Rocklen, Inc. v. Radulesco, 3376

• Decision Date: 24 March 1987
• Docket Number: No. 3376,3376
• Parties: ROCKLEN, INC., et al. v. George RADULESCO et al.
• Court: Connecticut Court of Appeals

Page 846

522 A.2d 846

10 Conn.App. 271

ROCKLEN, INC., et al. v. George RADULESCO et al.

No. 3376.

Appellate Court of Connecticut.

Argued Feb. 9, 1987.

Decided March 24, 1987.

Daniel V. Presnick, New Haven, for appellants (named defendants).

Geoffrey A. Hecht, New Haven, for appellees (plaintiffs).

Ronald A. Stone, Bridgeport, for appellees (defendants Anthony J. Grammatico et al.).

Before HULL, DALY and STOUGHTON, JJ.

HULL, Judge.

This case involves the transfer of a business and the conveyance of a leasehold interest in the premises upon which the business operated. The lessor sued the lessee and the transferee of the lease for nonpayment of rent. The lessor also alleged that a property conveyance made by the lessee, which rendered the lessor unable to attach that property, was fraudulent. The transferee filed a cross complaint against the lessee, alleging misrepresentation in the sale of the business to him and fraudulent conveyance. The court held that the transfer of the lease from the lessee to the transferee was an assignment and that the transferee and lessee were therefore jointly liable to the lessor for the unpaid rent. The court further held that the property transfer in question was fraudulent as to the lessor but not as to the transferee. On the cross complaint, the court held that while the transferee waived his rights to a rescission of the contract, he was entitled to damages from the lessee based on the lessee's fraud in the sale of the business.

From the judgment rendered, the transferee appealed, claiming (1) that the transfer of the leasehold to him from the lessee created a subtenancy and not an assignment, (2) that the court erred in holding that there was consideration between the landlord and the transferee (3) that the court erred in holding that the fair market value of the business was $35,000, (4) that the court erred in not granting him a rescission of his contract, and (5) that the court erred in holding that the transfer of real property from the lessee to his wife was not a fraudulent conveyance as to the transferee. We find error on the final claim.

The trial court found the following facts. The plaintiffs, Rocklen, Inc., and Sherman Rocklen, owners of the premises known as 476-480 Elm Street, West Haven, leased a portion of that premises to the defendant, Anthony Grammatico, by written lease dated May 11, 1976. In June, 1976, the plaintiff Howard Rocklen acquired an interest in the property. At all relevant times thereinafter, the three plaintiffs owned the premises. The premises was used as a roller skating rink and restaurant. The lease contained four separate options to renew. The first two options were exercised, obligating the tenant to pay monthly installments of rent, and a portion of certain other charges in connection with the property and business.

On January 21, 1982, while still operating the business, Grammatico transferred all of his interest in his home to the defendant Janet Grammatico, his wife, rendering creditors unable to reach that asset through regular legal channels. On February 24, 1982, Grammatico transferred "all of his rights, title and interest in and to said lease" to the defendant George Radulesco. The plaintiffs consented to this transfer in writing. The business apparently was unsuccessful, and the plaintiffs did not receive payments for the months of December, 1982, through April, 1983, inclusive. They consequently brought suit against Grammatico for rent and against Radulesco for rent, use and occupancy. The plaintiffs also alleged that Grammatico's transfer of their home to his wife was voidable as a fraudulent conveyance.

Radulesco filed a cross complaint against Grammatico in a three count complaint. ¹ In his cross complaint, Radulesco alleged that a fraudulent conveyance had taken place, that material misrepresentations had been made, and that those representations constituted a violation of Connecticut's Unfair Trade Practices Act (CUTPA). General Statutes § 42-110a et seq.

The court rendered judgment for the plaintiffs on their complaint, rejecting all claims and special defenses of the defendants. The court found for Radulesco on the third count of his cross complaint, which alleged violations of CUTPA. The court also found that the January 21, 1982 conveyance of the home was not a fraudulent conveyance as to Radulesco, since Radulesco was not a creditor of Grammatico at the time of the conveyance, and thus was not prejudiced by the transfer.

