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December 29, 1953


The opinion of the court was delivered by: SUGARMAN

On or about May 29, 1951, the Hungarian People's Republic leased from Cecil Associates, Inc., the entire building at 7 East 84th Street, New York City. The written lease provided inter alia '[Tenant] shall use and occupy demised premises for consular purposes. (sic) and for no other purpose' for a term of three years from June 1, 1951. A deposit of $ 9,000 was given to the landlord by the tenant to secure the latter's performance of its obligations under the lease.

On or about June 1, 1951, Cecil Associates, Inc., conveyed the demised premises to Alice Simon, Max Hofmann and Marcus Katz.

 On December 28, 1951, the Secretary of State of the United States officially required the plaintiff to close its consular offices in New York City for the reason set forth in a note to the Minister of the Hungarian People's Republic, viz.:

 '* * * The Secretary of State presents his compliments to the Minister of the Hungarian People's Republic and has the honor to refer to the recent detention in Hungary of four members of the United States Air Force. The Government of Hungary in this instance has again clearly failed to live up to the accepted standards of international practice with regard to the right of consular officers to exercise protective functions in behalf of nationals of their country. The detention of four Americans from November 19, 1951 to December 28, 1951 and the refusal by the Hungarian Government, despite repeated requests of the American Charge d'Affaires, to permit any access to them or communication with them on the part of American consular officers indicate that the Hungarian Government continues, as in previous cases, to place serious restrictions on the exercise of normal consular rights by United States representatives in Hungary. In these circumstances, the Government of the United States is not prepared to permit the continued operation of the Hungarian consulates general in Cleveland, Ohio, and New York, New York. The Minister is accordingly informed that these offices are required to cease all operations immediately and to be closed by midnight, December 31, 1951. Department of State, Washington, December 28, 1951.'

 On December 31, 1951, plaintiff vacated premises 7 East 84th Street, New York City.

 By letter dated January 8, 1952, the attorneys for the tenant informed Cecil Associates, Inc., that by reason of the action of the State Department followed by the tenant's vacating of the premises 'the lease between Cecil Associates, Inc., and the Hungarian People's Republic was automatically cancelled and terminated on December 31, 1951.' Demand was made in that letter for the return of the $ 9,000 security deposit, and, the demand being refused, on June 17, 1952, this action was commenced by the tenant against Cecil Associates, Inc., to recover said sum, pleading frustration of the contract because of the act of the United States Government.

 On October 28, 1952, an amended complaint was filed, to recover the security deposit from Cecil Associates, Inc., or from its grantees Alice Simon, Max Hofmann and Marcus Katz. The amended complaint alleges the conveyance of the premises to the individual defendants and alleges, in effect, that the corporate defendant may have transferred the security to its vendee, as allowed in paragraph numbered 32 in the lease.

 The defendants answered the complaint with general denials, seven affirmative defenses and by way of counterclaim, the defendants Alice Simon, Max Hofmann and Marcus Katz allege that plaintiff was notified some time after June 1, 1951 that rent under the above-mentioned lease was to be paid to them, and plaintiff did pay them the rent through the month ending December 31, 1951, but not thereafter. Further alleging plaintiff's wrongful abandonment of the premises, said defendants claim damages in the amount of $ 9,205 allegedly sustained by them up to the time they resold the premises on May 7, 1952, being loss of rent for the months of January through May, 1952, at $ 1,500 per month, broker's commissions for negotiating the lease in the amount of $ 1,205, attorneys fees and certain expenses for cleaning the premises after plaintiff vacated.

 In a second counterclaim, the individual defendants further allege that on resale of the premises in a vacant state, they received $ 20,000 less than they would have received had plaintiff remained in possession under its lease. This they claim plus $ 4,237.50 brokerage on the resale and attorney's fees in the amount of $ 500, as further damages.

 By way of a third counterclaim, the said defendants also claim the sum of $ 43,500, representing the monthly rentals from January 1, 1952 through May 31, 1954 at $ 1,500 per month.

 In their fourth counterclaim, the individual defendants assert that their net profit from renting to the plaintiff under the lease would have been $ 10,000 per annum. By reason of plaintiff's alleged breach, they also claim damages for loss of anticipated profits for two years, five months at $ 10,000 per annum or $ 24,165.

 The Hungarian People's Republic now moves 'for an order dismissing the four counterclaims of the Answer herein, on the ground that such counterclaims fail to state claims upon which relief can be granted, in that they seek affirmative judgment against an immune sovereign, which has not consented to the entry thereof'.

 Following the argument of the motion, the court addressed the following letter to ...

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