Sommer v. New York City Conciliation & Appeals Board

OPINION OF THE COURT

Bloom, J.

In May, 1977, petitioner, the landlord of premises 425 East 58th Street, New York City, leased apartment 24E to Barnwell Industries, Inc., a public corporation, for a period of three years. The lease contained a rider limiting the use of the apartment to Morton L. Kinzler, the president of Barnwell, and members of his immediate family. Kinzler was required to and did personally guarantee performance of the terms of the lease.

Barnwell is a Delaware corporation. Although its plant is located in Chattanooga, Tennessee, its principal office is maintained in New York City.

Since the apartment is a rent-stabilized apartment petitioner was required to offer Barnwell a renewal lease (Code of Rent Stabilization Association of New York City, Inc. [Rent Stabilization Code], § 60) or to apply to the Conciliation and Appeals Board for permission to refuse to offer such renewal (Rent Stabilization Code, § 54). It elected the latter alternative asserting, under subdivision E of section 54 that Kinzler’s primary residence was located in Chattanooga. Issue was joined by a response denying petitioner’s allegation and asserting affirmatively that the New York City apartment was Kinzler’s primary and, indeed, sole residence. The answer further averred that Kinzler traveled throughout the United States for business purposes. When he did so he stayed at hotels. On all other occasions — and, during the year immediately preceding, these occasions exceeded 250 days — he stayed at the apartment. In reply, petitioner asserted that Kinzler drove a vehicle with a New Jersey license plate; that he-was listed in the New Jersey telephone directory with Fairlawn and Hackensack addresses; that he was listed in the Chattanooga, Tennessee, phone directory; that he had not registered to vote from the 58th Street address, and that he had not paid New York State or New York City income taxes in 1979.

Further information was required of Barnwell by the Conciliation and Appeals Board. Pursuant to the request a portion of Kinzler’s Federal tax return for 1979 was provided. He also exhibited a passport and a New York State driver’s license; two pistol permits issued to him by the New York Police Department and an Office of Court Administration form indicating that he had registered with the Office of Court Administration as a member of the Bar of this State. All of these listed the East 58th Street address as his residence. Additionally, proof was submitted that he had qualified for jury duty in New York County; that his daughter attended New York University and resides with him; and that he maintained numerous bank and charge accounts which listed the East 58th Street address as his residence.. The New Jersey registration of the vehicle driven by him was explained by showing that the car was owned by Barnwell and was registered to its New Jersey office. The New Jersey telephone numbers were also accounted for. The Fairlawn number was shown to be the telephone for the home at which he had lived with his family prior to his separation from his wife. Since that time he has lived at the East 58th Street address. The Hackensack number was at the address of his accountant and the listing of his name was solely for purposes of convenience. As to his failure to pay New York State and New York City income taxes for 1979, Kinzler’s attorney asserted that this was done on the advice of both his accountant and attorney that he was not liable for such taxes in that year. However, the indication was that the extensive business-connected traveling outside the State which he had been required to do, the reason for such nonpayment, probably would not obtain in 1980 and that he would be required to pay such taxes for that year.

On March 26, 1981, the Conciliation and Appeals Board rendered its determination. After recounting the evidence it concluded that the premises were the tenant’s primary residence and directed petitioner to offer it a renewal lease. Thereafter, petitioner brought a CPLR article 78 proceeding to review that determination. The Conciliation and Appeals Board requested that the matter be remanded back to it for further processing so that it could clarify certain matters in issue. That application was granted. After considerable delay, the matter proceeded to hearing and on April 22, 1982 the Conciliation and Appeals Board issued its amended determination. Although that determination recites the facts in somewhat greater detail than did its initial holding, its conclusion remained the same. It directed petitioner to issue to Barnwell a one, two or three-year lease, at the tenant’s option, to commence on the date a fully executed copy was served upon the tenant, to run prospectively for the term selected by the tenant. This article 78 proceeding followed. Special Term (115 Mise 2d 820) held that the Conciliation and Appeals Board was neither arbitrary nor capricious in concluding that petitioner was required to offer a renewal lease to Barnwell. However, it further held that to give effect to the renewal lease from the date upon which an executed copy is delivered to the tenant would confer a windfall upon the tenant. Hence, it directed that the renewal lease be effective June 1, 1980, with the tenant to pay the arrearages in rent in three equal monthly installments. In the circumstances here presented, we conclude that Special Term was correct. Accordingly, we affirm.

