Court Opinion

ID: 5882956
Source: CourtListenerOpinion
Date Created: 2022-01-13 02:22:54.11174+00
Date Added: 2024-06-11T08:45:04.574469
License: Public Domain

Kupferman, J.
dissents in a memorandum as follows: I would reverse and find for the defendants-appellants on their fifth counterclaim.
This counterclaim involves the interpretation of two clauses of a lease agreement, namely sections 12 and 14. Plaintiff entered into a lease agreement with defendants for the use of one of three water crossings constructed by defendants between Brooklyn and Staten Island for electric power lines. The lease was for a 30-year term at a rental of $125,000 per annum, payable in monthly installments.
Section 12 states: "Lessor shall pay all taxes, assessments *486and fees and. charges against the demised pipeline and the right of way therefor, and shall keep the same free of liens and encumbrances. If any liens shall be entered against the demised pipeline or right of way therefor, superior in lien to Lessee’s interest under this agreement, and Lessor shall fail to take such action as shall cause such lien to be discharged within 30 days after the filing or entry of such lien or notice thereof, Lessee may pay the amount of such lien or discharge it by deposit or otherwise, and deduct any amount paid or expense so incurred from any amounts otherwise payable by Lessee to Lessor under this agreement” (emphasis added).
Section 14 states: "Upon default by Lessor in the performance of or upon the Lessor’s breach of any covenant, term or condition in this lease on Lessor’s part to be performed, Lessee may, at its option and upon 60 days’ prior notice in writing specifying the nature of the default, purchase the demised premises by satisfying or assuming the Mortgage Loan, and thereby terminate this lease without making any further or additional payment to Lessor, unless Lessor shall cure such default during such 60-day period. The right granted to Lessee under this Section 14 shall be in addition to, and not in lieu of, any other rights and remedies Lessee may possess upon the happening of such default or breach”.
Con Ed brought this action to recover taxes it had paid as lessee. Narrows had the obligation to pay the taxes under the terms of the lease; however, it defaulted on that obligation. Con Ed paid a substantial part of the taxes in default so as to terminate foreclosure proceedings by the City of New York. It is undisputed that the lease granted Con Ed the right to acquire title to the premises upon a default by assuming the outstanding mortgage. However, Con Ed had a superior obligation to pay the difference between the indebtedness assumed by the discharge of defendant’s tax liability plus the assumption of the mortgage and the purchase price according to a schedule in the lease.
The decision appealed from found sections 12 and 14 to be alternate options available to the lessee which "may” be exercised in the event of a default. The Trial Judge found that it was business judgment that directed Con Ed to follow section 14 and thus that action should be upheld.
There are two well-established rules of contract construction which are critical to this case and support a reversal. First, Con Ed was the party that wrote the lease agreement. Ambiguities in a contract will be resolved against the drafter *487of that contract. (4 Williston, Contracts § 621, at 761-762 [3d ed].)
Second, Con Ed followed section 14, which is a general clause of this lease. Section 12 is specific and as such should be controlling. (See, Higgins & Son v State of New York, 20 NY2d 425, 428.) When there is a "repugnancy” between a general clause and a specific clause, the specific clause should take precedence over the general clause, "and the [latter] subjected to such qualifications as the [former] might make necessary.” (4 Williston, op. cit. § 624, at 822.) In addition, Con Ed cannot pick and choose the individual provisions it wishes to follow. The intention of the parties to a contract "must be gleaned from all corners of the document [citation omitted], rather than from sentences or clauses viewed in isolation [citation omitted], and every part of the contract should be interpreted to give effect to its general purpose.” (Tougher Heating & Plumbing Co. v State of New York, 73 AD2d 732, 733.)
According to the lease, Con Ed should be required to follow the terms of section 12 and thereby deduct the taxes paid from the purchase price owed the defendant. I do not read the lease agreement as having afforded Con Ed the luxury of recovering the taxes it paid by merely assuming the mortgage indebtedness without paying a purchase price as scheduled in the lease agreement. The defendant defaulted on its tax obligation. Con Ed paid the taxes and then assumed the mortgage. However, its failure to follow the dictates of section 12 was a violation of the lease agreement.