Summary
In Jobco-Mitchel Field, the court held that a sub-tenant was not entitled to restitution of rent payable under a sublease even though the master lease between the sub-lessor and the county provided that no rent would be payable until certain zoning variances had been granted by the town so that the property could be developed.
Summary of this case from Caldor Corp. v. S Plaza Associates, L.P. (In re Caldor, Inc.)Opinion
December 11, 1989
Appeal from the Supreme Court, Nassau County (Christ, J.).
Ordered that the order and judgment is reversed insofar as appealed from, on the law, those branches of the plaintiff's motion which were for summary judgment with respect to the first and second causes of action are denied, those branches of the defendants' cross motion which were for summary judgment dismissing those causes of action are granted, and it is declared that the plaintiff must pay rent in accordance with the terms of the sublease; and it is further,
Ordered that the order and judgment is affirmed insofar as cross-appealed from; and it is further,
Ordered that the defendants are awarded one bill of costs.
The defendant L.B. Realty Company (hereinafter L.B.), entered into a lease with Nassau County. Pursuant to the terms of the lease, L.B. was not obligated to pay rent or taxes on the subject premises until the Town of Hempstead approved certain zoning changes, at which point L.B. would receive the right to develop the premises. Thereafter, L.B. subleased the premises to the plaintiff Jobco-Mitchel Field, Incorporated (hereinafter Jobco), with the sublease providing that Jobco would pay rent beginning on January 1, 1986, in exchange for L.B.'s right to develop the premises once rezoning occurred. The sublease further stated that the provisions in the prime lease regarding its commencement date were not applicable to the sublease. Pursuant to the sublease, Jobco was required to pursue rezoning diligently. Jobco ceased paying rent after about two years.
Thereafter, Jobco commenced the instant action and interposed three causes of action in its complaint, i.e., (1) to recover the rent it had already paid, (2) for a judgment declaring that its obligation to pay rent would not commence until L.B.'s obligation to pay rent commenced under the prime lease, and (3) to recover damages for breach of the covenant of quiet enjoyment. The Supreme Court, inter alia, granted those branches of Jobco's motion which were for summary judgment on the first two causes of action of the complaint and granted those branches of L.B.'s cross motion which were for summary judgment solely to the extent of dismissing the third cause of action of the complaint.
A review of the prime lease indicates that the primary right L.B. obtained was a future right to develop the premises once rezoning occurred. In other words, L.B. obtained a present interest, but it was a present interest in a future estate. At common law, such an interest is referred to as an "interesse termini" (1 Rasch, New York Landlord and Tenant — Summary Proceedings § 1:4 [3d ed]; see also, Young v Dake, 5 N.Y. 463; 39 Cortlandt St. Corp. v Lambert, 209 App. Div. 575). Such an arrangement is valid (see, Restatement [Second] of Property, Landlord and Tenant § 1.8, comment A). Moreover, it is clear that L.B. had the right to transfer its right to Jobco (see, EPTL 6-5.1; Becar v Flues, 64 N.Y. 518; Whitney v Allaire, 1 N.Y. 305; cf., Rowe v Great Atl. Pac. Tea Co., 46 N.Y.2d 62; Toroy Realty Corp. v Ronka Realty Corp., 113 A.D.2d 882, 883; 3A Warren's Weed, New York Real Property, Options, § 5.01 [4th ed]).
Jobco argues that its rental payments to L.B. under the sublease were not supported by consideration, since L.B. had no present right of possession to convey. We disagree. This court is empowered to construe the true nature of an instrument and is not bound by the terms employed by the parties (see, e.g., City of New York v Pennsylvania R.R. Co., 37 N.Y.2d 298; Richmond Children's Center v Fireman's Fund Ins. Cos., 128 A.D.2d 849; Prudential Westchester Corp. v Tomasino, 5 A.D.2d 489, affd 6 N.Y.2d 824). Although the sublease described the payments as rent, in fact the payments constituted compensation for the future right to develop the premises once rezoning occurred.
We also find unpersuasive Jobco's claim that the sublease is void because of the possibility that the rezoning may never occur. The sublease expressly provided that Jobco had the burden of obtaining the rezoning and the sublease was explicitly made subject to the conditions of the prime lease. Therefore, the parties must have intended that Jobco assume the risk that the rezoning might not occur, or might not occur for a substantial period (see, Say-Phil Realty Corp. v De Lignemare, 131 Misc. 827; see also, Friedman Realty Co. v De Stefan, 220 App. Div. 661; Elk Realty Co. v Yardney Elec. Corp., 153 N.Y.S.2d 730; see generally, Raner v Goldberg, 244 N.Y. 438; 1 Rasch, New York Landlord and Tenant — Summary Proceedings § 2:21 [3d ed]; cf., Restatement [Second] of Property, Landlord and Tenant § 9.3).
We reject Jobco's assertion that it is entitled to restitution on the ground that it made a mistake of fact or law. Jobco voluntarily made payments for over two years without any complaint or evident misrepresentation by L.B., and it was represented by counsel who had full opportunity to explore the relevant law and to ascertain the facts. Under these circumstances, Jobco is not entitled to restitution due to mistake (see, Gimble Bros. v Brook Shopping Centers, 118 A.D.2d 532; Birchwood Towers # 1 Assocs. v Haber, 98 A.D.2d 697; see also, Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3005:1, at 557-559). Mangano, J.P., Bracken, Kunzeman and Spatt, JJ., concur.