American Book Co. v. Yeshiva University Development Foundation, Inc.

• Decision Date: 11 February 1969
• Citation: 297 N.Y.S.2d 156,59 Misc.2d 31
• Parties: AMERICAN BOOK COMPANY, Plaintiff, v. YESHIVA UNIVERSITY DEVELOPMENT FOUNDATION, INC., Defendant.
• Court: New York Supreme Court

Page 156

297 N.Y.S.2d 156

59 Misc.2d 31

AMERICAN BOOK COMPANY, Plaintiff, v. YESHIVA UNIVERSITY DEVELOPMENT FOUNDATION, INC., Defendant.

Supreme Court, Trial Term, New York County, Part XXIII.

Feb. 11, 1969.

Greenbaum, Wolff & Ernst, New York City, Julia Perles, New York City, of counsel, for plaintiff.

Edward J. McCullen and Sidney Schutz, Martin H. Bockstein, Trial Counsel, New York City, for defendant.

EDWARD J. GREENFIELD, Justice.

This action, by a tenant in an office building for a declaratory judgment and an injunction to compel the landlord to give its consent to a proposed sublease, raises interesting questions as to the factors to be considered in determining whether withholding of consent to sub-letting is unreasonable.

Plaintiff American Book Company is the occupant of three floors and part of the basement space in an office building at 55 Fifth Avenue, in the City of New York. It occupies the premises under written leases entered into with 55 Associates, a limited partnership which then owned the building, running from October 1, 1961 to December 31, 1975. Pursuant to the terms of that lease the demised premises were to be used for executive and general officers, and for stockroom and storage. The lease was the standard Real Estate Board form, which provided:

'Tenant * * * shall not assign, mortgage or encumber this agreement, nor underlet, or suffer or permit the demised premises or any part thereof to be used by others, without the written consent of the Landlord in each instance.'

A typewritten rider to the lease provides:

'Wherever in this agreement the Tenant is required to secure the consent of the Landlord, such consent shall not be unreasonably withheld.'

During 1968 Litton Industries, Inc., plaintiff's parent company and the owner of all its stock decided to consolidate plaintiff's operations with two other book publishing companies it owned. Inquiry revealed that there was no additional available space at 55 Fifth Avenue. Thereupon plaintiff took steps to vacate its space, and sublet it to someone else. In September, 1968 plaintiff notified the managing agent of the building that it proposed to sublet all its space to Planned Parenthood-World Population, and requested the landlord's written consent.

Since the inception of the lease, the ownership of the building had changed hands, from 55 Associates to Franchard Corporation, and then in 1965 to defendant Yeshiva University Development Foundation, Inc. On November 7, 1968, two months after the request for consent to sublet had been made, plaintiff was notified that consent would not be forthcoming. The letter stated:

'Please be informed that the landlord cannot consent to such subletting and considers the activities of the proposed subtenant to be inconsistent with the present use of the premises and with the educational activities of the University.'

American Book Company and Planned Parenthood Federation of America, Inc. had formalized the proposed sublease on October 17, 1968, commencing March 1, 1969 and running for the balance of the term. It was contingent however upon finally obtaining the approval of the landlord by February 15, 1969.

Plaintiff brought this action, alleging irreparable damage would result if it could not go through with the proposed sublease, and asks for an injunction requiring defendant specifically to perform its agreement not to withhold consent unreasonably, and for a declaratory judgment adjudging that defendant is obliged to consent to the sublease between plaintiff and Planned Parenthood.

As a threshold defense, defendant asserts it is not a proper party to this proceeding, inasmuch as it, as owner, had entered into a long-term lease of the entire building to Yeshiva University, a separate corporate entity, running to the year 2061, under the terms of which the University, and not the Foundation, had the power to consent to any proposed subleasing. This defense is untenable. The Foundation is the owner of record, it is the Foundation to whom all rents are directed to be paid, and the plaintiff was never a party to any private agreements made by its landlord unbeknownst to it.

We come then to the question of whether a landlord, as the asserted grounds for refusing consent to a proposed sublease, may point to alleged philosophical and ideological 'inconsistencies' between itself and the proposed subtenant, or to the 'controversial' nature of the subtenant. Neither party has offered any cases directly in point.

