MARIE SYLVESTER, Individually and as Surviving Executrix of MARGHERITA SYLVESTER, Deceased, Respondent,
WALTER BERNSTEIN et al., Appellants.
APPEAL from an order of the Supreme Court at Special Term (MCNALLY, J.), entered June 3, 1953, in New York County, denying a motion by defendants for summary judgment dismissing the complaint on the merits under rule 113 of the Rules of Civil Practice.
William L. Messing for appellants.
Millard E. Theodore for respondent.
The question is whether tenants may be evicted in ejectment and be liable for damages because of fraudulent representations made by them in obtaining a commercial apartment for their residential use. Their statements were allegedly made in order to circumvent regulated residential rents. Landlord brings the action after the tenants had successfully recovered in another action excess rent over the maximum residential rent under the State Residential Rent Law (L. 1946, ch. 274, as last amd.).
The issue comes to us on the denial of tenants' motion for summary judgment and to dismiss the complaint on the ground that the judgment in the rent action was res judicata of landlord's claim in this action.
In our opinion the motion for summary judgment should have been granted. The landlord is precluded by the judgment in the prior action from claiming any relief against the tenants because she 'knew or should have known' that the apartment in question had been rented for residential purposes, or, in any event, that the apartment had been used for an extended period for residential purposes exclusively.
The salient facts are as follows: The landlord advertised the apartment for residential tenancy sometime early in 1950. The maximum rental that might be imposed for the apartment for
residential purposes was $100 per month. At that time the tenants were husband and wife with two children. The couple, tenants say, were separating and the husband was seeking an apartment for his family. The apartment was on the top floor of a five-story walk-up located on Washington Square South. Landlord's agent in dealing with the husband was supposedly told by the husband that the husband was a writer and that in addition to using the apartment for his residence he would use it as a place to work. This, it is suggested, was done by tenants in order to obtain the apartment, although as has been noted, the apartment had been advertised by landlord for residential occupancy. Landlord claims that both husband and wife moved into the apartment, although the tenants claim that the taking of the apartment was the beginning of the separation that was finally to eventuate in a divorce. The apartment was leased at a rental of $200 per month, twice the permitted maximum residential rent. It is not necessary, however, to discuss the facts in great detail. If the principle of res judicata is not applicable clearly then there must be a trial.
In March of 1952, the tenants began an action in the City Court of the City of New York to recover treble damages for the overcharge of rent beyond the maximum rent of $100. Judgment was rendered in that case in favor of the tenants on the verdict of the jury which found that the tenants were entitled to recover the excess rent but without a trebling of the excess. Pursuant to the statute the recovery was limited to a period of twelve months, together with attorney's fees and costs.
The Trial Justice in City Court charged the jury in the following words: 'The question is, though, did the agent or the landlord's representative, in renting this apartment, know that it was not going to be used, and that it couldn't have been used, for commercial or professional purposes, and that it was predominantly and substantially used for dwelling purposes only. That is the issue. Nothing else.'
At the close of the court's charge the attorney for the tenants requested: 'I respectfully ask your Honor to charge that regardless of what the facts were at the time of the renting of the apartment, if thereafter the landlord knew or should have known that the apartment in fact was being used for residential purposes and that a predominant part of the ...