to suppose that if the parties had contemplated the construction of a new hoistway in another place, they would have said so in the lease, and would also have provided for its cost, location, etc. So long as Dickinson remained the sole lessee, therefore, the lessors not only had the right, but it was their duty to place the hoisting apparatus in the old hoistway, when required to build it. Nor were the rights and duties of the lessor, in this regard, at all changed by the sub-letting of a portion of the premises to these defendants, or of the remaining portion to other sub-tenants. The lessors stood in the same position in relation to all the tenants collectively, which they occupied in regard to the original lessee, although their duty to erect the apparatus was to be performed upon the requisition of the defendants alone. It follows, therefore, that when the injunction was obtained, the plaintiffs had a perfect right to complete the erection of the hoisting apparatus in the old hoistway, although such erection there would seriously obstruct the only entrance to the defendants’ portion of the building. The latter ought, perhaps, to have foreseen all that, and provided for a new entrance-way in their lease from Dickinson. It is sufficient to say, however, that the plaintiffs were not bound to do it by their lease.

But the agreement of the 19th of March materially modified the provisions of the original lease touching the hoisting apparatus, and essentially changed the relative positions of the parties. By that agreement it was, in effect, mutually stipulated that the work upon the hoisting apparatus should be suspended until a new stairway and entrance should be provided for the defendants and made ready for use, and the latter undertook and promised to pay the rent for such apparatus from and after the 23d of March, if the same together with such new entrance and stairway should be con- ; pleted within a reasonable time. It is important to consider, therefore, what the parties understood by those words of limitation reasonable time” in the new agreement.

The referee was quite right in holding, as he did, that the intention of the parties in this matter was to be gathered from all the circumstances bearing upon the subject under which they contracted. But he appears to have erred in assuming that at the time the agreement was made, the parties contemplated the necessity of a purchase by the plaintiffs, from the tenants of the ground floor, of the right to construct a new passage-way to the premises of the defendants, and that negotiations for such purchase were carried on until October. For, not only is that assumption unsupported by the evidence in the case, but the testimony of the witnesses clearly shows that both, the plaintiffs and the defendants believed, when the contract was made and until long afterwards, that Ayer & Co. had a legal right to construct such new passage-way, irrespective of any objection or consent on the part of Amidown & Co. The defendant Kobbe testified that he did not know, when the agreement of the 19th of March was entered into, that the contemplated new entrance could not be got except by consent of Amidown, nor did the witnesses so understand it, and he knew nothing whatever of subsequent negotiations between Ayer & Co. and Amidown. Mr. Amidown testified that frequent discussions were had between Ayer & Co. and himself prior to March, 1868, which was continued up to October, in which Ayer & Co. claimed that they had a legal right to construct a new passage-way for the defendants over the premises of Amidown & Co., and would assert that right by force if necessary, and the latter denied such right, and that no offer of a money compensation for permission to construct such entrance-way was made to Amidown & Co., previous to October, 1868, when they granted' the right. Mr. Birdseye, one of the counsel for the plaintiffs, testified that he frequently, and almost weekly, saw and conversed with Amidown & Co. and their counsel between March and October, touching the claims of those parties; that during those interviews he told Amidown that he would advise his clients to go on and put in the new entrance-way, and Amidown said he would resist such attempt with a strong hand; and that during all that time, he “never heard of any such thing as that Mr. Amidown would consent to take money for allowing the door-way there ; ” that he did not hear of any such thing being talked about or negotiated for, till just about the time when the agreement of October 17th, 1868, was entered into, and that the subject of his frequent discussions with Amidown & Co. and their counsel was, not a money compensation, but the legal rights of Amidown & Co. and the plaintiffs respectively. Mr. Crosby, the law partner of the last-mentioned witness, testified substantially to the same effect, and so did Mr. Ely, one of the plaintiffs.

It appears from the evidence, therefore, that the parties to the agreement of the 17th of October did not, nor did either of them, contemplate, that a purchase of the right to construct the new entrance-way by the plaintiffs would be necessary to enable them to perform" that act and erect the hoisting apparatus, and that no considerable portion, if any part, of the seven months which elapsed between the making of the agreement of ; March and the final completion of the work was employed by Ayer & Co. in negotiating for the right to construct the contemplated new entrance-way; and it follows that the referee’s conclusion, based upon the contrary hypothesis, that the entrance-way and apparatus were constructed within a reasonable time after the making of the contract, and that the plaintiffs were therefore, entitled to recover rent for the apparatus between the 23d of March, 1868, and the final completion of the hoisting apparatus, was erroneous.

The claim of recoupment on the part of the defendants for damages "because of the failure of the plaintiffs to construct the apparatus within a reasonable time after the making of the agreement of the 19th of March, does not appear to be established by the evidence. The agreement in effect, prohibited them from erecting the apparatus unless they also furnished the defendants with a new entrance-way, and it did not require the plaintiffs absolutely to furnish such entrance-way, but it was left by the contract wholly optional with them. The error of the referee, therefore, only affects the rights of the parties in so far as concerns the extent of the plaintiffs’ claim, and that ought to be reduced by deducting from the judgment the amount allowed by the referee for the rent of the hoisting apparatus from the 23d of March to the time when it was completed and ready for use. If the plaintiffs consent to make that reduction, the judgment, so modified, should be affirmed, with costs of this appeal to the defendants; if not, the judgment should be reversed, the report of the referee and the order of reference vacated, and a new trial ordered, with costs to abide the event.

It may be added that the decision of the referee touching the sufficiency of the apparatus cannot properly be disturbed, and he appears to have committed no substantial error in the conduct of the trial.

"Van" Vorst, J., concurred.

Monell, J. (concurring in part, dissenting in part).

I concur with the chief justice that the entrance-way was not constructed within a reasonable time ; that the failure to do so was a breach of the plaintiff’s agreement with the defendant, and that the plaintiffs should not recover rent therefor for any period anterior to its full completion.

But I think the chief justice is in error in holding that the damages which the defendant claims to have sustained "by reason of the breach of the contract by the plaintiffs, is not the subject of counter-claim or recoupment. They were damages for the breach of the same contract, and therefore within the definition of counter-claim (Code, § 150).

As the referee determined that the work was done within a reasonable time, he necessarily overruled the entire defence, as well the counter-claim, as that the plaintiffs should have no rent for the entrance-way.

It is not necessary, therefore, to look at the evidence of damage. The conclusion of the referee, as a matter of law overruling the counter-claim on the ground that the work was done in a reasonable time, having been erroneous, it is to be assumed that he did not overrule it as being unsupported by evidence.

I think the judgment should be set aside, order of reference vacated, and new trial granted, with costs to the appellants to abide the event.  