379 Madison Avenue, Inc. v. Stuyvesant Co.

The landlord demands possession of the premises in question claiming that the tenant is in default in the payment of rent amounting to $7,070. The tenant has answered denying that such amount is due and denying that the rent has been personally demanded from the tenant and denying default in payment, and claims that by reason of various subleases and assignments there was a surrender and cancellation of the lease between the landlord and the tenant by operation of law. The tenant also sets up a counterclaim for rent claimed to be due it under various leases and assignments which are hereinafter set forth. The question of due demand for the rent has been waived by stipulation.

On April 30, 1923, the landlord herein made a lease to the Stuyvesant Company of “ the Madison Avenue end of the third floor ” in premises 383 Madison avenue, for a term commencing July 1, 1923, and ending April 30, 1934, the rent reserved being $10,000 a year from July 1, 1923, to June 30, 1924; $12,900 a year from July 1, 1924, to June 30, 1932, and $13,000 a year from July 1, 1932, to April 30, 1934, all payable monthly in advance.

On March 31, 1926, the said Stuyvesant Company leased to the Decorators Furniture Company, Inc., a part of the space herein-above mentioned for a period commencing June 1, 1926, and ending April 30,1934, at a rental of $13,000 per annum, payable in quarterly installments in advance.

Thereafter, and in November of 1928, the said Stuyvesant Company made a lease with the said Decorators Furniture Company of additional space covered by the first lease for a period commencing January 1, 1929, and ending April 30, 1934, at an annual rental of $2,400, payable in quarterly installments in advance. This lease is specifically made subject to the terms of the lease between the 379 Madison Avenue, Inc., and the Stuyvesant Company.

As a result of those leases the Stuyvesant Company has a profit of approximately $2,400 a year.

*692Thereafter, and in August of 1929, the landlord herein, the 379 Madison Avenue, Inc., made a lease to the Decorators Furniture Company, Inc., of the entire third floor in the building 383 Madison avenue, for a term commencing September 1, 1929, and ending April 30, 1943, at an annual rental of $35,000, payable in quarterly installments in advance. That lease provided that it was subject to, among others, the lease between the 379 Madison Avenue, Inc., and the Stuyvesant Company dated April 13, 1923.

At the same time the original lease from the 379 Madison Avenue, Inc., to the Stuyvesant Company was assigned by the Madison Avenue Company to the Decorators Furniture Company. At that time, therefore, the Decorators Furniture Company, as the assignee of the 379 Madison Avenue, Inc., lease, was entitled to receive from the Stuyvesant Company rent at the rate of $12,900 a year and the Stuyvesant Company was entitled to receive from the Decorators Furniture Company rents aggregating $15,400 a year. Thereupon, in order to avoid unnecessary exchange of checks, an agreement was made, dated October 10, 1929, between the Stuyvesant Company and the Decorators Furniture Company providing that one rent be set off as against the other and that only the difference in the rents should actually be paid.

That arrangement was carried out until the Decorators Furniture Company became financially embarrassed. The Decorators Furniture Company did not pay the quarterly rent due on December 1, 1931, amounting to $625, and has not paid the installment due on March 1, 1932.

On February 15, 1932, the lease from the 379 Madison Avenue, Inc., to the Decorators Furniture Company of the entire third floor was canceled and at the same time the Decorators Furniture Company reassigned to the landlord herein the original lease of April, 1923. That assignment, while dated February 15, 1932, and delivered at that time, purports to assign the estate from September 1, 1931.

Based upon that assignment, the landlord claims all of the rents that became due and payable under the first lease since September 1, 1931.

The tenant claims, however, that it having arranged for the setoff of one rent as against the other and only for the actual payment of the balance, the landlord, as assignee of the Decorators Furniture Company, is bound by the payments made in that manner, and hence in any event may not recover for any rents due prior to February 15, 1932.

The tenant’s position in that regard is well taken. Assuming that the lease (being under seal) may not be varied except by an *693agreement under seal, nevertheless, the agreement between the parties for the mutual offset is valid so far as it has been executed and in any event it is not an attempt to modify or vary the terms of the lease but was simply an agreement providing for a method of payment. The tenant, however, further claims that it is not hable for any rent and need not pay any rent to anybody on the theory of a merger or cancellation. In this the tenant is mistaken. A reading of the documents clearly indicates that there never was any intention to create a merger of these leases. The papers are all drawn with the apparent object of preventing cancellations or mergers. It is immaterial whether the leases from the Stuyvesant Company to the Decorators Furniture Company be deemed subleases or assignments. Even if assignments, the Stuyvesant Company still remains hable to the 379 Madison Avenue, Inc., by privity of contract and it now would seem that the landlord and the tenant are in the same position that they were when the original lease of 1923 was signed.

The landlord, therefore, is entitled to recover from the tenant all unpaid rent due since February 15, 1932, first, by virtue of the assignment (See Ottinger v. Prince, 2 City Ct. Rep. 353), and second, by virtue of the provisions of the main lease.

Up to the time of the assignment by the Decorators Furniture Company back to the 379 Madison Avenue, Inc., and the cancellation of the lease between the 379 Madison Avenue, Inc., and the Decorators Furniture Company, the agreement between the Decorators Furniture Company and the Stuyvesant Company was carried out in full so far as the Stuyvesant Company is concerned.

There was, therefore, nothing due from the Stuyvesant Company to the Decorators Furniture Company at the time of the assignment and cancellation in February of 1932.

The landlord is entitled to recover from the Stuyvesant Company in this proceeding only the rent that became due on the 1st of March, 1932, amounting to $1,075. A final order, therefore, is awarded in favor of the landlord for the non-payment of rent that became due on March 1, 1932, amounting to $1,075.

Ten days’ stay.