South Bay Center, Inc. v. Butler, Herrick & Marshall
43 Misc. 2d 269, 1964 N.Y. Misc. LEXIS 1725, 250 N.Y.S.2d 863 (1964)
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Rule of Law:
An assignment of a lease does not release the original tenant from their contractual obligations, even with the landlord's consent and the assignee's assumption of the covenants, unless there is an express release from the landlord. This is especially true when the original lease contains a clause stipulating the tenant's continued liability after an assignment.
Facts:
- On or about June 16, 1960, a landlord entered into a 10-year lease with tenants Butler, Herrick & Marshall.
- The lease contained a covenant explicitly stating that an assignment would not be deemed a release of the tenants from their obligations.
- On March 11, 1963, the landlord, tenants, and a new party, Commack Decorators Inc. (assignee), executed an agreement.
- This agreement gave the landlord's consent to the assignment, increased the annual rent, and required the assignee to assume all terms of the lease.
- The assignee took possession of the premises but abandoned them on December 1, 1963.
- No rent has been paid to the landlord since the assignee's abandonment.
Procedural Posture:
- The landlord (plaintiff) sued the original tenants (defendants) in a New York court for $60,000 in unpaid rent.
- The tenants filed an answer, raising the affirmative defense that the landlord had discharged them from all obligations under the lease.
- The landlord filed a motion to dismiss the answer or strike the affirmative defense.
- Both parties agreed to treat the landlord's motion as a motion for summary judgment.
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Issue:
Does a tenant's assignment of a lease, even when accompanied by the landlord's consent, an increase in rent, and an express assumption of obligations by the assignee, release the original tenant from their liability for rent if the assignee defaults?
Opinions:
Majority - William R. Brennan, Jr., J.
No. A tenant who assigns a lease remains liable on the express covenants within it because the original privity of contract between the landlord and tenant is not destroyed by the assignment. The court reasoned that the original lease itself expressly provided for the tenants' continuing liability. Even absent that clause, the common law rule is that an assignment does not discharge the original tenant's contractual obligations. Actions such as the landlord's consent, acceptance of rent from the assignee, or even the assignee's express assumption of the lease obligations, are insufficient to create a release. The tenants' claim of a discharge was unsubstantiated, as the written assignment agreement contained no release language, and the only evidence offered was an affidavit from their attorney, who lacked personal knowledge of the negotiations and whose statements therefore had no probative value.
Analysis:
This decision reinforces the durable nature of privity of contract in landlord-tenant law, establishing a high bar for an original tenant (assignor) to prove they have been released from their lease obligations. It clarifies that a novation or release is not to be implied from modifications to the lease or the landlord's consent to an assignment; rather, it requires express and clear evidence. The ruling serves as a strong precedent against discharging an original tenant's liability without a clear, written release, thereby protecting landlords from defaults by less reliable assignees. It also highlights the procedural rule that an attorney's affidavit without personal knowledge is insufficient to create a triable issue of fact in a summary judgment motion.
