Chemical Bank v. Evans & Hughes Realty, L.P.

• Decision Date: 13 June 1994
• Citation: 205 A.D.2d 573,613 N.Y.S.2d 239
• Parties: CHEMICAL BANK, etc., Plaintiff, v. EVANS & HUGHES REALTY, L.P., etc., et al., Respondents, Arthur J. Kremer, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 239

613 N.Y.S.2d 239

205 A.D.2d 573

CHEMICAL BANK, etc., Plaintiff, v. EVANS & HUGHES REALTY, L.P., etc., et al., Respondents Arthur J. Kremer, Appellant.

Supreme Court, Appellate Division Second Department.

June 13, 1994.

Rivkin, Radler & Kremer, Uniondale (Evan H. Krinick and Merril Schapiro Biscone, of counsel), for appellant.

Keck Mahin Cate & Koether, New York City (Lesley E. Goldberg, of counsel), for respondent.

Before SULLIVAN, J.P., and BALLETTA, JOY and FRIEDMANN, JJ.

MEMORANDUM BY THE COURT.

In an action to foreclose a mortgage, the appeal is from an order of the Supreme Court, Nassau County (Levitt, J.), entered March 6, 1992, which denied the application of the temporary receiver for an order compelling the defendant Evans & Hughes Realty, L.P., to return rent it collected from a tenant, Plain & Fancy Shows of Westbury, Inc., for November 1991.

ORDERED that the order is affirmed, with costs.

Defendant Evans & Hughes Realty L.P. (hereinafter Evans & Hughes) is the owner of the former Roosevelt Raceway and had leased part of the property to Plain & Fancy Shows of Westbury, Inc., to operate a flea market. Evans & Hughes collected the November 1991 rent from Plain & Fancy, on October 4, 1991, one day after the plaintiff Chemical Bank commenced a mortgage foreclosure proceeding against Evans & Hughes, but three days before a temporary receiver was appointed. Article 43 of the Rider to Plain & Fancy's lease with Evans & Hughes provided that the annual rent "shall be payable in monthly installments in advance on the first day of each month during the term of this Lease". Section 6.6(A) of the Mortgage and Trust Indenture (hereinafter the Indenture), between Evans & Hughes and Chemical Bank granted the owner a reasonable license to operate and manage the mortgaged property and to collect the rents, until its license to do so was revoked by the Trustee after a default was declared. Section 6.6(B) of the Indenture, declared that "[t]he Owner * * * (iv) shall not collect any of the Rents more than one (1) month in advance".

The lease at bar thus expressly provides that rent is payable "in advance" of the month for which the rent is due--i.e., on the first day of that month (see, Giles v. Comstock, 4 N.Y. 270). Since the lease was assigned pursuant to the Indenture, the two documents must be reviewed together (see, BWA Corp. v. Alltrans Express USA, 112 A.D.2d 850, 852, 493 N.Y.S.2d 1), and "[t]hat interpretation is favored which will make every part of a contract effective" (see, Fleischman v. Furgueson, 223 N.Y. 235, 239, 119 N.E. 400; see also, Rentways, Inc. v. O'Neill Milk & Cream Co. Inc., 308 N.Y. 342, 347, 126 N.E.2d 271). When the lease provision requiring first-of-the-month payment is considered in conjunction with Section 6.6(B) of the Indenture, it is clear that Evans & Hughes was entitled to demand November's rent of Plain & Fancy as early as October 1, 1991.

Moreover, by the terms of the Indenture governing the assignment of Plain & Fancy's lease, Evans & Hughes retained the right to collect its rents until Chemical Bank had affirmatively revoked its license to do so following a default, or until a receiver was appointed (see, NY Life Ins. Co. v. Fulton Development Corp., 265 N.Y. 348, 352, 193 N.E. 169; Gomez v. Bobker, 124...