Minton v. Domb

OPINION OF THE COURT

Evans, J.

This is a summary hold-over proceeding seeking recovery of a certain co-operative apartment in New York City. The building in question was converted to a co-operative under the Rent Stabilization Law of 1969, such conversion taking place in 1971. In July, 1972, one Alvin Schragis purchased the shares controlling the vacant apartment and was given a proprietary lease. Vacant until September, 1973, a three-year sublease for the apartment was granted to respondents. The sublease contained an option to purchase within six months of expiration of the term. Appellant Kaskel purchased the shares in December, 1974 and assumed the lease subject to the rights of the subtenants. The term of the sublease expired on September 30, 1976, and eviction proceedings were begun in October. Housing Court granted the petition and Appellate Term reversed, holding that tenants covered by the Emergency Tenant Protection Act of 1974 (ETPA) could be evicted only in accordance with the Rent Stabilization Law, that subtenants were likewise protected, and that therefore petitioner was obligated to offer respondents a renewal of the lease.

In 1969, when the New York City Council enacted the Rent Stabilization Law, it cited in its legislative findings "exactions of unjust, unreasonable and oppressive rents and rental agreements * * * profiteering, speculation and other disruptive practices” (Administrative Code of City of New York, § YY51-1.0) as the conditions which made such legislation necessary. The exaction of unconscionable profits at the expense of tenants was the malady which the law was to remedy, and exempted were those premises operated not for profit, i.e., co-operatives and condominiums. Section YY51-3.0 of the Administrative Code entitled "Application” prior to amendment in 1974 made lucid their exemption thusly: "This law shall apply to class A multiple dwellings not owned as a cooperative or as a condominium.”

*38 Respondents Domb contend that they are entitled to a renewal lease because of the operation of the Emergency Tenant Protection Act as it "restabilized” their apartment, and point to subdivision b of section YY51-3.0 "Application” as amended. The subdivision in question states that the law shall apply to "b other housing accommodations made subject to this law pursuant to the emergency tenant protection act of [1974]” whereas subdivision a specifically exempts co-operatives and condominiums. They now rely upon section 5 of the ETPA which stated that a declaration of emergency may be made as to all classes of housing with certain exceptions, and that co-operatives and condominiums are not excepted. Now, by way of a fuller explanation and understanding of respondent’s contentions let us take a step backward to 1974. The effective date of chapter 576 of the Laws of 1974, which included the ETPA, was May 29, 1974. It stated that the existence of an emergency requiring restabilization of destabilized apartments was a matter for the legislative body of each city, town or village within the State to determine; that it would become effective in cities with a population of one million or more whenever the local legislative body of the city determines the existence of such emergency and legislates accordingly. The New York City Council conducted the mandated public hearing on June 17, 1974 and on June 20, 1974, the council passed a resolution restabilizing destabilized apartments effective July 1, 1974. Section YY51-3.0 now reads after the 1974 amendment that it shall apply to "a. Class A multiple dwellings not owned as a cooperative or as a condominium, containing six or more dwelling units”, which further made clear the legislative intent to exempt co-operatives and condominiums (with certain exceptions) from the operation of the statute;

As further indicia of legislative intent, let us turn to the New York City Conciliation and Appeals Board (Wyle v Prince, Docket No. 008019, Opn No. 2926, at p 2) as follows:

"Had the Legislature intended that the RSL apply to buildings owned as a cooperative on July 1, 1974, Chapter 576 of the Laws of 1974 would have so provided. On the contrary, Subdivision 7 of such law specifically excludes jurisdiction of the Rent Stabilization Law over buildings owned as cooperatives.

"The Board finds that since the building was owned as a cooperative on July 1, 1974, the effective date in New York *39 City of Chapter 576 of the Laws of 1974, the subject apartments are not subject to the Rent Stabilization Law and the tenants herein, as well as other similarly situated tenants, are not entitled to renewal leases as provided thereunder. The tenants’ complaint is therefore dismissed (Adler v. Bonner Realty & Constr. Corp., N.Y.L.J. 6/24/74, p. 15, col. 1, Sup. Ct., Bx. Co., Spiegel, J., Brown, Harris, Stevens, Inc. v. Menzel, N.Y.L.J., 3/15/72, p. 17, col. 4, App. Term, 1st Dept.).”

Due to the unique nature and the function of the Conciliation and Appeals Board, it might be advisable to give more than ordinary weight to their opinion in matters of this nature. "Ordinarily, courts will defer to construction given statutes and regulations by the agencies responsible for their administration, if said construction is not irrational or unreasonable” (Matter of Albano v Kirby, 36 NY2d 526, 532).

