The action is brought, tenant against landlord, for the specific performance of a covenant to renew a lease. By indenture made in March, 1898, the defendant, individually and as executrix, demised certain premises and buildings in the city of Brooklyn to the plaintiff for the term of five years at a specified rent. The instrument contained the following provisions under which the controversy as to the respective rights of the parties in this case arises:
"IT IS FURTHER EXPRESSLY UNDERSTOOD AND AGREED between the parties hereto that the parties of the second part hereby lease the property of the party of the first part for the further term of five years from April 1st, 1903, at the same annual rental, and the party of the first part hereby agrees with the party of the second part that within one year of the expiration of this lease, on ten days' notice in writing by her received from the party of the second part she will institute proceedings in the Supreme Court for leave to execute and will enter into a lease of the said premises to the said party of the second part at the said rental for the said further term of five years commencing April 1st, 1903, and ending April 1st, 1908, the said lease for said further term to be in all respects similar to these presents.
"IT IS FURTHER EXPRESSLY UNDERSTOOD AND AGREED that the party hereto of the second part will erect a new pavilion on the rear and side of the Hotel now on the said demised premises, and an extension over the kitchen thereof, in addition thereto, which said erections and buildings shall be and remain the property of the party of the second part, except that on the expiration of the two terms of five years the said pavilion and extensions shall be and become the property of the party of the first part, and the party of the second part shall not remove the same after erecting the same during the continuation of said lease.
"In case it should happen that the party of the first part cannot for any reason legally give, or refuses to give to the party of the second part an extension of this lease for five years as hereinbefore provided, then and in that case, the *Page 547 party of the first part will pay the said party of the second part a fair and reasonable value for the said extension and pavilion so erected by him and if an agreement cannot be reached between the parties hereto as to such fair and reasonable value, each of them shall choose an arbitrator, both of whom shall choose a third and the award of the majority of said arbitrators shall be final and binding upon the parties hereto. If, however, the party of the second part should refuse to enter into the said extension of this lease for five years as aforesaid, then and in that case the said pavilion and extension, at the expiration of the time of this lease on April 1st, 1903, shall be and become the property of the first party hereto."
The plaintiff constructed the pavilion required by the lease, and in due time before the expiration of the demised term demanded of the defendant a renewal of the lease for an additional term of five years and that she apply to the Supreme Court for authority to execute the same. With this demand the defendant refused to comply. The complaint prayed as relief that the defendant be compelled to execute a lease for the additional term or that she apply to the Supreme Court for requisite authority for that purpose. The defendant demurred on the ground that the complaint did not state facts sufficient to constitute a cause of action.
The difference between the parties is as to the proper construction of the provisions of the lease which have been recited at length. The defendant's contention is that while the first clause, construed by itself, might appear to impose upon the defendant an absolute agreement to renew the lease, it is to be deemed qualified by the provisions of the second clause, which obligate the landlord on a refusal to renew the lease to pay for the value of the pavilion, and obligate the tenant upon a failure on his part to renew his tenancy to forfeit such value; that is to say, that under the proper construction of both clauses it was optional with the landlord to either renew the lease or pay for the value of the building erected thereon by the tenant and optional with the tenant to either renew his *Page 548 tenancy or to forfeit the building. On this theory, that it was optional with the landlord either to renew the lease or to pay for the building, the courts below have held that the plaintiff's action could not be maintained. We entertain a different view as to the proper construction of the instrument before us. It is to be first observed that the two clauses are entirely separate and distinct. The first imposes an unqualified obligation on the part of both the tenant and the landlord to renew the lease for an additional term of five years. Indeed, the language so far as it relates to the tenant is that of a present renting, not a mere covenant to take a new lease. "The party of the second part hereby leases the property of the party of the first part for the further term of five years from April 1st." There could be no doubt as to the effect of this clause standing alone. The following clause of the indenture deals with another subject. By it the tenant covenants to erect a building on the demised premises which it is expressly provided shall remain his property "except that on the expiration of the two terms of five years the said pavilion and extensions shall be and become the property of the party of the first part." It is difficult to see how the building can remain the property of the tenant until "the expiration of the two terms of five years" unless the plaintiff is given the unqualified right to both of such terms. Following this covenant that the tenant shall erect a pavilion, and forming part of the same clause of the indenture are found the provisions that on failure to renew by the landlord she is required to pay the value of the building, while on failure to renew by the tenant he forfeits the building. We think that these provisions affect and qualify only the previous provisions relating to the title to the building as to which they doubtless confer additional rights on the parties. Thus the tenant, if refused a renewal, might, in lieu of an action for damages, recover the value of the building, and on the other hand, the landlord, in case of the tenant's default, might, in lieu of her suit for damages, retain the building. But they did not operate to relieve either party from the unqualified obligation assumed by the *Page 549 previous clause of the lease, an obligation upon the performance of which either party had the right to insist. Under this view it follows that the action was well brought.
The judgment of the Special Term and that of the Appellate Division should be reversed, with costs in all courts, and judgment given for the plaintiff on demurrer, with costs, with the usual leave to the defendant to withdraw demurrer and answer on payment of costs.
PARKER, Ch. J., GRAY, BARTLETT, MARTIN, VANN and WERNER, JJ., concur.
Judgment reversed, etc. *Page 550
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