Court Opinion

ID: 5751640
Source: CourtListenerOpinion
Date Created: 2022-01-12 16:58:15.680197+00
Date Added: 2024-06-11T08:41:18.076823
License: Public Domain

Steuer, J.
Plaintiff is the assignee of Atlantic Stove & Conditioning Corp. The latter company, on October 18,1963, leased 125 air-conditioning units to 339 E. 51st Street Corp., the owner of a building located at that address. The lease was for a period of five years at a stipulated monthly rental. The lease provided that the units were not to become part of the realty and were at all times to remain the property of the lessor. The lease contained an acceleration clause providing that in the event of default in the payment of the rental, which default was not cured within 10 days upon demand, the rental for the balance of the period became due. There was a first mortgage on the building held by Brooklyn Savings Bank. This mortgage required the owner to have air-conditioning units of a kind and quality equal to those installed by plaintiff’s assignor, and the latter agreed to subordinate its lease to the mortgage. The lease was filed in the office of the Register of the City of New York.
339 E. 51st Street Corp. defaulted in the payment of the rental for June and July, 1964, and, pursuant to the acceleration clause, due notice was given it that the balance of the rental was due. On July 15, 1964, defendant Sternmor Realty .Corp. purchased the premises from the owner. Plaintiff, to whom the *537contract had been assigned, immediately notified Sternmor (who is the moving defendant) and demanded payment of the balance of rent due, $29,397.42. A few days later defendant advised plaintiff that it had not assumed performance of the lease and suggested that plaintiff remove the units from the premises. Plaintiff advised that it would remove the units on July 28 and requested that the necessary arrangements be made. On July 27, the Brooklyn Savings Bank, being advised by plaintiff that it was about to remove the conditioners, wrote to defendant stating that if the conditioners were removed and not replaced by similar units it would constitute a default on the mortgage. Defendant thereupon withdrew its permission to remove the units and has since then refused to allow plaintiff access to the premises.
Plaintiff sued for the accelerated balance under the lease. Defendant moved to dismiss the complaint. Plaintiff cross-moved for summary judgment. Special Term denied both motions.
We believe that plaintiff’s motion should have been granted. It may be conceded that a purchaser of real estate does not by virtue of the purchase also buy personalty in the building nor assume a contract in regard to the same that the prior owner may be liable upon (Langel v. Betz, 250 N. Y. 159; Title Guar. & Trust Co. v. 457 Schenectady Ave., 260 N. Y. 119). It is, of course, otherwise where the obligation is assumed. An assumption need not be by formal document (Frank v. New York, Lake Erie & Western R. R. Co., 122 N. Y. 197). It may be that where there is no formal writing or act, liability attaches by way of quasi-contract or general equitable principles. The existence of liability has been stated as an exception to the general rule under certain circumstances. “ [T]he defendant takes free from any obligation of the former owner as to the balance of the ten-year renewal period, excepting insofar as it has actually availed itself of the benefits of said agreement ” (General Meter Serv. Corp. v. Manufacturers Trust Co., 182 Misc. 184, 187 [Froessel, J.], affd. 267 App. Div. 992). Or it may be put on general principles of equity. “ But essentially and fundamentally such an assignee is so held because it is just that he should be required to pay for the use of property which he uses * * * I think that that fundamental consideration of justice requires that defendant copartnership be held liable for such sums as become due to plaintiff under its contract while that copartnership remains in possession of the hotel and uses plaintiff’s equipment in the operation thereof, even though there is no technical privity of estate.” (Tel-Hotel Corp. v. Lexnott Corp., 205 Misc. 576, 584.)
*538Here the significant act was defendant’s revocation of its prior permission to allow plaintiff to remove the units. It is not disputed that this was done with full knowledge of the obligation due under the lease. Nor can there be any doubt that it was done to avoid the necessity of replacing the equipment with like units to obviate a default on its mortgage. There could be no clearer case of an intent by defendant to secure to itself all of the advantages of the lease. It would be manifestly unjust to allow defendant to obtain and retain the benefits of the lease without complying with its terms.
Defendant’s contention, that the units remain in the building by virtue of plaintiff’s agreement to subordinate them to the mortgage rather than by any act of defendant, is belied by the facts. The mortgagee asserted no claim in regard to these particular units. Providing defendant replaced them, it was quite willing that they should be removed. The initiative was altogether with the defendant. It could keep the units, in which event it should meet the obligations of the contract; or it could replace them on any terms that it could make, in which event it would be free of the contract. All parties so understood and so acted. Defendant is reduced to the untenable position that it can have the use of the air conditioners without liability on the contract for their use — in fact, without any liability at all. And the rule that its purchase of the premises did not obligate defendant further to perform an executory contract has no application on the facts. The further contention that the acceleration clause constitutes an unenforcible penalty is without merit (Belnord Realty Co. v. Levison, 204 App. Div. 415).
Order should be modified on the law by directing summary judgment for the plaintiff for the relief demanded in the complaint, judgment directed to be entered accordingly, and otherwise should be affirmed, with costs and disbursements of this appeal to plaintiff-appellant.