Dress Shirt Sales, Inc. v. Hotel Martinique Associates

• Citation: 239 N.Y.S.2d 660,12 N.Y.2d 339,190 N.E.2d 10
• Parties: , 190 N.E.2d 10 DRESS SHIRT SALES, INC., et al., Appellants, v. HOTEL MARTINIQUE ASSOCIATES et al., Respondents, et al., Defendant.
• Decision Date: 28 March 1963
• Court: New York Court of Appeals

Page 660

239 N.Y.S.2d 660

12 N.Y.2d 339, 190 N.E.2d 10

DRESS SHIRT SALES, INC., et al., Appellants, v. HOTEL MARTINIQUE ASSOCIATES et al., Respondents, et al., Defendant.

Court of Appeals of New York.

March 28, 1963.

Conrad L. Teitell and Morris J. Fellner, New York City, for appellants.

Philip Gelfand and Milton Sanders, New York City, for respondents.

BURKE, Judge.

Plaintiffs were the lessees of space in defendants' hotel under a lease prohibiting subletting without defendant lessors' written consent. The lease, executed in 1955, was for a term of 10 years with a rental of $10,000 per year for the first five and $12,000 per year for the last five. In 1959 plaintiffs vacated but continued to pay rent. Then and at all times thereafter defendants assured plaintiffs of their willingness to allow a subletting and plaintiffs displayed a 'for rent' on the premises with defendants' consent. Three months later one Bencini approached plaintiffs with a desire to rent the premises. While defendants at first orally stated there 'would be no problem', they thereafter refused to consent to the proposed sublease because the inexpensive sand-with-type restaurant contemplated by Bencini (and, for that matter, any restaurant) was not what defendants wanted in their hotel. At the same time defendants proposed a cancellation of the lease for $75,000. Defendants' representations were false in that defendants then intended to and did thereafter negotiate with Bencini to lease the same space for the same type of restaurant. Five months later plaintiffs again tried to persuade defendants to consent to the Bencini proposition and defendants again refused for the same reasons. It is alleged that, as a result of defendants' refusal and in reliance on the truthfulness of their representation that the restaurant was not wanted, plaintiffs agreed on October 31, 1959 to pay $30,000 for cancellation of the lease. Two weeks later defendants leased to Bencini, at a higher rent than plaintiffs were paying. Most of these facts are denied by defendants, but their point on this summary judgment motion is that, in any event, the law denies recovery.

Plaintiffs allege, in effect, two causes of action. One is an arbitrary refusal to consent to sublease and a further breach of the alleged oral agreement to permit subleasing in general and to Bencini in particular. It is settled that, unless the lease provides that the lessor's consent shall not be unreasonably withheld, a provision against subleasing without the lessor's consent permits the lessor to refuse arbitrarily for any reason or no reason. (Symonds v. Hurlbut, 208 App.Div. 147, 203 N.Y.S. 223; Arlu Associates, Inc. v. Rosner, 14 A.D.2d 272, 220 N.Y.S.2d 288.) Since the lease contained a provision that no part could be changed or waived orally, the Real Property Law Consol.Laws, c. 50 (§ 282, subds. 1, 3, par. (a)) clearly invalidates the fully executory oral consent to subleasing given by defendants' agent. Even if plaintiffs gave consideration by promising to do that which they would not be obligated to do anyway (act as guarantors of the proposed new tenant's performance which is really a lesser duty than that imposed by law, i. e., remain primarily liable), the purpose of section 282 is to enable parties to protect themselves against false claims of oral change, including waiver, by providing for a writing. (See 1952 Report of N.Y.Law Rev.Comm., p. 143.) From a policy viewpoint the suggestion that defendants' permission to display a 'for rent' sign is an executed waiver and advance acceptance of any new tenant has little to recommend it.

Plaintiffs' other cause of action sounds in fraud.

While defendants' actions seem to amount to a fraud on plaintiffs to the extent of $30,000, and are cleary unconscionable, we do not think plaintiffs sufficiently show how the misrepresentation concerning defendants' unwillingness to accept Bencini's restaurant resulted in damage. Misrepresentation of an existing fact (present intention to accept a restaurant) and scienter clearly appear on the record. In plaintiffs' view, the allegations could also justify a finding that reliance on the truthfulness of the representation caused plaintiffs to buy out their lease for $30,000, believing that to be the only way out of an unprofitable situation. Had it not been for the lie, plaintiffs may well have out-waited defendants who were in fact anxious to fill an unsightly vacancy.

It is doubtless true that the only wrong to which plaintiffs can point, i. e., the false reason given for refusal is of dubious independent significance over and above the real lever by which plaintiffs were induced to buy out their lease the refusal itself. Defendants had an unqualified contractual privilege to refuse to accept Bencini and plaintiffs would have had no remedy if defendants had simply said nothing and remained adamant in refusing to accept Bencini as a sublessee until plaintiffs gave in and paid for a cancellation of the lease. Defendants' acceptance of Bencini as a new lessee immediately thereafter would be an instance of hard dealing and nothing more. Nevertheless, a fraudulent misrepresentation need not be the sole inducing cause for entering into the bargain complained of (Kley v. Healy, 127 N.Y. 555, 28 N.E. 593; Adams...