Tenzer, Greenblatt, Fallon & Kaplan v. Abbruzzese

• Decision Date: 15 July 1968
• Court: New York Supreme Court
• Parties: TENZER, GREENBLATT, FALLON & KAPLAN, Petitioner, v. Arthur M. ABBRUZZESE, Respondent.

Page 634

293 N.Y.S.2d 634

57 Misc.2d 783

TENZER, GREENBLATT, FALLON & KAPLAN, Petitioner, v. Arthur M. ABBRUZZESE, Respondent.

Supreme Court, Special Referee's Part, Queens County.

July 15, 1968.

Tenzer, Greenblatt, Fallon & Kaplan, New York City, for petitioner, pro se (Edward L. Sadowsky, New York City, of counsel).

Ivan A. Ezrine, New York City, for B.A.I., Inc., intervening petitioner.

DECISION PURSUANT TO CPLR 4213(b)

SAMUEL S. TRIPP, Special Referee.

At the commencement of the trial of this special proceeding brought pursuant to CPLR 5227, the respective attorneys for the appearing parties consented on the record, pursuant to CPLR 4317(a), that this reference be to hear and determine instead of to hear and report as provided in the order of Mr. Justice Roe dated June 19, 1967. (Rayex Corp. v. Sanchez, 6 A.D.2d 903, 177 N.Y.S.2d 630.)

In an action to recover a balance for legal fees and disbursements, petitioner, a firm of attorneys, docketed a default judgment for $30,088.49 against Sports Arenas, Inc., hereinafter Sports, on December 29, 1966 in the office of the County Clerk of New York County, Index Number 18362/1966. Less than two months prior to this judgment, petitioner obtained an order of attachment, dated November 10, 1966, a copy of which was filed on November 21, 1966 in the office of the Sheriff of the City of New York, Queens County Division. Copies thereof were served by a Deputy Sheriff on Sports and respondent Arthur M. Abbruzzese on November 22, 1966.

According to the sublease dated November 10, 1964 between Sports and the respondent, the former was 'not the owner of the demised premises (at 320--45 75th Street, Jackson Heights, Queens County) but * * * the successor by merger to Northern Lanes, Inc., a tenant under a lease ('Major Lease') thereon dated February 26, 1959 from Rush Realty Corp. for a term of twenty-one (21) years * * *' for several bowling alleys, a restaurant, a bar and a shop for the sale of bowling supplies. The sublease demised a portion of these premises to respondent, at a rental payable in monthly installments in advance on the first of each month based upon a percentage of his gross sales, for a term commencing on November 10, 1964, and expiring on November 30, 1969, with a 5-year renewal option.

Respondent, examined by petitioner pursuant to a Subpoena with Restraining Notice served on February 2, 1967, furnished an affidavit, sworn to on February 24, 1967, that he operates a luncheonette and bar concession at the leased premises on a percentage rental basis averaging about $5,000 a year; that because 'of the service of the warrant * * * (of) attachment' on him, he did not pay rent for the months of November, December, 1966 and January, 1967, and that 'the amount of rent owed is as follows: November, $662.78; December, $663.48 and January, $530.11 for a total of $1856.37.'

The instant special proceeding was commenced by petitioner against the respondent on March 14, 1967. Copies of all papers, including the foregoing affidavit, were served on Sports by certified mail, return receipt requested, addressed to 8730 Wilshire Boulevard, Beverly Hills, California. Therein judgment is sought directing respondent to pay the petitioner the aforesaid $1,856.37 and 'all sums that become due on * * * (the) percentage lease * * * executed with the judgment debtor * * * (Sports) as they become due on account of' the $30,088.49 judgment upon the ground that respondent is indebted to Sports, who in turn is indebted to petitioner 'for an amount in excess of moneys' held by respondent.

Neither respondent nor Sports appeared nor submitted opposing papers. Instead, B.A.I., Inc., a California corporation, designating itself as 'intervening petitioner', voluntarily appeared and submitted affidavits by its president and its New York attorney demanding that:

'(i) judgment be entered against respondent directing respondent to pay to B.A.I., Inc., the sum of $1,856.37, as well as all future sums which may accrue under and pursuant to the lease between respondent and Sports, dated November 10, 1964; (ii) judgment be entered restraining and precluding respondent from paying any sums of money under the lease dated November 10, 1964 to plaintiff-petitioner herein; and (iii) judgment be entered denying any interest of plaintiff-petitioner in and to the matured or future proceeds payable by respondent under the lease dated November 10, 1964.'

The foregoing demand is based on the claim asserted by the intervening petitioner that Sports 'as tenant and sub-landlord, assigned to Econo-Control, Inc. ('Econo'), a wholly owned subsidiary of BAI (with identical management control) all of Sports' rights in and to the November 10, 1964, sub-lease agreement between Sports (sublandlord) and respondent (subtenant). The assignment was dated December 12, 1966. Such assignment agreement recited herein that the assignment 'shall be effective as of October 13, 1966 * * *' BAI assumed actual working control of the assigned premises as of October 13, 1966, and advanced funds to Sports and paid the bills for the assigned premises as of October 31, 1966.' (Intervening Petitioner's post-trial memorandum received on June 15, 1968.)

