
    J. Wesley Rosenquest and Emeline Colville, Plaintiffs, v. William Noble and Charles F. Gall, Defendants.
    
      Summary proceedings — effect of the final order therein—liability of sureties upon an undertaking on an appeal therefrom—right of, to a deposit under a lease to secure rent, forfeited by a breach of the lease—res ad j udicata.
    While a final order dispossessing tenants for the non-payment of rent is, as between the parties to such proceeding, an adjudication as to the relation of landlord and tenant and that rent was due at the time of the commencement of the proceeding, it is not binding as to the rent for the period included within the terms of an undertaking given to stay, pending an appeal, the execution of a warrant for the delivery of possession of the premises, as against the sureties named therein.
    The liability of the sureties upon such an undertaking, by the terms of which they covenant to pay “all rents accruing or to accrue,” not exceeding a fixed sum, covers, under this phrase, merely the period during which the appeal has kept the lessors out of possession.
    The sureties upon such an undertaking are not entitled to claim, in exonera- • tion of their liability thereunder, the sum paid by the tenants under a covenant contained in the lease, to the effect that the tenants will deposit with the lessors a fixed sum to be held by them, and to be applied upon the rent of the last two months of the term, provided the tenants have, up to that period, complied with all the covenants and conditions of the lease, but that, if they have failed so to do, the deposit shall be forfeited and retained by the lessors as and for liquidated damages and not as a penalty.
    A judgment dismissing the complaint, in an action brought to recover rent under the lease, is not conclusive as to the right to recover under the undertaking for the same period of time.
    Application by the plaintiffs, J. Wesley Rosenquest and another, for judgment upon the verdict of a jury rendered by direction of the court after a trial at the Rew York Trial Term, subject to the opinion of the Appellate Division.-.
    
      Henry Thompson, for the plaintiffs.
    
      Ira Leo Bamberger, for the defendant Charles F. G-alL
    
      Rastus S. Ransom, for the defendant Noble.
   Ingraham, J.:

The action is brought upon an undertaking given by defendants to obtain a stay of the execution of a warrant awarding' the plaintiffs as landlords the. delivery and possession of certain premises in the possession of Canary and Lederer as tenants, the said- warrant having been granted for the non-payment of the sum of $2,250, rent alleged to be due on the 1st day of April, 1895, for the said month of April. The said tenants having failed to pay the rent, the proceeding in which this undertaking was given was instituted hy the landlords to obtain possession of the leasehold premises, and a warrant was granted removing the tenants from the premises and directing the delivery thereof to the plaintiffs as landlords. The undertaking recites that the said tenants had appealed from the order awarding the warrant, and that a justice of the Court of Common Pleas having fixed the amount of the undertaking at $5,000, these defendants, by such undertaking, did thereby j “ jointly and severally, undertake that if, upon the appeal, a final determination is rendered against the said tenants and appellants, we will pay all rent accruing or to accrue upon the premises, not exceeding the sum of $5,000.” It appears that .subsequently, and on the 16th day of December, 1895, the appeal from such final order was decided and the order affirmed by the General Term of the Court of Common Pleas, and judgment was-entered upon such affirmance, a copy of which judgment, with notice of entry, being served upon the attorney for the tenants, and more than ten days before the commencement of the. action upon the defendants -who executed the undertaking. It also appeared that the plaintiffs were in possession of the premises under a lease executed by one Benjamin Sire; that subsequently, and on May 18, 1895, the said Benjamin Sire commenced proceedings to dispossess both the plaintiffs, his lessees, and Canary and Lederer as sub-lessees; and that such proceedings were had that, on the 5th day of June, 1895, a warrant was issued by which both the plaintiffs and Canary and Lederer were dispossessed •of the premises, and all interest of the plaintiffs in the leasehold property, or right to receive rent, ceased at that time. The action is brought to recover the rent accruing for the months of April and May against these defendants as sureties upon this undertaking.

