Crawford Clothes v. Kaufman-8th Ave. Corp.
| Decision Date | 24 July 1951 |
| Citation | 201 Misc. 1026 |
| Parties | Crawford Clothes, Inc., et al., Plaintiffs,<BR>v.<BR>Kaufman-8th Ave. Corporation, Defendant. |
| Court | New York Supreme Court |
Hyman Fried and Abbie Goldstein for plaintiffs.
Abraham K. Kaufman and Irving Brown for defendant.
The plaintiffs, the tenants under a written lease of a store in a building in this city owned by the defendant, their landlord, have brought this action to recover rent payments claimed to have been in excess of the amount payable under the applicable lease. A brief history of the relation of the parties is necessary to an understanding of the problem posed for decision.
On August 12, 1943, the parties entered into the first lease for a term of five years, commencing on October 1, 1943, and ending on September 30, 1948. Under this lease the tenant was to pay a fixed minimum annual rent of $10,000 for the period from October 1, 1943, to September 30, 1945, and of $15,000 from October 1, 1945, to September 30, 1948, when the term ended. This lease provided further that if in any year 5% of the tenant's gross sales exceeded the fixed minimum for that year, the tenant was also to pay this excess as additional rent. Under this lease the plaintiffs paid the fixed minimum rent of $10,000 a year for the first two years and of $15,000 for the last three years of the term.
On March 28, 1945, the Business Rent Law (L. 1945, ch. 314, as amd.) which applies to the premises here involved, took effect. Under this law the rent freeze date is June 1, 1944. On June 15, 1948, the defendant pursuant to subdivision (e) of section 8 of the Rent Law as amended tendered to the plaintiffs for execution a renewal lease for the further term of two years to commence on October 1, 1948, at the expiration of the current lease, and to end on September 30, 1950. The terms and conditions of the proposed renewal lease were substantially similar to those of the prior lease, except for the stipulated rental. The plaintiffs under date of July 6, 1948, executed the renewal lease so tendered to them.
This renewal lease, the one from which the plaintiffs' claim in this action springs, bound the tenant to pay "(a) a fixed annual rental equal to the emergency rent as defined by Chapter 314 of the Laws of 1945 of the State of New York, as amended, commonly known as the Business Rent Law". In addition to this fixed rent, referred to as "minimum rent," the plaintiffs by this renewal covenanted, as they had in the earlier lease, to pay the amount by which 5% of the gross sales each year exceeded the minimum rent. Attention is at once arrested by the manner in which the minimum rental is prescribed in the renewal lease. Instead of stating a fixed sum the parties adopted the emergency rent, as defined in the Rent Law, whatever that might be.
On April 10, 1945, the defendant pursuant to section 3 of the Business Rent Law gave the plaintiffs written notice that the emergency rent was $11,500, at the same time quoting the provision of the law that acceptance of the emergency rent was not to be construed as a waiver of the right to seek increased rent. In point of fact, the plaintiffs at no time paid as minimum rent the amount stated in this notice as the emergency rent. Until September 30, 1945, they paid minimum rent at the rate of $10,000, and from October 1, 1945, to September 30, 1948, they paid at the rate of $15,000 a year, in accordance with the first lease.
On the commencement of the renewal term the defendant billed the plaintiffs for the October, 1948, rent at $1,437.50, which is at the rate of $17,250 a year, or 115% of the $15,000 minimum rent which the tenant had been paying for the last three years of the expired lease. This October, 1948, rent bill and the succeeding monthly bills for the first year of the renewal term bore the further statement that the amount billed was on account only of the true rent and without prejudice to the landlord's right to have the emergency rent fixed by the Supreme Court. This statement, however, did not appear on the monthly rent bills during the second year of the renewal term. The tenant paid promptly and unconditionally each of these rent bills at the rate of $17,250 a year from October 1, 1948, to September 30, 1950, and the plaintiffs concede that at no time during this renewal period did they assert that the rent so being paid was more than the proper rent due.
The formula for the minimum rent under the renewal lease of July 6, 1948, was, of course, pregnant with controversy and the renewal term had barely begun when the inevitable storm broke. The threat implicit in the reservation on the October rent bill became an actuality on October 2, 1948, when the defendant as petitioner instituted a proceeding in this court to have the emergency rent fixed. In its petition it alleged that the initial lease of August 12, 1943, was "primarily and fundamentally a graduated lease" and that the emergency rent was the reasonable rent to be fixed by the Supreme Court on the basis of the rent for comparable business space. The plaintiffs, as respondents in this rent-fixing proceeding, countered with a cross motion to dismiss the petition for insufficiency in law.
The motion and cross motion were submitted in November, 1948, and on December 20, 1948, a final order in the proceeding was made, dismissing the petition on the merits and granting the cross motion to dismiss for insufficiency. Mr. Justice EDER who made this order rendered an opinion in which he rejected the contention of the petitioner (defendant here) that the original lease was a graduated lease, and held it to be a variable lease. In the course of his opinion Mr. Justice EDER, upholding the position taken by the respondents (the present plaintiffs) in their brief said: (Matter of Kaufman-Eight Ave. Corp. [Crawford Clothes], N. Y. L. J., Dec. 15, 1948, p. 1540, col. 5.)
When Mr. Justice EDER said that the plaintiffs were "already paying the emergency rent required to be paid pursuant to the lease" he was referring to their monthly payments, without protest, at the rate of $17,250 a year. The plaintiffs, having thus successfully maintained their position that $17,250 was the correct emergency rent and, therefore, the minimum rent payable under the renewal lease, were entirely satisfied with the result they had achieved and on the strength of it freely continued to pay the minimum rent of $17,250 a year. The petitioner (defendant here), however, appealed from the final order, though it has never pressed the appeal.
On August 23, 1950, the parties entered into a third lease from October 1, 1950, to September 30, 1952, in which they again adopted the emergency rent as the minimum rent and prescribed the same additional percentage rent which had prevailed in the two prior leases. Under this third lease the plaintiffs have also been paying as minimum rent $17,250 a year.
It was testified for the defendant that had the plaintiffs asserted a claim of overpayment during the period of the second lease the defendant would not have entered into this third lease. I find this testimony to accord with the facts.
Early in October, 1950, the defendant as petitioner instituted a proceeding in this court to have the emergency rent fixed. In this proceeding, though now admitting the lease to be variable, it invoked a 1950 amendment (L. 1950, ch. 326) to section 13 of the emergency law, as basis for its renewed claim that the emergency rent was the reasonable rent to be fixed by the Supreme...
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