950 Third Ave Co. v. Eastland Industries, Inc.

• Decision Date: 13 May 1983
• Citation: 463 N.Y.S.2d 367,119 Misc.2d 19
• Parties: 950 THIRD AVE CO., Petitioner, v. EASTLAND INDUSTRIES, INC., Respondent.
• Court: New York City Court

Page 367

463 N.Y.S.2d 367

119 Misc.2d 19

950 THIRD AVE CO., Petitioner, v. EASTLAND INDUSTRIES, INC., Respondent.

Civil Court of the City of New York,

New York County, Part 52.

May 13, 1983.

Morton L. Portnoy, New York City, for petitioner.

Finkelstein, Borah, Schwartz, Altschuler & Goldstein, P.C., New York City (Burton R. Ross, New York City, of counsel), for respondent.

DECISION AFTER TRIAL

DAVID B. SAXE, Judge.

The principal issue in this case is whether a landlord may evict a commercial tenant in a holdover proceeding based upon the termination of the lease by the operation of a conditional limitation resulting from the tenant's default in the payment of rent. In deciding this issue, it is necessary to determine whether the respondent's implicit waiver of statutory protections afforded tenants (both residential and commercial) in nonpayment proceedings is permissible.

As a starting point, I note that the procedural and substantive rights of a tenant depend upon the remedy chosen by the landlord (see e.g., Park Summit Realty Corp. v. Frank, 107 Misc.2d 318, 434 N.Y.S.2d 73, 75 (App.Term, 1st Dept.1980), aff'd 84 A.D.2d 700, 448 N.Y.S.2d 414 (1st Dept.1981), aff'd 56 N.Y.2d 1025, 453 N.Y.S.2d 643, 439 N.E.2d 358 (1982). Thus, in a nonpayment proceeding commenced within New York City, both commercial and residential tenants have a right to obtain an automatic and indefinite stay of the issuance and execution of a warrant of eviction by paying all rent due to the landlord or the court. (RPAPL Sec. 751(1)).

The following are the essential facts here: This is a summary holdover proceeding to recover possession of a portion of the 30th floor in the office building known as 950 Third Avenue, New York, New York. On January 10, 1977, the parties entered into a written lease to use these premises as office space for a period of ten years commencing April 1, 1977 and ending March 31, 1987.

As a basis for eviction, the petitioner relies on Paragraph "15" of the lease, which states:

"CONDITIONS OF LIMITATION.

This Lease and the term and estate hereby granted are subject to the limitation that: ...(e) in case Tenant shall default in the payment of any fixed rent or additional rent or any other charge payable hereunder by Tenant to Landlord on any date upon which the same becomes due and such default shall continue for 5 days after Landlord shall have given to Tenant a written notice specifying such default, ... then in any of said cases Landlord may give to Tenant a notice of intention to end the term of this Lease at the expiration of 3 days from the date of the giving of such notice, and, in the event such notice is given, this Lease and the term and estate hereby granted (whether or not the term shall theretofore have commenced) shall expire and terminate upon the expiration of said 3 days with the same effect as if that day were the date hereinbefore set for the expiration of the term of the lease ..."

The respondent failed to pay the additional rent for the months of January through September 1982 as well as the fixed rent and additional rent for October and November 1982 in the aggregate sum of $24,613.85. A holdover proceeding was then commenced.

The tenant argues that Lease Paragraph # 15 is a condition and not a conditional limitation." In the case of a condition, the breach thereof does not ipso facto end the lease. The lease continues after breach exactly as before it occurred, until the landlord who has the right of forfeiture, elects to exercise it. Then the lease will come to an end. Thus, some act is required to be done to effect the termination of the lease.

However, in the case of a conditional limitation upon the mere occurrence of the limitation; that is, the stipulated contingency, the lease automatically expires; and no reentry or any other act is necessary to end the lease. Thus, the happening of the event is, in itself, the limit beyond which the estate no longer exists, or can exist. No act is required to be done by anyone. The lease just expires." Rasch, New York Landlord and Tenant, 2d Ed.Sec. 744. See Also, Beach v. Nixon, 9 N.Y. 35 (1853).

I find that the provision created a conditional limitation by providing for termination of the lease upon the expiration of 3 days after the tenant's receipt of the landlord's notice of intention to terminate.

Although not raised by either side, the court, on its own, questions whether a landlord may, consistent with the public policy of this state, maintain a holdover summary proceeding based upon the operation of a conditional limitation resulting from the tenant's default in the payment of rent. A tenant, promoting this view might argue as follows: RPAPL sec. 711(2), the statute under which a landlord may commence a nonpayment summary proceeding, was enacted to afford a landlord a quick and expeditious method for the recovery of unpaid rent without the necessity of becoming involved in the slow and cumbersome method of an action in ejectment. Rasch, New York Landlord and Tenant Summary Proceedings, Section 994.

