The action is brought to recover the sum of $4,000, being the amount set forth in a bond given by the Thomas Mulligan Construction Company, Inc., and The 115th Street Garage Company, Inc., as principals, and the defendant, as surety. It is claimed by the plaintiff that the bond was given entirely for her benefit, and was to secure the faithful performance on the part of the principals of an agreement to reconstruct into a garage a building then standing upon the demised premises and used as a stable. Plaintiff claims that she is a lessee of the premises and sublet them to The 115th Street Garage Company, Inc., under a lease containing a covenant on the part of the lessee to alter the building thereon into a garage.
On the part of the defendant, appellant, it is claimed that the defendant in executing the bond incurred no liability, except under the clause therein contained in which the principal agreed “ to satisfy the owner ” that the garage when built should comply with the rules and regulations of the fire, building and other city and State departments.
The learned trial court has found that the premises in question were “ held by the plaintiff as lessee under a long term lease. * * * That the alteration of the stable into a garage was for the benefit of the plaintiff. * * * That the cost of said alteration is a sum in excess of Four Thousand ($4,000.00) Dollars.” The court then directed judgment in favor of the plaintiff for the sum of $4,000, and costs. I do not think that the findings support the judgment, nor do I think that the evidence supports the findings.
The complaint alleges that the plaintiff was a lessee “ holding a lease on said premises dated 9 day of September, 1916.” The answer puts in issue said allegation and upon the trial the lease under which plaintiff held was not introduced in evidence and no testimony was offered with reference to *763plaintiff’s tenure. The complaint further alleges that on the 7th day of November, 1917, the plaintiff entered into a lease with The 115th Street Garage Company, Inc., for said premises on East One Hundred and Fifteenth street for the term of twenty-one years, commencing on the 1st day of January, 1918, at a rental of $4,200 per year, payable in equal monthly installments of $350, in advance; that said premises were to be used for a garage and for the sale of automobiles, automobile supplies and accessories; that in said lease the lessee agreed, at its own cost and expense, to make the necessary alterations and changes in said premises to permit the same to be so used as a garage instead of a stable; that such repairs and alterations were to be completed on or before the 1st day of June, 1918; that such garage was to be in strict compliance with the laws governing the same in any and all departments of the city and State of New York; that it was further agreed between the parties that the tenant should, simultaneously with the execution of the lease, deliver to the plaintiff the bond sued upon; that the bond in question was executed on the 9th day of November, 1917; that thereafter the plaintiff vacated the premises and leased other premises for the purpose of conducting therein her stable business; that the lessee refused, failed and neglected to take and occupy the demised premises and made no alterations. The complaint then alleges that due notice of default was served upon the parties, as required in the lease. The complaint then alleges:
“ Fifteenth. That by reason of the aforesaid, the plaintiff was compelled to and did vacate premises hereinbefore leased and was compelled to and did lease other premises for the conducting of her stable business and plaintiff did otherwise suffer damages amounting to Four thousand ($4000.00) dollars.”
No claim is made by the plaintiff that the parties agreed upon any forfeiture respecting any sum mentioned in the bond or that the defendant is liable to the plaintiff on any theory of liquidated damages. The complaint is drawn and the action was tried on the theory that the plaintiff has suffered damages by reason of the alleged default of the parties in failing to alter the demised premises into a garage.
*764Upon the trial the defendant conceded the making of the lease, the giving of the bond, the fact that no work was ever done on the plaintiff's premises, and that the plaintiff instituted summary proceedings to evict the tenant, in which proceedings the tenant defaulted. The defendant sought to prove upon the trial that the parties had voluntarily consented to the termination of the lease. The trial court held adversely to the defendant’s contention in that respect, and the appellant does not question the decision of the court upon this point.
In addition to the question raised by the appellant as to the construction of the bond, it further contends that the dispossess proceedings and the occupancy of the premises by the plaintiff canceled all obligations of the defendant under the bond; that under the express terms of the lease the parties stipulated that in case of default on the part of the lessee the sum of $350 was fixed as liquidated damages, and that no damages were proven.
The plaintiff did not offer in evidence the lease under which she held the premises, nor did she make any proof respecting her title. There is no evidence in the case to show whether the plaintiff had a lease for one year or for one hundred years, or at all. There is, therefore, no basis for an award of damages. The only evidence of damages offered by plaintiff was the testimony of one Nathan Langel, an architect. He was shown the proposed plans and specifications for the alterations which were to be made to the demised premises, and testified, under defendant’s objection and exception, that the cost of such alterations would be $14,435 without an elevator. It was disclosed that the proposed plans had never been accepted by the proper city authorities. There is no evidence in the case bearing upon the value of plaintiff’s reversion, the value of the premises, or what effect the alterations would have had upon the rentals. It is, therefore, clear that the judgment appealed from is unsustained by the evidence and should be reversed.
