Krasner v. Transcontinental Equities, Inc.

OPINION OF THE COURT Fein, J. Plaintiff appeals from an order which denied his motion for summary judgment against defendant Ben-Ness Cameras & Electronics Center, Inc. (Ben-Ness) to recover the sum of $12,000 and granted summary judgment to Ben-Ness on its cross motion, dismissing the complaint as to said defendant. The action concerns possession of store premises at 57-59 East 59th St., Manhattan, in the Delmonico Hotel, originally leased by Tankoos-Y armón Hotels, Inc., now defendant Transcontinental Equities, Inc. (Transcontinental) to defendant Liberty Travel Service, Inc. (Liberty) by lease executed September 27, 1968, for a term commencing October 10, 1968 and ending September 31 [sic], 1978. Subsequently, the premises were subleased by Liberty to plaintiff Krasner for the period December 1, 1968 through September 30, 1978. On June 25, 1973, with Liberty’s consent, plaintiff sublet the premises to Selectronic Office Equipment, Inc. (Selectronic) for the period July 1, 1973 to September 29, 1978, the sublease terminating one day prior to the termination of plaintiff’s sublease from Liberty. On March 14, 1975, Selectronic assigned its sublease to Ben-Ness. On May 7, 1976, Ben-Ness entered into an agreement with Transcontinental as owner of the building, described as a "surrender of lease”, wherein Ben-Ness agreed to vacate the premises on or before May 21, 1976, in return for the payment by Transcontinental to Ben-Ness of $12,000 plus $2,000 representing security under the sublease, in consideration of Ben-Ness’ surrender of all of its interest in the premises under the sublease assigned to it by Selectronic. Transcontinental also [314] agreed to hold Ben-Ness harmless from any claim which might be asserted by plaintiff arising out of Ben-Ness’ tenancy, possession and/or surrender of the premises. Prior to execution of the agreement, plaintiff had written advising Ben-Ness that Krasner would not recognize any surrender of the premises which did not take into account plaintiffs interest. On June 21, 1976, this action was commenced to recover damages for breach of the sublease agreement. On the prior appeal we reversed Special Term’s order granting summary judgment to Ben-Ness and denying summary judgment to plaintiff. Our reversal was premised on the failure of the parties to submit copies of the pleadings (64 AD2d 551). Plaintiff again moved for summary judgment against BenNess only, contending that the receipt of the $12,000 and the purported surrender of the lease violated the terms of the sublease between Krasner and Selectronic, Ben-Ness’ assignor. Special Term again denied plaintiffs motion for summary judgment and granted summary judgment to Ben-Ness on its cross motion, dismissing the complaint. Special Term again held that the assignment of its leasehold interest by Ben-Ness to Transcontinental effected "a merger of the balance of BenNess’ tenancy in the main landlord’s freehold estate” thereby extinguishing plaintiffs obligations under the paramount lease and Ben-Ness’ obligations under the sublease. Special Term also ruled that in the absence of any showing by plaintiff that he was damaged by Ben-Ness’ "violation of the lease provision * * * requiring plaintiff’s consent to assign its interest in the premises”, judgment was appropriate in favor of Ben-Ness. The conclusion that the surrender by Ben-Ness violated the terms of sublease from plaintiff to Selectronic and the assignment by Selectronic to Ben-Ness ignores the provisions of the sublease and the assignment. Those instruments do not require plaintiffs consent as a precondition to any assignment by Ben-Ness. The absence of any condition requiring the consent of Krasner to any assignment by Ben-Ness is dispositive. Ben-Ness surrendered only its leasehold interest in the premises to Transcontinental in return for the payment of $12,000 by Transcontinental to Ben-Ness. The Selectronic sublease, assigned to Ben-Ness, terminated one day prior to the termination of Krasner’s leasehold interest. In surrendering its interest to Transcontinental, Ben-Ness did not infringe [315] upon nor interfere with plaintiffs remaining one day reversion. Ben-Ness’ surrender or assignment of the balance of its term could not interfere with Krasner’s remaining limited leasehold interest. There was neither a surrender nor a merger. "A surrender is the restoring and yielding up of an estate for life or for years to one who has the immediate estate in reversion or remainder, whereby the lesser estate is merged in the reversion or remainder.” (34 NY Jur, Landlord and Tenant, § 388.) Transcontinental did not have the immediate estate in reversion or remainder of Ben-Ness’ sublease. Plaintiff Krasner had such immediate estate by virtue of the facts that (1) it was Ben-Ness’ sublessor, and (2) there remained one day of Krasner’s original term after the end or termination of Ben-Ness’ sublease. Thus there was an intermediate estate held by Krasner between the estate of Transcontinental and Ben-Ness, which precluded either a surrender or a merger. (34 NY Jur, Landlord and Tenant, § 354.) The so-called "surrender” by Ben-Ness to Transcontinental constituted an assignment. Special Term ruled that this was a breach of Ben-Ness’ covenant against assignment without obtaining plaintiffs