When the statute was first enacted giving landlords the right to bring nonpayment proceedings, a landlord could only recover possession of property and not a money judgment. In 1920, however, the statute was amended to permit the landlord not only to recover possession but also a money judgment (Id.).

A tenant in a nonpayment proceeding has a right to effect an automatic and indefinite stay of the issuance and execution of a warrant by paying all the rent due to the landlord or the Court. (RPAPL Sec. 751(1)). Where a landlord, by operation of a conditional limitation in a lease makes the nonpayment of rent grounds for terminating the lease, he is, it could be argued, foreclosing the right of the tenant to stay the issuance of a warrant of eviction by paying the rent due--the procedure permissible if the vehicle of a non payment proceeding had been utilized. The tenant has no such right in a holdover proceeding because the operation of the conditional limitation terminates the tenancy. There is, simply put, after the conditional limitation operates to terminate the lease, nothing to redeem. Permitting the operation of the clause in question would operate at cross-purposes with the favored policy of permitting tender of the rent up to the time the warrant of eviction issues.

Nevertheless, it is true that parties of apparently equal bargaining power are free to contract with each other concerning the designation of terms and conditions of default. Birnbaums Estate v. Yankee Whaler, Inc., 75 A.D.2d 708, 427 N.Y.S.2d 129, aff'd 51 N.Y.2d 935, 434 N.Y.S.2d 994, 415 N.E.2d 982 (1980). And, a landlord might contend that there is nothing intrinsically unconscionable regarding the designation of failing to pay rent when due in the context of a commercial lease as a conditional limitation. Id.

More to the point however, is an analysis of the special statutory scheme to protect tenants in nonpayment proceedings within the context of whether a waiver of these rights is permissible. Under Sec. 751 of the RPAPL, in a nonpayment proceeding, a tenant may effect a permanent stay by depositing the amount of the rent due into court. By treating the nonpayment of rent as a conditional limitation that terminates the lease, the tenant is seemingly waiving the possibilities of cure (through payment) that exist prior to the issuance of the warrant of eviction.

Although RPAPL Sec. 751(1) (dealing with nonpayment proceedings), does not expressly prohibit waiver, a stay is mandated under that section if the tenant pays the amounts due. Consequently, it would be difficult to infer that the legislature intended to implicitly permit waiver. The more logical inference is that the legislature considered an explicit prohibition of waiver unnecessary. The right to redeem after judgment in a nonpayment proceeding is stated in mandatory terms. The implication then is that the right to cure is nonwaivable and that the creation of lease termination possibilities on account of the nonpayment of rent, constitutes an impermissible waiver of the provisions in law providing a right of redemption to tenants in nonpayment proceedings. Support for this construction may be found in the history and purpose of summary proceedings. At common law, summary proceedings were not allowed. An action in ejectment, the available procedure, was slow and expensive. As previously indicated, in 1920, the New York legislature provided for summary proceedings to afford the landlord a "simple, expeditious and inexpensive means of regaining possession of his premises in cases where the tenant refused upon demand to pay rent, or where he wrongfully held over without permission after the expiration of his term." Reich v. Cochran, 201 N.Y. 450, 453-54, 94 N.E. 1080 (1911). See, Gardens Nursery School v. Columbia Univ., 94 Misc.2d 376, 377, 404 N.Y.S.2d 833 (CIV CT.N.Y.CO.1978); Maxwell v. Simons, 77 Misc.2d 184, 186, 353 N.Y.S.2d 589 (Civ.Ct., Kings Co.1973); Lex-56th Corp. v. Morgan, 24 Misc.2d 48, 203 N.Y.S.2d 59 (Munic.Ct., (N.Y. (Manh.) 1960), aff'd 13 A.D.2d 912, 217 N.Y.S.2d 1020 (1st Dept.1961); Haskell v. Surita, 109 Misc.2d 409, 439 N.Y.S.2d 990 (Civ.Ct.N.Y.Co.1981).

Since summary proceedings are in derogation of tenants' common law rights, the legislature enacted a comprehensive scheme to insure preservation of certain of those rights while achieving the purpose of providing an inexpensive and expeditious remedy for landlords. Moreover, because of the speed with which a landlord could retain possession of premises in which tenants had had a significant property interest, certain safeguards were required to comport with due process.

In discussing the statute from which Sec. 751(1) was derived, ¹ the Appellate Division held that summary proceedings for nonpayment of rent should be dismissed upon the tenant's tender of the full amount of rent due, rather than stayed under a...