487 Elmwood, Inc. v. Hassett

• Decision Date: 11 December 1981
• Parties: 487 ELMWOOD, INC., Appellant, v. William D. HASSETT, Jr. and Leo Townsell, et ano., Defendants, and McDonald's Corporation, Franchise Realty Interstate Corp., and McDonald's of Kensington, Respondents.
• Court: New York Supreme Court — Appellate Division

Page 336

445 N.Y.S.2d 336

83 A.D.2d 409

487 ELMWOOD, INC., Appellant, v. William D. HASSETT, Jr. and Leo Townsell, et ano., Defendants and McDonald's Corporation, Franchise Realty Interstate Corp. and McDonald's of Kensington, Respondents.

Supreme Court, Appellate Division Fourth Department.

Dec. 11, 1981.

Magavern, Magavern, Lowe, Beilewech, Dopkins & Fadale, Buffalo, for appellant; Michael Beilewech, Jr., Buffalo, of counsel.

Falk, Siemer, Glick, Tuppen & Maloney, Buffalo, for respondents; Edwin H. Wolf, Buffalo, of counsel.

Before SIMONS, J. P., and HANCOCK, CALLAHAN, DENMAN and SCHNEPP, JJ.

SCHNEPP, Justice.

Plaintiff appeals from an order granting summary judgment and dismissing its action for injunctive relief and damages against McDonald's Corporation, McDonald's of Kensington Ltd. (McDonald's) and Franchise Realty Interstate Corp. (Franchise) which stems from the erection of a McDonald's restaurant in an area of a Buffalo shopping plaza reserved for automobile parking. Plaintiff's sublease agreement of a large store in the plaza included the right to use this area for the "automobile vehicles of its customers and/or employees" with the plaza's other tenants for which plaintiff, because it was a major tenant, agreed to pay 90% of the parking area's maintenance and other expenses. Thereafter, Franchise leased a portion of this parking area from the defendant owners of the plaza on which McDonald's erected and now operates a restaurant. Plaintiff's claim is grounded on its allegations that the defendants have wrongfully entered upon the premises and constructed a building, claimed the right to possession of the area to the exclusion of plaintiff's rights, interfered with plaintiff's use and occupancy of the parcel, and evicted plaintiff from a part of the premises sublet to it.

McDonald's and Franchise contend that their lease warrants that the premises are free and clear of tenancies and that the presence of plaintiff as a tenant in the plaza under an unrecorded lease did not constitute sufficient notice to alert them of any adverse claim of possession or occupancy. In their moving papers on this motion they state that plaintiff had full knowledge of the restaurant proposal prior to its construction which was commenced in March, 1979 and completed on September 12, 1979; that prior to the commencement of the action in August, 1979 plaintiff did not object to the construction of the restaurant or claim any interest in the premises on which the restaurant was built; and, that plaintiff is guilty of laches which bars it from seeking relief. In its responding affidavit plaintiff submitted a map of the plaza which indicates that the moving defendants leased an area containing 53,000 square feet, about two thirds of the entire parking area, and contended that it did object to the "trespass and sued the defendants in August, 1979 for redress".

Special Term held that since plaintiff did not record its sublease, the moving defendants could not be charged with notice of its terms. Additionally, in granting summary judgment, Special Term found that there was no evidence to controvert defendant's claim that they were not put on notice of plaintiff's rights and did not lease the property subject to those rights, implicitly holding that absent proof of actual notice the cause of action against defendants must be dismissed. We disagree. The issue here is whether these defendants had sufficient information to put them on inquiry as to plaintiff's interest in the property.

