New York Law Review

Tag: 1970

  • Barash v. Pennsylvania Terminal Real Estate Corp., 26 N.Y.2d 77 (1970): Measure of Damages for Partial Eviction

    Barash v. Pennsylvania Terminal Real Estate Corp., 26 N.Y.2d 77 (1970)

    In a partial actual eviction, the measure of damages is the difference between the actual rental value of the premises and the rent reserved under the lease, and the award should be reduced to its present value.

    Summary

    Barash, a commercial tenant, sued Pennsylvania Terminal after being forcibly evicted from a portion of its leased premises to accommodate elevator construction for a new tenant. The lower courts awarded treble damages based on the difference between the market rental value and the rent paid under the lease. The New York Court of Appeals reversed, holding that the correct measure of damages for a partial actual eviction is the difference between the market rental value and the rent reserved in the lease, discounted to its present value. Additionally, the court clarified the calculation of lost profits and distinguished between a “nominal” award in the legal sense versus a conservative estimate of damages.

    Facts

    Barash leased the entire eighth floor of a building for commercial art and subleasing purposes under a 10-year lease with escalating rent. Pennsylvania Terminal, the lessor, forcibly ejected Barash from 269 square feet of valuable office space to construct elevators for a new tenant leasing floors below. Barash paid $1.90 per square foot under the lease but the space had an actual value of $5 per square foot.

    Procedural History

    Barash sued Pennsylvania Terminal for forcible ejectment, seeking treble damages. The trial court awarded treble damages, calculating the loss based on the difference between the market rental value ($5/sq ft) and the lease rate ($1.90/sq ft). The Appellate Division modified the judgment by eliminating legal expenses but otherwise affirmed. Pennsylvania Terminal appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether the proper measure of damages for a partial actual eviction is the difference between the market rental value and the rent reserved under the lease, and whether that award should be reduced to its present value.
    2. Whether the award for lost profits was speculative and conjectural.
    3. Whether the trial court’s designation of a $1,000 award as “nominal” was an error.

    Holding

    1. Yes, because the measure of damages is the difference between the actual rental value and the agreed-upon but unpaid rent, and the award should be reduced to its present value to avoid overcompensating the plaintiff.
    2. No, because there was sufficient evidence to support the award for lost profits based on the loss of the employee’s contribution to the company’s income.
    3. No, because the court used the term “nominal” to indicate a conservative estimate of damages, not in its strict legal sense.

    Court’s Reasoning

    The court held that the correct measure of damages for partial eviction is the difference between the market rental value of the space and the rent reserved under the lease. It cited numerous cases, including Peerless Candy Co. v. Halbreich, to support this rule. The court noted that the award should be reduced to its present value, stating, “We think that due regard for an award which neither overcompensates the plaintiff nor unduly penalizes the defendants warrants reduction of the award to its present value.”

    The court rejected the argument that the lost profit award was speculative, finding sufficient evidence to support the award based on the lost employee’s contribution. Citing Wakeman v. Wheeler & Wilson Mfg. Co., the court stated, “When it is certain that damages have been caused by a breach of contract, and the only uncertainty is as to their amount, there can rarely be good reason for refusing, on account of such uncertainty, any damages whatever for the breach.”

    Regarding the $1,000 “nominal” award, the court clarified that the term was used to indicate a conservative estimate of damages, not a nominal award in the strict legal sense (e.g., 6 cents or $1). The court agreed with the Appellate Division that there was sufficient evidence to predicate a finding of loss of profits in the sum of $1,000.

    The court emphasized the importance of correctly calculating damages to avoid unjust enrichment or undue penalty, specifying that “the rent which the tenant would have been liable to pay if he had enjoyed the possession is to be deducted from the value of the use and occupation during the period of the withholding of the possession.”

  • Mill Factors Corporation v. Irving Trust Company, 27 N.Y.2d 53 (1970): Admissibility of Parol Evidence to Prove Fraudulent Inducement

    Mill Factors Corporation v. Irving Trust Company, 27 N.Y.2d 53 (1970)

    Parol evidence of a fraudulent misrepresentation, including a misrepresentation of intent, is admissible to avoid an agreement induced by such fraud, even if the written agreement is unconditional and makes no mention of the alleged misrepresentation.

    Summary

    Mill Factors sued Irving Trust and others on guarantees. The defendants claimed they were fraudulently induced into signing the guarantees by Mill Factors’ oral promises of extended credit and forbearance, promises Mill Factors allegedly never intended to keep. The lower courts granted summary judgment to Mill Factors, finding the fraud defense “feigned.” The New York Court of Appeals reversed, holding that a triable issue of fact existed regarding the alleged fraudulent inducement. The court emphasized that parol evidence is admissible to prove fraud, even if the written contract is unconditional.

