
    Howard Stores Corporation, Respondent, v. Robison Rayon Co., Inc., Appellant.
    Supreme Court, Appellate Term, First Department,
    September 25, 1970.
    
      
      Cleary, Gottlieb, Steen & Hamilton (Joseph Chase and Stephen L. Cohen of counsel), for appellant. Pawl, Weiss, Goldberg, Rif kind, Wharton & Garrison (George P. Felleman of counsel), for respondent.
   Per Curiam.

The defendant has appealed from a lower court, judgment rendered in favor of the plaintiff in the sum of $3,935.64, upon an order granting plaintiff’s motion for summary judgment and denying the defendant’s cross motion to dismiss the complaint.

The action was instituted by the plaintiff landlord for breach of two leases. On December 1, 1967, the defendant, the tenant under certain leases of real property, with the plaintiff’s consent, assigned the leases for the balance of the terms of the leases which expired May 31,1970. The assignments reserved no right in the assignor to recover possession in the event of the assignees ’ default, and expressly provided that the assignor would continue to be responsible for the full performance of all the covenants of the leases of the assignor. In May, 1969, the assignee defaulted in payment of rent. The landlord commenced summary proceedings, to which the defendant was not a party, resulting in a final judgment awarding possession to the plaintiff. Warrants were issued and the Marshal placed the plaintiff in possession on July 8,1969.

The defendant paid the plaintiff an amount equal to the July rent, and then demanded possession of the premises. Upon the plaintiff’s failure to comply with the demand, the defendant refused to pay the August rent. The plaintiff then instituted the instant action, and the defendant answered by asserting as a defense that it was denied possession.

Both sides moved for summary judgment. The lower court granted summary judgment in favor of the plaintiff, holding, inter alia, that the refusal by plaintiff to allow the defendant re-entry and restoration to possession did not constitute a breach of the leases relieving it of its rental obligations.

The defendant again urges, upon this appeal, that its obligations were discharged when it was denied possession, and argues that if the assignor remains liable as a tenant for rent, then the landlord must grant him quiet enjoyment of the premises.

There is no basis in law to support the appellant’s contention.

An assignment of a lease is defined as a transaction by which he [the tenant] transfers his entire interest in the whole or a part of the demised premises for the unexpired term of the original lease ” (2 N. Y. Law of Landlord and Tenant, § 506; see New Amsterdam Cas. Co. v. National Union Fire Ins. Co., 266 N. Y. 254). It is distinguished from a sublease in that in the latter, the assignor reserves unto itself, a reversionary interest in the leasehold estate (1 Rasch, Landlord and Tenant and Summary Proceedings, § 35; Herzig v. Blumenkrohn, 122 App. Div. 756).

Here, clearly, the defendant assigned his estate and had no reversionary interest.

The original leases created a twofold privity: a privity of contract and a privity of estate. The former rests on the agreement between the parties; the second upon the interest in the real property leased (New Amsterdam Cas. Co. v. National Union Fire Ins. Co., supra).

The privity of estate was terminated when the defendant divested itself of all interest in the property by assigning all its rights therein without any reversion (Gillette Bros. v. Aristocrat Rest., 239 N. Y. 87, 91). The privity of contract remained, and that could be terminated only by a showing “ that there was an express agreement by which the lessee was released from his covenant to pay the rent, or facts shown from which such agreement can be implied ” (Halbe v. Adams, 176 App. Div. 588, 590).

The express provision in the assignments under which the defendant was to remain liable for the covenants of the leases clearly establishes that it was not released from its covenant to pay the rent.

The appellant’s reliance on 220-228 Brook Avenue Corp. v. Zaft (151 Misc. 231) as authority for the argument that the assignor is a proper party in a summary proceeding, is misplaced. That holding was expressly disapproved in Radlog Realty Corp. v. Geiger (254 App. Div. 352) where the Appellate Division, First Department, held that the assignor out of possession is not a proper party to a summary proceeding.

Upon assigning the leases, the defendant surrendered its right to possession, and only its contractual obligations remained. The parties contracted with respect to their rights after the termination of their landlord and tenant relationship. There is no question that such agreements are enforceable (Hermitage Co. v. Levine, 248 N. Y. 333; International Pub. v. Matchabelli, 260 N. Y. 451, 454). By their leases they agreed that the defendant’s liability would survive a re-entry or dispossess by summary proceeding (par. 18), and no provision was made requiring the defendant to have possession as a condition for imposing such liability. Absent such agreement, there is no basis to the defendant’s claim that its obligations were discharged.

