Court Opinion

ID: 5851926
Source: CourtListenerOpinion
Date Created: 2022-01-13 00:05:11.383161+00
Date Added: 2024-06-11T08:44:07.356473
License: Public Domain

Lynch, J.
(dissenting). In 1977, the plaintiff corporation leased an apartment in the defendants’ building for the use of visiting executives, salesmen, and the like. The lease expired in November, 1980, but the plaintiff corporation has remained as a month-to-month tenant. On May 2, *1571980, an eviction plan seeking to convert the apartment building to co-operative ownership was offered to the tenants. Paragraph (f) provides that, while a corporate tenant in possession shall have no right to purchase an apartment, an individual approved by the corporation may purchase.
According to the defendants, the last day for a tenant to subscribe to the plan, after its final amendment, was February 19, 1981. On that day the plaintiff corporation executed and mailed a subscription agreement on its own behalf. On February 23 the defendants rejected it, claiming that it was untimely because they had not received it on the 19th and that the plaintiff, being a corporation was an ineligible subscriber. On May 3, the plaintiff corporation designated the plaintiff Lebow as its approved purchaser. The defendants rejected this subscription as untimely.
The defendants sent the plaintiff corporation in the following September a notice of their election to terminate the month-to-month tenancy in October. The plaintiffs countered with an action for specific performance of the subscription agreement and moved for a preliminary injunction to preserve the status quo. Special Term denied the motion. It felt that the Code of the Real Estate Industry Stabilization Association of New York City, Inc. (Rent Stabilization Code), in which the eviction plan has its genesis, was intended to protect individuals, not corporations, and that the plan itself spoke only in terms of individuals. Special Term found it unlikely that the plaintiffs could prove that the corporation had a right to subscribe on its own behalf. It did not decide whether the corporate subscription was timely, but it held that the corporate approval of Lebow as its designee subscriber was untimely. Special Term found also that there was no irreparable harm since no one person was actually living in the apartment and, hence, no one was losing a home. It saw the controversy as one over the profit that could be made on the sale of the apartment at the market price, for which money damages could wholly compensate the plaintiffs. We disagree with these conclusions and find the denial of a preliminary injunction to have been an abuse of discretion. The plaintiffs have demonstrated their likely success, the *158threat of irreparable injury, and the balance of equities in their favor (see Albini v Solork Assoc., 37 AD2d 835).
The defendants’ eviction plan concedes that any inconsistency between it and the Rent Stabilization Code must be resolved in the latter’s favor. An inconsistency is presented between the plan’s denial of subscription rights to a corporation and section 61 (subd 4, par [b]) of the Code. That subdivision grants a first right of subscription to a “tenant in occupancy at the time of the offering”. It is unquestioned that the plaintiff corporation was in occupancy at the time of the offering and the plan’s proscription of the corporation must give way to the latter’s right under the Code.
Paragraph (a) of subdivision 4 of the same section of the Code provides that an eviction will become effective only when 35% of the “tenants then in occupancy” have agreed to subscribe. Five clauses of subdivision 4 (par [a]) set forth rules for computing the necessary percentage. Clause (v) provides “Purchases by the tenant of record of a subleased apartment will be included; sub-tenants will have no right to purchase unless approved by the tenant of record and only then would purchases by sub-tenants be included; purchases of apartments leased to a Corporation or Partnership will be included if purchased by an individual approved by said Corporation or Partnership.”
The defendants would have us apply the limitation on tenants in occupancy found in paragraph (a) of subdivision 4 to the right of subscription granted to tenants in occupancy, without limitation, in paragraph (b) of subdivision 4. We are constrained, however, to avoid judicial legislation (Matter of Thomas, 216 NY 426), and to determine the legislative intent from the language used, if possible (Lawrence Constr. Corp. v State of New York, 293 NY 634). When this is done, the two paragraphs are readily harmonized. When a corporation is a tenant in occupancy, it has the right to purchase, but its election to purchase cannot be included in the 35% necessary for adoption of the eviction plan. A corporation may, however, approve an individual to purchase its apartment, in which case the purchase may be included in the 35%.
*159The defendants point out that the subtenant limitation in the above-quoted clause of section 61 (subd 4, par [a]) has been held in effect to be a limitation on the class of tenants in occupancy under paragraph (b) of subdivision 4 (see Thuna v Di Sanza, 102 Misc 2d 342, affd 78 AD2d 517; Willis vKrull, NYLJ, Sept. 23,1981, p 6, col 2). But there is no analogy to be drawn here. First, section 61 (which would include the right to purchase granted under paragraph [b] of subdivision 4) is specifically made inapplicable to subtenants by subdivision 5 of section 61. Second, it is reasonable for the statute to give the exclusive right to purchase to the tenant of record under the primary lease and thus distinguish subtenants from tenants, corporate or not.
The defendants also argue that restricting the plan to individuals is warranted to preserve the co-operative’s beneficial tax status, the Internal Revenue Code allowing a flow through of certain deductions to the tenants only if 80% of the co-operative’s income is derived from shareholders other than corporations. However compelling or preferable this might be, it cannot be accomplished by unilaterally depriving the corporate tenants in occupancy of rights granted them by the Rent Stabilization Code.
Contrary to the Special Term’s finding that the plaintiffs were unlikely to succeed in the underlying action, we find merit in their contention that the plaintiff corporation had the right to subscribe without having designated an individual purchaser. We also find the corporate subscription was timely. It was mailed and postmarked on the last day for exercising this option. The plan provided only that after this last day there would be no further right to subscribe. There was no express requirement that the subscription had to be received on the last day. There being no direction “inconsistent with an authorization of acceptance by mail”, “the contract is completed at the moment the acceptor deposits his letter of acceptance in the post office directed to the offeror’s proper address and with the postage prepaid, provided he does so within the proper time and before receiving any intimation of the revocation of the offer” (9 NY Jur, Contracts, §§ 36, 565).
We also find merit in the plaintiff corporation’s argument that denial of the preliminary injunction would cause *160it irreparable harm. While a proprietary lease and shares in a co-operative building are personalty (Silverman v Alcoa Plaza Assoc., 37 AD2d 166), they do represent a unique form of property ownership having a “real property aspect” which at times “may predominate” (Matter of State Tax Comm, v Shor, 43 NY2d 151, 154). This aspect — the use and occupancy of a particular apartment in a particular building for essentially an unlimited period of time — especially should predominate here because it was granted to the plaintiff corporation by statute. This right will be lost if the defendants are able to dispose of the shares prior to the adjudication of the underlying case. The loss of this statutory right would be an irreparable harm, and the defendants should not be able to so easily circumvent the purpose of the Rent Stabilization Code.
The balance of equities favors the plaintiffs. They stand to lose an apparent statutory right to purchase shares in the co-operative building and the substantially unlimited use of the apartment. The defendants, if successful in the underlying action, would lose only a return on their investment during its pendency, a damage readily compensable by a monetary award.
Accordingly, the order of the Supreme Court, New York County (Greenfield, J.), entered November 25, 1981, denying plaintiffs’ motion for a preliminary injunction to bar defendants from selling or offering for sale the shares of stock allocated to apartment 11E at 201 East 66th Street to anyone other than those plaintiffs, should be reversed, and the motion granted.
Murphy, P. J., and Fein, J., concur with Ross, J.; Lupiano and Lynch, JJ., dissent in an opinion by Lynch, J.
Order, Supreme Court, New York County, entered on November 25,1981, affirmed. Respondents shall recover of appellants $50 costs and disbursements of this appeal.