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WOODS v. CLAVING REALTY CORP.

April 15, 1948

WOODS
v.
CLAVING REALTY CORPORATION et al.



The opinion of the court was delivered by: FORD

My findings of fact may be briefly stated thus: The defendant, Claving Realty Corporation, of which the defendant Irving Friedman was the president, acquired a building at 204 East Eightieth Street in New York City sometime about the middle of July, 1946, and proceeded to make it available for residential apartments to be rented.

At about that time Mr. Friedman was approached by the defendant Harold C. Samuels, who is the president of the defendant Harold C. Samuels Corporation, and Mr. Samuels secured from Mr. Friedman permission to negotiate with tenants for occupancy of those apartments, to send tenants to inspect the apartments and to offer persons to Mr. Friedman and his corporation as prospective renters. Mr. Friedman told Mr. Samuels what the rents would be for the various apartments and in general told him the terms of his rentals.

 Mr. Samuels' corporation, and Mr. Samuels personally, are licensed real estate brokers in the City and State of New York.

 As a result of that interview, Mr. Samuels proceeded to send various persons to inspect the apartments. He was not authorized to place any agent in charge of the apartments or at the apartments. He was not authorized to close any rental contracts. When Mr. Friedman sent a tenant or a prospective tenant to inspect the apartment, and the tenant returned and reported that the apartment was satisfactory, the defendant Samuels, or other agents of his corporation, prepared a rental contract and received from the prospective tenant a check payable to the Claving Realty Corporation for the first month's rent which was in accordance with Mr. Friedman's terms of renting; and at the same time received from the tenant a check or cash, for an amount equal to the first month's rent which the Samuels corporation retained as compensation for its services.

 The proposed rental contract, together with references which were required of the prospective tenant, and the check for the first month's rent, were tendered by mail or in person, to the landlord, the Claving Realty Corporation, for which Mr. Friedman was acting in the transaction. Mr. Friedman then examined the references, and upon finding them satisfactory, signed the contract, accepted the check for the first month's rent, and the tenant, who was dealing through Mr. Samuels, was notified of the date on which occupancy could be taken.

 The Harold C. Samuels Corporation, through Mr. Harold C. Samuels, or any other person, never received or collected any of the subsequent rents. The whole transaction, as far as the Samuels Corporation is concerned, constituted the bringing of the tenant and the landlord together and by their efforts, closing the contract, a service usually rendered by brokers in such transactions.

 There was no division between the Harold C. Samuels Corporation and the Claving Realty Corporation of the amount paid by the tenants to the Samuels Corporation, and there was no agreement for division of that payment. It was retained by the Samuels Corporation, and, in each case, it was equivalent to the first month's rent.

 Those are the facts in this case as I find them and upon those facts it must be determined whether they disclose a violation of the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 901 et seq., or the regulations prescribed thereunder.

 The case presents the question whether the amount received by the Samuels Corporation constituted rent for this property, under the regulations which define rent. Unless the commissions paid to the Samuels Corporation constitute rent there was no overpayment of rent by the tenant. The amounts paid otherwise were the prescribed rentals fixed by the Office of Price Administration.

 We must determine, therefore, whether these payments constituted rent. Ordinarily, of course, they would not constitute rent, but the term 'rent' as used in these regulations is defined for the purpose of this Act. Section 13, subsection 10 provides: "Rent' means the consideration, including any bonus, benefit or gratuity demanded or received for or in connection with the use or occupancy of housing accommodations.'

 Was this amount a consideration received in connection with the occupancy of those housing accommodations? I see no escape from the conclusion that a commission paid in consideration of services rendered in securing the apartments for tenants, and bringing the tenants and landlord together, in preparing the necessary papers, submitting them for consideration of the landlord, reporting to the tenants the acceptance or approval of the landlord, are, and must be considered, as payments or considerations 'in connection with the use or occupancy of housing accommodations.'

 So I am forced to the conclusion that under the regulation that I have referred to this payment constituted rent.

 Our next inquiry is whether, within the meaning of the Act and the regulations thereunder, the Samuels Corporation and Mr. Samuels are responsible as a landlord.

 We again find that the ordinary term 'landlord' is not limited in this Act and in these regulations to the owner of the property or to the manager of the property, or to the person who has it under his control or supervision. It includes any other person who receives rent and any agent of such person who participates in the transaction. This payment was rent. The definition of ...


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