The general rule is that in the absence of an express restriction by contract or statute, a tenant has an unrestricted right to assign or sublet as he wills. Fleisch v. Schnaier, 119 App.Div. 815, 104 N.Y.S. 921; Syracuse Savings Bank v. D'Elia, 185 Misc. 928, 56 N.Y.S.2d 800; Werber v. Weinstein, 207 Misc. 707, 138 N.Y.S.2d 196. Provisions restricting assignment or subletting are restraints which are not viewed with favor by the courts. Francis v. Ferguson, 246 N.Y. 516, 159 N.E. 416, 55 A.L.R. 982; Presby v. Benjamin, 169 N.Y. 377, 62 N.E. 430; Riggs v. Pursell, 66 N.Y. 193.

If, however, the lease contains an express covenant restricting assignment or subletting without the landlord's consent, the landlord may arbitrarily refuse his consent for any reason, or indeed for no reason. Ogden v. Riverview Holding Corp., 134 Misc. 149, 234 N.Y.S. 678, aff'd 226 App.Div. 882, 235 N.Y.S. 850; Arlu Associates v. Rosner, 14 A.D.2d 272, 220 N.Y.S.2d 288; Dress Shirt Sales, Inc. v. Hotel Martinique Associates, 16 A.D.2d 899, 228 N.Y.S.2d 807, aff'd 12 N.Y.2d 339, 239 N.Y.S.2d 660, 190 N.E.2d 10. That absolute right to withhold consent contained in the standard Real Estate Board printed form lease was here modified by the inclusion of the not uncommon rider that the landlord's consent was not to be 'unreasonably withheld'.

The standards of 'reasonableness' have not heretofore been clearly delineated by any single New York case, but are left to the trial court to determine in accordance with the particular factual patterns before it, and the conceptual boundaries may be only faintly discerned in the few reported cases.

It would appear to me, after such a review, that the purported reasons for refusal of consent by a landlord fall into two broad categories--objective and subjective. By 'objective' are meant those standards which are readily measurable criteria of a proposed subtenant's or assignee's acceptability, from the point of view of Any landlord:

(a) financial responsibility

(b) the 'identity' or 'business character' of the subtenant--i.e. his suitability for the particular building

(c) the legality of the proposed use

(d) the nature of the occupancy--i.e. office, factory, clinic, or whatever.

Most of these categories form a ready basis upon which to predicate a 'reasonable' refusal, and need no further elucidation. Thus, in 57th St. Luce Corp. v. General Motors Corp., 182 Misc. 164, 46 N.Y.S.2d 730, aff'd 267 App.Div. 978, 48 N.Y.S.2d 557, aff'd 293 N.Y. 717, 56 N.E.2d 732, where the lease provided the premises were to be used for an automobile showroom, warehouse, garage or allied business, and they were sublet for the manufacturing and printing of paper cartons, it was held there was a proper sublease because, 'in the absence of restrictions contained in a lease a tenant may utilize the demised premises in any lawful manner, not materially different from that to which it is adapted and for which it was constructed.' (p. 168, 46 N.Y.S.2d p. 733). See also Lyon v. Bethlehem Engineering Corp., 253 N.Y. 111, 170 N.E. 512; Bovin v. Galitzka, 250 N.Y. 228, 165 N.E. 273.

In Time, Inc. v. Tager, 46 Misc.2d 658, 260 N.Y.S.2d 413, on the other hand, it was pointed out that factors other than financial responsibility, respectability and the character of the business could properly be taken into account. In that case it was the use of the space (subdivision into multiple subtenancies) which gave the landlord the basis for a reasonable withholding of consent.

In this case, however, there is nothing inherent in the identity of the proposed subtenant which would render it manifestly objectionable by any of the objective standards mentioned above. It is financially responsible, engaged in a respectable and legal activity, and intends to use the entire space of the prime tenant for identical purposes--as executive offices and a stockroom for its publications. If it is objectionable, it is because of the identity of the landlord, who urges that immiscible doctrinal differences render peaceful coexistence in the same building impossible, or at least uncomfortable.

It the original landlord here, 55 Associates, or its successor, the Franchard Corporation, both profit-making commercial enterprises, had continued ownership of the building there could have been no real question as to...