    Facts

    Mill Factors sold cattle feed to Briarcliff Farms. The individual defendants, controlling shareholders and directors of Briarcliff, guaranteed Briarcliff’s debts to Mill Factors. Originally, the guarantee was for $400,000. When Briarcliff’s debt exceeded this amount, Mill Factors requested an increased guarantee of $1,000,000. The defendants alleged that Mill Factors orally promised additional credit up to $1,000,000 and forbearance from demanding payment until the debt reached that limit, inducing them to increase their guarantee. The written guarantees were unconditional and silent on these promises. Shortly after the new guarantees were signed, Mill Factors demanded payment, leading to the lawsuit.

    Procedural History

    The trial court initially granted summary judgment for Mill Factors. After reargument based on affidavits alleging fraudulent inducement, the trial court denied summary judgment and allowed the defendants to amend their answer. The Appellate Division reversed, granting summary judgment to Mill Factors, concluding the defense of fraudulent inducement was “feigned.” The Court of Appeals reversed the Appellate Division’s decision, reinstating the trial court’s order denying summary judgment.

    Issue(s)

    Whether parol evidence is admissible to prove that a written guarantee was fraudulently induced by oral misrepresentations regarding future credit and forbearance, despite the absence of such terms in the written agreement.

    Holding

    Yes, because parol evidence of a fraudulent misrepresentation, including a misrepresentation as to intent, is admissible to avoid an agreement induced by such fraud. The court found a triable issue of fact existed as to whether the guarantee was fraudulently induced.

    Court’s Reasoning

    The court reasoned that summary judgment is inappropriate when there is a material and triable issue of fact. The Appellate Division erred in concluding that the defendants’ fraud defense was “feigned.” The Court of Appeals acknowledged arguments against the defendants’ claim, such as the absence of the alleged promises in the written guarantees. However, the court also noted the improbability that the defendants would increase their guarantees from $400,000 to $1,000,000 without some assurance of continued credit for Briarcliff. The court cited Sabo v. Delman, 3 N.Y.2d 155, 160-161, stating that “Parol evidence of a fraudulent misrepresentation including a misrepresentation as to intent is admissible to avoid an agreement induced by such fraud.” The court emphasized that the truth should be determined through trial, where witnesses can be examined and cross-examined. The court stated, “The truth as to these matters must be arrived at in the lawful and customary way, this is, by a trial where the witnesses can be examined and cross-examined and their demeanor and their versions put under the scrutiny of the triers of the facts.”

  • Stevens Constructors, Inc. v. Long Is. R.R., 27 N.Y.2d 55 (1970): Adequacy of Appendix on Appeal

    Stevens Constructors, Inc. v. Long Is. R.R., 27 N.Y.2d 55 (1970)

    An appellate court should not affirm a judgment solely because an appellant’s appendix is deemed insufficient; instead, the court should direct the appellant to submit a further appendix or risk dismissal of the appeal if a sufficient appendix is not filed within a specified time.

    Summary

    Stevens Constructors, Inc. appealed a judgment against it, claiming fraudulent misrepresentations induced it into a construction contract with Long Island Railroad. The Appellate Division affirmed the judgment, solely because Stevens’ appendix was insufficient to determine the issues. The Court of Appeals reversed, holding that affirming solely due to an inadequate appendix defeats the purpose of the appendix system, which aims to reduce costs by including only necessary parts of the record. The Court of Appeals instructed that the Appellate Division should have directed Stevens to supplement the appendix or face dismissal of the appeal.

    Facts

    Stevens Constructors, Inc. entered into a construction contract with Long Island Railroad. Stevens subsequently sued, alleging fraudulent misrepresentations induced them into the contract. A judgment was entered in favor of Long Island Railroad. Stevens appealed, but the Appellate Division deemed the submitted appendix insufficient.

    Procedural History

    The trial court rendered a judgment for damages against Stevens Constructors, Inc. Long Island Railroad’s counterclaim and third-party claim were disallowed. The Appellate Division affirmed based solely on the inadequacy of Stevens’ appendix. Stevens then appealed to the New York Court of Appeals.

    Issue(s)

    Whether the Appellate Division erred in affirming the trial court’s judgment solely on the ground that the appellant’s appendix was insufficient to permit determination of the questions raised on appeal.

