Marburt Holding Corp. v. Picto Corp.

• Decision Date: 13 May 1958
• Citation: 5 A.D.2d 617,173 N.Y.S.2d 762
• Parties: MARBURT HOLDING CORP., Landlord-Appellant, v. PICTO CORP., Tenant-Respondent, and Harry Brandt, Intervenor-Defendant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 762

173 N.Y.S.2d 762

5 A.D.2d 617

MARBURT HOLDING CORP., Landlord-Appellant, v. PICTO CORP., Tenant-Respondent, and Harry Brandt,

Intervenor-Defendant-Respondent.

Supreme Court, Appellate Division, First Department.

May 13, 1958.

Clarence S. Barasch, New York City, of counsel (Emil Leepson and Charles Rubman, New York City, on the brief; Clarence S. Barasch, New York City, attorney), for landlord-appellant.

Morris Gutt, New York City, of counsel (Milton C. Weisman, New York City, on the brief; Weisman, Celler, Allan, Spett & Sheinberg, New York City, attorneys), for respondents.

Thomas J. Kelleher, of counsel (Harold J. Treanor, New York City, attorney), for the Real Estate Board of New York, Inc., as amicus curiae.

Before BOTEIN, P. J., and BREITEL, RABIN, FRANK and STEVENS, JJ.

BOTEIN, Presiding Justice.

Petitioner-landlord appeals by leave of this court from a determination of the Appellate Term which reversed a final order and judgment of the Municipal Court. The Municipal Court had awarded possession of the Mayfair Theater to the landlord for failure of the tenant to pay rent.

The lease was executed between the Mayfair Building, Inc., the present landlord's predecessor in interest, and Picto Corp. as tenant, on October 1, 1956 for a term of slightly less than eight years, at a rental of $3,000 per week. Brandt, the intervenor-defendant-respondent, executed a personal guaranty of the lease, guaranteeing full performance of all its covenants, conditions and agreements, but with the proviso that 'the aggregate liability of the undersigned hereunder is limited to $50,000.00.' Brandt is president of the tenant Picto Corp.

In June, 1957 the tenant defaulted in the payment of two weekly rent installments. Brandt thereupon tendered his own personal check for $6,000, accompanied by a letter stating that 'all payments made by me shall be in discharge of the guaranty indebtedness.' The landlord refused this tender and commenced summary proceedings to dispossess for nonpayment of rent against Picto Corp., in which proceedings Brandt intervened.

The Appellate Term held that the guaranty instrument constituted a primary obligation, so that the tender of rent by the guarantor was the equivalent of performance by the tenant. However, there was no relationship of landlord and tenant between Marburt Holding Corp. and Brandt (Ruppert Realty Corporation v. Bank of United States, 156 Misc. 93, 281 N.Y.S. 761, affirmed 249 App.Div. 721, 292 N.Y.S. 997, affirmed 276 N.Y. 629, 12 N.E.2d 611; Stern v. Equitable Trust Co., 238 N.Y. 267, 144 N.E. 578). And under his agreement of guaranty, Brandt was not a primary or joint obligor but assumed a secondary liability which accrued only upon default by the principal (Pink v. Investors' Syndicate Title & Guaranty Co., 246 App.Div. 172, 176, 285 N.Y.S. 155, 160; Fischer v. Mahland, No. 1, 191 App.Div. 209, 181 N.Y.S. 179). 'A guaranty in its technical and legal sense has relation to some other contract or obligation with reference to which it is a collateral undertaking; it is a secondary and not a primary obligation.' 38 C.J.S. Guaranty § 2 p. 1130.

Brandt could not, by tender of a sum equivalent to the rent, compel the landlord to treat with him as if he were the tenant. The guaranty did not give him an option to extend the tenant's occupancy after its default, and coincidentally to exhaust the limits of his liability. Rather, the option inured to the landlord alone. Upon termination of the tenancy by reason of the tenant's default, the landlord could, if it chose,...