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App. Div.]

First Department, April, 1908. respect to any implication, or the construction of ambiguous provisions that the contractor was entitled to the possession of these ducts and to use them in the operation of the railroad, and this seems to be conceded by plaintiff. The city had parted with the right to the possession of the ducts as well as the rest of the road and certainly could not take possession of them from the defendant and use them for its own purposes whether the lessee used them or not. But the plaintiff says, although entitled to the possession and to use them in the operation of the railroad, the defendant is not entitled to use them for anything else, although the use of which complaint is made is a strictly railroad use for the purposes of operating a surface line railroad which brings to the railroad operated by the defendant a substantial increase of business and is a distinct advantage to the public in enabling passengers to be carried over both railroads for a substantially reduced fare. It seems to me that the plaintiff here is seeking to inject into this lease a covenant restricting the use of the property leased to McDonald which is not in the lease and which is expressly negatived by its provisions. No case that has been cited and no principle of law of England or of this country, with which I am acquainted, justifies the insertion of a restrictive covenant in property leased or conveyed by the municipality where no such covenant is either expressly or by implication contained in the grant or lease. Applying the principle relied on by the plaintiff to its fullest extent it is only where a grantee attempts to obtain by implication or by ambiguous clauses what the grant does not expressly convey, not where the public seek to insert in the grant or lease a restrictive covenant by implication. For a full and adequate consideration the city of New York has granted to the defendant's assignor this railroad upon terms satisfactory to itself and which provide for an adequate return for the use of the property. It saw fit to restrict the use to which the lessee should put the property in certain respects, but did not attempt to restrict the use to which the defendant should put these ducts, except by a general provision that it should not use any of the demised property in any way so as to interfere with the fullest operation of the railroad. I think the lessee has the right to make use of the property leased so far as such use does not in any way violate any of the covenants or conditions of the lease. APP. DIV.–VOL. CXXV. 29

First Department, April, 1908.

Scorr, J. (dissenting):

[Vol. 125.

I dissent. In my opinion the contract under which the defendant operates the rapid transit railway partakes much more of the character of a grant from the public than of a lease, as the latter term is ordinarily used, and it is too well established to justify discussion that a grantee from the public takes nothing from implication which is not to be by fair construction found in the terms of the grant itself. The railway and the structure in which it runs are the property of the city of New York and their use is granted to the contractor solely to the end that the railroad may be operated for the benefit and use of the public. All that the third chapter of the contract, denominated the lease, purports to grant to the contractor is the "railroad" and the agreement of the latter is to equip, maintain and operate the "railroad." There cannot be found anywhere within the lines of the contract any express agreement to lease the structure for general purposes, or for any purpose other than that of operating a railroad, wlrich while it may carry with it the right to use the structure for such purposes as are naturally and customarily connected with railroad operation, does not include the right to use the structure for the carrying on of a business not germane to, nor connected with the operation of a railway in the structure. The purely negative condition that the contractor may not "make any use of the railroad or any part of it, or of its equipment, which shall to any extent or in any way interfere with such use to its fullest capacity for passengers," cannot be transformed into a positive covenant that the structure may be put to any use, whether connected with the operation of the road or not, which would not interfere with its use for passengers.

There are numerous ways in which a railroad property may be used for railroad purposes other than the carrying of passengers, and since the rapid transit road was intended primarily for passenger traffic, the condition quoted was undoubtedly inserted for greater caution to insure that however the road might be operated, the carrying of passengers should always be the first consideration. If the ducts used for the transmission of electricity for sale had been built by the contractor at his own expense as part of the equipment a different question would perhaps be presented, but they were not so built. They constitute a part of the

App. Div.]

First Department, April, 1908.

city's property, built with the city's money and leased to the contractor solely for the purpose of operating the railroad, the public necessity for which created the sole authority for the expenditure of the public money for such a proposal. (Sun Publishing Assn. v. Mayor, 152 N. Y. 257.) It is quite true that there are many more ducts in the structure than can be presently used in the operation of the railroad, and that the use of the ducts for carrying wires does not injure the structure, and that the company can now manufacture more electricity than is needed to operate the railroad at the present time, and, therefore, the city cannot be said to be injured to any appreciable extent by the use of the ducts for the transmission of the electricity for sale. That, however, is not the question with which we have to deal, but it is the broad question whether or not, under his contract, the contractor or his assignee may use the structure for other purposes of private gain than the operation of the railroad for which the structure was erected and leased. The development of science is rapid, and the ingenuity of man is unlimited; and if it be now established that the contractor or his assignee may use the structure belonging to the city for any purpose whatever except that of maintaining and operating the rapid transit railway, it is impossible to foresee to what uses it may hereafter be put. The case, much relied on by defendants, of New York Mail & Newspaper Transportation Co. v. Shea (30 App. Div. 266) is of slight assistance in determining the question we are now called upon to consider, which is solely as to the scope and construction of the contract between the city and the contractor. It may be authority for the proposition that it is competent for the city by an unambiguous contract, and for a proper consideration, to grant to the defendant the right to use the subway ducts in the manner and for the purpose it is now using them.