By the terms of its lease plaintiff acquired an easement for the use of the parking area which was appurtenant to its leasehold (see generally, Doyle v. Lord, 64 N.Y. 432; Rainbow Shop Patchogue Corp. v. Roosevelt Nassau Operating Corp., 34 A.D.2d 667, 310 N.Y.S.2d 231; Ann. 56 A.L.R.3d 596; see, also, Great Atlantic & Pac. Tea Co. v. LaSalle National Bank, 77 Ill.App.3d 478, 32 Ill.Dec. 812, 395 N.E.2d 1193; Walgreen Co. v. American Nat. Bank & Trust Co. of Chicago, 4 Ill.App.3d 549, 281 N.E.2d 462; The Fair v. Evergreen Park Shopping Plaza of Delaware, 4 Ill.App.2d 454, 124 N.E.2d 649). Since an easement is a property interest which equity can protect by injunction (see Collins v. Arancio, 72 A.D.2d 759, 421 N.Y.S.2d 375; Feuer v. Brenning, 279 App.Div. 1033, 112 N.Y.S.2d 382, affd. 304 N.Y. 881, 110 N.E.2d 173; Stolts v. Tuska, 76 App.Div. 137, 78 N.Y.S. 687; O'Hara v. Wallace, 83 Misc.2d 383, 371 N.Y.S.2d 570, mod. on other grounds 52 A.D.2d 622, 382 N.Y.S.2d 350; De Forrest v. Bunnie, 201 Misc. 7, 107 N.Y.S.2d 396, affd. 280 App.Div. 1035, 117 N.Y.S.2d 676), plaintiff has a cause of action in equity to enjoin any interference with its use of the parking area (see Food Fair Stores v. Jackson Hgts. Shopping Center, 55 Misc.2d 205, 284 N.Y.S.2d 814, affd. 28 A.D.2d 1207, 285 N.Y.S.2d 1009; Great Atlantic & Pac. Tea Co. v. LaSalle National Bank, 77 Ill.App.3d 478, 32 Ill.Dec. 812, 395 N.E.2d 1193, supra; Walgreen Co. v. American Nat. Bank & Trust Co. of Chicago, 4 Ill.App.3d 549, 281 N.E.2d 462, supra). In Food Fair Stores, 55 Misc.2d 205, 284 N.Y.S.2d 814, supra, for example, it was held that a shopping center tenant was entitled to a permanent injunction prohibiting the owner from constructing a building in the parking area in violation of the tenant's right to use the area. The same result occurred in Walgreen, 4 Ill.App.3d 549, 281 N.E.2d 462, supra where a kiosk was constructed in a parking area which had been reserved for the common use of the tenants.

Plaintiff's sublease was subject to the Recording Act because it exceeded three years in duration (Real Property Law, §§ 290, 291), and had it been recorded, defendants would be on constructive notice of its terms and liable for its breach (see Stolts v. Tuska, 76 App.Div. 137, 78 N.Y.S. 687, supra had been created by a lease recorded by a previous lessee]; see also, Lent & Graff Co. v. Satenstein, 210 App.Div. 251, 205 N.Y.S. 403). In the absence of recording, however, defendants would be subjected to liability if they had actual notice of plaintiff's claim of right (see Williamson v. Brown, 15 N.Y. 354). InWalgreen, 4 Ill.App.3d 549, 281 N.E.2d 462, supra the court imposed liability where the proof established that the lessee had actual notice of plaintiff's rights before beginning construction (see, also, The Fair v. Evergreen Park Shopping Plaza of Delaware, 4 Ill.App.2d 454, 124 N.E.2d 649, supra).

Merely because, as Special Term found, plaintiff's sublease was not recorded and defendants' disclaimer of actual notice went unrebutted does not mean that a triable issue of fact does not exist. In New York, "where a purchaser has knowledge of any fact, sufficient to put him on inquiry as to the existence of some right or title in conflict with that he is about to purchase, he is presumed either to have made the inquiry, and ascertained the extent of such prior right, or to have been guilty of a degree of negligence equally fatal to his claim to be considered as a bona fide purchaser" (Williamson v. Brown, 15 N.Y. 354, 362, supra; see generally, Reed v. Gannon, 50 N.Y. 345; 2 Pomeroy's Equity Jurisprudence, 3d ed., § 614). In Covey v. Niagara, Lockport & Ontario Power Co., 286 App.Div. 341, 344, 143 N.Y.S.2d 421, a case involving an unrecorded easement to...