Eaton v. New York City Conciliation & Appeals Board

Majority

p. 340

Barbara H. Eaton, Appellant, v New York City Conciliation and Appeals Board et al., Respondents. Tenants’ Association of St. John’s Colony, Intervenor-Appellant. Eleanor Nesbitt, Appellant, v New York City Conciliation and Appeals Board et al., Respondents. Tenants’ Association of St. John’s Colony, Intervenor-Appellant.

Argued May 4, 1982;

decided June 17, 1982

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POINTS OF COUNSEL

Sidney H. Stein and David Wright for appellants and intervenor-appellant.

I. Section 5 (subd a, par [6]) of the Emergency Tenant Protection Act of 1974 does not exempt religious organizations from rent regulation. (La Guardia v Cavanaugh, 53 NY2d 67 ; Matter of Association of Bar of

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City of N. Y. v Lewisohn, 34 NY2d 143 ; Patrolmen’s Benevolent Assn. of City of N. Y. v City of New York, 41 NY2d 205 ; Matter of Watson, 171 NY 256 ; People v Illardo, 48 NY2d 408 ; People v Shapiro, 50 NY2d 747 ; Matter of Bowen v Allen, 17 AD2d 12 , 13 NY2d 663 ; Matter of Mlodozeniec v Worthington Corp., 9 AD2d 21 , 8 NY2d 918 , 364 US 628 ; Tcherepnin v Knight, 389 US 332 ; Henderson v Defense Contract Admin. Servs. Region, N. Y., 370 F Supp 180 .) II. If these housing accommodations are subject to rent regulation, the statute is constitutional; if they are exempt, the statute is unconstitutional. (Allied Stores of Ohio v Bowers, 358 US 522 ; Craig v Boren, 429 US 190 ; Everson v Board of Educ., 330 US 1 ; Board of Educ. v Allen, 392 US 236 ; Walz v Tax Comm., 397 US 664 ; Committee for Public Educ. v Nyquist, 413 US 756 .) III. Appellants are entitled to recover attorneys’ fees subject to section 234 of the Real Property Law. (Dolman v United States Trust Co. of N. Y., 2 NY2d 110 ; People ex rel. City of N. Y. v Nixon, 229 NY 356 ; Skandia Amer. Reinsurance Corp. v Schenck, 441 F Supp 715 ; Concord Vil. Mgt. Co. v Rubin, 101 Misc 2d 625 ; 111 East 88th Partners v Simon, 106 Misc 2d 693 ; Century Apts. v Yalkowsky, 106 Misc 2d 762 .)

Cullen S. McVoy and Ellis S. Franke for New York City Conciliation and Appeals Board, respondent.

I. The court below properly upheld the board’s order which found, pursuant to the express provisions of the rent stabilization law, as amended by chapter 576 of the Laws of 1974, that the premises in question are exempt from rent stabilization by virtue of the fact that the owner is a religious institution operated exclusively for charitable purposes on a nonprofit basis. (Matter of Cornerstone Baptist Church v Rent Stabilization Assn., 55 AD2d 952 ; Cornell Univ. v New York City Conciliation & Appeals Bd., 87 Misc 2d 1060 , 55 AD2d 587 , 42 NY2d 804 ; Minton v Domb, 63 AD2d 36 ; People ex rel. Doctors Hosp. v Sexton, 267 App Div 736 , 295 NY 553 ; Matter of Huntington, 168 NY 399 ; People ex rel. Watchtower Bible & Tract Soc. v Haring, 8 NY2d 350 .) II. The court below correctly held that the board’s construction of the statute, which afforded equal exemption treatment to religious institutions as a class, was entirely consistent with the establishment clause of

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the Constitution, whereas the construction adopted by Special Term (and now advocated by appellant) would likely run afoul of constitutional protections. (Walz v Tax Comm., 397 US 664 ; Committee for Public Educ. v Nyquist, 413 US 756 .)

Gary M. Rosenberg and Jay Zinns for St. John’s in the Village, respondent.

I. The court below properly held that a rational basis supports the board’s determination that the vacancy decontrolled apartments in question located in buildings owned and operated by St. John’s in the Village are exempt from the rent stabilization law by virtue of section 5 (subd a, par [6]) of the Emergency Tenant Protection Act of 1974. (Matter of Cornerstone Baptist Church v Rent Stabilization Assn., 55 AD2d 952 ; Cornell Univ. v New York City Conciliation & Appeals Bd., 87 Misc 2d 1060 , 55 AD2d 587 , 42 NY2d 804 ; People ex rel. Watchtower Bible & Tract Soc. v Haring, 8 NY2d 350 ; Matter of Huntington, 168 NY 399 .) II. The statutory provision exempting vacancy decontrolled apartments owned by St. John’s Church is constitutional. (Walz v Tax Comm., 397 US 664 ; Board of Educ. v Allen, 392 US 236 ; Committee for Public Educ. v Nyquist, 413 US 756 .) III. Section 234 of the Real Property Law does not entitle appellant to attorneys’ fees in an article 78 proceeding. (Concord Vil. Mgt. Co. v Rubin, 101 Misc 2d 625 .)

