Horn & Hardart Co. v. Junior Bldg., Inc., 40 N.Y.2d 920 (1976)

When interpreting lease agreements, courts will consider the language employed by the parties, the past and present use of the leased premises, and whether a proposed use falls within the scope of permitted uses as defined in the lease.

Summary

This case concerns a dispute between a landlord and tenant regarding the permitted use of leased premises under a 1957 lease agreement. The tenant, Horn & Hardart, sought to operate a “Burger King” restaurant on the premises, which the landlord argued was not permitted under the lease’s specified uses. The New York Court of Appeals held that operating a “Burger King” restaurant was not within the permitted uses outlined in the lease, considering the language of the lease and the current operation of an “Automat” cafeteria. The court found that despite changes in food service, a distinction remained between cafeterias and limited-menu, short-order food service establishments.

Facts

Horn & Hardart Co. leased premises in a 30-story office building on East 42nd Street in New York City. The 1957 lease specified permitted uses as: “a service restaurant, Automat restaurant, cafeteria, counter and stool restaurant, retail shop for the sale of baked goods and other items usually sold in Horn & Hardart retail stores.” Horn & Hardart operated an “Automat” cafeteria on the premises. They sought to change the operation to a “Burger King” restaurant. The proposed “Burger King” would have a dining area and counter service, offering a limited menu for consumption on or off the premises.

Procedural History

Both the landlord and tenant filed cross-motions for summary judgment. The Appellate Division’s decision is not described. The New York Court of Appeals reviewed the case, finding no factual disputes and agreed to decide the case based on the existing record.

Issue(s)

Whether the operation of a “Burger King” restaurant is a permitted use under the 1957 lease, which specifies uses such as “service restaurant, Automat restaurant, cafeteria, counter and stool restaurant, retail shop for the sale of baked goods and other items usually sold in Horn & Hardart retail stores.”

Holding

No, because the operation of a “Burger King” restaurant is not within the scope of permitted uses outlined in the lease, considering the language of the lease and the existing operation of an “Automat” cafeteria.

Court’s Reasoning

The court based its decision on the language employed by the parties in the lease and the use to which the leased premises had been and were presently being put. It acknowledged the differing contentions and resisted speculation about various aspects of food service. The court reasoned that despite changes in restaurant and food service, a distinction remains between cafeterias and short-order, limited-menu food service primarily for off-premises consumption. Since the “Burger King” operation was not a permitted use, the landlord could reasonably withhold consent to alterations appropriate for such use. The court did not find any admissible extrinsic evidence to determine the parties’ intention when they executed the lease. The court stated, “It cannot be said that the changes which concededly have occurred in recent years in manner and style of restaurant and food service have destroyed completely the difference between cafeterias and short-order, limited menu food service primarily for off-premises consumption.”