Westgate North, Inc. v. State University of New York

Decision Date19 October 1973
Docket NumberNo. 55046,55046
Citation354 N.Y.S.2d 281,77 Misc.2d 611
PartiesWESTGATE NORTH, INC., Claimant, v. STATE UNIVERSITY OF NEW YORK, Defendant. Claim
CourtNew York Court of Claims

Di Fabio & Couch, Albany, by Leslie F. Couch, Albany, of counsel, for the claimant.

Louis J. Lefkowitz, Atty. Gen., by Joseph T. Hopkins and Barry L. Radlin, Albany, of counsel, for the State.

MEMORANDUM--DECISION AND ORDER

WILLIAM L. FORD, Judge.

Motion by the State University for dismissal is granted only as to the second cause of action, and is denied as to the first cause of action and the claimant's cross motion for summary judgment on the first cause of action is granted.

This claim was filed on May 25, 1972 containing two causes of action arising out of an Agreement of Lease (No. L--5817) between the claimant and the State University of New York (SUNY), pursuant to which SUNY occupied office space at 30 Russell Road in the City of Albany.

The first cause of action alleges damages of $16,245.58, with interest, representing unpaid rent for half of the month of March and all of April 1972, which period remained on said lease, L--5817, after the defendant moved out of claimant's premises.

On the claimant's cross motion for summary judgment on this first cause of action, the State concedes liability but contends that interest should not be payable because claimant was offered payment of the principal rent due by a third party, Capitol Hill Twin Towers Corporation, which had contracted with defendant to pay same, and contends further that claimant ignored or refused said offer.

The second cause of action alleges damages of $757,867.50 representing compensation for the alleged breach of a contract obligating defendant to continue the use and occupancy of certain quarters at 30 Russell Road for a five-year period commencing June 1, 1972. The alleged breach is predicated upon a letter (Exhibit B), dated August 26, 1971, from Raymond W. Kettler, Vice Chancellor for Finance, Management and Business of SUNY to James F. Sowalsky, President of claimant, who signed the same letter indicating a mutual understanding and agreement to the terms and conditions set forth in said letter. To the claimant this letter is a renewal of Lease No. L--5817 and thus a new five-year lease. To the defendant it is an offer of terms looking toward a new lease and is unenforceable because not approved by the State Comptroller pursuant to the requirements of section 112(2) of the State Finance Law.

Claimant in its cross motion for summary judgment on the first cause of action alleges that the total principal amount of rent remaining due on the original lease is $16,245.58 which consists of $5,169.00 representing rent for the last half of March 1972 and further consists of $11,076.58 representing rent for all of April 1972. Claimant contends it is entitled to interest on the $5,169.00 from March 1, 1972 and on the $11,076.58 from April 1, 1972. Defendant concedes that the total principal rent remaining due is $16,245.58 and does not object to claimant having summary judgment in that amount, but does object to paying any interest thereon.

In contending that interest is not payable, the defendant relies upon an offer to pay to claimant the principal rent remaining due which offer was made by the Comptroller of Capitol Hill in a letter from him to the claimant (Exhibit E) dated August 8, 1972 which was either ignored or rejected. Defendant further relies on an Agreement of Lease (L--6742) dated November 26, 1971 and particularly Paragraph 39 thereof (Exhibit A) which provided that Capital Hill would assume the remaining rental obligation of the defendant to claimant to the extent of the remaining rent due from the time that defendant moved out of 30 Russell Road to April 30, 1972, the date of the termination of the original lease. Defendant argues that this offer to claimant by Capitol Hill to pay the remaining rent due stopped the running of interest. We do not agree.