    Holding

    No, because affirming solely due to an inadequate appendix defeats the purpose of CPLR 5528, which aims to reduce the cost of appeals by encouraging parties to include only necessary portions of the record. The proper procedure is to direct the appellant to submit a further appendix or face dismissal if they fail to do so within a specified time.

    Court’s Reasoning

    The Court of Appeals reasoned that the appendix system, as outlined in CPLR 5528, was designed to reduce the cost of printing records on appeal. The court noted that paragraph 5 of subdivision (a) of CPLR 5528 provides that an appellant’s appendix shall contain “only such parts of the record on appeal as are necessary to consider the questions involved, including those parts the appellant reasonably assumes will be relied upon by the respondent”. While acknowledging the appendix was insufficient, the court found that affirming the lower court’s decision was an inappropriate penalty. The court stated, “The most effective guarantee against an inadequate appendix, of course, is an attorney’s desire to supply the court with all material necessary to convince it to adopt his client’s position.” The Court suggested the proper remedy would have been for the Appellate Division to direct Stevens to submit a further appendix or dismiss the appeal if a sufficient appendix was not filed within a specified time. The court reasoned that harsher penalties could defeat the purpose of CPLR 5528 by encouraging advocates to submit unreasonably lengthy appendices to avoid the extreme consequence of an affirmance based on a mistaken belief about what portions of the record are needed.

  • Svenson v. Svenson, 27 N.Y.2d 131 (1970): Annulment Based on Concealed Fanatical Beliefs

    Svenson v. Svenson, 27 N.Y.2d 131 (1970)

    A marriage can be annulled if one party fraudulently conceals a fanatical belief so repugnant that it renders the marital relationship unworkable, and the other party would not have consented to the marriage had they known the truth.

    Summary

    This case concerns a wife’s attempt to annul her marriage based on her husband’s fraudulent concealment of his fanatical anti-Semitic beliefs and Nazi past. The wife alleged that her husband hid these beliefs during their courtship and revealed them only after the marriage, making the relationship unworkable. The New York Court of Appeals reversed the Appellate Division’s decision, holding that the wife’s amended complaint stated a valid cause of action for annulment because if proven, the concealed beliefs were so repugnant and fundamental that they negated the wife’s consent to the marriage.

    Facts

    The parties married in New York City in June 1963, and the wife filed for annulment in April 1964. The wife alleged that before the marriage, the husband concealed that he had been an officer in the German Army and a member of the Nazi party during World War II. She further claimed he was fanatically anti-Semitic, supported the extermination of Jewish people, and would require her to shun her Jewish friends. The wife alleged she relied on the husband’s apparent lack of fanaticism and would not have married him had she known the truth.

    Procedural History

    The Special Term initially denied the husband’s motion to dismiss the wife’s amended complaint. However, the Appellate Division reversed, finding the alleged fraud was not vital to the marriage relationship. The wife appealed to the New York Court of Appeals.

    Issue(s)

    Whether the wife’s allegations that the husband fraudulently concealed his fanatical anti-Semitic beliefs and Nazi past before the marriage, which were revealed after the marriage and made the relationship unworkable, state a cause of action for annulment.

    Holding

    Yes, because if the facts alleged in the wife’s complaint are true, the trier of fact could conclude that there was no reality to the wife’s consent to the marriage, as the concealed beliefs were so repugnant and fundamental that the wife would not have married the husband had she known the truth.

    Court’s Reasoning

    The Court of Appeals emphasized that a pleading should be construed liberally, with all allegations assumed to be true for the purpose of a motion to dismiss. The court reviewed prior annulment cases, noting that fraud justifying annulment must be material to the degree that, had it not been practiced, the deceived party would not have consented to the marriage. Citing Shonfeld v. Shonfeld, 260 N.Y. 477 (1933), the court reiterated that a lack of reality in consent makes a marriage voidable. The court distinguished the allegations in this case from mere disagreements or disappointments, finding that the wife’s allegations of fanatical anti-Semitism and support for genocide, if true, were so extreme and repugnant that they negated the essence of the marital relationship. The court stated, “Allowing the pleading the broad construction to which it is entitled under the law, defendant had not merely been a member of the Nazi party…but also, as an individual, he was fanatically anti-Semitic and supported the extermination of the Jewish people.” The court concluded that the wife should have her day in court to prove her allegations, as a trial could determine that the concealed facts went to the essence of her consent to marry the husband. The Court directly quoted Justice Loreto from Special Term: “‘These are more than distasteful beliefs; they are absolutely repugnant and insufferable…A fraud with respect to such beliefs, inducing marriage, is one affecting a vital aspect of the marital relationship…It might well be found to be ‘material to that degree that, had it not been practiced, the party deceived would not have consented to the marriage’”

  • 8200 Realty Corp. v. Lindsay, 27 N.Y.2d 124 (1970): Constitutionality of Rent Control Based on Current Market Conditions

    8200 Realty Corp. v. Lindsay, 27 N.Y.2d 124 (1970)

    The constitutionality of rent control, when not based on a war emergency, must be evaluated based on current market conditions and whether it represents a legitimate exercise of the police power in regulating prices.

