Opinion
May 27, 1971
Order, Supreme Court, New York County, entered November 6, 1970, unanimously modified, on the law, to dismiss those causes of action in the complaint designated first, third, fourth, fifth and sixth, with leave to plaintiff Atlantic Bank of New York to replead the cause designated first, and to amend the ad damnum clause, if so advised, within 20 days after service of a copy of the order entered hereon upon plaintiff Atlantic Bank of New York by defendants, and otherwise affirmed, without costs and without disbursements. Defendants-appellants, who own and manage certain premises, agreed, on March 25, 1969, with plaintiff-respondent Bank, upon a long-term lease. Upon compliance with certain terms of the agreement relating to approval by the Banking Department, a date was set for the Bank to become possessed of the premises. Meanwhile, the Bank, with knowledge of the lessors, arranged with coplaintiff-respondent Peters Tours, Inc., for sublease of a portion of the premises. Neither plaintiff ever took possession for it appears that, on February 24, 1969, the occupant of the premises had advised defendants that it was taking up a renewal option for continued tenancy for a term of five years. Plaintiffs commenced an action in six causes, four by the Bank and two by Tours. Special Term denied defendants' motion to dismiss as not stating a cause of action. We disagree as to five of the six causes. The first cause, by the Bank, and the third, by the sublessee, are parallel, and sound in fraud: they state claims that defendants, with knowledge of the option renewal and of the sublease arrangement, proceeded nevertheless to enter into the lease arrangement with the Bank and misled it into applications to the Banking Department, and it and its sublessee into arrangements for the sublease. Neither cause pleads an intent to deceive but rather a failure to enlighten as to the true facts. In any event, as to Tours, which never dealt directly with defendants, there was obviously no privity. It may be that plaintiff Bank may be able to establish the requisite intent and reliance based upon outright misrepresentation, and it should be afforded the opportunity to do so if able. The fourth cause, by the Bank alone, is based on section 223-a Real Prop. of the Real Property Law, but that section, which implies in all leases a condition of delivery of premises at the beginning of a term, provides only the remedies of rescission and repayment for failure to deliver; plaintiff seeks only money damages thereunder, and the cause may not stand. The fifth cause, by the Bank, and the sixth, by Tours, in effect are based on the first and third, adding only a claim for punitive damages. Plaintiffs concede that such a claim alone will not support a separate cause of action. If plaintiff Bank is in a position properly to replead the stricken first cause, it may seek the relief of punitive damage by amendment of the ad damnum clause. The complaint as it now stands is, therefore, stripped down to the properly pleaded second cause by the Bank for breach of contract of possession. As for Tours, whatever remedy it may have in the circumstances, the absence of any dealing directly with plaintiffs will preclude it from suing defendants directly.
Concur — McGivern, J.P., Markewich, Kupferman, Steuer and Macken, JJ.