First Nat. Stores, Inc. v. Yellowstone Shopping Center, Inc.

• Decision Date: 18 April 1968
• Citation: 237 N.E.2d 868,290 N.Y.S.2d 721,21 N.Y.2d 630
• Parties: , 237 N.E.2d 868 FIRST NATIONAL STORES, INC., Respondent-Appellant, v. YELLOWSTONE SHOPPING CENTER, INC., Appellant-Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 721

290 N.Y.S.2d 721

21 N.Y.2d 630, 237 N.E.2d 868

FIRST NATIONAL STORES, INC., Respondent-Appellant, v. YELLOWSTONE SHOPPING CENTER, INC., Appellant-Respondent.

Court of Appeals of New York.

April 18, 1968.

Sylvan D. Freeman, New York City, for appellant-respondent.

Charles J. Nager and William P. Lage, New York City, for respondent-appellant.

SCILEPPI, Judge.

Plaintiff, First National Stores, Inc., is the tenant and defendant, Yellowstone Shopping Center, Inc., is the landlord under the lease of the supermarket building in the Yellowstone Shopping Center, Forest Hills. By order of the Fire Department of the City of New York dated November 9, 1966, the landlord was directed to install a wet automobile sprinkler system in the cellar. This resulted in a dispute between the parties as to who was obligated under the lease terms to pay for the sprinkler system.

Article Twelfth of the lease provides in part: 'In case lessee shall default in the performance of any covenant or agreement herein contained and such default shall continue for ten (10) days after receipt by the lessee of written notice thereof given by lessor, then lessor, at the option of lessor, may declare said term ended, and may re-enter upon the leased premises either with or without process of law, and remove all persons therefrom'. After writing three letters to the tenant demanding that it comply with the order of the Fire Department, the landlord finally, pursuant to article Twelfth, sent the tenant a 10-day notice of default on February 24, 1967. This notice was received on February 27, 1967. The tenant chose not to cure its default and instead, on February 28, commenced this action for a declaratory judgment by the service of a summons only. On March 9, 1967 the tenant served the complaint together with an order to show cause for a preliminary injunction returnable March 13, 1967. The order to show cause did not contain a stay. It is important to note, however, that on March 10, 1967, since the 10 days under the notice of default had run, the landlord sent a notice to the tenant terminating the lease. It is undisputed that on the return date of the tenant's motion, since the landlord had already acted to terminate the lease, the parties agreed to adjourn the motion for a preliminary injunction to March 29, 1967, and the landlord consented to an order restraining it from instituting summary proceedings pending the hearing and determination of the motion.

The Supreme Court, Queens County, in the exercise of its discretion, declined to entertain jurisdiction of the declaratory judgment action on the ground that 'the facts which form the basis of the instant complaint can be asserted by (the tenant) as a defense to a summary proceeding (Real Property Acts and Proceedings Law (Consol.Laws, c. 81), section 743)'. We are not directly concerned with this determination, however, because, on appeal, the landlord by stipulation waived its contention that the court should dismiss the action, and authorized the Appellate Division to determine the controversy on the appeal as a matter of law.

The Appellate Division, 28 A.D.2d 873, 281 N.Y.S.2d 873, unanimously held that it was the tenant's obligation to install the sprinkler system in the basement of the supermarket. Arguing that this determination is erroneous, the tenant calls our attention to article Fifth of the lease, entitled 'LESSOR'S REPAIRS', which provides in pertinent part: 'Lessor further agrees * * * to make all repairs to or alterations of the leased premises which may be required by governmental authority'. If our reading of article Fifth stopped at this point, we would be compelled to hold that the installation of the sprinkler system is the landlord's obligation. However, the lease further provides in the same article that 'Lessee agrees to observe and comply with all requirements of governmental authority relating to matters affecting the leased premises only and involving the use of the leased premises over which lessee would exercise control during the normal course of its business operation, it being provided that lessee shall not be required to make any exterior or structural repairs, additions, alterations, or changes to the leased premises or any other repairs, additions, alterations or changes made necessary by any requirements of governmental authority, or amendments thereto, Pertaining to matters which affect retail establishments generally and over which lessee would not exercised control during the normal course of its business operations' (emphasis added).

This language, as the Appellate Division noted, makes the tenant responsible for repairs, alterations, or additions to the premises required by governmental authority as a result of Its specific use of the premises.

Although the landlord owns 19 stores in the shopping center where the supermarket is located, the Fire Department order requiring the sprinkler system applies only to the tenant's premises. Accordingly, we agree that this is not an alteration or addition required by governmental authority which affects retail establishments Generally. The Fire Department cited six reasons for requiring the sprinkler system: (1) heavy fire loading and large...