The issue as to mitigation of damages was not raised in the court below or by the appellant on this appeal. It is settled that although an appellate court may have power to grant such relief as the court below should have granted (CPLR 5522), it exercises such power, except- under unusual circumstances not present here, by determining only questions raised on appeal (Malus v. Sperry-Rand Corp., 2 A D 2d 877; Gordon v. City of Albany, 278 App. Div. 233); and it does'not consider questions not raised below (Baker v. Topping, 15 A D 2d 193; Vaughan v. Globe Neon Sign Co., 13 A D 2d 625; Hirschberg v. Bertal Textile Co., 238 App. Div. 338; Atlantic Basin Iron Works v. American Ins. Co., 222 App. Div. 608, 614; 10 Carmody-Wait 2d, New York Practice, § 70:300, p. 563).

The sole question presented here was one of law as to the right of the assignor of a lease to possession after a default by his assignee. The court below correctly decided that issue, and there is no compelling reason to seek grounds for reversal other than those raised by counsel for the appellant.

The judgment should be affirmed, with $10 costs.

Quinn, J.

(concurring). I concur fully in the opinion affirming the judgment and order of the Civil Court. Taking note of the dissent, it may be pertinently observed in addition that the landlord’s re-entry under a final order in summary proceedings does not necessarily cancel or constitute a termination of the lease, particularly when, as here, the provisions of the lease explicitly give the landlord the option of terminating the lease or keeping the lease alive and reletting at any time as he sees fit. ‘ ‘ By the agreement of the parties, the landlord may keep the lease alive for its entire term for the purpose of reletting. ’ ’ (Rosenfeld v. Aaron, 248 N. Y. 437, 444.) “It is settled law that ‘ the lessor is not required to lease to another if he have an opportunity. ’ (Becar v. Flues, 64 N. Y. 518.) The usual obligation to reduce damages ‘ has no application to a contract of leasing, as the latter is governed by peculiar and entirely different rules. ’ ’ (Gray v. Kaufman Dairy & Ice Cream Co., 9 App. Div. 115, 119.) * * * The defendant’s absolute covenant [as assignor-surety] to pay any rent which was not paid by the tenant is, therefore, unaffected by the landlord’s refusal to lease to a new tenant.” (Sancourt Realty Corp. v. Dowling, 220 App. Div. 660.) The foregoing cases epitomize the subsisting law on the extraneous issues raised by the dissent. It is the law as impliedly accepted, followed and in some instances reiterated in the very cases cited in the dissenting memorandum, such as Hermitage Co. v. Levine (248 N. Y. 333) ; Lenco, Inc. v. Hirschfeld (247 N. Y. 44); Kottler v. New York Bargain House (242 N. Y. 28); Seidlitz v. Auerbach (230 N. Y. 167), etc. Culling fragmen-. tary expressions here and there from these latter cases which, though dealing with somewhat collaterally similar questions, are not directly in point, fails as a proper basis for the diverging views and inferences drawn by the dissent.

Markowitz, J.

(dissenting). In my judgment, both motions for summary judgment should have been denied.

Defendant, tenant under certain leases of real property, assigned the leases, with plaintiff’s consent, for the balances of the terms of the leases. The assignments provided that defendant assignor would continue to be fully responsible jointly and severally with the assignee ‘ ‘ for the performance of all of the terms, covenants and conditions of the Assignee as Tenant under the said leases ”.

In May, 1969, the assignees defaulted in the payment of rent and landlord commenced summary proceedings, to which defendant was not a party, resulting in a final judgment awarding possession to plaintiff. Warrants were issued and the Marshal placed plaintiff in possession on July 8, 1969.

The rent for May and June was paid, and defendant paid the amount of the July rent. The action is for the “ rent ” claimed to have become due on August 1,1969.

The affidavit in support of the motion for summary judgment is devoid of proof of efforts to relet the. premises after the assignees of the leases moved out. Defendant’s opposing affidavit shows that by letter dated July 16, 1969 defendant sought to move back into the premises and asked for the keys. Plaintiff refused this request although defendant advised plaintiff that defendant ‘ ‘ really needed and wanted the demised premises because * * * [defendant] was paying public warehousing for space which * * * [defendant] direly needed ”. Plaintiff nevertheless reiterated that “under no circumstances” would it permit defendant to enter the premises. Nowhere is this denied by plaintiff.

The term of the leases ended with the issuance of the warrant in the summary proceedings. Thereafter, the liability of defendant was not to pay rent — it was to make good the landlord’s loss; to pay any deficiency in rent collection suffered by the landlord (Hermitage Co. v. Levine, 248 N. Y. 333, 337; Lenco, Inc. v. Hirschfeld, 247 N. Y. 44, 49-50; Kottler v. New York Bargain House, 242 N. Y. 28, 33; Hines v. Bisgeier, 244 App. Div. 354; 45 E. 57th Street v. Millar, 214 App. Div. 189).

