Court Opinion

ID: 5699743
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:38:49.310296+00
Date Added: 2024-06-11T08:40:18.540908
License: Public Domain

VaxiENtb, J.
(dissenting). In affirming the dismissal of the complaint by the Trial Justice at the close of the case and before submission to the jury, a premium has been placed on the ingenuity of a landlord in disguising a security transaction in the form of a seemingly innocuous bill of sale. The lease and bill of sale, when read together, are not so unequivocal as to compel a holding, as a matter of law, • that the parties did not intend a security arrangement. Clearly there was a question presented here for the jury as to the intent of the parties. This was to be gathered not only from the language and form of the agreements but also from the surrounding circumstances, including the relationship of the parties and the subject matter of the contracts.
Plaintiff leased a fully equipped theatre from defendant for a term of 21 years. The evidence, prima facie, could have been determined by a jury to demonstrate that instead of an outright provision for security or advanced rental, $35,000 was transferred to the landlord under the guise of a bill of sale of the personalty and fixtures used in the operation of the premises and theatre. But under the lease, the same personalty which the landlord purported to sell was to be returned to the landlord at the termination of the lease. Moreover, the $35,000 was to be returned to the tenant, less 5% for each expired year, if the lease terminated before the expiration of the 21-year term.
Section 233 of the Beal Property Law, dealing with security deposits under leases, was enacted to prevent depletion of funds deposited with a lessor. Its provisions may not be avoided by subterfuge, and courts should pierce the form that an attempt at circumvention takes to arrive at the real substance of particular agreements so as to avoid unjust enrichment, an unconscionable penalty or conversion.
We do not have to speculate on the advantages which accrued to the landlord in dressing the security for the lease in its bill of sale garb. Certainly the landlord’s tax returns, which the court below erroneously excluded, would have given more than a mere hint of the landlord’s real purpose.
In summary, we think that enough evidence was presented to create a jury question as to whether the transaction herein was an attempt to circumvent the provisions of section 233 of the Beal Property Law, and the court below erroneously took that issue away from the jury.
In view of the conclusion of the court below as to the insufficiency of the evidence, as a matter of law, the defense of res judicata was not ruled upon. An examination of the record in *496the Justice’s Court, Harrison, New York, whose judgment is the basis of the landlord’s defense of res judicata, indicates that the proceedings, insofar as they touched on the tenant’s claim to the return of the security, were so confused as to create an uncertainty as to what was actually litigated. The judgment itself does not specifically indicate a disposition of plaintiff’s .claims here. Moreover, even culling from the confused presentation of the issues in that case the elements which have some definiteness, we are convinced that the merits of the instant suit were never adjudicated.
We would therefore reverse the judgment below and grant a new trial, with costs to abide the event.
Breitel and McNally, JJ., concur with BoteiN, P. J., Valerte, J., dissents in opinion, in which SteveNS, J., concurs.
Judgment affirmed, on the law, with costs to the respondent.