In my opinion the interlocutory judgment should be affirmed, with costs.

CLARKE, J., concurred.

Judgment reversed, new trial ordered, costs to appellants to abide event.

First Department, April, 1908.

[Vol. 125.

SOPHIE MAASS, Respondent, v. MARCUS A. ROSENTHAL, Appellant.

First Department, April 10, 1908.

Real property - suit in equity to rescind conveyance for fraud of grantee - inability of parties to rescind - dismissal of complaint money damages based on affirmance of contract not authorized.

Where a complaint in equity asks solely the rescission of a conveyance of lands because of the fraud of the grantee in misrepresenting the quality and amount of lumber given to the grantor in exchange for the lands, and it appears that the grantee has parted with title to third persons not made defendants, and that the plaintiff has used part of the lumber and has not made a tender of complete rescission to the defendant, the complaint should be dismissed, for neither party is in a position to rescind. In such case it is error to allow the plaintiff money damages based upon an affirmance instead of a rescission of

the contract.

In such action the plaintiff must rescind in toto, having no right to rescind in part.

As, under the circumstances, evidence offered by the plaintiff as to the condition and value of the lumber was competent as bearing on the question of fraud, upon which the rescission was predicated, the defendant, by failing to object thereto, cannot be deemed to have consented to change the cause from one in equity for rescission to one at law in affirmance of the contract.

APPEAL by the defendant, Marcus A. Rosenthal, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 17th day of August, 1907, upon the decision of the court rendered after a trial at the New York Special Term.

Arnold Charles Weil, for the appellant.

Daniel W. Blumenthal, for the respondent.

LAUGHLIN, J.:

This is a suit in equity to set aside a conveyance of three parcels of land with the buildings thereon in the borough of The Bronx in the county of New York, made by plaintiff to defendant on the 26th day of September, 1904, pursuant to a contract therefor in writing made on the sixteenth day of the same month, on the ground that the execution of both contract and deed by plaintiff was

App. Div.]

First Department, April, 1908. induced by false and fraudulent representations made to her by the defendant and for an accounting for rents and profits collected and realized by the defendant since such conveyance.

The consideration for the contract and conveyance was an agreement to sell and assign by bill of sale and the execution and delivery to plaintiff of a bill of sale of six carloads of lumber.

The alleged false representations were with respect to the ownership, quality and value of the lumber. Plaintiff alleges that defendant represented that the lumber was all oak of the value of $60 per thousand feet, that the six cars contained not less than ninety thousand feet and that it was owned by one Joseph Fleischman, from whom defendant was to and did procure the bill of sale to plaintiff; but that the lumber, instead of being oak, was maple and mixed woods of different varieties greatly inferior in value to oak and not worth more than $20 per thousand feet; that the total quantity of lumber in the six cars did not exceed sixty thousand feet; that one carload thereof was not owned by said Fleischman and that the bill of sale from him assigned no title thereto. It is further alleged in the complaint that before discovering the falsity of said representations, plaintiff used one carload of said lumber which consisted of only five thousand feet of the value of $450, and that prior to the commencement of the action and within a reasonable time after discovering that the representations were untrue, plaintiff offered to return to defendant the other five carloads of lumber and tendered to defendant $450, being the value of the lumber so used and demanded a reconveyance, all of which were refused.

The defendant in his answer admits the conveyance, but denies all other material allegations of the complaint, and alleges that prior to the commencement of the action he had conveyed the premises for good and valuable considerations to other parties to the knowledge of the plaintiff and "that this court has no jurisdiction of the subject-matter of this action," and demands that the complaint be dismissed.

When the cause was moved for trial, counsel for defendant moved that the complaint be dismissed on the ground that the court had not jurisdiction of the subject-matter of the action in that on the facts alleged plaintiff was not entitled to equitable relief, because

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