Matter of Park East Land Corp. v. Caprice, 47 N.Y.2d 653 (1979)

Landlords can be penalized for each instance of rent overcharge, and individuals acting on behalf of a landlord can be held personally liable for restitution of illegally collected rent, although civil penalties abate upon the individual’s death.

Summary

This case addresses whether a rent commissioner properly imposed penalties on a landlord for multiple monthly rent overcharges and whether an individual (Visco) acting on behalf of the landlord could be held personally liable for restitution. The Court of Appeals held that the commissioner acted within his authority to impose penalties for each monthly overcharge. Additionally, the Court found Visco personally responsible for repaying illegally collected rent but ruled that civil penalties abated upon his death. The decision clarifies the extent of landlord and agent liability under New York City rent control laws.

Facts

Elm Realty, Inc. and its agent, Visco, were found to have illegally overcharged rent. The rent commissioner imposed penalties on Elm Realty for each month of overcharge and directed Visco to repay the illegally collected rent. Visco died during the pendency of the appeal.

Procedural History

The Rent Commissioner initially determined that Elm Realty and Visco had illegally overcharged rent, imposing penalties and ordering restitution. The Appellate Division reversed in part, holding that Visco could not be held personally liable. The Court of Appeals then modified the Appellate Division’s order, reinstating the rent commissioner’s determination regarding Elm Realty and Visco’s obligation to repay the illegally collected rent, but noting the penalties against Visco abated due to his death.

Issue(s)

1. Whether the rent commissioner misconstrued the statute or abused his discretion by imposing a penalty for each monthly overcharge of rent against Elm Realty, Inc.
2. Whether petitioner Visco can be held personally responsible for his actions in illegally collecting rent and be required to make restitution, and if civil penalties against him survive his death.

Holding

1. No, because the commissioner did not misconstrue the statute (Administrative Code of City of New York, § Y51-11.0, subd b, par [2], cl [a]) or abuse his discretion as a matter of law by imposing a penalty for each monthly overcharge of rent.
2. Yes, because the applicable section of the Administrative Code (Y51-10.0) expressly provides that “any person” may be subject to civil penalties for violating the law and can be compelled to refund unlawfully obtained sums. However, civil penalties, which are penal in nature, abated upon the death of Visco.

Court’s Reasoning

The court reasoned that the rent commissioner had the authority to impose penalties for each monthly instance of rent overcharge, viewing each month as a separate violation. Regarding Visco’s personal liability, the court emphasized that the Administrative Code explicitly states “any person” violating the law could be subject to penalties and compelled to refund unlawful gains. However, the court distinguished between restitution (which Visco’s estate remained liable for) and civil penalties, which it deemed penal in nature. Citing *People v. Mintz*, the court held that these penal civil penalties abated upon Visco’s death. The court quoted the applicable section of the Administrative Code (Y5110.0) which expressly provides that “any person” may be subject to civil penalties for violating the law.