It is, however, proper to dispose of the other questions raised by the appellant, the most important of which is the appellant’s liability under the aforesaid bond. The important portions of the bond are as follows:
“ Know all men by these presents, That Thomas Mulligan *765Construction Co., Inc., and The 115th Street Garage Company of New York City (hereinafter called the ‘ Principal ’), and the New Amsterdam Casualty Company, a corporation of the State of New York (hereinafter called the ‘ Surety ’), are held and firmly bound unto Sarah Kanter of 1811 Lexington Avenue, New York City (hereinafter called the ' Owner ’) in the full and just sum of Four Thousand ($4000.00) Dollars, to the payment of which said sum of money, the said Principal and the said Surety bind themselves, their heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents.
“ Signed, sealed and dated this 9th day of November, A. D. 1917;
“ Whereas, said Principal Thomas Mulligan Construction Company, Inc., above mentioned has entered into an agreement with the said The 115th Street Garage Co. above mentioned for the alteration of a stable owned by Sarah Kanter, aforementioned, located at #307-11 East 115th Street, into a Garage according to plans and specifications and in accordance with the rules and regulations of the Fire and Building departments of the City .of New York, and has agreed to satisfy the owner of the property, Sarah Kanter, that all work done thereunder will be in accordance with said rules and regulations of the Fire and Building Departments,
“ Now, therefore, the condition of this obligation is such that if the said Principal shall faithfully perform said contract on his part, according to the terms, covenants and conditions thereof (except as hereinafter provided), then this obligation shall be void, otherwise to remain in full force and effect; ”
As above stated, the appellant contends that it is surety only for the faithful performance on the part of the “ principal ” of the agreement that “ all work done thereunder will be in accordance with said rules and regulations of the Fire and Building Departments.” The complaint states and the lease shows that prior to the execution thereof the lessee had agreed to give the bond sued upon. A copy of this bond was placed in the hands of the lessor’s attorney prior to the execution of the lease, as stated in the body of the lease itself, The *766lease bears date on November seventh and the bond on November ninth, but it is quite obvious that one of the considerations of the lease was the giving of the bond for the faithful performance on the part of the lessee of its agreement to alter the demised premises in accordance with certain plans and specifications agr.eed upon. It, therefore, follows that when the parties agreed in the lease that the sum of $350 was to be taken as liquidated damages in the event of certain defaults on the part of the lessee, they did not contemplate that such sum was to be accepted in case of default under the provisions for alterations. If such were the case the liability under the bond would in no event be over $350, which is contrary to all of the acts of the parties and contrary to the fair interpretation of the lease and of the bond itself. Assuming, therefore, for the reasons above stated, that the defendant contracted to become liable as surety, to some one in the sum of $4,000 in case of default as provided in the bond, it is necessary to carefully read the bond itself for the purpose of determining just what the defendant’s liability is. At the outset it will be noted that the Thomas Mulligan Construction Company, Inc., and The-115thStreet Garage Company, Inc., of New York were designated in the bond to be the “ principal ” and the New Amsterdam Casualty Company was named as the “ surety,” and that as such they jointly and severally became bound “unto Sarah Kanter” in the sum of $4,000. The parties did not assume liability to any one else except the plaintiff, Sarah Kanter; and the surety company cannot be sued by either the Thomas Mulligan Construction Company, Inc., or by The 115th Street Garage Company, Inc., under the terms of the bond. It is, therefore, apparent that the things mentioned in the body of the bond were to be done and performed for the benefit of Sarah Kanter. While the bond itself is in the form of the usual contractor’s bond, such fact does not alter the liability of the defendant to the plaintiff.
In the bond the parties referred to certain plans and specifications for the alteration of a stable “ owned by Sarah Kanter,” and further provided that “ if the said Principal shall faithfully perform said contract on his (sic) part according to the terms, covenants and conditions thereof * * *, then this obligation shall be void.” It is obvious that the word *767“ principal ” means both the Thomas Mulhgan Construction Company, Inc., and The 115th Street Garage Company, Inc., and that the contract clearly refers to the agreement on the part of the lessee to alter the stable in accordance with the plans and specifications, which work was to be done by the other principal, the-Thomas Mulhgan Construction Company, Inc. The evidence shows that Thomas Mulhgan was the head of both of the principals, and that the stock of both companies was held by said Thomas Mulhgan and his sons.
It seems to me that the obligation of the bond was threefold: (1) “ for the alteration of a stable owned by Sarah Kanter, aforementioned, located at #307-11 East 115th Street, into a garage according to plans and specifications;” (2) “ in accordance with the rules and regulations of the Fire and* Building departments of the City of New York,” and (3) “ to satisfy the owner of the property, Sarah Kanter, that ah work done thereunder will be in accordance with said rules and regulations of the Fire and Building Departments.”
