Raleigh Co. v. Society for Avatar Meher Baba

• Decision Date: 17 July 1973
• Citation: 346 N.Y.S.2d 534,74 Misc.2d 760
• Parties: The RALEIGH COMPANY, Petitioner-Landlord-Respondent, v. SOCIETY FOR AVATAR MEHER BABA, Respondent-Tenant-Appellant.
• Court: New York Supreme Court — Appellate Term

Page 534

346 N.Y.S.2d 534

74 Misc.2d 760

The RALEIGH COMPANY, Petitioner-Landlord-Respondent, v. SOCIETY FOR AVATAR MEHER BABA, Respondent-Tenant-Appellant.

Supreme Court, Appellate Term, First Department.

July 17, 1973.

Carb, Luria, Glassner, Cook & Kufeld, New York City (Bernard B. Sumliner, New York City, of counsel), for appellant.

Bergner & Bergner, New York City (David Bergner, New York City, of counsel), for respondent.

Before LUPIANO, J.P., and FINE and FRANK, JJ.

PER CURIAM:

This is a holdover summary proceeding. Respondent, a religious corporation, rented an apartment in a multiple dwelling and agreed in the lease that it was to be used as 'offices for the Society . .. and for no other purpose.' Respondent alleged that the subject apartment was controlled under the New York City Rent, Eviction and Rehabilitation Regulations, and counterclaimed for $10,000 as treble damages for rent overcharges.

The trial court found that the respondent was a nonprofit religious organization that was exempt from rent control under section 2f(2) of the Rent Regulations (exempting charitable and educational institutions from rent control); that the respondent voluntarily entered into the lease; that it was executed by both parties in good faith and without any intent to evade the Regulations; that the respondent occupied and utilized the demised premises solely and wholly as offices to conduct its business as an unincorporated association for religious purposes and there was no proof of fraud. (The parties concede that respondent is a religious corporation organized under the laws of the State of New York.)

The trial court granted petitioner final judgment of possession and dismissed the counterclaim.

Respondent's defense and counterclaim hinge on Section 13 of the Rent Regulations, reading:

'Section 13. Commercial or Professional renting of controlled housing accommodations on or after May 1, 1955. Any Housing accommodation subject to these Regulations which, on or after May 1, 1955, was or may be rented for commercial or professional use shall continue to be subject to control, unless the State Rent Commission issued an order exempting them from control during the period of occupancy by the tenant or an order is issued by the Administrator exempting the housing accommodation from these Regulations during the period of occupancy by the tenant. Such order shall be issued by the Administrator where he finds that the renting complies with the requirements of law and of City agencies having jurisdiction and was made in good faith without any intent to evade the Rent Law or these Regulations and shall be effective as of the date of the commercial or professional renting or May 1, 1962, whichever date is later.' (Emphasis supplied.)

Respondent corporation does not come within the purview of the above regulation.

'Housing Accommodation' is defined in Section 2(e) of the Regulations in relevant part as, '. . . any building or structure, permanent or temporary, or any part thereof, occupied or intended to be occupied, by one or more Individuals as a residence, home, sleeping place, boarding house, lodging house or hotel . . ..' (Emphasis supplied.)

If Section 13 was to cover a corporation in the circumstances herein, then it would have been simple to do so by substituting 'person' for 'individual' in the definition of 'housing accommodation'.

Section 2(j) of the Rent Regulations defines 'person' as 'a(n) Individual, corporation, partnership, association, or any other organized group of individuals or the legal successor or representative of any of the foregoing.' (Emphasis supplied.)

This is not to say that the corporation could not be a housing tenant. Housing accommodations may be leased to a corporation for residential purposes for its officers, employees, customers, etc.

However, this is different when the respondent seeks to invoke Section 13 to make it a housing tenant of an accommodation whereby the express terms of its lease, the subject premises was to be used as 'offices for the society . . . and for no other purpose.'

The dissenting opinion does not refer to the Rent Regulation definition of 'Housing Accommodations.'

It must be observed that the local court made a finding that the lease was made in good faith and without any intent to evade the Rent Regulations and that the respondent occupied the demised premises solely and wholly for offices to conduct business.

The interpretation of Section 13 is consistent with the holding in Matter of Colin v. Altman, 39 A.D.2d 200, 333 N.Y.S.2d 432 (1st Dept.).

The final judgment should be affirmed with $25.00 costs.

Final judgment affirmed, etc.

LUPIANO, Justice Presiding (dissenting):

In this summary holdover proceeding, the petition, as amended, contains allegations that the demised premises are not subject to the Rent Stabilization Law of 1969 or to the City Rent, Eviction and Rehabilitation Law and Regulations (hereinafter 'Regulations') by reason of the fact that they constitute business and commercial space and that they are not subject to rent control by virtue of Section 2f(2) of the Regulations. The tenant's answer was that the subject premises are controlled and contains a counterclaim to recover treble damages for alleged rent overcharges. It is indicated upon the face of the lease that the premises were to be used as 'offices' and for no other purpose. Tenant, it appears, was incorporated under the Religious Corporations Law of New York State and has received a Treasury Department exemption as a religious corporation.

By order of the District Rent and Rehabilitation Director dated July 31, 1962, it was found that the subject premises 'are controlled housing accommodations as defined by the aforesaid Regulations'. A subsequent order dated April 29, 1968, in a proceeding Before the City Rent Administration involving a prior corporate tenant of these premises, terminated such proceeding with the observation: '(p)ursuant to representation and statement of landlord, the subject apartment is an office and not a residential unit. This office does not control office or commercial units unless used as a residence'. A further subsequent order of the City Rent Administration effective January 1, 1972 setting forth maximum collectible rent for all apartments in the building clearly indicates the controlled status of the subject premises. Also admitted into evidence, in addition to the aforesaid, was City Rent Control Form A23 subscribed by the managing agent of the petitioner in charge of the building of which the demised premises are a part. This form, a combination application and notice for compensatory rent and labor cost adjustment (Sections 23 and 33.8 of the Regulations) was served in 1970 on the corporate tenant herein. In it the petitioner by his agent described the premises as 'controlled and exempt'. Said form bears an admonitory legend to the effect that any false statement or entry is a crime punishable by imprisonment or fine or by both fine and imprisonment, and a civil fine which may be imposed by the Administrator.

The trial court found that the tenant was a non-profit religious organization exempt from the City Rent Regulations by reason of Section 2f(2) of the Regulations. On this basis, the trial court further concluded that Section 13 of the Regulations did not apply. This finding and conclusion are in error. Scrutiny of the record discloses that there is no proof that the corporate tenant was 'operated exclusively for charitable or educational purposes on a non-profit basis' as required by City Rent Regulations 2f(2). Be that as it may, the exemption envisioned under said section is given in respect of 'housing accommodations' Owned by the institutions delineated therein. It is not the privileged institution which is exempt, it is the owned housing accommodation.

The most critical issue raised by the record herein involves the interpretation and application of Section 13 of the City Rent Regulations. This section, entitled 'Commercial or professional renting of controlled housing accommodations on or...