Noah's Ark, Division of Eckmar Corp. v. Geib

• Decision Date: 22 May 1968
• Citation: 56 Misc.2d 800,290 N.Y.S.2d 453
• Parties: NOAH'S ARK, DIVISION OF ECKMAR CORP., Petitioner, v. Fred W. GEIB, Respondent.
• Court: New York Supreme Court

Page 453

290 N.Y.S.2d 453

56 Misc.2d 800

NOAH'S ARK, DIVISION OF ECKMAR CORP., Petitioner, v. Fred W. GEIB, Respondent.

Supreme Court, Monroe County.

May 22, 1968.

Wiser, Shaw, Freeman, Van Graafeiland, Harter & Secrest, Rochester, John F. Mahon, Rochester, of counsel, for petitioner.

Harris, Beach, Wilcox, Dale & Linowitz, Rochester, Kreag Donovan, Rochester, of counsel, for respondent.

DECISION

MARSHALL E. LIVINGSTON, Justice.

This proceeding is brought pursuant to section 745 of article 7 of the Real Property Actions and Proceedings Law to recover possession of real property by the tenant-petitioner. Respondent concedes that the tenant was forcibly evicted from the premises following a fire which occurred February 5, 1968.

The original tenant, Noah's Ark Auto Accessories, Inc. and its assignee, Phillips-Eckhardt Electronics Corporation, now known as Noah's Ark, Division of Eckmar Corp., will be referred to at all times as Noah's Ark, and the original landlord, Bull's Head Plaza, Inc. and its assignee, Fred W. Geib, will be referred to hereafter as Geib.

A general background of the occurrences leading up to the fire of February 5, 1968 should be set forth as a prologue to the events upon which this proceeding is based.

Since 1959 and until the fire of February 5, 1968, Noah's Ark had been a tenant of spaces designated as stores 9, 10, 11 and the second floor over store 9 in one of the buildings at the Bull's Head Plaza, sharing a building with a coin laundromat to the north and a shoe store (Thom McAn) and a drug store (Daw's) to the south. Noah's Ark occupied approximately 7250 square feet of floor space of which approximately 6700 square feet was on the first floor.

The building itself is of steel column and girder construction covered by a concrete roof, insulation and roofing material. The sidewalls were partitioned with two by four studding faced with plasterboard. The store front of about 60 feet was constructed of glass windows and doors set in aluminum frames. Across the rear of the sales area, about 75 feet from the front, was a partition behind which were two storerooms separated longitudinally by a hall and a stairway to a second story storeroom. A garage also was at the rear of the store, and the rear wall of the building was of cinder block construction.

Noah's Ark leased the premises from Geib for a term of five years, commencing May 1, 1959. The lease provided for two extensions of five years each on the same terms, at the tenant's option, at an agreed guaranteed minimum rental of $9600 per year, or an annual rental equal to 4% Of the tenant's annual gross sales, whichever was larger.

Noah's Ark had apparently given notice to Geib, exercising its option for the first five-year renewal of the lease.

On June 21, 1966, at a time when Noah's Ark was in arrears in rental payments for at least three months, it filed a petition in bankruptcy in United States Bankruptcy Court, Western District of New York, seeking relief under Chapter XI of the Bankruptcy Act. Phillips-Eckhardt Electronics Corporation thereafter purchased the assets of Noah's Ark, including its leasehold rights, and this arrangement was approved by the Bankruptcy Court on August 19, 1966. On August 30, 1966 the sale and assignment of leases was consummated by an order of said court.

In September of 1966, after the consummated assignment, Geib demanded the removal of the tenant from the premises, by notice. The matter was brought before the Bankruptcy Court because the termination notice related to the insolvency clause under the lease. By stipulation of both parties, the court entered an order declaring the termination notice void and of no effect.

About September 28, 1966 a proceeding (Exhibit 27) was started by Geib in Monroe County Court against Noah's Ark and Phillips-Eckhardt to recover possession of his real property. It appears that even before that proceeding was started, Peter R. Geib, respondent's son and conceded general agent, insisted, on August 30 (Exhibit 22) and again on September 8, 1966 (Exhibit 23), that the tenant quit the premises. On September 19, 1966 (Exhibit 24), November 9, 1966 (Exhibit 25) and January 9, 1967 (Exhibit 26), notices to terminate the lease were also sent to Noah's Ark by or in behalf of Geib. The petition in County Court was subsequently discontinued.

It is apparent that since the early summer of 1966, when Noah's Ark was behind in its rent, Geib has tried unsuccessfully to terminate the lease.

On February 5, 1968, a fire occurred in the premises leased by Noah's Ark, also damaging the Thom McAn Shoe Store on the south and a coin laundry on the north side of Noah's Ark. The next day Noah's Ark notified Geib in writing of the fire (Exhibit 2), pursuant to paragraph SEVENTH of the lease, which provides as follows:

'SEVENTH. That the Tenant shall, in case of fire, give immediate notice thereof to the Landlord who shall thereupon cause the damage to be repaired forthwith; but if the premises be so damaged that the Landlord shall decide to rebuild, the term shall cease and the accrued rent be paid up to the time of the fire.'

On February 13, 1968 Geib's attorneys (Exhibit 4), in his behalf, notified Noah's Ark of his decision to rebuild and that the lease was thereby terminated. On March 15, 1968 Geib, by registered mail, again notified Noah's Ark (Exhibit 3) of his decision to rebuild and terminate the lease in accordance with the second clause of the above-quoted paragraph SEVENTH.

On March 18, 1968 Noah's Ark brought this proceeding by petition, in conformance with article 7 of the Real Property Actions and Proceedings Law, to recover possession of the real property from which it had been evicted. Accordingly, a trial was had before me.

Petitioner's prompt notice of a fire causing 'extensive damage', as provided the fire clause of the lease, demanding that the landlord forthwith repair the premises, is conceded.

Geib's answer denies the contentions of Noah's Ark, and for an affirmative defense, urges that, as provided by paragraph SEVENTH of the lease, the lease be terminated because the fire caused such extensive damage to the premises that he has decided to rebuild.

Noah's Ark contends that Geib's repeated attempts to terminate the lease from June, 1966 indicate that the present affirmative defense based on the notices set forth at Exhibits 3 and 4 is not founded in good faith and that Geib has not really decided to rebuild. Noah's Ark claims in fact that Geib is not going to rebuild, but merely repair the building.

At the outset it is clear that the fire clause (paragraph SEVENTH of the lease) constitutes an express agreement which excludes the operation of section 227 of the Real Property Law (see Matter of Mfrs. Trust Co. v. Bach, 32 Misc.2d 858, 223 N.Y.S.2d 86 and cases cited therein).

Neither counsel nor I have been able to find any authority in New York construing the second part of paragraph SEVENTH of the lease. In this case the parties agreed that 'if the premises be so damaged that the Landlord shall decide to rebuild' (italics supplied), the term shall cease. This language is the choice of the parties and must be construed accordingly.

Just what do these words mean? Must Geib, by a fair preponderance of the evidence, convince the court that a reasonable man, in the face of the 'extensive damages' (Exhibit 2) which occurred, would probably elect to rebuild rather than repair? Or, is it enough to show...