Opinion ID: 1660511
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Heading: The Nature of the Unreasonable Withholding of Consent Clause.

Text: There is a dispute among the authorities whether language in a lease to the effect a lessor will not unreasonably withhold its consent to an assignment or subletting by the lessee is a promise of the lessor, the breach of which may give rise to damages or be the basis for the termination of the lease, or whether such a provision is merely a condition on or qualification of the clause forbidding the assignment or subletting on the part of the lessee. In form, this provision of the instant lease is not expressly promissory either on the part of the lessee or of the lessors. Whether either or both phases of the provision constitute a promise or covenant depends upon the intention of the parties. Not all terms of a lease are promissory in fact or in form; they may be promises or they may be conditions or provisions. At common law the lessee had a right to assign and sublet the leased estate and because a lease for a term of years was a conveyance of an interest in land, a restriction on this right commonly took the form of a mere provision limiting the exercise of the right without the consent of the lessor. The common law and weight of authority view the additional provision, that the consent of the lessor will not be unreasonably withheld, as not being a covenant on the part of a lessor but rather a qualification of or a partial limitation on the lessee's right to assign or sublet. Consequently, an arbitrary withholding of consent by the lessor is not a breach of a promise but of a condition or of a limitation which can be ignored by the lessee as a restriction upon his right. 3A Thompson, Real Property, p. 88, sec. 1214; 51 C. J. S., Landlord and Tenant, p. 552, sec. 36. This view is taken by Mann v. Steinberg (1946), 188 Misc. 652, 64 N. Y. Supp. 2d 68; Butterick Publishing Co. v. Fulton & Elm Leasing Co., Inc. (1928), 132 Misc. 366, 229 N. Y. Supp. 86; and Sarner v. Kantor (1924), 123 Misc. 469, 205 N. Y. Supp. 760. The lessee argues this is now an unrealistic view of the provisions as applied to modern commercial leases whatever its validity might have been when the doctrine originated at common law in respect to agrarian leases. The lessee contends that the later New York cases consider this provision in a lease to be a promise of the lessor. The lessee argues further that in a modern commercial lease such promise is so material to the lessee's making of the lease and so important for his protection that the lessor's promise must be considered as a matter of law to be material and dependent and thus the lessee's promise to pay rent for the full term is likewise dependent upon its observance. Under this theory, the lessor's promise is not incidental to a conveyance but goes to the very essence of the contract and its breach gives to the lessee a right to terminate the lease. We think the cases cited by the lessee at least go to the point that the provision in a lease that the lessor will not unreasonably withhold consent to an assignment is in fact intended to be a promise on the part of the lessor and should be so considered. That such a provision is a promise upon which an action for damages may be grounded for breach thereof was held in Singer Sewing Machine Co. v. Eastway Plaza (1957), 5 Misc. 2d 509, 158 N. Y. Supp. 2d 647; Arlu Associates v. Rosner (1961), 14 App. Div. 2d 272, 220 N. Y. Supp. 2d 288, affirmed 12 N. Y. 2d 693, 233 N. Y. Supp. 2d 477, 185 N. E. 2d 913; Broad & Branford Place Corp. v. J. J. Hockenjos Co. (1944), 132 N. J. L. 229, 39 Atl. 2d 80. In the latter case the court held there was a peremptory duty upon the lessor under the language of such a provision not to unreasonably withhold consent when his consent was invoked and he was to be governed therein by the standard of reason. The failure of a lessor to act upon a request for consent to an assignment within a reasonable time is an unreasonable withholding. The lessor cannot ignore the lessee's request. This view is consistent with the modern view of the factual background of lease making. Lessees normally want an unrestricted right to sublet and assign for their own convenience and protection; but landlords are interested in who their lessee is, not only because of his ability to pay the rent but also because his use of the premises may determine the amount of the rent. The instant lease, like so many modern-business leases while providing for a fixed monthly rent, also provided for a percentage rental based upon the gross sales of the business of the lessee. The usual compromise result is a restriction on the lessee's right to assign or what amounts to a lessee's promise not to assign without the lessor's consent and a promise by the lessor not to unreasonably withhold his consent. This view has recently been taken in Speare v. Consolidated Assets Corp. (2d Cir. 1966), 360 Fed. 2d 882, and the change of view on the part of courts is also noted in the textbooks. 3A Thompson, Real Property, p. 78, sec. 1213, states the common-law view, but its 1965 Pocket Part, p. 4, now reads, A provision in a lease that permission to assign shall not be unreasonably withheld is a covenant by the lessor. The Singer Case and 26 Fordham L. Rev. (1957), 352 are cited. See also Million, Lipton and Mahan, Real and Personal Property, 32 N. Y. U. L. Rev. (1957), 1415; Million, Lesar and Martz, Real and Personal Property, 33 N. Y. U. L. Rev. (1958), 552; 1 American Law of Property, p. 306, sec. 3.58, and Annot. (1953), Right of lessor arbitrarily to refuse or withhold consent to subletting or assignment which is barred without such consent, 31 A. L. R. 2d 831.