Twentieth Century Assocs., Inc. v. Waldman

• Decision Date: 19 July 1945
• Citation: 294 N.Y. 571,63 N.E.2d 177
• Parties: TWENTIETH CENTURY ASSOCIATES, Inc., v. WALDMAN.
• Court: New York Court of Appeals Court of Appeals

294 N.Y. 571

63 N.E.2d 177

TWENTIETH CENTURY ASSOCIATES, Inc.,

v.WALDMAN.

Court of Appeals of New York.

July 19, 1945.

Appeal from Municipal Court, Borough of Manhattan, Second District.

Action by Twentieth Century Associates, Inc., against Adolph Waldman, doing business under the name of the Ardmore Manufacturing Company, to recover rent under a lease executed prior to the effect date of the Emergency Rent Control Act. From a judgment of the Municipal Court of the city of New York, Borough of Manhattan, 184 Misc. 24, 53 N.Y.S.2d 612, entered February 16, 1945 upon an order of the court at a special term which denied a motion by plaintiff for judgment on the pleadings pursuant to Rules of Civil Practice, rules 109 and 112, and directed a judgment in favor of defendant, plaintiff appeals on constitutional grounds.

Affirmed.

DYE, J., dissenting. Charles Gottlieb, Alexander S. Natanson, and Marvin L. Lothstein, all of New York City, for appellant.

Edwin W. Cooney and Pauline Taylor, both of New York City, for City Bank Farmers Trust Company, amicus curiae, in support of appellant's position.

John C. Crawley and Henry W. Proffitt, both of New York City, for Seamen's Bank for Savings in the City of New York, amicus curiae, in support of appellant's position.

Martin S. House and Adolph S. Ziegler, both of New York City, for Mid-Manhattan Management Corporation, amicus curiae, in support of appellant's position.

Jack Gross, of New York City, for respondent.

Nathaniel L. Goldstein, Atty. Gen. (Orrin G. Judd and Saul A. Shames, both of New York City, and Irving I. Waxman, of Albany, of counsel), appearing pursuant to section 68 of the Executive Law, Consol.Laws, c. 18, in support of constitutionality of the Emergency Rent Control Law (L.1945, ch. 3, as amended by L.1945, ch. 315, McK.Unconsol.Laws, s 8521 et seq.).

THACHER, Judge.

Plaintiff appeals from a final judgment of the Municipal Court of the City of New York dismissing its complaint in an action to recover rent under a lease executedprior to January 24, 1945, the effective date of chapter 3 of the Laws of 1945, and seeks to review the constitutionality of said act in its application to such leases. The court below, with the consent to both parties, having construed the statute as retroactively applicable to the plaintiff's lease, we may determine the sole question of constitutional validity upon the basis of that construction. N.Y.Const. art. VI, s 7(2); Civil Practice Act, s 588, subd. 4; Doubleday, Doran & Co., v. R. H. Macy & Co., 269 N.Y. 272, 281, 199 N.E. 409, 410, 103 A.L.R. 1325; cf. Matter of Chirillo, 283 N.Y. 417, 421, 28 N.E.2d 895, 896.

The statute relates to the regulation, control and stabilization of rentals of premises occupied for commercial purposes in cities having more than one million inhabitants. Section 1 thereof contains the following recitals and finding ^*: ‘Section 1. Unjust, unreasonable and oppressive leases and agreements for the payment of rent for commercial space in certain cities having been and being now exacted by landlords from tenants under stress of prevailing conditions accelerated by the present war, whereby a breakdown has taken place in normal processes of bargaining and freedom of contract has become an illusory concept and whereby there have come into existence conditions threatening to obstruct war production and the production and distribution of essential civilian commodities, and to cause inflation, and all of the foregoing situations and conditions being a threat to the successful prosecution of the war and essential civilian activities, and to the public safety, health, and general welfare of the people of the state of New York, it is hereby declared that a public emergency exists, which is increasing in intensity without slackening and without promise of relief so long as present war conditions continue, and that action by the legislature is imperative and will not permit of delay. It is hereby found by the legislature that for the duration of such emergency, the establishment of a maximum rent for commercial space at a level of fifteen per centum above rents charged on March first, nineteen hundred forty-three, or at a level otherwise determined as provided herein, will curb the evils arising from such emergency and will accomplish the purposes hereby sought to be achieved. This act is declared to be a measure designed to protect and promote the public health, safety and general welfare, to aid the successful prosecution of the war, and essential civilian activities, and to prevent inflation, and is made necessary by an existing public emergency.’

This legislation followed the report of a joint legislative committee appointed pursuant to resolutions adopted in both houses of the Legislature on March 18, 1944. After exhaustive study and investigation, the committee reported its findings as follows: ‘After a careful examination of the facts assembled through the investigations and studies described above, the Committee has concluded that a public emergency existed on March 1, 1943 and still exists because of the exaction and attempted exaction by landlords of unjust, unreasonable and oppressive agreements for the payment of rent with regard to certain types of commercial real property. The record is replete with illustrations of these practices. It has been found by the Committee that, because of war conditions and the suspension of building construction, there is a serious shortage of premises adapted for manufacturing and merchandising purposes. Moreover, in portions of the City of New York which are heavily tenanted by substantial merchandising establishments, there exists a similar scarcity of space suitable for use as stores. As a result, a breakdown has taken place in the normal processes of bargaining for leases between landlords and tenants of buildings falling within these two categories. Knowing that their tenants cannot obtain space elsewhere, a considerable number of these landlords are demanding, and in many instances have obtained, exorbitant and unjust and unreasonable increases of rent went approached by their tenants for a renewal of existing leases. These demands are in many cases coupled with an insistence that the tenant sign a lease providing for a substantially longer term than that of the current rental agreement and with a reduction of services previously given. In these cases, the landlord'sterms are peremptorily submitted to the tenant in ultimatum form and the latter knows that he must acquiesce or go out of business. As between landlords and tenants in this situation, freedon of contract has become in illusory concept.

‘While the cost of maintaining and operating commercial properties has risen as a result of factors stemming from the war, the increases in rent which many owners of such buildings are exacting and attempting to exact are so excessive and exorbitant as to bear no reasonable relation whatsoever to augmented operating expenses. Furthermore, these increases soar far above the level of a reasonable return on an investment in real estate.’ Many graphic illustrations of exorbitant increases of rent contained in new leases already executed were verified by careful inquiry and set forth in the committee's report. The effect of these oppressive practices, and resulting business stoppages and migrations, on war production and essential civilian production, it was prophesied, would result in widespread unemployment and far reaching economic dislocations of a most harmful character.

The committee concluded: ‘The Committee is convinced by the facts which have been adduced before it that the health, morals, safety and general welfare of the People of the State of New York, as well as the safety of the Nation, and the successful prosecution of the war and essential civilian activity are menaced by the situation now prevailing in New York City with regard to rentals demanded for...