Susskind v. 1136 Tenants Corp.

43 Misc. 2d 588, 251 N.Y.S.2d 321, 1964 N.Y. Misc. LEXIS 1650
CourtCivil Court of the City of New York
DecidedJune 18, 1964
StatusPublished
Cited by28 cases

This text of 43 Misc. 2d 588 (Susskind v. 1136 Tenants Corp.) is published on Counsel Stack Legal Research, covering Civil Court of the City of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Susskind v. 1136 Tenants Corp., 43 Misc. 2d 588, 251 N.Y.S.2d 321, 1964 N.Y. Misc. LEXIS 1650 (N.Y. Super. Ct. 1964).

Opinion

Saul Price, J.

Plaintiffs, lessees of a co-operative apartment, sue the co-operative apartment corporation to recover $435 as damages. The “ sleepers ” and underflooring in the bedroom of plaintiffs’ apartment rotted and required replacement. The rotted “ sleepers ” and underflooring caused the parquet flooring of the bedroom to buckle and create a ‘ wavy ’ ’ effect. [589]*589“ Sleepers ” are 2 inch by 4 inch wooden parts to which under-flooring is attached. These “ sleepers ” are situated on the base of the ceiling of the apartment beneath the parquet floors of plaintiffs’ apartment.

Upon proper and adequate notice and demand for repairs, the lessor corporation failed to repair the condition. The lessees thereupon spent $435 in replacing the rotted underflooring and sleepers.

The stockholder lessees contend the defendant co-operative corporation was bound by a covenant, specifically paragraph 2, of the proprietary lease executed between the parties, to make such repairs; that failure to do so caused the defendant to breach its covenant.

Paragraph 2 of the proprietary lease reads in pertinent part: “ Lessor shall keep in good repair the foundations, sidewalks, walls, supports, beams ”.

It is the contention of the defendant that a co-operative apartment corporation has the obligation to repair and maintain the structure and structural parts; that it need only repair those facilities of the building used in common by all lessees. The co-operative lessor maintains that “ sleepers ” and underflooring are neither structural parts of the building nor “beams and supports ” as stated in the proprietary lease.

The crux of the problem is: Is the repair of the ‘ ‘ sleepers ’ ’ and underflooring the responsibility of the co-operative corporation or the proprietary lessees?

It is important that the relationship between the plaintiffs and the defendant here to be defined to determine which party is obligated to make this repair.

The form of co-operative development most commonly employed, particularly in the Metropolitan area, is the co-operative apartment corporation (Isaacs, To Buy or Not to Buy: That is the Question — What is a Cooperative Apartment? 1958, Record New York City, BA203). Such a corporation is subject to the general provisions of the Cooperative Corporations Law (Lazar v. Knolls Co-op. Section No. 2, 205 Misc. 748). It is usually organized as a stock corporation for the purpose of obtaining an apartment building to be operated on a co-operative basis (Whitebook, The Cooperative Apartment, 9 The Practical Lawyer 25 [1963]).

Under this plan the corporate entity holds title to all the premises (4 Powell, Real Property, 1Í631, p. 720). The prospective tenant then purchases stock in the co-operative corporation, the number of shares allocated proportionately to the value of [590]*590the apartment to be occupied (Note, Co-operative Apartment Housing, 61 Harv. L. Rev. 1407,1408, [1948]).

By virtue of his stock ownership, a purchaser is entitled to a 1 proprietary lease ” (1 American Law of Property, § 3.10 [Casner ed., 1952]; Bernstein, Practical Problems in the Organization, Acquisition, Financing and Operation of Real Estate Cooperatives, N. Y. U. 18th Institute on Fed. Taxation, 89 [I960]).

The plaintiff lessees, Jesse Susskind and Frances Susskind, purchased 275 shares of capital stock of the defendant corporation. The defendant then, on June 1,1960, entered into a “ proprietary lease ” with the plaintiffs as owners of its corporate stock. The execution of a “ proprietary lease ” from the owning corporation to the stockholder desiring to be a tenant is vital (4 Powell, Real Property, p. 727, supra). . This is an important instrument to the purchaser, for, without it, he has no right of occupancy of his apartment. Stock ownership alone will not suffice (Smith, A Suvey of the Legal Aspects of Cooperative Apartment Ownership, 16 Univ. of Miami L. Rev. 305 [1961]).

In the present situation, the terms embodied in the ‘ proprietary lease ” and its legal meaning determine the interest acquired by the plaintiffs in the premises in question (Tompkins v. Hale, 172 Misc. 1071; Matter of Miller, 173 Misc. 347). Thus, the ‘1 proprietary lease ’ ’ will characterize the relationship between the parties before this court (Vernon Manor Co-op. Apts., Section I v. Salatino, 15 Misc 2d 491).

In legal theory, a corporation is an entity distinct and separate from its shareholders, no one of whom has a right to receive legal title to any specific property of the corporation (1 American Law of Property, § 3.10, supra). In an apartment co-operative, then, the corporation is sole owner of the land and building (4 Powell, Real Property, supra, 1T633.il). It is the shares of the corporation that are sold, and, despite a vernacular use to the contrary, the apartment is not sold but leased under a so-called proprietary lease (People ex rel. McGoldrick v. Sterling, 283 App. Div. 88). The lessee of the proprietary lease is in much the same position as any other tenant under the usual leasing arrangement. By the “proprietary lease” the shareholder tenant acquires a right to occupy a particlular apartment. He is only a lessee and his property rights are restricted (Vogel, Co-op Apartment, Appendix A, §§ 5, 6, 13,15, 18). The nature of his tenancy is a leasehold coupled with forfeiture provisions, usually in the nature of a right of re-entry by the co-operative corporation (4 Powell, Real Property, supra, V 633.13).

[591]*591The defendant corporation, then, in law, is markedly different from its shareholders because of its corporate qualities, as is ownership of the corporate realty. The plaintiff shareholders are lessees of the premises in much the same position as any other tenant under the usual leasing arrangement. They are not owners but third parties having distinct rights against and distinct obligations toward the defendant owner (People ex rel. McGoldrick v. Sterling, supra).

Some courts, for the very limited purpose of enforcing restrictive plans under which co-operative apartment houses are constructed and leased, have referred to the lessee as an owner of the co-operative apartment (Penthouse Props. v. 1158 Fifth Ave., 256 App. Div. 685). Others have regarded the lessee as a title holder to permit him to.bring dispossess proceedings to recover possession of the co-operative apartment (Curtis v. Le May, 186 Misc. 853). However, a landlord is defined as one entitled to the rent for use and occupancy of any housing accommodation. Thus, a stockholder tenant of an apartment may be a “ landlord ” to a party in possession of premises leased to the aforementioned tenant stockholder (People ex rel. McGoldrick v. Sterling, supra).

Such decisions, however, have no effect on the law that an estate measured by a definite number of years, such as a leasehold of a co-operative apartment, is personalty and not realty (Despard v. Churchill, 53 N. Y. 192; Matter of Ehrsam, 37 App. Div. 272; Matter of Althause, 63 App. Div. 252, affd. 168 N. Y. 670) and the fact that stock ownership is prerequisite to the procurement of the lease does not affect the legal classification of these assets as personal property (Surrogate’s Ct. Act, § 202, subds. 1, 8;

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43 Misc. 2d 588, 251 N.Y.S.2d 321, 1964 N.Y. Misc. LEXIS 1650, Counsel Stack Legal Research, https://law.counselstack.com/opinion/susskind-v-1136-tenants-corp-nycivct-1964.