154 Nassau Street Realty Co. v. Pinkerton's National Detective Agency, Inc.

Steuer, J.

Defendant from an order of Term denying its motion addressed in several respects to the amended complaint. As we believe that the amended complaint does not state a cause of action, whether or not it is deficient in other respects is not significant, and those phases of the motion have not been considered.

The amended complaint alleges that plaintiff was the owner of the building located at 154 Nassau Street. Defendant was a tenant in said building. In October, 1958 these parties entered into a new lease which was for three years to begin on December 1, 1958. The annual rental was $52,578. It is alleged that prior to the execution of this lease, and while negotiations looking toward it were in progress, plaintiff was negotiating with one Gross for a lease of the entire building, of which negotiations defendant had knowledge. Such a lease was entered into with Gross on October 15,1958. This lease is styled the “ top ” lease in the complaint, and we adopt that designation.

The top lease contained a provision that Gross would not anticipate or discount any rents of the occupants of the building or suffer them to pay any rents more than one month in advance. It is alleged that defendant had knowledge of this provision. The lease further provided that all leases of space in the building were assigned to plaintiff but that the assignments should not become effective until Gross suffered certain defaults.

The complaint alleges mesne assignments of the top lease and that defendant attorned and paid its rent to the successive assignees. It is then alleged that defendant negotiated with Tribune Towers, Inc., the assignee in possession of the top lease at the time, to surrender its lease before the expiration of the lease, and did in fact so cancel the last year of the lease, in consideration of which it paid $39,433.50 to Tribune Towers, Inc. This was done without notice to plaintiff.

Thereafter Tribune Towers, Inc., assigned its top lease to other lessees, who later defaulted, and plaintiff obtained the right to all rentals commencing May 1,1961. Suit is for the rent reserved in defendant’s lease for the period from May 1, 1961, to November 30,1961, the date of its expiration.

Assuming, as we must, the factual validity of these allegations, what they amount to is that defendant, by paying a consideration, obtained a cancellation of the final year of its lease, and that it did this with knowledge of the clauses contained in plaintiff’s lease of the entire building. Plaintiff rests on either of two theories, first that cancellation of the lease comes within the prohibition against prepayment, or that defendant was foreclosed by its knowledge that its lease stood as security for the main lease from doing anything that would impair that security.

Assuming that the terms of the top lease imposed a liability on defendant, despite the fact that it never consented to them, that liability would be limited to the strict terms of the lease. No liability on a tenant can be presumed or implied (455 Seventh Ave. v. Hussey Realty Corp., 295 N. Y. 166). It is unanswerable that there is no provision in the top lease against cancellation, but only against prepayment. These are distinct activities and one does not embrace the other. Nor are there any factual allegations to support the claim that the transaction between defendant and the assignee of the top lease was in effect a prepayment.

We come now to the question of whether defendant’s knowledge that its lease stood as security for another lease prevented it on pain of paying damage from doing anything that might impair the value of its lease as security. That is not the law. The basis of plaintiff’s contention is interference with its contract rights by one having knowledge of those rights. But not every such interference is actionable. The original cause of action was limited to a malicious interference with contract rights. We have defined “ malice ” in this connection so that it ‘ ‘ does not necessarily mean actual malice or ill-will but the intentional doing of a wrongful act without legal or social justification ” (Campbell v. Gates, 236 N. Y. 457, 460). The act must be without reasonable justification or excuse (see Hornstein v. Podwitz, 254 N. Y. 443, 448). Here the defendant desired to be relieved of its lease. It negotiated with its landlord as it had an unquestionable right to do. In the words quoted it had both legal and social justification for its act. That act proved disadvantageous to a third party, but that alone does not make it either illegal or so contrary to our sense of fair dealing as to denominate it socially unjustifiable. To say otherwise is to impose a standard above that of the market place, namely, that one otherwise free to act may not buy his release from a burdensome contract is he knows that by so doing a third party may be disadvantageously affected. Or to put it conversely, an over-all landlord may impose a condition on a subtenant not found in the sublease by giving notice that an act, lawful, common and not offensive to morals, may cause him damage.

The foregoing is based upon the conclusion, which is a necessary implication from the facts alleged, that the lease between the parties was assigned by plaintiff to Gross and later assigned to the mesne assignee. And further that Tribune Towers, Inc., the assignee at the time of the cancellation, was then defendant’s landlord. Obviously, if the lease between the parties was never assigned by plaintiff, the purported cancellation would be entirely without effect, as the mesne assignee would be a complete stranger. That the lease was assigned is not specifically alleged, but the further allegations make it clear beyond the possibility of controversy that this was the intent of the pleader. The allegation that the defendant attorned to the mesne assignees, the fact that plaintiff’s rights to collect rent from defendant were dependent on its dispossessing the so-called top lessee, and its acknowledgment that there was a cancellation, albeit denominated unlawful, prevent the complaint from being read in any other way.

Nor can it be claimed that the complaint admits of the possibility that the lease entered into by defendant was reassigned to plaintiff by the top lessee. The complaint does not allege any such reassignment except as an assignment through operation of law may be inferred from other allegations. The top lease does provide that all leases on space in the building, either existing or thereafter to be made by the top lessee, are assigned to plaintiff ‘ ‘ upon condition, however, that such assignment shall become operative and effective only in the event that this lease [the top lease] and the term hereof shall be cancelled or terminated pursuant to the terms, covenants and conditions hereof”. The intention and effect of this clause is quite clear. The lessee’s relationship to the lessees of space and their leases continued as if no assignment were made by the top lessee. No other meaning is attributable to the provision that the assignments were not to become operative and effective. Moreover, if the top lessee did not occupy the position of landlord in regard to the lessees of space, attornment would not be called for. What the provision was intended to effectuate was that immediately upon a default by the top lessee, the assignments would become effective ipso facto, and without the necessity of executing further documents or even evicting the top lessee. Needless to say, it is not alleged that the top lessee was in default at the time of the cancellation of defendant’s lease.

Furthermore, this is undoubtedly the understanding of the pleader. It is not alleged that the cancellation was futile, as it would have been had the transaction been with anyone other than defendant’s landlord. On the contrary, it is definitely alleged that the cancellation was improper only because it impaired the security provided for in the top lease, or because it was in effect a prepayment of rent. As we have seen, both of these contentions are without merit.

The order denying defendant’s motion to dismiss the complaint should be reversed on the law and the motion granted, with costs to appellant.