River View Associates v. Sheraton Corp. of America ( 1969 )

Capozzoli, J. P.

(dissenting in part). Under section 2.01 of article II of the lease, we find that the “ Tenant shall pay, as additional rent hereunder * * * all real estate taxes, assessments, vault charges, sewer. rent, and water charges, franchise charges imposed by the City of New York by reason of the use of any facilities affecting the streets or highways owned by the City of New York, and all other taxes and charges ”. This is clear and unambiguous language and admits of no doubt as to its meaning. The parties have expressly agreed that these payments shall constitute additional rent.

No one contends that the amount which is paid for these aforementioned taxes is to be matched by a similar amount to be paid to the landlord and I am at a loss to understand the language of the majority opinion which indicates that “ the tenant would be obligated to pay the landlord in addition to what is was obligated to pay to the taxing authority ”. All that the language in article II means, it seems to me, is that the tenant assumes payment of all taxes and that such payment shall be considered rent in addition to the rent specified in section 1.01 of article I, of $670,000 per annum. Why did they not arrive at a specific figure which would represent taxes and add that figure to the original rent in the first place ? It is simple to understand why they did not do so. There is no assurance that the taxes would be constant year after year. Obviously, in view of the nature of the business being conducted by the tenant, the landlord could not be certain as to what the taxes might be in the future and it was with that thought in mind that the agreement was made whereby the tenant assumed the obligation of paying all taxes irrespective of amount and the sum so paid would be considered additional rent. This inference is not weakened by the fact that the use of the words “ additional rent ” would also permit the landlord to evict the tenant, in the event the latter failed to meet its obligation to pay the taxes, where without them it would not be permitted to do so.

Let us contrast the language of the lease, quoted above, with that which appears in section 4.01 of article IV entitled Public Utility Charges. There we find the following: ‘ Tenant agrees to pay or cause to be paid all charges for gas, water, sewer, electricity, light, heat, power, telephone or other communication service, or other utility or service used, rendered or supplied to, upon or in connection with the leased premises throughout the demised term, and to indemnify Landlord and save it harmless from and against any cost, expense, including reasonable attorneys’ fees, loss and liability or damage on such account.”

It should be noted that nowhere in the language of the lease covering these items is the term “additional rent” used, as was in the case of the taxes. The parties must have intended to draw a distinction between the manner in which the taxes were to be treated and the manner in which the utility services were treated.

The defendant’s summary of the lease prepared by it shortly after obtaining the lease and before any litigation, which appears in the record as plaintiff’s Exhibit 7, at page A-70, discloses the following language: ‘ ‘ additional rent : Tenant shall pay all costs and obligations related to the premises including real estate taxes ”.

Again, under overage rent, we find the following: “ Net Profit for any year shall be the profit derived from operations-

“ Before- (a) deducting fixed rent and additional rent ”.

The aforesaid quotes from the summary prepared by the defendant clearly denote that the defendant itself regarded the payment of taxes as additional rent and that this additional rent could not be deducted in arriving at net profits.

For the above reasons I dissent in part and would modify the judgment so as to exclude only the following items:

Fuel............................$ 28,344.83

Gas ............................ 5,381.31

Electricity ...................... 64,699.07

Telephone ...................... 115,362.42

Total.......................$213,787.63

because they are not additional rent and the amount of the judgment be reduced pro tanto.

Markewioh and McNally, JJ., concur with Steuer, J.; Capozzoli, J. P., dissents in part in opinion, in which McGiverh, J., concurs.

Judgment reversed on the facts and the law, the judgment vacated, and judgment directed for the defendant, with $50 costs and disbursements, and the Clerk is directed to enter judgment in favor of defendant dismissing the complaint with costs.