It seems very clear that upon default of the principals in respect of any of the acts above mentioned the defendant was obligated to respond in damages to the plaintiff and that this court should hold that the defendant is liable to the plaintiff in such damages as the plaintiff is able to show were suffered by reason of the failure of the principal to make the alterations agreed upon in the lease and the aforesaid plans and specifications.
The appellant asserts, as above stated, that it is not hable under the bond because the lease was canceled either by the dispossess proceedings or by the acceptance of the surrender of the premises and the occupancy thereof by the plaintiff. It was admitted at the opening of the case by defendant’s counsel that “ the tenant went into possession on February first.” It appears, however, that the actual possession was postponed by agreement between the parties until March first. After that date summary proceedings were instituted to evict the tenant who had never actually taken possession. No warrant, however was issued, although the tenant made default and the plaintiff thereafter moved back into the demised premises. While the plaintiff was clearly -authorized to retain the $350 paid in advance under *768the lease, neither the dispossess proceedings nor taking possession of the premises by the plaintiff released the lessee and the defendant from their obligations under the aforesaid bond. As above noted, it was clearly the intention of the parties to make a separate agreement to insure the proper alteration of the premises, and the -bond sued upon was given for this particular purpose. The defendant cannot escape liability under the bond by simply proving a general default on the part of its principal which rendered summary proceedings necessary, nor are the plaintiff’s damages confined to the $350 stipulated in the lease. If the plaintiff can prove that she holds the demised premises under a long term lease, and that the alterations to the premises which the lessee agreed to make would have benefited the premises and increased the value of plaintiff’s security or reversion, it' is clear that the plaintiff is entitled to recover substantial damages. The alterations provided for in the lease are much more than ordinary repairs. The lessee agreed to alter the premises from a stable into a garage. It does not necessarily follow, however, that such alterations would increase the market value of the premises as a whole or the rental value thereof. It does not appear that at the time the lease was made the premises were in any respect out of repair or that any part or portion of the alleged improvements and alterations which the sublessee agreed to make were in the nature of repairs. Assuming, however, that the plaintiff will be able to prove that the alterations were for her benefit and increased the value of the premises and also the value of her leasehold estate, the measure of damages is not the actual cost of making these material alterations and improvements, but the true measure of damages is the difference between the value of the plaintiff’s leasehold estate and what the value thereof would have been at the time of the breach had the lessee made the alterations and improvements agreed upon. There is a great conflict in the authorities respecting the true measure of damages in this and similar cases. When an action is brought for the breach of a covenant on the part of a lessee to make ordinary repairs and such action is brought before the expiration of the term y it is now settled that the measure of damages is the injury, done to the reversion. (Appleton v. Marx, 191 *769N. Y. 81.) When, however, such an action is brought by the landlord after the expiration of the term, the measure of damages is the cost of putting the premises in repair. (Appleton v. Marx, supra; Lehmaier v. Jones, 100 App. Div. 495; City of New York v. McCarthy, 171 id. 561; 2 McAdam Landl. & Ten. [4th ed.] 1326; 16 L. R. A. [N. S.] 212, n.; 16 R. C. L. 1094, ft 612.) The above cases, however, were decided upon the theory that the repairs which the tenant agreed to make were necessary to preserve the property and in most instances the repairs had actually been made by the landlords after default on the part of the tenant. In the case at bar, the tenant having made immediate default and having failed to actually enter into possession of the premises, it would be unfair to award to the plaintiff, she being now in possession of the premises, the full cost price of the alterations which the lessee had agreed to make under the lease, but which might not have benefited the demised property at. all nor increased its market or rental value. Prior to the decision of Appleton v. Marx (supra) the law in this State seems to have been unsettled respecting the proper measure of damages in an action brought by a landlord upon the default of a tenant to make repairs. The lease under consideration in the last-mentioned case involved a simple covenant on the part of the lessee to make repairs. It does not follow, therefore, that Appleton v. Marx is any authority upon the question as to what is the true measure of damages in the case at bar.
In the case of Kidd v. McCormick (83 N. Y. 391) the plaintiff sought to reach certain trust funds which had been deposited for the security of the plaintiff who had sold certain lots under an'agreement that the vendees should build dwellings upon them. The vendees having defaulted before the dwellings were fully constructed, it was necessary for the court to determine what damages the plaintiff was entitled to receive by reason of the vendees’ default. The opinion of the Court of Appeals was written by Chief Judge Folger, and it was held that the plaintiff’s damages were “ the difference in the value of the premises, as they were with the houses unfinished, on the 1st of September, 1877, from what the value of them *770would have been had the houses been finished on that date according to the contract.” In his opinion Chief Judge Fólger reviews the authorities upon the question of damages in such cases and analogous decisions respecting similar defaults by a lessee, and stated: “ Sometimes it has been held that the measure is what it will cost to put in repair. [Cases cited.] Other times it has been said or intimated, that the measure would be what the landlord would lose, if he put his reversion in market and'sold it; in other words, the difference between what it was worth with the premises out of repair, and what it would have been with them in repair.”