Under Lease No. L--6472 SUNY extracted a promise from Capitol Hill to discharge SUNY's liability, if any, for March and April rent to Westgate. This created a third-party creditor beneficiary relationship in favor of Westgage which it could have enforced against Capitol Hill. (Lawrence v. Fox, 1859, 20 N.Y. 268; Strong v. American Fence Constr. Co., 1927, 245 N.Y. 48, 156 N.E. 92). However, the right created by the contract does not vest in the third party creditor beneficiary until he has knowledge of the contract made for his benefit and consents thereto. The parties to the contract may rescind it as to the third party up to that point in time. (N.Y.Contracts Law, § 1017; John Berger & Son Co. v. Duys, 1940, 174 Misc. 976, 22 N.Y.S.2d 470, affirmed 261 App.Div. 961, 26 N.Y.S.2d 503, argument denied 261 App.Div. 986, 27 N.Y.S.2d 439.)

This Court has not been presented, and has not found, any authority to sustain the argument in the factual situation of the instant claim, that the third party beneficiary Westgate must accept an offer by the promisor Capitol Hill to discharge the debt of the promisee SUNY. While privity may be found to exist here sufficient to allow the enforcement of the promise by Westgate, absent consent by the latter the Court holds that it was not legally obliged to accept Capitol Hill's offer to pay SUNY's remaining rent due.

We decide therefore that claimant is entitled to summary judgment against the State on the first cause of action for total principal rent due in the amount of $16,245.58 with interest on the March rent due of $5,169.00 from March 1, 1972, and with interest on the April rent due of $11,076.58 from April 1, 1972.

Claimant's second cause of action is based upon the August 26, 1971 letter (Exhibit B) from the Vice Chancellor for Finance, Management and Business of SUNY to the President of Westgate North, Inc. Claimant has not filed an opposing affidavit to the defendant's motion to dismiss, but in oral argument and in a memorandum of law makes the following points:

That the August 26th letter (Exhibit B) constitutes a contract enforceable against entities other than the State and also against the State, absent intervening factors;

That the original Lease Agreement (L--5817) with rental option was approved by the Comptroller;

That every contract implies good faith and fair dealing between the parties even those to which a State body is a part;

That the defendant cannot use State Finance Law, section 112, as a sword; and

That the State University is not subject to State Finance Law, section 112.

On none of the arguments advanced by claimant, or any combination thereof, do we believe that claimant can avoid the explicit and mandatory requirement of section 112(2) of the State Finance Law. At the center of the controversy here is real property, and more particularly the rental thereof to which section 112(2) is directly applicable. The parties hereto do not dispute the fact that the alleged renewal of lease was not approved by the Comptroller of the State and was not filed in his office. Claimant argues that the Comptroller's approval was unnecessary because he had approved the option in the original lease (L--5817...

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  • Ehrlich-Bober & Co., Inc. v. University of Houston, EHRLICH-BOBER
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    • New York Court of Appeals Court of Appeals
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    ...and hold that it extends to units of the State University of New York as a component of State government. (Westgate North v. State Univ. of N.Y., 77 Misc.2d 611, 354 N.Y.S.2d 281, affd. 47 A.D.2d 1004, 368 N.Y.S.2d 1020; State Univ. of N.Y. v. Syracuse Univ., 206 Misc. 1003, 1004, 137 N.Y.S......
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  • Schenker v. State, 65360
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    ...This section has been held applicable to contracts entered into by the State University of New York. See Westgate North v. State University of New York, 77 Misc.2d 611, 354 N.Y.S.2d 281, aff'd 47 A.D.2d 1004, 368 N.Y.S.2d Claimant, initially, argues that the defendant waived the right to as......
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    ...49 N.Y.2d 850, 427 N.Y.S.2d 796, 404 N.E.2d 1337, cert. denied 449 U.S. 840, 101 S.Ct. 118, 66 L.Ed.2d 47; Westgate North v. State Univ. of N.Y., 77 Misc.2d 611, 354 N.Y.S.2d 281, affd. 47 A.D.2d 1004, 368 N.Y.S.2d 1020) and it was unnecessary to submit the additional work to a new bidding ......
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