22 N.Y.2d 383 (1968)

When interpreting contracts, including lease agreements, courts must adhere to the plain meaning of the words used, and should not rewrite the agreement under the guise of interpretation to reflect a party’s subjective intent if it contradicts the clear language of the contract.

Summary

Rodolitz (lessor) sued Neptune Paper Products (lessee) to recover sums due under a tax apportionment clause in a lease. The dispute centered on which three-year period should be used to calculate the average assessed valuation for determining tax responsibility. The lease stated the averaging period was “the first three (3) years of the term of this lease.” The lessor argued the term began with the temporary certificate of occupancy, while the lessee contended it began when the building’s assessment included the completed building. The Court of Appeals held that the plain language of the lease controlled, and the averaging period began with the temporary certificate of occupancy, even if that resulted in a different tax allocation than the lessee anticipated.

Facts

On July 25, 1955, Abraham J. Rodolitz (lessor) and Neptune Paper Products, Inc. (lessee) entered into a lease for premises intended for a paper products plant.
The building was under construction when the lease was signed and completed on October 10, 1955.
Neptune took possession on October 1, 1955, under a temporary certificate of occupancy.
The tax assessment for 1955-56 did not include the value of the completed building, as it was still under construction.

Procedural History

The lessor sued the lessee to recover funds allegedly owed under the tax apportionment clause.
Special Term ruled in favor of the lessor.
The Appellate Division reversed, favoring the lessee’s interpretation.
The Court of Appeals reversed the Appellate Division and reinstated the Special Term’s judgment.

Issue(s)

Whether the tax apportionment clause, which defines the averaging period as “the first three (3) years of the term of this lease,” should be interpreted to mean the first three years from the date of the temporary certificate of occupancy, or the first three years in which the assessment included the completed building.

Holding

Yes, because the lease explicitly states that “the obtaining of either a permanent or a temporary Certificate of Occupancy, shall be deemed as the commencement of the term of this lease.” Therefore, the first three years are calculated from the date of the temporary certificate of occupancy, regardless of whether the tax assessment reflected the completed building during that period.

Court’s Reasoning

The court emphasized the importance of adhering to the plain language of the contract. The lease clearly stated that the term commenced upon obtaining a temporary or permanent certificate of occupancy. The Appellate Division’s interpretation, which focused on the assessment including the completed building, was deemed “strained and untenable.”
The court acknowledged the possibility that the parties intended a different outcome but reiterated that courts cannot rewrite contracts to reflect unexpressed intentions: “we concern ourselves with what the parties intended, but only to the extent that they evidenced what they intended by what they wrote.” The court cited prior precedent, including Dwight v. Germania Life Ins. Co., 103 N.Y. 341, to support the principle that courts should not alter the clear language of a contract under the guise of interpretation.
The court distinguished H. L. Klion, Inc. v. Venimore Bldg. Corp., 15 N.Y.2d 601, where the lease explicitly referred to taxes due and payable for the tax years “during which the premises as improved shall be first assessed.” In contrast, the lease in Rodolitz linked the averaging period directly to the commencement of the lease term, which was defined by the occupancy certificate.
The court concluded that while the Appellate Division’s interpretation might align with the parties’ true intent, the clear and unambiguous language of the lease dictated a different result. Therefore, the original judgment of Special Term was reinstated.