In an effort to differentiate between this case and Axelrod v Starr (52 AD2d 232, affd 41 NY2d 942) and Krauss v Perry (53 AD2d 578) upon which respondents rely as controlling, we find that Axelrod holds that housing accommodations financed by loans from public agencies are subject to the New York City Rent Stabilization Law, and the rent guidelines established thereto, during the period that the Emergency Tenant Protection Act of 1974 is applicable within the City of New York. The case here differs from Axelrod in that the present housing accommodations were not financed by agency loans.

Housing accommodations such as condominiums, co-operatives and Class B dwellings are not specifically exempted by the ETPA but are exempted by the Rent Stabilization Law. Thus, they are still exempt from regulation, though not specifically exempted by the Emergency Tenant Protection Act. There is clearly then, no basis for concluding that this court’s ruling in Axelrod, either expressly or impliedly applied to a building converted to co-operative ownership prior to enactment of the ETPA and the subsequent Resolution No. 276 of the City Council. Here the tenant came in after conversion and after the proprietary lease was effective and never achieved the status of tenant, but was rather, a subtenant or subleasor with an option to buy the property. Further, rent control is not readily adaptable to co-operative properties which have a nonprofit landlord and where maintenance charges, not rent, are established by actual expenses, a factor which is an income tax deduction as a proportionate share of real estate taxes and mortgage interest.

*40 Krauss v Perry (supra) began as a consolidated eviction proceeding, the tenants contending that they were in a house converted to a co-operative and subject to the Rent Stabilization Law and entitled to renewal leases. The hearing officer agreed; however he could not reach the question of whether co-operatives were subject to regulation under the laws because no evidence of such conversion was presented. The case was sent back for a new trial to determine if the landlord was entitled to relief under section 61 of the Rent Stabilization Code. The evidence compelled a finding that there was a conventional landlord-tenant relationship. The court commented that the petitioner’s assertion that the co-operative plan was valid and effective was a mere assertion with no basis in the record. While Krauss did involve the application of the ETPA to an alleged co-operative, the decision has no bearing on the question of the application of the ETPA to cooperatives due to the fact that the record could not support a finding of the existence of a co-operative owner. It would appear that condominiums and co-operatives are still exempt from regulation, although not exempted by the ETPA. Chapter 576 of the Laws of 1974 contain both the amended section YY51-3.0 of the Administrative Code and the sections of the ETPA. Further, section 95 of the General Construction Law provides that "The provisions of a law repealing a prior law, which are substantial re-enactments of provisions of the prior law, shall be construed as a continuation of such provisions of such prior law, modified or amended according to the language employed, and not as new enactments.” The Legislature by its re-enactment of section YY51-3.0 with the ETPA apparently intended the previous exemption to remain in effect.

As was said in Axelrod (52 AD2d 232, 236, supra): "All rights, remedies and obligations heretofore created pursuant to the New York City rent stabilization law, including those contained in the code of the rent stabilization association of New York city, approved by the New York city housing and development administration, and the orders of the conciliation and appeals board, shall inure to the benefit of all owners and tenants of units subject to this chapter.” (L 1974, ch 576, § 15.) This means that any exemptions theretofore existing shall continue in effect.

The City Council’s Resolution No. 276 was enacted consistent with section 5 of the ETPA which required that "A declaration of emergency may be made pursuant to section *41 three as to all or any class or classes of housing accommodations in a municipality”. The language used was calculated to conform to the language of the statute as much as possible and not to effect any changes in existing law. The Attorney-General’s office of the State of New York issued an Advisory Opinion, dated December 2, 1974, stating: "The New York City Council resolution which was adopted to implement ETPA § 3 * * * did not expressly or otherwise purport to modify the clear and unmistakable intent to exempt cooperatives as set forth in subdivision a.” (§ YY51-3.0).

Lastly, this court in Wyle v Prince (50 AD2d 538, supra) affirmed on the opinion of Justice Helm an sitting in Special Term, Part I, New York County. Wyle is comparable to the instant case. Here too the conversion to a co-operative became effective prior to July 1, 1974, the date of ETPA’s effective date as established by the New York City Council. The building having been a co-operative before July 1, 1974, was not "restabilized”. In denying renewal leases, the court cited Jacobus v Colgate (271 NY 235, 240) that: "The general rule is that statutes are to be construed as prospective only * * * It takes a clear expression of the legislative purpose to justify a retroactive application”. Therefore, it appears that the only guiding and controlling case in the determination of the issues at bar is Wyle v Prince.

Accordingly, order, Appellate Term, First Department, entered May 31, 1977, reversing a judgment of the Civil Court of the City of New York, entered November 24, 1976, should be reversed on the law without costs and the judgment of the Civil Court should be reinstated.