Glassman v. Hyder,
Chief Judge Fuld and Judges Burke, Scileppi and Jasen concur with Judge Breitel; Judge Keating dissents and votes to reverse in a separate opinion in which Judge Bergan concurs.
Involved on this appeal is the vacatur of an attachment of future rents to become due on New Mexico property. Plaintiff appeals from the vacatur and the consequent dismissal of his complaint for lack of jurisdiction.
Plaintiff Glassman, a New York resident, sued for real estate brokerage commissions. Defendants are the New Mexico owners of a building in that State. The tenant is an out-of-State corporation doing business in this State. In order to obtain quasi in rem jurisdiction over the nonresident defendants (N. Y. City Civil Court Act [CCA], § 405, subd. [c], counterpart to CPLR 314, subd. 3) plaintiff obtained a warrant of attachment and caused a levy to be made on the tenant in New York. Plaintiff also claims personal jurisdiction over defendants on the ground that the nonresident defendants transacted business in the State out of which the cause of action arose (CCA, § 404, subd. [a], par. 1, counterpart to CPLR 302, subd. [a], par. 1).
The Civil Court held that there was no jurisdiction (51 Misc. 2d 535); the Appellate Term reinstated the attachment and the complaint (52 Misc. 2d 618); and the Appellate Division, agreeing with the Civil Court, vacated the attachment and dismissed the complaint (28 A.D.2d 974).
Because it is concluded that there was no jurisdiction over the defendants on either basis, the vacatur and dismissal should be affirmed.
Plaintiff, a licensed real estate broker, allegedly, through a series of telephone calls, letters, and a telegram, entered into a brokerage agreement with defendant owners, who were at no time physically present in New York, for the procurement of a buyer for the New Mexico property. A suitable buyer, he alleges, was found. The owners agreed to accept the buyer's offer, but subsequently refused to sign a written contract, and failed to pay the broker the agreed commissions.
I. Quasi in rem jurisdiction
The owners had in 1962 leased the land and building, the subject of the alleged brokerage agreement, to Fireman's Fund Insurance Company, under a 20-year net lease expiring in 1983. Only the destruction or condemnation of the premises, or a breach of the covenant of quiet enjoyment, could materially affect the duty of the lessee to pay rent. The rent was reserved on a monthly basis, to be paid on the first day of each calendar month, commencing on the first day of the term. On December 20, 1965, broker obtained (pursuant to CCA, §§ 209, 801) an order of attachment, which was levied upon the tenant, Fireman's Fund, on December 21, 1965. Personal service on the defendants in New Mexico (pursuant to CCA, § 405) was made the first week in January and plaintiff was given additional time to file proof of service. At the time of the levy, the rent due December 1 had already been paid on December 3. No further rent was due until January 1. On January 3, tenant paid the rent then due, $1,398.10, to the Sheriff. The property was sold to another purchaser in January and no subsequent rent has been paid to the Sheriff.
CPLR 6202 provides that any debt or property against which a money judgment may be enforced under CPLR 5201 is attachable. There are three kinds of things subject to execution, and the same was to some extent true under the Civil Practice Act.
The first is a debt past due, or yet to become due, certainly, or upon demand, which is always an intangible (CPLR 5201, subd. [a]). The second is property, real or personal, tangible or intangible, which includes vested or unvested interests (CPLR 5201, subd. [b]). The third is income of various kinds, but subject to preconditions before it is available to levy by execution, and most often limited to garnishing of 10% (CPLR 5231, but compare 5226).
On any ordinary analysis, particularly any economic analysis, future rents might be treated either as a debt or as a form of income.
A debt to be attachable must be "past due or * * * yet to become due, certainly or upon demand of the judgment debtor" (CPLR 5201, subd. [a]). Where a duty to pay is conditioned on the creditor's future performance, or upon contractual contingencies, there is no debt certain to become due (see Sheehy v. Madison Sq. Garden Corp., 266 N. Y. 44, 47; Herrmann & Grace v. City of New York, 130 App. Div. 531, 535, affd. 199 N. Y. 600). An obligation to pay rent, it has been held, is not a debt and is not certain to become due (see Matter of Ryan, 294 N. Y. 85, 95). Thus, in the Ryan case, it was said, "The 'covenant to pay rent creates no debt until the time stipulated for the payment arrives * * * It is not a case of debitum in praesenti solvendum in futuro. On the contrary, the obligation upon the rent covenant is altogether contingent.' In some contingencies the stipulated rent payable in the future by a lessee for the right to occupy leased premises might never become due." (Matter of Ryan, supra, p. 95.)
Seider v. Roth (17 N.Y.2d 111) and Simpson v. Loehmann (21 N.Y.2d 305), relied on by plaintiff, are hardly applicable. Those cases depend upon the construction that an indemnitor's duty to defend is a present duty and, therefore, a current asset. Notably, in those cases, there was no special effort made by the majority to classify contractual duties as between debt and property, although, to be sure, it was said in the Seider case that "as soon as the accident occurred there was imposed * * * a contractual obligation which should be considered a 'debt' within the meaning of CPLR 5201 and 6202." (17 N.Y.2d, p. 113.) As to future rents, there is no present duty.
Although New York has never specifically held that future rents cannot be attached or garnished, most other jurisdictions have held that future rents are so speculative as not to qualify as debts certain to be due, or even as debts at all, and hence are not garnishable (see United States Fid. & Guar. Co. v. Wrenn, 89 F. 2d 838; Calechman v. Great Atlantic & Pacific ...