Indeed, paragraph 18 of the leases spells out this obligation — tenant shall pay landlord “ any deficiency between the rent hereby reserved and/or covenanted to be paid and the net amount, if any, of the rents collected on account of the lease * * * for each month of the period which would otherwise have constituted the balance of the term of this lease ”.

To put it differently, plaintiff is not entitled automatically to recover the amount of the rent reserved. It may recover only its damages. In computing these damages, it must show that it has taken all steps possible to mitigate damages.

Illustrative is 812 Park Ave. Corp. v. Pescara (268 App. Div. 436, affd. 294 N. Y. 792; s.c. 267 App. Div. 817). On the first appeal (267 App. Div. 817), the Appellate Division affirmed an order denying plaintiff’s motion for summary judgment “ Because we found issues of fact which required trial ” (268 App. Div. 436, 439). On the second appeal, the court observed (p. 439): “ The present record shows that after the termination of the dispossess proceedings, the landlord diligently endeavored to relet the premises, but was unable to do so. Defendant does not now dispute these contentions. The earlier record had no statements concerning any efforts to relet. Part of the sum claimed by plaintiff is represented by attorney’s fees in the amount of $700, which plaintiff says it incurred in the dispossess proceedings and in negotiations endeavoring to bring about the termination of the tenant’s noise-making. The present record does not appear to dispute the payment of this sum, or the reasonableness of the amount expended. The record in the earlier appeal showed that defendant did question the reasonableness of this charge ” (emphasis supplied). The court in that case granted plaintiff summary judgment only by reason of the additional proof.

The record before us makes no such showing — to the contrary, as indicated above.

I take note of the sentence in printed paragraph 18 of the leases that the failure or refusal of landlord to re-let the premises or any part or parts thereof shall not release or affect tenant’s liability for damages ’ ’. If this means that the landlord need not diligently endeavor to relet the premises, the sentence would make paragraph 18 inoperable as a penalty (Lenco, Inc. v. Hirschfeld, 247 N. Y. 44, 51, supra; Seidlitz v. Auerbach, 230 N. Y. 167; 884 West End Ave. Corp. v. Pearlman, 201 App. Div. 12, affd. 234 N. Y. 589).

The situation is not changed by the sentence near the end of paragraph 18 that landlord will not be liable for failure to relet the premises or, in the event the premises are relet, for failure to collect the rent under such reletting. Reasonably read, this sentence means that if the landlord’s good faith efforts to relet or to collect rent under a reletting fail, the tenant is not entitled to a setoff. Included in a printed form used by plaintiff when preparing the lease, the sentence must be read strictly against plaintiff.

Cases such as Becar v. Flues (64 N. Y. 518); Sancourt Realty Corp. v. Dowling (220 App. Div. 660) and Gray v. Kaufman Dairy & Ice Cream Co. (9 App. Div. 115), are not applicable here. In these cases, the term of the lease had not expired (cf. Matter of Hevenor, 144 N. Y. 271). In the case at bar, the term demised expired with the execution of the warrant of eviction and plaintiff’s re-entry — although the lease itself, and liability thereunder, remained alive.

It is at least debatable whether plaintiff mitigated its damages, as it was required to do. Firstly, as stated, there is no showing by plaintiff that it made any effort to mitigate damages. Secondly, if there was no good reason why defendant should not be accepted as a tenant — and plaintiff had accepted defendant as such in two prior leases — plaintiff affirmatively violated its obligation to mitigate damages.

Moreover, in view of the foregoing, the damages were unliquidated, not liquidated (Lenco, Inc. v. Hirschfeld, 247 N. Y. 44, 50, supra; Hermitage Co. v. Levine, 248 N. Y. 333, 337, supra; 812 Park Ave. Corp. v. Pescara, 268 App. Div. 436, 441, affd. 294 N. Y. 792). So that, at least, an assessment of the damages was required.

Finally, the facts presented by the record indicate that plaintiff may not be entitled to recover any damages; and that, at best, it would be entitled to an assessment of its damages, which would encompass substantially the same proof as on a trial. ‘ Where the proof on the assessment would involve the same evidence as the proof on the trial, no purpose is served by a resort to summary judgment” (Williamson v. Ditmars Theatre, 30 A D 2d 785, 786).

I therefore dissent and vote to reverse the judgment and to deny both motions for summary judgment.

Streit and Quinn, JJ., concur in Per Curiam opinion; separate memorandum by Quinn, J.; Markowitz, J., dissents in memorandum.

Judgment affirmed, etc.  