New York Law Review

Tag: Covenant to Repair

  • Putnam v. Stout, 38 N.Y.2d 607 (1976): Landlord’s Tort Liability Based on Covenant to Repair

    Putnam v. Stout, 38 N.Y.2d 607 (1976)

    A lessor may be liable for harm caused to others upon his land with the permission of the lessee, based on the lessor’s contract to keep the premises in good repair.

    Summary

    Plaintiff Putnam was injured when she fell in a hole in the driveway of a supermarket leased by Grand Union from Steigler. The court addressed whether the landlord, Steigler, could be held liable for the plaintiff’s injuries based on a covenant to repair in the lease agreement. The Court of Appeals overruled its prior precedent, holding that a landlord may be liable for injuries to persons on the land with the lessee’s consent solely based on the landlord’s contractual covenant to keep the premises in repair. The court affirmed the lower court’s decision, finding both Grand Union and the Steigler estate liable.

    Facts

    Plaintiff Putnam fell and sustained injuries when her shoe became caught in a hole in the driveway adjoining a Grand Union supermarket and parking lot. The sidewalk was blocked by cartons and rocks, forcing her to walk in the driveway. The hole was approximately 10 inches in diameter and 2 inches deep, with the surrounding area rutted and cracked. Putnam had observed the deteriorated condition of the area weeks before the accident. Grand Union employees regularly used the driveway for deliveries and returning shopping carts. The landlord, Steigler, had repaired the parking lot months before but not the adjacent driveway.

    Procedural History

    The plaintiff won a jury verdict against both Grand Union and the Steigler estate. Liability was apportioned 25% to Grand Union and 75% to the Steigler estate. The Appellate Division affirmed the judgment. Grand Union and the Steigler estate appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether Grand Union had sufficient notice and control over the premises to be held liable for the plaintiff’s injuries.
    2. Whether the landlord, Steigler, can be held liable for the plaintiff’s injuries based on a covenant to repair in the lease agreement.

    Holding

    1. Yes, Grand Union had sufficient control because, by the terms of the lease, Grand Union had the right and control necessary to effect repair of the driveway.
    2. Yes, the landlord may be held liable because the court overruled Cullings v. Goetz and adopted the Restatement (Second) of Torts § 357, which holds a landlord liable for injuries to persons on the land with the lessee’s consent based on the landlord’s covenant to repair.

    Court’s Reasoning

    The court found that Grand Union had constructive notice of the dangerous condition, given the hole’s size, the length of time it existed, and the frequent use of the driveway by employees. Regarding control, the court held that the lease agreement gave Grand Union the right and responsibility to make repairs to the driveway, making them liable for the injury. Addressing the landlord’s liability, the court explicitly overruled Cullings v. Goetz, which had previously held that a covenant to repair does not impose tort liability on the lessor. The court adopted the Restatement (Second) of Torts § 357, stating that several factors support this rule: the lessor’s agreement to repair for consideration, the tenant’s reliance on the lessor’s promise, the lessor’s reversionary interest, and broader social policy considerations regarding tenants’ financial constraints and limited possession. The court emphasized that “[t]he modern trend of decision is toward holding the lessor liable to his tenants or those upon the land with the tenant’s permission where the landlord has breached his covenant to repair.” The court reasoned that consideration must be given to protecting persons from injury, rather than adhering to technical, outmoded rules of contract. The court directly quoted from the Restatement (Second) of Torts § 357: “A lessor of land is subject to liability for physical harm caused to his lessee and others upon the land with the consent of the lessee…by a condition of disrepair existing before or arising after the lessee has taken possession if (a) the lessor, as such, has contracted by a covenant in the lease or otherwise to keep the land in repair, and (b) the disrepair creates an unreasonable risk to persons upon the land which the performance of the lessor’s agreement would have prevented, and (c) the lessor fails to exercise reasonable care to perform his contract.”

  • City of New York v. Pennsylvania Railroad Co., 37 N.Y.2d 298 (1975): Tenant’s Duty to Repair Continues During Holdover Period

    City of New York v. Pennsylvania Railroad Co., 37 N.Y.2d 298 (1975)

    When a tenant remains in possession of property after the expiration of a lease or permit, a holdover tenancy is created, and the terms of the original agreement, including covenants to repair, remain in effect.

    Summary

    The City of New York sued Pennsylvania Railroad for failing to maintain a pier in good condition as required by the terms of expired permits. The railroad had occupied the pier for over 70 years under various permits and a lease, all requiring maintenance. After the last permit expired, the railroad remained in possession for 11 years, paying rent but without a new agreement. The City sued three years after the railroad vacated the pier. The Court of Appeals held that the railroad was a holdover tenant, and the covenant to repair remained in effect during the holdover period, making the railroad liable for the cost of repairs.

    Facts

    Pennsylvania Railroad erected Pier 77 on New York City land in 1888. The railroad had exclusive possession of the pier for over 70 years. From 1888 to 1891, occupancy was by permit. From 1891 to 1921, occupancy was under a 10-year lease, twice renewed. For the next 30 years, occupancy was under annual or semi-annual permits. The last permit expired on December 31, 1949. The railroad remained in possession until June 1961, paying rent, but without a new agreement. All agreements required the railroad to maintain the pier in good condition. The City sued in 1964 for failure to maintain the pier.

