De Minicis v. 148 East 83rd Street, Inc., 15 N.Y.2d 432 (1965)
The Emergency Housing Rent Control Law does not apply to cooperative conversions where no statutory tenants in possession are evicted, and the Rent Commission lacks jurisdiction absent an eviction.
Summary
Plaintiffs sought to rescind a proprietary lease agreement for a cooperative apartment, alleging the cooperative conversion violated the Emergency Housing Rent Control Law. The defendant converted the building into a cooperative after purchasing it and renovating vacant apartments. The plaintiffs purchased shares and a lease for an apartment that had been voluntarily vacated. The court held that the Rent Commission lacked jurisdiction because no statutory tenants were evicted during the conversion. The plaintiffs entered an arm’s length transaction, and applying rent control in this situation would not advance the law’s purpose.
Facts
Defendant Carsen purchased a building in 1954, taking title under the corporate defendant’s name. The building was subject to the Emergency Housing Rent Control Law, with some apartments occupied by statutory tenants and others vacant. After renovations, the defendant arranged a cooperative ownership plan where purchasing shares entitled the owner to a 99-year proprietary lease. In 1957, Carsen vacated an apartment and offered its corresponding shares for sale. The plaintiffs purchased the shares, paying $2,000 down and agreeing to monthly “Maintenance Rent” and “Leasehold Lien Rent”. The plaintiffs took possession and one plaintiff even served as president and director of the corporation. The dispute arose after disagreements about selling the property.
Procedural History
The plaintiffs filed suit seeking to rescind the lease agreement. The lower courts held the plaintiffs’ complaint sufficient. The Court of Appeals reversed the lower court’s decision.
Issue(s)
Whether the Emergency Housing Rent Control Law applies to a cooperative conversion when no statutory tenants in possession have been evicted.
Holding
No, because the Rent Commission lacks jurisdiction over premises except when statutory tenants in possession are sought to be evicted.
Court’s Reasoning
The court reasoned that the Emergency Housing Rent Control Law primarily aims to protect statutory tenants from eviction. The relevant regulations, such as Section 55(3) and Section 10(4), focus on procedures for evicting tenants and withdrawing housing accommodations from the rental market. The court emphasized that the Rent Commission’s jurisdiction is limited to situations involving the eviction of statutory tenants. The court cited People ex rel. McGoldrick v. Sterling, 283 App. Div. 88, 92, stating that “The State’s police power is exercised through control of evictions”. Here, the plaintiffs were not statutory tenants and took possession based on an arm’s length purchase agreement. Granting relief would not advance the Emergency Housing Rent Control Law’s purpose. The court noted the plaintiffs did not rely on any representations that rent laws had been complied with and make no claim based on fraudulent inducement. The court stated that absent an eviction, the Rent Commission is without jurisdiction.