Nesbitt v. St. John’s Episcopal Homes, Inc., 47 N.Y.2d 761 (1979)

A statute exempting housing accommodations owned by charitable or educational institutions from rent stabilization does not extend that exemption to religious institutions unless their functions are primarily charitable and the rental income is devoted exclusively to charitable purposes.

Summary

Tenants of an apartment building owned by St. John’s Episcopal Church challenged the landlord’s attempt to raise rents above rent-stabilized levels. The landlord claimed exemption from rent stabilization under a provision of the Emergency Tenant Protection Act of 1974 that exempted housing owned by charitable or educational institutions. The New York City Conciliation and Appeals Board (CAB) agreed with the landlord, but the lower court reversed. The Appellate Division reversed again, finding the terms “religious” and “charitable” interchangeable. The New York Court of Appeals reversed the Appellate Division, holding that the statute’s specific enumeration of charitable and educational institutions impliedly excluded religious institutions, absent a demonstration that the institution operated primarily for charitable purposes and devoted rental income exclusively to those purposes.

Facts

St. John’s in the Village, a religious institution, owned and operated approximately 60 residential apartments. These apartments had initially been subject to rent stabilization but were decontrolled under a vacancy decontrol law. Tenants Nesbitt and Eaton subsequently occupied apartments and entered into renewal leases at rents consistent with the Emergency Tenant Protection Act of 1974, which restored rent stabilization to previously decontrolled apartments. In 1979, the landlord informed the tenants that their apartments were exempt from rent stabilization, claiming the exemption for institutions operated exclusively for charitable purposes on a non-profit basis. The landlord then sought to raise rents above the stabilized levels.

Procedural History

The tenants filed complaints with the New York City Conciliation and Appeals Board (CAB), which dismissed the complaints, holding that the premises were exempt from rent regulation. The tenants then commenced Article 78 proceedings seeking annulment of CAB’s determinations. Special Term reversed CAB’s decision. The Appellate Division modified, reversing the Special Term’s judgment. The tenants then appealed to the New York Court of Appeals.

Issue(s)

1. Whether Section 5(a)(6) of the Emergency Tenant Protection Act of 1974, exempting housing accommodations owned by charitable or educational institutions from rent stabilization, also applies to housing accommodations owned by religious institutions.
2. Whether the landlord’s refusal to offer renewal leases at rent-stabilized terms constituted a failure to perform a covenant or agreement under the lease, entitling the tenants to attorneys’ fees.

Holding

1. No, because the statute specifically enumerates charitable and educational institutions, implying the exclusion of religious institutions unless they operate primarily for charitable purposes and devote rental income exclusively to those purposes.
2. The issue is remitted to Special Term for further consideration.

Court’s Reasoning

The Court of Appeals emphasized the principle of statutory interpretation that the intent of the legislature should be effectuated, and where the language is clear, the plain meaning of the words should be given effect. The court stated that, “where the statute describes the particular situations to which it is to apply ‘an irrefutable inference must be drawn that what is omitted or not included was intended to be omitted or excluded’.” The court found no language in the statute that would permit an interpretation providing a similar exemption for institutions operated for religious purposes. The court also noted that the statutory reference to monastery or convent does not serve to define religious institutions generally. The court found no constitutional infirmity in the statute. The court noted that the record did not disclose that the apartments were owned or operated by an institution operated exclusively for charitable purposes or that the income derived from the rental property was devoted exclusively to charitable purposes. Finally, the issue regarding attorneys’ fees was remitted to Special Term to determine whether the landlord’s actions constituted a failure to perform a covenant or agreement, as required for the application of Section 234 of the Real Property Law.