National Conversion Corp. v. Cedar Bldg. Corp.

23 N.Y.2d 621 (1969)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

P, intending to engage in the conversion of restaurant garbage into fertilizer, entered into a five-year lease with D. The lease contained a representation that the demised premises were in an unrestricted zone and that the proposed use would not be in violation of the zoning ordinance. The lease contained a covenant by P that the operation of its business would produce no objectionable odors or gases. After alteration of the premises, and installation of equipment violations were filed by the City of New York. The premises were placed in an M-1 district allowing light manufacturing uses. Garbage conversion would be permitted in an M-1 district provided odors did not become readily detectable at the lot line and provided various other performance standards not confined to odors were satisfied. The premises were never adapted to control odors in order to comply with an M-1 standard. Because of the violation P defaulted on the lease and then sued D for fraud. At trial, D argued that P, represented by a lawyer, was just as much on notice, as they were, that the premises were located in a restricted zone. P testified that when it sought an adjournment of the negotiations in order for its lawyer to check whether the premises were located in an unrestricted zone, D's lawyer, who was also one of the principals, said that it would not be necessary, that they (landlords) 'own the property, and we know the area', that it is in an unrestricted zone, and 'We [landlords] guarantee it.' This representation was included in the lease. The court found for P and D appealed.