OPINION OF THE COURT

The question presented on these appeals is whether residential apartments owned and operated by a religious institution and rented to the general public are exempt from the rent stabilization laws. The New York City Conciliation and Appeals Board has determined that the apartments are exempt. In separate article 78 proceedings brought by tenants of the subject apartments, the Supreme Court vacated the determinations but the Appellate Division reversed and confirmed the determinations. The tenants now appeal to this court.

Respondent, St. John’s in the Village, is a religious institution responsible for the operation of the St. John’s Episcopal Church in New York City. It also owns and

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operates as landlord approximately 60 residential apartments in Greenwich Village. These apartments were originally subject to the Rent Stabilization Law of 1969 but were decontrolled pursuant to the vacancy decontrol law (L 1971, ch 371).

Petitioners Eleanor Nesbitt and Barbara Eaton assumed occupancy of their apartments in August, 1972 and August, 1974 respectively. Thereafter, each entered into subsequent renewal leases at rents permitted under the rent stabilization guidelines authorized by the Emergency Tenant Protection Act of 1974 (L 1974, ch 576, § 4). The act provided, with certain exceptions, that apartments previously vacancy decontrolled were to be restored to rent stabilization. In 1979, respondent informed its tenants that the apartments were not subject to rent stabilization. It was respondents’ position that as a religious institution operated exclusively for charitable purposes on a nonprofit basis, its rental units were exempted from rent stabilization as authorized by section 5 (subd a, par [6]) of the Emergency Tenant Protection Act. This section specifically exempts from rent stabilization: “housing accommodations owned or operated by a hospital, convent, monastery, asylum, public institution or college or school dormitory or any institution operated exclusively for charitable or educational purposes on a non-profit basis”.

When respondent insisted that its tenants enter into new leases at rents higher than those permitted by rent stabilization, petitioners filed separate complaints with the New York City Conciliation and Appeals Board (CAB). CAB dismissed petitioners’ complaints holding that the dwelling units were exempt from rent regulation and control in that respondent operated the subject premises exclusively for charitable purposes on a nonprofit basis in accordance with section 5 (subd a, par [6]) of the act.

The petitioners then commenced separate article 78 proceedings seeking an annulment of CAB’s determinations and an award of attorneys’ fees pursuant to section 234 of the Real Property Law. Special Term reversed on the ground that the section in question specifies “monastery” or “convent” and not religious institutions generally.

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The Appellate Division modified on the law by reversing the judgments insofar as they annulled CAB’s determination. The court found that binding precedents recognize a degree of interchangeability between the terms “religious” and “charitable” and that the statute as interpreted suffered from no constitutional infirmity. The court also held that petitioners’ claims for attorneys’ fees were properly denied. We now reverse the Appellate Division.

The petitioner tenants argue on this appeal that section 5 (subd a, par [6]) does not specifically exempt religious institutions from rent stabilization and that such an exemption would violate the establishment clause of the Constitution. They further contend that respondent’s failure to offer renewal leases at rent-stabilized terms constitutes a failure to perform a covenant or agreement under the lease entitling them to recover attorneys’ fees in accordance with section 234 of the Real Property Law.

It is a fundamental principle of statutory interpretation that a court should attempt to effectuate the intent of the Legislature (McKinney’s Cons Laws of NY, Book 1, Statutes, § 76; Matter of Petterson v Daystrom Corp., 17 NY2d 32 , 38; see Matter of Carr v New York State Bd. of Elections, 40 NY2d 556 ) and where the statutory language is clear and unambiguous, the court should construe the statute to give effect to the plain meaning of the words used (Bender v Jamaica Hosp., 40 NY2d 560 ; Matter of De Peyster, 210 NY 216 ). In this case the language of the statute exempts from rent stabilization housing accommodations owned or operated by any institution operated exclusively for charitable or educational purposes on a nonprofit basis. There is no language in the statute which would permit an interpretation providing a similar exemption for institutions operated for religious purposes nor is there statutory language which would suggest this legislative intent. Where as here, the statute describes the particular situations to which it is to apply “an irrefutable inference must be drawn that what is omitted or not included was intended to be omitted or excluded” (McKinney’s Statutes, § 240; see Patrolmen’s Benevolent Assn. of City of N. Y. v City of New York, 41 NY2d 205 , 209). Nor does the statutory reference to monastery or convent serve to define religious institutions

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generally. Indeed the opposite conclusion could be inferred by virtue of the specific language of the statute which singles out convent or monastery from the application of its provision.

Had the Legislature intended to extend the exemption to religious institutions, it could have chosen to do so through appropriately worded legislation (Bright Homes v Wright, 8 NY2d 157 ). In view of the Legislature’s failure to include religious institutions generally within the exemption provisions of the statute an “irrefutable inference” arises that housing accommodations owned or operated by religious institutions are outside the scope of this statute.

