Eagle Spring Water Co. v. Webb & Knapp, Inc.

• Decision Date: 02 November 1962
• Citation: 236 N.Y.S.2d 266
• Parties: EAGLE SPRING WATER CO., Inc., Plaintiff, v. WEBB & KNAPP, INC., Defendant.
• Court: New York Supreme Court

Page 266

236 N.Y.S.2d 266

EAGLE SPRING WATER CO., Inc., Plaintiff, v. WEBB & KNAPP, INC., Defendant.

Supreme Court, Special and Trial Term, New York County, Part XVII.

Nov. 2, 1962.

Malcolm A. Hoffmann, New York City, for plaintiff.

Hodges, Reavis, McGrath & Downey, New York City (John P. McGrath, New York City, of counsel), for defendant.

HARRY B. FRANK, Justice.

Eagle Spring Water Co., Inc., a supplier of bottled drinking water and related equipment, seeks to enjoin defendant, the landlord of buildings located at 112 West 34th Street and 130 West 34th Street, respectively from interfering with plaintiff's business activities by preventing plaintiff from entering these buildings to make deliveries of bottled water and installations of water cooling equipment, as requested by its customers who are tenants therein.

Plaintiff's business dealings with the tenants at 112 West 34th Street began in early 1954 when that building first opened. At the time of trial Eagle's records showed that it had accumulated some 65 accounts in the building, 56 of whom were leasing plaintiff's coolers, and 59 receiving deliveries of bottled water at regular intervals. Up to October 1960, plaintiff carried on its regular business activities with its customers in the building without any serious interference from defendant's agents on the premises. While the evidence indicates that some occasional difficulties were encountered relative to the installation of new coolers, it appears that substantially all such installations were, in fact, able to be made.

The difficulties that have given rise to the instant litigation are directly related to the opening of defendant's new building at 130 West 34th Street in the summer of 1960. Regular occupancy of that building began in July, 1960, although some tenants had been permitted to move into their quarters as early as May, when the building was not yet officially open. Eagle had obtained accounts from several prospective tenants during the construction period and as these customers moved into the building it proceeded to make installations of cooler equipment and deliveries of spring water as required. From May, when it made its first cooler installation, through the summer months, plaintiff carried on its business activities in the new building unhampered. This came to an end on September 30, 1960, when plaintiff's employees were prevented from entering the building at '130' to make a delivery. Eagle was advised by defendant's supervisory personnel that it would no longer be permitted to enter the building to make any cooler installations or water deliveries since another firm, Crystal Spring Water Co., was the sole and exclusive water supplier authorized by the landlord to service the water needs of the tenants at the building. With some few exceptions, Eagle has been unable to enter the building at '130' for its business purposes since that date resulting in its inability to fulfill the orders of its customers at that building. The evidence discloses that these customers thereafter necessarily obtained their water supplies from Crystal, the exclusive supplier at the building.

After September 30th, plaintiff also experienced difficulties in its activities at 112 West 34th Street, particularly with regard to its installation of cooling equipment. It was not permitted to deliver and install any coolers on a leased basis but could only bring in equipment accompanied by a paid bill indicating that it had been purchased outright by the tenant-customer. There was, however, no interference with plaintiff's periodic deliveries, once every two weeks, of bottled water to its various customers at '112' and such deliveries were still being made at the time of the trial, although plaintiff was told by Mr. Allio, defendant's operational supervisor at both buildings, that it would be barred from '112', for all purposes, when operations at the new building were running smoothly.

By virtue of the loss of business suffered as a result of defendant's conduct, and the threat of further economic injury, plaintiff instituted this action for injunctive relief in November, 1960.

Although this court is in no way bound by the disposition made in connection with the application for an injunction pendente lite (Walker Memorial Baptist Church v. Saunders, 285 N.Y. 462, 35 N .E.2d 42), a review of that proceeding is helpful in bringing into focus the basic factors upon which this case hinges.

