Minister, Elders & Deacons of the Reformed Protestant Dutch Church of City of New York v. 198 Broadway, Inc.

• Decision Date: 09 June 1983
• Citation: 59 N.Y.2d 170,451 N.E.2d 164,464 N.Y.S.2d 406
• Court: New York Court of Appeals Court of Appeals
• Parties: , 451 N.E.2d 164, 39 A.L.R.4th 818 MINISTER, ELDERS & DEACONS OF THE REFORMED PROTESTANT DUTCH CHURCH OF the CITY OF NEW YORK, Respondent, v. 198 BROADWAY, INC., et al., Respondents, and Henry Modell and Co., Inc., Appellant.

Page 406

464 N.Y.S.2d 406

59 N.Y.2d 170, 451 N.E.2d 164, 39

A.L.R.4th 818

MINISTER, ELDERS & DEACONS OF THE REFORMED PROTESTANT DUTCH

CHURCH OF the CITY OF NEW YORK, Respondent, v. 198 BROADWAY, INC., et al., Respondents, and Henry Modell and Co., Inc., Appellant.

Court of Appeals of New York.

June 9, 1983.

Simon H. Rifkind, Walter Feldesman, Lawrence A. Mendelker, Robert S. Smith, David Rosenberg and Eleanor J. Ostrow, New York City, for appellant.

Anthony M. Dattoma, New York City, for Minister, Elders and Deacons of the Reformed

Protestant Dutch Church of the City of New York, respondent

OPINION OF THE COURT

JONES, Judge.

Where a sublease is expressly made subject to the terms of the master lease, the subtenant has no legal right to compel the tenant to exercise an option granted the latter for renewal of the master lease of the entire premises with a 12-story building in order to enable the subtenant to exercise an option granted it for renewal of its sublease of the ground floor and a part of the basement only, in the absence of either proof of an agreement on the part of the tenant to exercise its option or proof of special circumstances entitling the subtenant to such relief.

In January, 1959, Daniel S. Levy and Joseph Richter as fee owners, leased premises at 198 Broadway in the Borough of Manhattan and City of New York to Arthur H. Bienenstock. The master lease covered the entire premises, 23 feet front by approximately 161 feet, 9 inches deep, on which stood a 12-story office building, and was for an initial term from January, 1959 to January 15, 1980. The tenant was given two successive options to renew for periods of 21 years each. On October 1, 1959, Bienenstock subleased the store as it then existed on the ground floor together with part of the basement thereunder to Henry Modell & Co., Inc., for a term of 20 years, 3 1/2 months to end on January 15, 1980. The sublease contained the following paragraphs pertinent to the present dispute:

"52. Provided that the Tenant is not in default of any of the terms, conditions and covenants of this Lease, it shall have the option to renew this Lease for an additional period of twenty-one years on the same terms and conditions as contained in the present lease, provided that the Tenant shall give notice in writing to the Landlord by registered mail of the exercise of such option at least one year prior to the expiration of this lease. The Tenant shall have the further option, under the same terms and conditions as aforesaid, to renew this lease for a second renewal term of twenty-one years upon giving of notice to the Landlord as aforesaid on or before one year prior to the expiration of the first renewal term.

"53. The Tenant has been informed that the Landlord named herein is the holder of a lease on the land and building in which the demised premises are situated and is not the owner of the fee. Accordingly, the lease is subject to the terms, covenants and conditions of the said major lease dated January 8, 1959 between Daniel S. Levy and Joseph Richter as lessors and Arthur H. Bienenstock as lessee."

By agreement dated December, 1965, Bienenstock assigned his interest as tenant under the master lease to 198 Broadway, Inc., a New York corporation, subject to the terms and conditions contained in the sublease to Modell, and 198 Broadway, Inc., assumed and agreed to carry out the obligations of Bienenstock as landlord under the sublease. Thereafter on February 1, 1966, the Minister, Elders and Deacons of the Reformed Protestant Dutch Church of the City of New York (Church), a corporation organized under the royal charter of 1696 and existing under the laws of the State of New York, acquired fee title to the underlying premises at 198 Broadway. The master tenant, 198 Broadway, Inc., is a wholly owned subsidiary of the Church.

In November, 1978, Modell notified 198 Broadway, Inc., of its intention to exercise its option to renew the sublease for an additional period of 21 years. In January, 1980, 198 Broadway, Inc., notified Modell that it had not exercised its right to renew the master lease and took the position that in such circumstance Modell had no effective option to renew the sublease.

When Modell's undertenant, The Camera Barns, Inc., failed to vacate the premises, the Church brought a holdover proceeding in Civil Court of the City of New York. The Church moved for summary judgment in its favor, and Modell cross-moved for summary judgment in its favor. Civil Court held that there were material issues of fact requiring a trial, denied the Church's motion, and granted Modell's cross motion unless the Church and 198 Broadway, Inc., submitted to an examination before trial as previously ordered. The Appellate Term reversed the order of Civil Court and granted summary judgment to the Church. The Appellate Division affirmed, 88 A.D.2d 511, 450 N.Y.S.2d 4, one Justice dissenting, and thereafter granted leave to Modell to appeal to our court. In our turn, we affirm the grant of summary judgment to the Church.

The option granted Modell to renew its sublease of the ground floor and basement for an additional period of 21 years set forth in paragraph 52 of the sublease was expressly made subject in paragraph 53 to the terms, covenants and conditions of the master lease. In substance the tenant was given an option under the master lease to renew its tenancy of the entire 12-story building, and the subtenant was given an option, if the tenant renewed the master lease, to renew its sublease of the ground floor and basement. We...