    Procedural History

    The City sued for damages. The railroad argued that the City’s plan to replace the pier precluded damages, that the statute of limitations had expired, and laches. The trial court initially granted the City summary judgment but later vacated the judgment and ordered a hearing to assess damages. The Appellate Division reversed, dismissing the complaint, holding that the relationship was a licensor-licensee arrangement, to which the repair covenant did not attach. The City appealed to the New York Court of Appeals.

    Issue(s)

    Whether the Pennsylvania Railroad’s continued occupancy of Pier 77 after the expiration of its permits constituted a holdover tenancy, thereby continuing the applicability of the covenant to maintain the pier in good repair.

    Holding

    Yes, because when a tenant remains in possession after the expiration of a permit granting exclusive possession, it becomes a holdover tenant, and the tenancy continues on the same terms and conditions, including the covenant to maintain the pier.

    Court’s Reasoning

    The court determined the true character of the agreement by looking at the nature of the right conveyed, not just the name given to it. If the agreement gives exclusive possession against the world, including the owner, it creates an interest in land, not a license. Since the railroad had exclusive possession, it was a tenant, not a licensee. The court applied the common-law rule that a tenant who remains in possession after a lease or permit expires becomes a holdover tenant. The court quoted Kennedy v. City of New York, 196 N.Y. 19, 23 stating that a holdover tenancy implies “a continuance of the tenancy on the same terms and subject to the same covenants as those contained in the original instrument”. Therefore, the covenant to maintain the pier remained in force while the railroad was in possession, and the City’s cause of action for breach of that covenant was timely brought after the railroad surrendered possession. The court emphasized the damages were measured by the cost to put the premises in the required state of repair, citing Farrell Lines v City of New York, 30 NY2d 76, 84, regardless of the City’s subsequent demolition of the pier.

  • Mayor, etc., of New York v. Second Ave. R.R. Co., 102 N.Y. 572 (1886): Business Record Exception to Hearsay

    Mayor, etc., of New York v. Second Ave. R.R. Co., 102 N.Y. 572 (1886)

    A business record is admissible as evidence of a fact if the record was created in the ordinary course of business, based on reports of employees who had a duty to report accurately, and the person who made the entry testifies that they correctly entered the information.

    Summary

    The City of New York sued the Second Avenue Railroad Company to recover costs for street repairs the city performed after the Railroad failed to do so, as required by a covenant. The city introduced a time-book and material account to prove the expenses. The Court of Appeals held that the time-book was admissible under a business records exception to the hearsay rule because it was based on daily reports from foremen with a duty to accurately report hours worked, which were then entered into the time book by someone who testified to entering the data correctly. This case clarifies the business records exception to the hearsay rule.

    Facts

    The Second Avenue Railroad Company had a covenant to pave and repair streets “in and about the rails.” The City of New York notified the Railroad that repairs were needed, but the Railroad failed to make them. The City then made the repairs itself and sought to recover the costs from the Railroad. To prove the amount of labor and materials used, the City introduced a time-book and a written account of materials used. The time-book was kept by a foreman, Wilt, who recorded the names and times of the workers based on reports from gang foremen. Wilt visited the site twice a day to verify the reports. The gang foremen did not see Wilt’s entries but testified they accurately reported the information.

    Procedural History

    The trial court directed a verdict for the City, including the sum expended on labor and materials. The Railroad appealed, arguing that the City didn’t prove the “reasonable cost” of repairs and that the time-book and material account were inadmissible hearsay. The New York Court of Appeals affirmed the judgment for the City, holding the evidence was properly admitted.

    Issue(s)

    1. Whether the measure of damages for breach of a covenant to repair is the reasonable cost of repairs, and if so, was there sufficient evidence to support the directed verdict?

    2. Whether a time-book and material account, based on reports from others, are admissible as evidence of the labor and materials used in repairs.

    Holding

    1. Yes, because in the absence of evidence to the contrary, the sum actually expended by the covenantee in making repairs is prima facie evidence of the reasonable cost of the work.

    2. Yes, because a time-book is admissible if it’s based on daily reports of foremen who had charge of the men and a duty to report accurately, and the person who made the entries testifies that they correctly entered them.

    Court’s Reasoning

    The Court reasoned that while the measure of damages is the reasonable cost of the work, the sum actually expended by the city is prima facie evidence of that cost, absent any evidence of fraud, recklessness, or extravagance. Regarding the admissibility of the time-book, the Court recognized that the foreman who kept the book did not have personal knowledge of all the hours worked, but relied on reports from gang foremen. However, the Court created an exception to the hearsay rule, reasoning, “We are of opinion that the rule as to the admissibility of memoranda may properly be extended so as to embrace the case before us. The case is of an account kept in the ordinary course of business, of laborers employed in the prosecution of work, based upon daily reports of foremen who had charge of the men, and who, in accordance with their duty, reported the time to another subordinate of the same common master, but of a higher grade, who, in time, also in accordance with his duty, entered the time as reported. We think entries so made, with the evidence of the foremen that they made true reports, and of the person who made the entries that he correctly entered them, are admissible.” The Court emphasized the importance of the record being made in the ordinary course of business, with a duty to report accurately. The court found that this practice was necessary for conducting business, and safeguards against inaccuracy were sufficient to justify admission of this type of evidence.