Filmways, Inc. v. ABC Consolidated Corp., 28 N.Y.2d 591 (1971)
A lease provision requiring landlord consent for subletting allows the landlord to consider its own interests and the specific characteristics of the proposed subtenant when deciding whether to grant consent, even if the lease includes a clause against unreasonably withholding consent.
Summary
Filmways, Inc. (tenant) sought approval from ABC Consolidated Corp. (landlord) to sublease its entire premises to Textron, Inc. The lease required landlord consent for subletting, with a clause stating consent would not be unreasonably withheld for a sublease of the entire premises to one tenant. The landlord refused consent, arguing the sublease terms were broader than the prime lease. The court held that the landlord’s refusal was reasonable, as the proposed sublease terms regarding use by affiliates and future subletting rights potentially expanded the scope of permissible occupancy beyond what the original lease allowed, justifying the landlord’s refusal to consent to the sublease.
Facts
ABC Consolidated Corp. leased the 23rd floor of its building to Filmways, Inc. The lease stipulated that Filmways needed ABC’s written consent to sublet the premises, but ABC agreed not to unreasonably withhold consent for a sublease of the entire floor to a single tenant.
Filmways sought to sublease the entire floor to Textron, Inc. ABC refused to consent, citing concerns that the sublease granted Textron broader rights than Filmways had under the original lease, particularly regarding use by affiliates and future subletting.
Filmways sued, seeking a declaration that ABC’s refusal to consent was unreasonable.
Procedural History
Special Term granted summary judgment to Filmways, finding ABC’s refusal to consent unreasonable.
The Appellate Division affirmed.
The New York Court of Appeals reversed, holding that ABC’s refusal to consent was reasonable and that ABC was entitled to summary judgment.
Issue(s)
Whether the landlord’s refusal to consent to the sublease was unreasonable, considering the lease provision requiring consent but prohibiting unreasonable withholding of consent for a sublease of the entire premises to one tenant, and considering the terms of the proposed sublease.
Holding
No, because the proposed sublease contained terms that were broader than those in the original lease, potentially expanding the scope of permissible occupancy and use of the premises. This justified the landlord’s refusal to consent.
Court’s Reasoning
The court emphasized that a landlord has the right to protect its own interests when considering a request to sublet, even when a lease includes a clause against unreasonably withholding consent. The court noted the original lease allowed Filmways’ affiliates and subsidiaries to use the premises, but ABC retained the right to withhold consent if Filmways attempted to grant a similar right to a third party.
The proposed sublease authorized use by Textron’s affiliates and subsidiaries, and permitted subsequent subleases by Textron without Filmways’ consent, creating the possibility of multiple tenancies. The court reasoned that consenting to the sublease could constitute a waiver of valuable property rights safeguarded in the prime lease.
The court found that the landlord’s concerns about the expanded use and subletting rights were legitimate and justified the refusal to consent. Even though a letter agreement was drafted to address some of ABC’s concerns, the court found that it was insufficient to bring the sublease fully in line with the original lease terms. The dissent argued that the sublease terms were not sufficiently different and that the landlord was being unreasonable.