The original answer interposed by the defendants alleged that upon the execution of the lease from the plaintiffs to Canary and Lederer, in pursuance of this provision, the sum of $4,500 was paid' by Canary ánd Lederer to the plaintiffs, which was to be applied to the payment of the rent of the premises for the two last months of the term, namely, April and May, 1896, providing that the tenants, Canary and Lederer, should comply with all the covenants and conditions of the lease up to that time, with a provision, however, that in case they should fail to comply with all the terms and conditions •of the lease up to that time the amount should be retained by the ' plaintiffs as liquidated damages for a failure to comply with such te>'ms and conditions, or for a breach of the obligation contained in ■ such lease; that as the plaintiffs had received this sum of $4,500, they were entitled to deduct it from the amount due for rent; and that nothing was due to the plaintiffs from Canary and Lederer for the months of April and May, 1895. By a supplemental answer it was alleged that the plaintiffs had commenced an action ■ against Canary and Lederer to recover the rent for the months of April and May, 1895 ; that such cause having come on to he tried, judgment was entered dismissing the complaint, and that such judgment was ■res adjudicada as to the claims of these plaintiffs against these •defendants under the undertaking, and was a bar'to any recovery in this action. The plaintiffs, on the other hand, insist that the judgment of the District Court dispossessing Canary and Lederer was itself an adjudication that the rent for these two months was due •and unpaid.

The principle is well established that a proceeding to dispossess for non-payment of rent, which has proceeded to final Order or judgment, is, as between the parties, an adjudication as to. the relation of landlord and tenant, and that rent was due at the time of the commencement of the proceeding. It is not, however, an adjudication ' as to the amount of the rent due; and, assuming that it would be binding upon persons in the position occupied by these defendants as sureties upon an undertaking given to stay the execution of such a warrant, it is clear that such a judgment is not binding as to the amount of rent due for the period included within the terms of the undertaking, for, by the very terms of the undertaking itself, the only obligation assumed by the defendants was to pay the rent accruing or to accrue. In other words, the undertaking was to pay the rent for the period during which the landlord should be kept-out of the possession of the premises in consequence of the pendency of the appeal and a stay of an issuance of a warrant which would result in putting the landlord in possession of the premises, and the adjudication was that rent was due prior to the commencement of the proceeding. Nor do we think that the judgment in the action brought by the plaintiffs against Canary and Lederer is an adjudication binding upon these plaintiffs as to their right to recover from the defendants the rent which accrued between the time of ■ the execution of the undertaking and the final entry of the judgment of the appellate court affirming the order appealed from. The parties in this action are not the same as- the parties in the rent action. The instrument sued on here is not the instrument under which the right of the parties in that action was determined. The action there was to recover for a liability created by the lease between the plaintiffs and Canary and Lederer, and was to be determined by the-terms and conditions of the agreement between those parties. Here the action is to-recover under this undertaking which was executed-to stay the proceedings under this warrant, and which, but for the execution of this undertaking, would have resulted in placing the property in the possession of the landlords on the 1st day of May, 1895. The undertaking effectually prevented the landlords from obtaining possession of the premises at that time; and to accord to the landlords the same right that they would have received had the execution of that warrant been allowed, these defendants have agreed that, in case the judgment or order appealed from should be affirmed, they would pay,/ not any sum of money that Canary and Lederer owed to the plaintiffs, but the rent accruing, or which should accrue, during the period that the warrant was stayed. It is quite clear that, had the plaintiffs recovered a judgment against - Canary and Lederer, that judgment would riot have been an adjudication which could have inured to the benefit of. these plaintiffs in an action upon this undertaking.

