Minister, Elders & Deacons of the Reformed Protestant Dutch Church v. 198 Broadway, Inc.

— Order, Supreme Court, Appellate Term, entered May 21,1981, reversing the order of the Civil Court, New York County (Ribaudo, J.), dated January 12,1981, and granting petitioner landlord summary judgment in its holdover proceeding to terminate the tenancy of undertenant respondent Henry Modell and Co., Inc. while denying Modell’s cross motion for summary judgment, affirmed, with costs. The facts are fairly stated in the dissenting opinion. Affirmance is warranted for the reasons stated by the Appellate Term. However, in the light of the dissent, further comment is appropriate. There is no merit to respondent’s contention that the sole purpose of preserving the overlandlord, the greater estate, and the underlandlord, the lesser estate, was to interfere with respondent’s contractual rights. As the Appellate Term held, the fact that both corporations are owned by the same parties or that one owns the other does not bring about a merger. 198 Broadway, Inc. acquired the master lease as assignee in December, 1965. At that time Modell had been a long-time tenant as sublessee of 198 Broadway, Inc.’s assignor. The church, overlandlord, did not acquire the title and fee to the entire premises until February, 1966. Thus, at the time the church became the overlandlord, 198 Broadway, Inc. was already the lessee on the master lease and the sublessor on the sublease to Modell. Paragraph 52 of the sublease, which grants the option to Modell, requires that its exercise be at least one year prior to the expiration of the sublease. The counterpart in the overlease requires six months’ notice. The fact that the latter notice period is shorter creates no implication that it was obligatory on the underlandlord to exercise its option once the undertenant exercised the option granted to it. If this was the purpose of the parties, it would have been easy to spell out the obligation in the lease and the sublease. Paragraph 53 of the sublease makes clear the status of 198 Broadway, Inc. as a lessee of the land and building and that the sublease is subject to the terms, covenants and conditions of the major lease, which contains the option provision exercisable by the major tenant. To require the underlandlord to exercise its option is to impose an obligation upon it which it never undertook. There is no covenant to exercise the option, either express or by implication. To spell out an implied obligation is to rewrite the lease between the parties. Paragraph 51 of the master lease grants 198 Broadway, Inc. an absolute, unfettered right to renew or not to renew. No limitation appears in the master lease or in the sublease. Accordingly, the termination of the master lease extinguished Modell’s right to renew the sublease (Loudave Estates v Cross Rds. Improvement Co., 28 Misc 2d 54, affd without opn 20 AD2d 864). The option was dependent upon the continued existence of the master lease and did not constitute a property interest subject to forfeiture. “As between the lessee and his sublessee, the lessee ordinarily has the right of renewal of the major lease and the sublessee’s right to renewal of his sublease is conditioned on the lessee’s obtaining a renewal of the major lease, in which event the sublessee acquires no right unless the lessee obtains such renewal.” (Loudave Estates v Cross Rds. Improvement Co., 28 Misc 2d, supra, at p 55.) There was no reason to expect that the option to renew was automatically exercisable, regardless of whether or not 198 Broadway, Inc. chose to renew its lease with the church (J.N.A. Realty Corp. v Cross Bay Chelsea, 42 NY2d 392). In that case, relied on by the dissent, the issue was whether a belated exercise of the option worked a forfeiture. This has nothing to do with our case, where the option in issue is plainly made dependent upon the exercise of the option in the overlease. This is further demonstrated by the “No Disturbance” letter dated March 22,1960, signed after execution of the sublease pursuant to which Modell as sublessee was authorized to compel the landlord to honor the terms of the sublease in the event of default by the then tenant. In that letter, the overlandlord agreed to recognize the sublease if the tenant defaulted under the terms of the master lease. The letter did not give sublessee Modell the right to renew the term of the sublease if the option in the master lease was not exercised. This would surely have been appropriate to recite if it had been the intention of the parties. Finally, we note that the space held by Modell was for a store and basement constituting only a portion of the twelve-story premises. In the absence of a clear contractual right, the sublessee should not be permitted to compel renewal by the sublessor of the overlease of the whole premises, the result here sought. Concur — Murphy, P. J., Markewich and Fein, JJ.