The facts under consideration in Kidd v. McCormick are quite similar to the facts in the case at bar. The Court of Appeals in deciding Appleton v. Marx did not in any way overrule Kidd v. McCormick or similar cases which do not involve the narrow question of ordinary repairs. Kidd v. McCormick is cited with approval in Comey v. United Surety Co. (217 N. Y. 268). The question involved in Comey v. United Surety Co. was one growing out of a construction contract and was brought on a surety bond given. for its faithful performance on the part of the principal. The principal defaulted and suit was brought against the surety. The court held that the plaintiff had a cause of action to recover damages for the abandonment of the contract, citing Kidd v. McCormick (supra). The court further held that the language of the bond was that of the defendants, and that words of doubtful meaning should be construed in favor of the plaintiff.
In Sutherland on Damages (Vol. 3 [4th ed.], p. 3164) the learned author says: “The measure of damages for failure of a lessee to erect a building upon premises during the term as agreed is such a sum as with legal interest would equal the fair cost of the building at the end of the term.” (Citing Wentworth v. Manhattan Market Co., 218 Mass. 91.)
While the rule stated by Sutherland has never been authoritatively adopted in this State, it is founded upon good logic, for in no event can a landlord who leases his property to another under a covenant to make improvements or alterations receive any benefit therefrom or enjoyment thereof until after the expiration of the term. For this reason a landlord can*771not claim the right to both the immediate possession of the premises and the full cost of such improvements or alterations. It seems to me that all such damages are clearly included within the rule above stated in this opinion, and that the true amount which a landlord in such event is entitled to recover is the benefit which the repairs or improvements would be to his reversion or interest in the demised premises. In the case at bar the plaintiff intended to part with the possession of her premises for twenty-one years. Outside of the additional security for the rents, she could receive no benefit from the alterations for twenty-one years. It was, therefore, necessary for her to show as a foundation for her claim for damages what her actual interest was in the demised premises and how it was affec.ted by the failure of the lessee to make the alterations which it agreed to make. I am unable to find any case in this State where the rule respecting the measure of damages as laid down in Appleton v. Marx has been applied to facts similar to those in the case at bar. The law also seems to be unsettled in Massachusetts. One of the leading cases in that State is that of White v. McLaren (151 Mass. 553). In that case an action was brought under a written agreement made by a firm of builders to do certain work and furnish certain stock and materials in accordance with certain specifications. The builders did not construct the roof of the building in accordance with the agreement. The court said: “ In determining such damages, different elements are proper for consideration in different cases, according to the nature of the defect. Sometimes the measure of damages is the necessary cost of making the work according to the specifications. * * * The defect might be of -such a character as to diminish the value of the house but little, while to make the work conform literally to the contract would involve reconstruction at unreasonable and disproportionate expense. The question ordinarily is, How much less is the building fairly worth than it would have been if the contract had been performed? ”
A case very similar to the one at bar is that of Illinois Surety Co. v. O’Brien (223 Fed. Rep. 933). The plaintiff . in that action held a ground lease for ninety-nine years which had run two years. The premises were sublet for ninety-*772seven years with a provision in the lease for the erection of a building during the first year. To secure the performance of such agreement the lessee gave a surety company bond. The building was not erected and the lease was terminated for the default of the lessee. The action was brought against the surety company. The court held that the surety company was liable, and that the lessor’s damages were to be measured by the value which the building, if erected, would have been to him as security for the performance of the lessee’s covenants contained in the lease. It is quite apparent that had the court permitted the lessor in the above case to recover the cost of the construction of the building which the lessee had agreed to erect there would have been a grave miscarriage of justice. O’Brien, the plaintiff, had agreed to part with the possession of his premises for ninety-seven years in consideration of the agreement of the lessee to pay rent and to construct a building thereon and, therefore, as held by the court, was not entitled to the cost price of the structure. In the case at bar the plaintiff had agreed to part with the possession of her premises for twenty-one years for the same consideration. It, therefore, follows that the true measure of damages is as above stated, viz., the difference between the value of plaintiff’s leasehold estate at the time of the breach, and what its value would have been had the alterations been made as agreed by the sublessee.
The judgment appealed from should be reversed and a new trial granted, with costs to appellant to abide event.