As before stated, this undertaking was riot given to secure the payment of any rent due under that lease, but was, by' express terms, given to secure the payment of the rent of the property during the time that the appeal was pending from the order dispossessing the tenants. These defendants agreed to pay the rent pending that time. This was an independent agreement upon their part based upon a sufficient consideration and upon the happening of the contingency named, viz., upon the affirmance of the final order in the proceedings against the tenants and appellants, these defendants agreed to pay all rent accruing, or to accrue, upon the premises, not exceeding the amount named in the undertaking. This undertaking was executed on the 1st day of May, 1895. Under the lease the rent for the month of April had already accrued. R became payable on the first day of April. The time for which that payment was to give to Canary and Lederer the possession of the property had expired, and the execution of the warrant would not give to the plaintiffs any right to receive the proceeds of the property for the month of April. The rent for that month, therefore, was not within the obligation assumed by the defendants when they executed this undertaking. We think, however, that the plaintiffs were entitled to recover the amount of rent for the month of May. During that month the defendants were kept out of possession of the property by the stay of proceedings which was procured by this undertaking. But for the execution of this undertaking the plaintiffs would have been entitled to have possession of the. property on the first day of May, and thus would have been entitled to its use during that month. The rent for that month was, therefore, rent accruing or to accrue, pending the appeal, and comes within the obligation assumed by the defendants-upon the execution of-the undertaking.

The defendants in this case, however, insist upon the right to apply, or to have applied, the $4,500 paid by Canary and Lederer to the plaintiffs under the lease between them, to the rent that should become due and owing during- these two months, and thus to be relieved from liability to pay such rent, on the ground that the same was paid by the application of such deposit thereto. We think that, under the terms of the lease, between the plaintiffs and Canary and Lederer, they are not entitled to have such sum of money applied to the payment of the rent for these two months. By the lease it was agreed that, before its delivery, Canary and Lederer “ will deposit with the parties of the first part (the plaintiffs) the sum of four thousand five' hundred ($4,500) dollars, which sum shall be held by the parties of the first part and applied by them as and for the rent of said premises for the months of March and April, 1896, provided that all the covenants and conditions herein have been fully complied with by the parties of the' second part (the said Canary and Lederer) up to said date, but if default is made by the parties of the second part in any of the covenants and agreements herein up to the months of March and April, 1896, then, and in that' case the said sum of four thousand five hundred ($4,500) dollars shall be forfeited to the said parties of-the first part, and the said sum' of four thousand five hundred ($4,500) dollars shall be retained by the parties of the first part as and for liquidated damages, and which are hereby fixed as liquidated damages and not as a penalty.”

Row, the meaning of this provision is quite clear. If the lessees should comply with the conditions of their lease up to the 1st day of April, 1896, then this deposit was to be applied to the payment of the rent for April and May, 1896. If, however, they should fail to comply with the covenants contained in. the lease up to that time, then the sum of $4,500 was to be retained by the lessors as liquidated damages for a breach of the covenants contained -in the lease. Row, the damages stistained by such a breach would not be the amount of rent that accrued prior to the time when any covenant was broken, which would entitle the plaintiffs to retain this deposit as liquidated damages.. Irrespective of the damages sustained by the plaintiffs upon a breach of the covenants by Canary and Lederer, any sum of money due and unpaid for -rent prior to the time of' the breach would be an obligation that the plaintiffs could collect from their tenants, not as damages for a breach of the lease, but as money due under the covenants contained in the lease. The agreement between the parties by which this sum of $4,500 should be retained by the plaintiffs as liquidated damages for a breach of the covenants contained in the lease would not satisfy an obligation of Canary and Lederer to pay the money due under the lease as rent of the premises. The retention, therefore, of this money by the. plaintiffs as liquidated damages for the breach did not satisfy the obligation under the lease for rent that accrued and became due Upon the 1st day of April and the 1st day of May, 1895, and certainly would not be a bar to an action brought under this undertaking by which these defendants had agreed to pay to the plaintiffs the rent of the premises which accrued subsequent to the execution off the undertaking and before the final termination of the lease.

We think, therefore, that the plaintiffs are entitled to recover from these defendants the rent for the month of May, 1895, and that the verdict must be reduced from $4,500 to $2,250 and interest, and judgment must be directed for the plaintiffs for this amount, with costs in the court below and in this court.

Van Brunt, P. J., Williams, Patterson and O’Brien, JJ., concurred.

Verdict reduced to $2,250 and interest, and judgment directed for plaintiffs for that amount, with costs in the court below and in this court.  