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Mutual Life Ins. Co. of New York v. Tailored Woman, Inc.

Supreme Court of New York, Appellate Division

December 31, 1953

MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, Respondent,
v.
TAILORED WOMAN, INC., Appellant.

Page 174

APPEAL from a judgment of the Supreme Court in favor of plaintiff, entered May 5, 1953, in New York County, upon a decision of the court on a trial at Special Term (GREENBERG, J.).

COUNSEL

M. James Spitzer of counsel (Philip Feldman and Irving Fliegler with him on the brief; Reich, Spitzer & Feldman, attorneys), for appellant.

George A. Spiegelberg of counsel (Robert H. Preiskel with him on the brief; Riegelman, Strasser, Schwarz & Spiegelberg, attorneys), for respondent.

Page 175

PECK, P. J.

Plaintiff has recovered judgment for an amount claimed as additional rental, being a percentage of sales, under a lease of store premises. The lease under which the claim is made was of the basement and first three floors of the building known as 742 5th Avenue at the corner of 5th Avenue and 57th Street. At the time of the making of the lease in 1939, defendant operated a nearby store where it sold women's wearing apparel and accessories, including furs. The lease of the new premises was for the sale, display and manufacture of all kinds of women's wearing apparel and accessories and contained a covenant by defendant that the store 'will at all times contain a stock of first class merchandise and the business will be conducted and maintained in a manner substantially similar to the Tenant's present store at No. 729 Fifth Avenue'. In addition to a fixed rental, the lease provided as additional rental for the payment of a sum equal to 4% of the gross receipts from all sales made 'on, in or from the demised premises'.

The leased premises were part of an eight-story building having entrances on both 5th Avenue and 57th Street. Four passenger elevators serviced the building. The tenant was given the exclusive use of the 5th Avenue entrance and two of the elevators. Accordingly, the elevator openings were arranged so that the two elevators set aside for defendant's exclusive use would open only into the demised premises and the shafts were capped so that these elevators would not rise above the third floor. The other elevators in the building opened into a building lobby, with the entrance on 57th Street, and gave access to the upper floors.

In 1945 the tenant of the fifth floor who conducted a custom-made dressmaking business desired to vacate the premises. Defendant desired to lease this space to expand its business and establish a custom-made dress department. Plaintiff thus leased to defendant the fifth floor, and under the terms of the lease defendant was to occupy the premises for the sale of all types of women's wearing apparel and accessories and as workrooms. The rent was a fixed amount. It was specifically provided that the landlord should not be entitled to any percentage of receipts from sales or services on the demised premises and that the lease should not have any 'effect' on the 1939 lease of the basement and lower three floors. The lease provided that the landlord would maintain the existing elevator facilities, meaning as to this lease the public elevator service from the 57th Street lobby, which elevators were the

Page 176

only ones which gave access to the fifth floor at that time. The lease also provided that the tenant should make no alterations in the demised premises without the landlord's prior written consent.

Immediately after taking possession of the fifth floor, the defendant removed the caps on the elevators within its store and altered the fifth floor premises, without the written consent of the landlord, so that its private elevators opened into these premises and for all store operating purposes the fifth floor was integrated into defendant's store.

The custom-made dress department taken over from the prior lessee was continued for a time but proved to be unsuccessful and was abandoned. The fur department, which had occupied cramped space on the second floor, was moved to the fifth floor and enlarged. Some workrooms were moved to the eighth floor, which defendant also leased at about this time. The space on the lower floors saved by the removal of the fur department and workrooms was used for the expansion of the coat and suit department, the lower-priced dress department and the bridal department. The business in all branches of the store increased substantially.

The controversy between the parties arose in the fall of 1946 when plaintiff claims it learned for the first time that it was not receiving its percentage from the sales of furs. It asserted its claim to a percentage of sales made on the fifth floor upon the ground that this floor had been so integrated into the main premises as to be covered by the percentage provisions of the main lease. Defendant insisted upon the separateness of fifth floor sales in accordance ...


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