On that motion, as in its answer, defendant denied that it had at any time interfered, or threatened interference, with plaintiff's deliveries or installations of equipment at 112 West 34th Street, and the denial of temporary injunctive relief with respect to that building was based upon such assertion.

As to the building at 130 West 34th Street, however, defendant admitted that it had barred the plaintiff therefrom, and it submitted that such exclusion was warranted by reason of certain 'Rules and Regulations' contained in the leases with its tenants at that building. The pertinent regulation relied upon by defendant, designated as Regulation No. 4 in the various leases, provides as follows:

'No tenants shall obtain or accept for use in the premises ice, drinking water, towel, barbering, bootblacking, floor polish or other similar services from any persons not authorized by the Landlord in writing to furnish such services, provided always, that the charges for such services by persons authorized by the Landlord are not excessive. Such services shall be furnished only at hours and under regulations fixed by the Landlord.'

Defendant argued that this provision in the leases gave it the right to restrict the furnishing of drinking water and the other enumerated services to a single designated firm for each such service in order to prevent overloading of the freight elevators and that it had, in fact, designated Crystal Spring Water Company as the sole authorized water supplier for the tenants at the building.

Special Term in denying at temporary injunction with regard to the building at '130' held that the restriction appeared to be authorized by the leases and that, 'From the papers submitted, it seems its purpose is merely to prevent overloading of the freight elevator rather than to interfere with plaintiff's business or to further the business of the particular concern selected by the defendant to furnish drinking water and cooler service.'

While the papers submitted on the motion at Special Term permitted distinct treatment as to each building, the facts developed at the trial indicate that plaintiff's position is basically the same at both buildings with regard to its eligibility for injunctive relief. Although Eagle has not been completely excluded from the building at '112,' and is still permitted to make deliveries of bottled water, there has been a significant interference with its business activities therein. Customers invariably prefer water cooling equipment on a leased rather than a purchased basis, and plaintiff's inability to install or replace leased equipment has, as a practical matter, been tantamount to barring its equipment installations, entirely in that building. Since equipment is the most substantial aspect of the business, this restriction has been of serious economic consequence. Moreover, plaintiff has been threatened with complete exclusion from the building in the near future, and it was made clear by defendant at the trial that such was its intention. Defendant indicated that each of the leases with the tenants at '112' contained the same 'Regulation 4' as the leases at '130,' and that such regulation likewise authorizes its exclusion of the plaintiff from '112.' It was brought out that the Great Bear Spring Co. had been designated by the defendant as the exclusive water supplier for the building by an agreement entered into in October, 1954, and that while defendant in the past had not strictly enforced the lease restriction so as to exclude Eagle completely from the building at '112,' strict enforcement would be forthcoming.

The trial record also presents a more fully developed picture of the nature and purposes of the agreements between defendant and the exclusive water suppliers in the two buildings involved. The agreements are somewhat informal in form consisting of letters submitted by the respective suppliers, and countersigned by the defendant, which set forth a schedule of commissions to be paid to the defendant on all drinking water supplies and equipment sold or rented by the supplier in the particular building. The specific language in the letter-agreements varies. The Great Bear agreement, covering 112 West 34 th Street, makes clear that such rebates are to be paid by reason of its selection as the sole supplier privileged to furnish water cooling services to the tenants at that building, while the Crystal agreement, relative to the building at 130 West 34th Street, states that such commissions are 'in return for your cooperation in recommending us and helping us to secure this business in the building.' The record indicates that in conjunction with the agreements letters were sent to tenants 'recommending' the particular supplier and the defendant's superintendent at the buildings urged tenants to use the services of the designated suppliers. The evidence clearly shows that the restrictions imposed upon plaintiff in the buildings were in furtherance of these agreements, and it appears that pressures were exerted on defendant by the exclusive suppliers, particularly Great Bear, to exclude rival firms.

The record completely negatives any claim that either the restrictions imposed upon plaintiff or the exclusive supplier arrangements were necessary in order to alleviate elevator congestion in the buildings. Defendant's own employees and witnesses testified that it was completely immaterial in that regard whether only one, or more than one, water supplier made the...