Monarch Information Services, Inc. v. 161 William Associates , 99 A.D.2d 1007 ( 1984 )

Order of the Supreme Court, New York County (Richard W. Wallach, J.), entered on September 2,1983, which denied plaintiffs’ motion for a preliminary injunction and granted defendant’s cross motion to dismiss the complaint, is reversed, on the law, the facts and in the exercise of discretion, with costs, the defendant’s cross motion to dismiss the complaint is denied and the plaintiffs’ motion for a preliminary injunction is granted. H It is undisputed that the principals of APSI Monarch, Ltd., and Monarch Data Corporation are and have always been identical and that the employees of the two corporations are the same and that the two corporations have occupied the premises from the beginning of the relationship between them and the defendant 161 William Associates. It is equally undisputed that while the lease is in the name of APSI Monarch, Ltd., and Monarch Data Corporation is the guarantor under the said lease, the defendant has continuously since May of 1982, and for some 15 consecutive months, accepted payment of the rent for the premises from Monarch Data Corporation. 11 Indeed, it appears that even after the notice to cure the default was served upon the appellant APSI Monarch, Ltd., rental payments were accepted from Monarch Data. Special Term and our dissenting brother assert the right of the defendant to accept rent from “guarantor” and/or sublessee/assignee under the nonwaiver provisions of paragraph 11 of the lease. That lease provision however, entitles the landlord to “collect rent from the assignee, under-tenant or occupant, and apply the net amount collected to the rent herein reserved” only after there has been a default by the tenant. The meaning of the language “after default by Tenant”, inserted parenthetically in the “nonwaiver” clause, is unclear. If the “default” referred to is the subletting or assignment, then the phrase is surplusage, since the sentence opens with the conditional language describing that circumstance. If the referenced “default” pertains to the failure of the tenant to pay the rent following the assignment or subletting, then the defendant’s acceptance of the rent here was unauthorized by paragraph 11. There is no contention that there was a default by APSI Monarch at any time of the payment of the rent due. K As has been stated by the Court of Appeals in Atkin’s Waste Materials v May (34 NY2d 422, 427), “[w]hen rent is accepted with knowledge of particular conduct which is claimed to be a default * * * acceptance of the rent is in effect an election by the landlord to continue the relationship of landlord and tenant.” In Jefpaul Garage Corp. v Presbyterian Hosp. (92 AD2d 514 [a case in which there was indeed a general nonwaiver clause and the issue of nonwaiver was presented to this court in the briefs on appeal]), we held the determination of the Court of Appeals in Atkin’s {supra.) to be dispositive of issues such as those here presented. Paragraph 11 of the lease bars both assignment and subletting. It is undisputed that Monarch Data Corp. occupied the premises along with APSI Monarch from the inception of the lease. Thus, the acceptance of the rent from Monarch Data Corp. during the course of this “subletting” effectively waived the lease prohibition as well. H At the very least, it appears that questions of fact exist in respect to the intention of the parties that can be resolved only by an examination of their conduct over the course of the relationship between them and by a determination of what the defendant knew and when was it known. Accordingly, since the equities seem to favor the tenant, the status quo ought to be maintained, pending such determination. Concur — Ross, Fein and Alexander, JJ.