Court Opinion

ID: 5870614
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:46:12.357996+00
Date Added: 2024-06-11T08:44:42.066951
License: Public Domain

I dissent. The question in dispute is whether the purchase price under the option is $490,000 (to be made up of the assumption of the mortgage balances existing at the time of exercise of the option plus a cash payment equal to the difference between those balances and $490,000 or, as plaintiffs contend, the assumption of the mortgage balances existing at the time of exercise with no cash payment. I believe Special Term was correct in holding that the record presents a factual issue as to the intent of the parties which requires a hearing. H Paragraph 14 B of the lease is ambiguous. The words “and a cash payment of Zero Dollars ($0) being the difference between the sum of $490,000.00 and the aggregate principal balances of mortgages” can be read as referring only to the date of signing of the lease and as describing the difference between the mortgage balances and $490,000 (i.e., “Zero Dollars ($0)”) as it existed on that date when the mortgage balances exactly equaled $490,000. HThat the parties did not contemplate that the consideration for the purchase under paragraph 14 B' would be the assumption of the mortgages with no additional cash payment is shown by paragraph 14 D which provides that in the event the lessor permits the balances to become encumbered by a lien, the lessee may satisfy the lien and deduct the amount paid from the rent due or “from the cash payment at closing upon exercise of the option to purchase” (emphasis added). Moreover, in an addendum to the lease signed on the same day, the parties make specific reference to the cash payment to be made upon exercise of the option in the following provisions: “Paragraph 14 B of the Lease describes your option to purchase the leased premises upon terms and conditions therein set forth, including among other things, a cash payment by you to the Company and the payment and/or assumption by you of the Company’s indebtedness to Marine Midland Bank and to Manufacturers Hanover Drust Company/Genesee Region (‘Manufacturers’), therein stated to be $192,802.35, and $297,197.65, respectively, as of this date” (emphasis added). And: “3. The amount of the cash payment due to the Company upon exercise of your purchase option under Paragraph 14 B of the Lease shall be increased by an amount equal to any reductions in the indebtedness to Manufacturers by reason of payments upon such indebtedness made pursuant to paragraphs 1 and 3 hereof” (emphasis added). H Additionally the record shows that there is parol evidence supporting defendants’ interpretation of paragraph 14 B, including a rejected prior draft prepared by plaintiffs’ attorney in which plaintiffs’ monthly rental payments were to be “credited toward the purchase price.” Despite this rejection, plaintiffs’ interpretation of paragraph 14 B as it was finally adopted achieves essentially the same result. Hit should be noted that plaintiffs’ interpretation of paragraph 14 B has the effect of changing what purports to be a lease into a land contract. The lessees rather than the lessors get the benefit of the “rental payments” in the form of reductions of the mortgage balances and the consequent reduction in the option purchase price. The net result is that the lessees are permitted to enjoy the use and occupancy of the premises until the option is exercised without any rental charge. The circumstances surrounding the signing of the lease should be developed to establish whether the parties intended such a result. (Appeals from order of Supreme Court, Monroe County, Rosenbloom, J. — summary judgment.) Present — Hancock, Jr., J. P., Callahan, Doerr, O’Donnell and Moule, JJ.