Radulesco's first claim is that the court erred in holding that the transfer of the leasehold from Grammatico to Radulesco was an assignment of the lease rather than the creation of a subtenancy. We do not agree.

The basic distinction between an assignment and a sublease is that by the former, the lessee conveys his whole interest in the unexpired term, leaving no reversion in himself; the latter transfers only a part of the leased premises for a period less than the original term. T.A.D. Jones Co. v. Winchester Repeating Arms Co., 55 F.2d 944, 947 (D.Conn.), aff'd, 61 F.2d 774 (2d Cir.1932), cert. denied sub nom. Southeastern Investment Co. v. Tobler, 288 U.S. 609, 53 S.Ct. 401, 77 L.Ed. 983 (1933). Contrary to Radulesco's claim, a mere reservation of the right of entry on default does not constitute retention of a reversionary interest. Thomas v. United States, 505 F.2d 1282, 1287, 205 Ct.Cl. 623 (1974).

In the present case, Grammatico assigned "all of his rights, title and interest in and to said lease" to Radulesco. Radulesco thereinafter clearly had an assignment of the lease. The entire lease had been transferred; there was no reversionary interest which would have rendered the interest Radulesco received a subtenancy.

Radulesco's second claim is that the court erred in holding that there was consideration between the plaintiffs and Radulesco for the transfer of the leasehold to Radulesco. We do not agree. The trial court correctly held that the assignment of a lease is sufficient consideration to support the legal obligation of the defendant Radulesco to pay rent. See Dwyer v. Hamre, 123 Conn. 137, 138-39, 193 A. 207 (1937). By accepting the assignment and entering into possession of the premises, sufficient consideration passed between Radulesco and Grammatico to obligate Radulesco to perform what had previously been Grammatico's duty, to pay rent.

Radulesco next claims that the court erred in holding that the fair market value of the business was $35,000. We do not agree.

On direct examination, Radulesco testified that he had asked $65,000 to sell the business. His realtor confirmed the asking price. No offers were made at that asking price; in fact, no negotiations ever took place at that time. Radulesco testified that he received a $35,000 offer for the business, but had received no higher offer. The court found that the business deteriorated while Grammatico operated it, and that it was not worth what it once had been. Grammatico confirmed this and testified as to various reasons for the deterioration.

The court had competent evidence upon which it could have found that the value of the business was $35,000. Radulesco is asking us to retry the case. We cannot. Our review of the trial court's factual findings is limited solely to a determination of whether they are clearly erroneous. Practice Book § 4061 (formerly § 3060D); Fortier v. Laviero, 10 Conn.App. 181, 183, 522 A.2d 313 (1987); Cook v. Nye, 9 Conn.App. 221, 224, 518 A.2d 77 (1986). We find that they are not.

Radulesco's fourth claim is that the court erred in not granting him a rescission of his contract. He claims that the rescission was justified because Grammatico violated CUTPA, and therefore the contract was unconscionable and illegal.

The trial court held that it need not determine whether Grammatico made a material misrepresentation to Radulesco, since the latter never made any attempt to rescind. The court stated that Radulesco in fact continued in his attempt to sell the business until the time of eviction. He therefore waived any right of rescission due to his own failure to inquire as to his rights for well over a year after he knew or should have known that he had purchased a dying business. We agree.

"To determine the presence of waiver, there must be evidence of intelligent and intentional action by the petitioner of the right claimed to be waived. Waiver does not have to be express but may consist of acts or conduct from which it may be implied. Talton v. Warden, 171 Conn. 378, 385-86, 370 A.2d 965 (1976)." McClain v. Manson, 183 Conn. 418, 430, 439 A.2d 430 (1981); see also Goldenberg v. Corporate Air, Inc., 189 Conn. 504, 510, 457 A.2d 296 (1983). "In other words, waiver may be inferred from the circumstances if it is reasonable so to do." Loda v. H.K. Sargeant & Associates, Inc., 188 Conn. 69, 76, 448 A.2d 812 (1982).

In the present case, the court made lengthy factual findings concerning the financial...