    Summary

    This case addresses the constitutionality of rent control in New York City, questioning whether it can still be justified as a war emergency measure. The dissenting opinion argues that since the war emergency is over, the validity of rent control must be assessed as a form of general price control, considering factors similar to those used for other price-controlled goods. The dissent contends that a summary judgment is insufficient to determine this complex issue, especially when it relies heavily on vacancy rates without fully considering other relevant economic factors and expert testimony.

    Facts

    The case involves a challenge to the continuation of rent control in New York City. The enabling legislation cited a war emergency as justification for rent control. However, the appellants argued that the emergency no longer existed and that rent control should be evaluated under different constitutional standards.

    Procedural History

    The case reached the New York Court of Appeals after a lower court granted summary judgment upholding the rent control law. The Court of Appeals affirmed the lower court’s decision. The dissenting opinion argued that the issue was too complex for summary judgment and required a full trial.

    Issue(s)

    1. Whether the constitutionality of rent control in New York City can continue to be justified based on a war emergency that no longer exists.
    2. Whether the validity of rent control should be evaluated under the same standards as other forms of price control, considering current market conditions and economic factors.
    3. Whether summary judgment is an appropriate method for deciding the constitutionality of rent control, given the complexity of the issue and the need for expert testimony.

    Holding

    1. The majority held that the rent control law was constitutional and affirmed the lower court’s decision.
    2. The dissenting judge stated the case should be decided on current facts, after a trial, with examination and cross-examination of expert and other witnesses.

    Court’s Reasoning

    The dissenting opinion argued that the constitutional basis for rent control had shifted from a war emergency to a broader exercise of police power to regulate prices. This requires a consideration of factors beyond vacancy rates, including expert testimony and a comprehensive understanding of the housing market. The dissent drew analogies to cases involving price controls on other commodities like milk, coal, and natural gas, where courts have demanded a thorough examination of the economic realities. It emphasized that relying solely on vacancy rates in controlled housing is insufficient to justify continued rent control, especially when it penalizes landlords for participating in the system. "It is a gratuitous assumption, contrary to fact, that a complicated issue of such far-reaching importance can be decided summarily on a mere ‘battle of the pamphlets’ without testimony, without opportunity to test conflicting conclusions in the crucible of cross-examination…" The dissent advocated for a trial to properly weigh all relevant factors, ensuring a decision based on current facts rather than an outdated emergency justification.

  • People v. Freshley, 27 N.Y.2d 241 (1970): Admissibility of Testimony from a Witness with a History of Mental Illness

    People v. Freshley, 27 N.Y.2d 241 (1970)

    The mere fact that a witness has a history of mental illness does not automatically disqualify them from testifying, but the jury should be made aware of the witness’s condition to properly evaluate their testimony.

    Summary

    Freshley was convicted of first-degree murder for the shooting death of Arthur Holst. His codefendant, Krombholz, testified against him. After the verdict but before sentencing, Krombholz was declared legally insane and committed to a mental hospital. Freshley moved for a new trial based on newly discovered evidence of Krombholz’s long history of mental illness, arguing that this information would have significantly impacted the jury’s assessment of Krombholz’s credibility. The Court of Appeals reversed the conviction, holding that the jury should have been aware of Krombholz’s mental condition to properly evaluate his testimony, especially in a capital case.

    Facts

    Arthur Holst was found dead in the basement of the ice cream parlor where he worked, shot twice in the chest.
    Freshley, the manager of the store, admitted to the murder and implicated Krombholz, claiming his employer instructed him to kill Holst for stealing money.
    Krombholz testified against Freshley, directly implicating him in the crime.
    After the jury’s verdict, Krombholz was found to be legally insane with a longstanding mental illness and committed to Matteawan State Hospital.
    Krombholz had a history of mental illness, including a head injury, brain operation, and multiple hospitalizations for mental illness diagnosed as Paranoid Schizophrenia.