permission. However, neither the sublease from plaintiff to Selectronic, nor the assignment of that sublease by Selectronic to Ben-Ness requires that plaintiffs consent be obtained before further assignment of the sublease. In effect, Special Term engrafted upon the agreement between the parties the condition in the major lease requiring the major landlord’s consent. However, the parties to the sublease between plaintiff and Selectronic did not agree that plaintiffs consent was required for an assignment. The sublease between Krasner and Selectronic provides as follows: "8. The Tenant herein agrees not to attorn to the major landlord and/or owner of the building and if any payment is made directly by the Tenant herein to the said major landlord and/or owner, the same shall be solely as agent for the Landlord herein. "9. Anything to the contrary contained in Article 11 hereof notwithstanding, the Tenant may further sublease the entire premises but shall obtain landlord’s consent to said subletting prior to entering into any subleasing, agreement. Landlord agrees not to unreasonably withhold said consent, provided, however, that in the event that the rental paid by the said [316] subtenant shall be in excess of the rental under this sublease, then Landlord shall be entitled to such excess over and above the rental paid by this Tenant. The consent of the major landlord to such further assignment and/or subletting shall not be deemed as a consent by the Landlord herein.” This provision must be strictly construed against plaintiff, its drafter. It requires consent only to a sublease, not to an assignment. When Selectronic assigned the sublease to Ben-Ness, the latter became obligated by the terms and conditions contained in the sublease between Krasner and Selectronic, Ben-Ness’ assignor. Since the Selectronic sublease only required the consent of Krasner to any subletting and no consent was required to an assignment, there was no breach by Ben-Ness. It is undisputed that Ben-Ness did not enter into a sublease with Transcontinental. The surrender of the balance of Ben-Ness’ term to Transcontinental amounted to an assignment, not subletting. Krasner’s consent was not required either under the provisions of the sublease from Krasner to Selectronic or by virtue of the assignment from Selectronic to Ben-Ness. The concurring opinion concludes that since the sublease from Krasner to Selectronic was subject and subordinate to the lease between Liberty and Krasner, which precluded assignment without the landlord’s written consent, Krasner’s consent was requisite before an assignment by either Selectronic or its assignee, Ben-Ness. However the sublease from Krasner to Selectronic did not contain a similar provision. It required consent only to subletting. That the sublease was subject and subordinate to the prior Liberty sublease did not create an obligation to obtain Krasner’s consent to any assignment by Ben-Ness, not expressly reserved. Nor was the transfer by Ben-Ness to Transcontinental of its remaining leasehold interest violative of paragraph 8 of the sublease between Krasner and Selectronic. That clause in the sublease precludes the tenant from attorning to the major landlord and/or owner of the building and provides that if any payment is made by the tenant to the major landlord, it shall be solely as agent for Krasner. Here, however, it is clear that there was no attornment. Attornment contemplates the act or agreement by a tenant accepting one person in place of another as his landlord. Here, there was no recognition by Ben-Ness of Transcontinental as its landlord. Nor was there any payment by Ben-Ness to Transcontinental. [317] Moreover, Krasner could have no legal or practical interest in the terms of the assignment by Ben-Ness to Transcontinental. That assignment in no way impinged upon Krasner’s one-day reversionary interest in the premises. Any claim for damages for the loss of that one day’s reversion is to be asserted against Transcontinental not Ben-Ness. Krasner’s interest was in collecting the rent from Ben-Ness and his obligation was to pay the rent to his landlord. So far as appears Krasner has not been called upon to pay rent for the period assigned by Ben-Ness to Transcontinental. Nor could he be. There was no damage to Krasner, even if it be concluded that Krasner’s consent to the Ben-Ness assignment was required. Krasner covenanted that he would not "unreasonably withhold” his consent. He has shown no basis for withholding consent except for his desire to share in the $12,000 paid by Transcontinental to Ben-Ness for Ben-Ness’ removal from the premises. Since this sum did not exceed the rent Ben-Ness would have been required to pay Krasner for the balance of the term, had Ben-Ness not removed, Krasner has not been damaged by such payment. Nor is he entitled to share in it. Ben-Ness was paid for giving up possession of the store, closing its business. It was not unjustly enriched. Krasner lost nothing, as a matter of fact and law. He was not damaged. Accordingly, the order, Supreme Court, New York County (Gabel, J.), entered January 24, 1979, denying plaintiffs motion for summary judgment as against defendant Ben-Ness Cameras & Electronics Center, Inc. and granting said defendant summary judgment dismissing the complaint as to it, should be affirmed with costs.