There can be little doubt but that the conclusion that the apartment in question is Kinzler’s primary residence is supported by substantial evidence (300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176). There is substantial direct proof that he lives at apartment 24E in 425 East 58th Street and at no other place. On the other hand, the evidence seeking to establish that he lives elsewhere is largely circumstantial and has been adequately answered.

The central issue as framed by petitioner is whether a corporation may maintain a residence, as that term is used in the Rent Stabilization Law. To support her view, petitioner relies on Matter of Walter & Samuels v New York City Conciliation & Appeals Bd. (81 AD2d 212). That case, however, was decided against a background wholly different from that here presented. There, the lease in question was first entered into by the then Ambassador and Permanent Representative of the Syrian Republic to the United Nations. The intent was that the apartment be occupied by whomever was the Ambassador and Permanent Representative at the time. Subsequently the lease was renewed in the name of the mission. When that lease expired the landlord refused to renew. The Conciliation and Appeals Board ruled that a renewal of the lease was required and directed it be issued. After confirmation by Special Term, we reversed and held that the provisions of the Rent Stabilization Law did not inure to the benefit of an organization which seeks renewal of a lease not for the benefit of any specific person but simply “to make available an apartment to whomever, at any stage may temporarily have the title of Ambassador and Permanent Representative” (p 215). The circumstances before us are a far cry from those presented in Walter & Samuels. Here, the lease expressly provided for occupancy by Kinzler and the members of his immediate family only. Before the lease was issued Kinzler was required to and did guarantee its performance. In sum, it was a lease which, for all practical purposes, was entered into between petitioner and Kinzler but which was executed by Barnwell so that it could derive certain tax benefits and so that Kinzler could derive certain personal benefits. Neither consideration detracts from the reality that Kinzler was the “tenant in occupancy” within the meaning of section 60 of the Rent Stabilization Code.

Petitioner endeavors to analogize subdivision a of section 55 of the New York City Rent and Eviction Regulations, and subdivision B of section 54 of the Rent Stabilization Code, both of which authorize the issuance of a certificate of eviction where a landlord seeks in good faith to recover possession of a housing accommodation for his own personal use and occupancy or for the use and occupancy of his immediate family, with the case at bar, noting that under both subdivision a of section 55 and subdivision B of section 54 corporate landlords are excluded (Matter of Colin v Altman, 39 AD2d 200; Henrock Realty Corp. v Tuck, 52 AD2d 871). The situations do not lend themselves to comparison. Exclusion of a tenant from possession runs counter to the purpose of the rent laws. Hence, the exceptions created by subdivision a of section 55 and subdivision B of section 54 are properly strictly construed. This would be equally true of subdivision E of section 54 of the Rent Stabilization Code, which permits refusal to renew the lease because the premises are not occupied as the primary residence of the tenant. On the other hand, section 60 of the Rent Stabilization Code, which requires renewal of the lease, implements the purposes for which the rent laws were enacted. Accordingly, it is to be construed liberally. In directing that the renewal lease be tendered, the Conciliation and Appeals Board acted rationally and in accordance with the proof submitted to it.

The second issue presented concerns the date upon which the renewal lease shall become effective. The rule heretofore applied by the Conciliation and Appeals Board and to which hitherto we have given our approval, requires that such lease shall be prospective only and shall take effect when an executed copy of the lease is delivered to the tenant (Matter of Briar Hill Apts. v Conciliation & Appeals Bd., 44 AD2d 816). In holding that the lease in this case shall be effective as of June 1, 1980, we do not intend to abrogate that rule. We hold merely that the delay between the initial application by petitioner and the ultimate determination was so inordinate as to render it grossly inequitable to apply it to this case. Indeed, if Barnwell had been offered a lease when the prior one had expired and had selected the maximum term available under the law, that term would now be in the throes of expiration. By consequence, and solely by reason of this circumstance, we hold that the renewal lease shall be effective as of the day following the expiration of the old lease, i.e., June 1, 1980 and that the arrearage shall be paid in three equal monthly installments.

Accordingly, the judgment of the Supreme Court, New York County (Fraiman, J.), entered December 9, 1982 which confirmed so much of respondent’s determination as directed petitioner to issue a renewal lease to the tenant and vacated so much thereof as required that the lease be effective as of the date that an executed copy of the renewal lease is delivered to the tenant and also directed that such lease be effective as of June 1,1980, with arrears to be paid in three equal monthly installments is affirmed, without costs.