    Procedural History

    Freshley was convicted of first-degree murder in the Supreme Court, Kings County.
    He moved for a new trial based on newly discovered evidence of Krombholz’s mental illness.
    The trial court denied the motion, finding that Krombholz appeared competent to testify and that his testimony did not materially affect the verdict.
    Freshley appealed to the New York Court of Appeals.

    Issue(s)

    Whether the trial court erred in denying Freshley’s motion for a new trial based on newly discovered evidence of Krombholz’s long history of mental illness, which was not disclosed to the jury during the trial.

    Holding

    Yes, because the jury should have been made aware of Krombholz’s mental condition to properly assess his credibility, especially in a case where the punishment is death.

    Court’s Reasoning

    The court acknowledged that a person’s mental illness does not automatically disqualify them from testifying. A witness is competent to testify if they understand the nature of an oath and can give a reasonably accurate account of events.
    However, the court emphasized that the jury should have been informed of Krombholz’s mental condition so they could properly evaluate his testimony. The court stated, “what would have been the reactions of the jurors had they been made aware that there was ‘something mentally wrong’ with Krombholz and had they known that he had ‘visual and auditory hallucinations with marked memory defect’, that he had been diagnosed ‘as a case of Paranoid Schizophrenia’ and that he had been discharged from a sanitarium in 1950 ‘against medical advice’?”
    Without this knowledge, the jury would have accepted Krombholz’s testimony as that of a “normal” individual, which was not the case.
    Unlike People v. Salemi, where the jury was aware of the witness’s mental instability, in this case, the jury had no indication that Krombholz suffered from a long-standing mental illness. Therefore, the court held that Freshley was entitled to a new trial in the interests of justice.

  • Gasperino v. Larsen Ford, Inc., 307 N.Y.S.2d 111 (1970): Duty to Provide Safe Workplace and Foreseeable Use

    Gasparino v. Larsen Ford, Inc., 42 A.D.2d 1047, 348 N.Y.S.2d 235 (1973)

    An employer has a duty to provide a safe workplace, which extends to reasonably foreseeable uses of the premises, even if those uses are not explicitly directed by the employer.

    Summary

    Gasparino, a window washer, sustained injuries when he fell from a window while cleaning it at Larsen Ford. He sued Larsen Ford, alleging negligence in failing to provide a safe workplace. The key issue was whether Larsen Ford furnished the window seat as a place to work, even though it wasn’t explicitly directed. The jury found in favor of Gasperino, but the appellate division reversed. The Court of Appeals reversed the appellate division, holding that the jury could reasonably find that Larsen Ford knew the windows were being cleaned in this manner and had not provided any alternative safe method, thus establishing a breach of duty. The dissent argued that the jury’s verdict should stand because Ford had a duty to provide a safe workplace, and the evidence supported the finding that the window seat was the only available place to perform the work, with Ford’s knowledge.

    Facts

    Plaintiff Gasperino, a window washer, was injured while cleaning windows at Larsen Ford. The injury occurred when he fell from a window. The evidence suggested that the window seat was the only available place to perform the cleaning work.
    There was evidence suggesting that Larsen Ford employees knew that the windows were being cleaned in this manner.
    Larsen Ford did not provide any alternative or safe method for cleaning the windows.

    Procedural History

    The trial court entered judgment in favor of the plaintiff, Gasperino. The Appellate Division reversed the trial court’s judgment. The New York Court of Appeals reversed the Appellate Division’s decision, reinstating the trial court’s verdict in favor of Gasperino.

    Issue(s)

    Whether Larsen Ford breached its duty to provide a safe workplace by failing to provide a safe means for cleaning the windows, given that its employees knew how the cleaning was being performed.

    Holding

    Yes, because the jury could reasonably find that Larsen Ford knew the windows were being cleaned in the manner they were, and that Larsen Ford had not provided any alternative safe means, thus establishing a breach of duty.

    Court’s Reasoning

    The Court reasoned that an employer has an affirmative duty to provide employees with a safe place to work. The jury was justified in finding that the seat on the ventilating window was the only place from which this work could be done. The court emphasized that the critical question was whether Ford “furnished” this location as the place to do the work. The jury’s positive answer was well-founded on the proof that responsible employees of Ford furnished no other place or way to do the work and knew that the windows were being washed in this manner. The court distinguished this case from Borshowsky v. Altman & Co., where the complaint was dismissed because the plaintiff had been told to keep off the glass marquee, there were other safe ways to clean, and the defendant never knew the marquee was being used for that purpose. The dissent argued that the evidence supported the jury’s finding that Ford provided no other safe method and was aware of the existing practice.