Morlee Sales Corp. v. Manufacturers Trust Co.

• Citation: 172 N.E.2d 280,9 N.Y.2d 16,210 N.Y.S.2d 516
• Parties: , 172 N.E.2d 280 MORLEE SALES CORP., Respondent, v. MANUFACTURERS TRUST COMPANY, Appellant. In the Matter of MANUFACTURERS TRUST COMPANY, Appellant, v. MORLEE EDSEL CORPORATION, Respondent.
• Decision Date: 12 January 1961
• Court: New York Court of Appeals

Page 516

210 N.Y.S.2d 516

9 N.Y.2d 16, 172 N.E.2d 280

MORLEE SALES CORP., Respondent, v. MANUFACTURERS TRUST COMPANY, Appellant.

In the Matter of MANUFACTURERS TRUST COMPANY, Appellant, v. MORLEE EDSEL CORPORATION, Respondent.

Court of Appeals of New York.

Jan. 12, 1961.

Whitney North Seymour, William J. Granger and Nancy L. Boxley, New York City, for appellant.

Edgar Hills and Neil M. Lieblich, New York City, for respondent.

BURKE, Judge.

The issue here is whether the Manufacturers Trust Company, as purchaser of the property, was authorized, under paragraph 18 of the lease, to give notice of cancellation in the absence of a resale of the property by it. Paragraph 18 provides: 'That if the Landlord should sell said premises, prior to the expiration of this lease and the purchaser thereof desires possession of said premises, then and in that event, the Tenant will cancel this lease and surrender possession of said premises, and will execute an instrument to effect a proper cancellation of this lease and surrender of the demised premises upon receiving 60 days written notice of the cancellation of this lease, by registered mail addressed to the Tenant to the premises herein demised, and the security deposited with the Landlord as aforementioned shall be returned to the Tenant.' (Italics supplied.)

On August 1, 1957 respondent Morlee entered into a five-year lease with the Ave. D. Building Co., Inc., the then landlord of the leased premises now under consideration. In addition to the provision for notice of cancellation upon sale (par. 18, supra), this lease agreement provided (par. 33) that the tenant shall have the option to renew for a period of five years from its expiration (July 31, 1962) upon notification to the landlord by registered mail no later than April 1, 1962. On November 5, 1958, Ave. D. entered into a contract to sell the leased premises to appellant, Manufacturers Trust Company (hereinafter called the Bank) where it desired, and subsequently obtained permission, to establish a branch office thereon. On January 29, 1959, subsequent to obtaining title (January 8, 1959), the Bank, in formal compliance with the conditions of paragraph 18, notified Morlee that the lease would be cancelled on March 31, 1959. On February 3, 1959 Morlee notified the Bank that it was exercising its option pursuant to paragraph 33 to renew the lease for an additional period of five years. Thereafter, on March 25, 1959, Morlee instituted an action to declare that the attempted termination, pursuant to paragraph 18, was invalid because the Bank was not a landlord who was about to sell the premises; and that the extension pursuant to the option in the lease was, therefore, properly exercised. A summary dispossess proceeding instituted by the Bank in the Municipal Court on April 6, 1959 was subsequently consolidated with the former action instituted by Morlee in the Supreme Court.

The Supreme Court, concluding that this exact issue was decided by Furio v. Smith, 272 App.Div. 941, 72 N.Y.S.2d 425, found itself constrained to dismiss the dispossess proceeding and grant judgment in Morlee's favor. The Appellate Division affirmed on the authority of 112 East 36th St. Holding Corp. v. Daffos, 273 App.Div. 447, 78 N.Y.S.2d 31, affirmed 298 N.Y. 763, 83 N.E.2d 462 and Furio v. Smith, supra.

We do not think that the rationale of Daffos supports the decision below, and believe that the reasoning attributed to the cases cited in Furio should not be followed.

It is axiomatic that a contract is to be interpreted so as to give effect to the intention of the parties as expressed in the unequivocal language employed (Green v. Doniger, 300 N.Y. 238, 90 N.E.2d 56; Hartigan v. Casualty Co. of America, 227 N.Y. 175, 124 N.E. 789). the Courts may not by construction add or excise terms, nor distort the meaning of those used and thereby 'make a new contract for the parties under the guise of interpreting the writing.' Heller v. Pope, 250 N.Y. 132, 135, 164 N.E. 881, 882; Friedman v. Handelman, 300 N.Y. 188, 194, 90 N.E.2d 31, 34. In this respect we note that the language of clause 18 of the lease refers to a sale, rather than a contract to sell, and does not mandate that notice be given by any particular party. Although a similar provision has been liberally construed to allow the lessor (the only one designated in the lease) to give notice upon the execution of the contract to sell (and thereby permit him to convey free and clear of the lease; see Miller v. Levi, 44 N.Y. 489; Hyman v. Federal Doll Mfg. Co., Sup., 185 N.Y.S....