Although respondent may have functions and attributes which may be characterized as charitable there is no demonstration that they are anything but incidental to its religious purposes. The record before us fails to disclose that the subject apartments are owned or operated by an institution operated exclusively for charitable purposes or that the income derived from the rental property is devoted exclusively to charitable purposes.

Moreover, we find no constitutional infirmity in the statute. A statute is presumptively constitutional and should be construed in such a manner as to uphold its constitutionality (McKinney’s Statutes, § 150). We believe that the interpretation adopted by Special Term is consistent with this objective.

Finally, the issue involving petitioners’ claim for attorneys’ fees should be remitted to Special Term for further consideration as to whether the landlord’s refusal to offer renewal leases in rent-stabilized terms constituted a failure to perform a covenant or agreement as is requisite to the application of section 234 of the Real Property Law.

Accordingly, in each case, the order of the Appellate Division should be reversed and the matter remitted to Special Term for consideration of the issue as to whether petitioner is entitled to attorneys’ fees and for reinstatement of the provisions of the judgment of Special Term vacating the determination of the board and remanding to the board for consideration of petitioners’ claim for refund of prior rent increases.

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Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Fuchsberg and Meyer concur.

In each case: Order reversed, with costs, and matter remitted to Supreme Court, New York County, for further proceedings in accordance with the opinion herein.

Cases cited

La Guardia v. Cavanaugh 53 NY2d 67 N.Y. 1981-06-04 p. 341
Association of the Bar of New York v. Lewisohn 34 NY2d 143 N.Y. 1974-05-08 p. 342
In re the Appraisal of the Estate of Watson 171 NY 256 N.Y. 1902-05-20 p. 342
People v. Illardo 48 NY2d 408 N.Y. 1979-11-27 p. 342
People v. Shapiro 50 NY2d 747 N.Y. 1980-07-03 p. 342
Bowen v. Allen 17 AD2d 12 N.Y. App. Div. 1962-07-13 p. 342
Bowen v. Allen 13 NY2d 663 N.Y. 1963-05-09 p. 342
Claim of Mlodozeniec v. Worthington Corp. 9 AD2d 21 N.Y. App. Div. 1959-08-13 p. 342
Mlodozeniec v. Worthington Corp. 8 NY2d 918 N.Y. 1960-06-10 p. 342
Tcherepnin v. Knight 389 US 332 SCOTUS 1967-12-18 p. 342
Allied Stores of Ohio, Inc. v. Bowers 358 US 522 SCOTUS 1959-02-24 p. 342
Craig v. Boren 429 US 190 SCOTUS 1976-12-20 p. 342
Everson v. Board of Education 330 US 1 SCOTUS 1947-02-10 p. 342
Board of Education v. Allen 392 US 236 SCOTUS 1968-06-10 p. 342, p. 343
Walz v. Tax Commission of New York 397 US 664 SCOTUS 1970-05-04 p. 342, p. 343
Committee for Public Education & Religious Liberty v. Nyquist 413 US 756 SCOTUS 1973-06-25 p. 342, p. 343
Dolman v. United States Trust Co. 2 NY2d 110 N.Y. 1956-11-15 p. 342
People ex rel. City of New York v. Nixon 229 NY 356 N.Y. 1920-07-07 p. 342
Concord Village Management Co. v. Rubin 101 Misc 2d 625 N.Y. Dist. Ct. 1979-11-06 p. 342, p. 343
111 East 88th Partners v. Simon 106 Misc 2d 693 N.Y. Civ. Ct. 1980-12-31 p. 342
Century Apartments, Inc. v. Yalkowsky 106 Misc 2d 762 N.Y. Civ. Ct. 1980-12-08 p. 342
Cornell University v. New York City Conciliation & Appeals Board 87 Misc 2d 1060 N.Y. Sup. Ct. 1976-06-17 p. 342, p. 343
Minton v. Domb 63 AD2d 36 N.Y. App. Div. 1978-06-27 p. 342
People ex rel. Doctors Hospital, Inc. v. Sexton 295 NY 553 N.Y. 1945-10-25 p. 342
In re the Appraisal, under the Transfer Tax Act, of the Estate of Huntington 168 NY 399 N.Y. 1901-11-12 p. 342, p. 343
People ex rel. Watchtower Bible & Tract Society, Inc. v. Haring 8 NY2d 350 N.Y. 1960-11-17 p. 342, p. 343
Claim of Petterson v. Daystrom Corp. 17 NY2d 32 N.Y. 1966-02-17 at 38 p. 345
Carr v. New York State Board of Elections 40 NY2d 556 N.Y. 1976-10-21 p. 345
Bender v. Jamaica Hospital 40 NY2d 560 N.Y. 1976-10-26 p. 345
In re the Transfer Tax upon the Estate of De Peyster 210 NY 216 N.Y. 1914-02-24 p. 345
Bright Homes, Inc. v. Wright 8 NY2d 157 N.Y. 1960-07-08 p. 346