Subsequent to the commencement of the instant special proceeding, petitioner issued an execution, dated March 11, 1968, on its judgment docketed on December 29, 1966, containing a notice to the garnishee, the respondent herein, that he 'is a lessee of judgment debtor and owes rent accruing thereunder from November 1, 1966'. This execution was filed in the office of the Sheriff of the City of New York, Queens County Division, on March 25, 1968 and two days later a Deputy Sheriff served a copy thereof on the respondent. The latter had paid no rent to his landlord since 'around November 9th or so' when he paid the rent that became due for the month of October, 1966. Because of the attachment levy on November 22, 1966, he paid no further rent but set aside the monthly rental payments as they became due since November, 1966 and deposited them in a separate savings account in his own name with Bankers Trust Company, Jackson Heights, Queens County, New York, branch.

In his memorandum decision dated May 12, 1967, upon which the order of reference was entered, Mr. Justice Roe sustained the informal intervention by B.A.I., Inc. in claiming as the transferee of the debt consisting of rents under the sub-lease, the $1,856.37 which was the subject of this proceeding when originally commenced 'as well as all future sums which may accrue under and pursuant to the lease between the respondent and Sports, dated November 10, 1964.' (See 'Wherefore' clause in affidavit of B.A.I.'s attorney, sworn to April 5, 1967.) By the time this proceeding was finally submitted on July 9, 1968 by the filing of a stipulating dated July 8, 1968 executed by the attorneys for petitioner and B.A.I., Inc. agreeing to certain material facts and additional exhibits, unpaid rents had accrued through March, 1968 totalling $7,591.35 from November 1, 1966. According to the foregoing stipulation this sum was turned over by respondent to the Sheriff's Office, Queens County, pursuant to petitioner's property execution 'and the funds are presently on deposit with the aforesaid Sheriff, per the attached certificate'. That certificate, made by the Under Sheriff, in charge of Queens County Division, on June 26, 1968, states that his office received on May 16, 1968 from respondent's attorneys an official check of Bankers Trust Co., in the sum of $7,591.35 'in an execution in the above entitled action dated March 11, 1968 filed in the Sheriff's Office on March 25, 1968 and pursuant to a levy made * * * on March 27, 1968 by service of a copy of said execution on the said garnishee', the respondent herein, which 'sum of $7,591.35 is on deposit in the Trust Account of the Sheriff of the City of New York, Queens County Division.'

Absent a motion at the trial addressed specifically to any variance between the petition and the proof in which event petitioner could have successfully moved to conform the pleadings to the proof, the parties are deemed to have elected to 'depart from the strict issues made by the pleadings, and * * * (tried) other questions relating to the merits of the controversy by consent or acquiescence'. (Farmers' Loan and Trust Co. v. Housationic Railroad Co., 152 N.Y. 251, 254, 46 N.E. 504, 505; see, also, Pattison v. Pattison, 301 N.Y. 65, 68, 92 N.E.2d 890, 892; Gillies v. Manhattan Beach Improvement Co., 147 N.Y. 420, 423--424, 42 N.E. 196, 197; Fallon v. Lawler, 102 N.Y. 228, 233, 6 N.E. 392, 394; Nirenstein v. George A. Horvath, Inc., 286 App.Div. 409, 412, 143 N.Y.S.2d 833, 836.) In any event, the pleadings herein are now amended to conform to the proof in accordance with the motion made in petitioner's reply brief served on July 9, 1968. (CPLR 3025(c); Dittmar Explosives, Inc. v. A. E. Ottaviano, Inc., 20 N.Y.2d 498, 502, 285 N.Y.S.2d 55, 57, 231 N.E.2d 756, 758.)

It was agreed in the stipulation dated July 8, 1968 that the judgment recovered by petitioner on December 29, 1966 'is an in personam judgment' and that 'a copy of the affidavit of service be offered and received in evidence as petitioner's Exhibit '8'.' That affidavit attests to the service of the summons and complaint upon Sports on November 22, 1966, pursuant to section 306 of the Business Corporation Law (see also recitals in default judgment, Petr's Ex. 3). Thus this Court acquired In personam jurisdiction over this defendant and not merely Quasi in rem jurisdiction, in which case the judgment could be collectible solely from the debt levied upon prior to the entry of judgment. (McCarthy v. Culkin, 254 N.Y. 328, 331, 172 N.E. 524, 525; De Cammillis v. De Cammillis, 26 A.D.2d 817, 274 N.Y.S.2d 273, 274, affd. 19 N.Y.2d 880, 281 N.Y.S.2d 79, 227 N.E.2d 879.)

It is clear from the evidence as now in the record that the Sheriff made...