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Landlord and tenant - lease - percentage rental - (1) where percentage rental under main lease was to be paid on all sales "from" demised premises, sales made on fifth floor, taken over from landlord under separate lease, to customers sent there by salespeople on lower floor, which was subject of main lease, were made "from" main store and were subject to percentage rent - (2) however, all fur sales were not made "from" lower store simply because fur department was moved up to fifth floor after that floor had been "integrated" with main store - (3) violations, if any, caused by change of elevator doors could not result in liability for additional rent not promised in lease - (4) lease provision to maintain "first class merchandise" and that store would be conducted substantially similar to tenant's prior store, intended no more than that woman's clothing shop of same general character as tenant's store from which it had moved should be conducted on three lower floors.
The lessee, which operated a woman's retail clothing store, entered into an agreement to lease the first three floors of the lessor's building for a flat rent plus a percentage of sales. The parties later agreed to lease a portion of the fifth floor under a flat rate rent. The lessee subsequently moved its fur department to the fifth floor and reconstructed the interior elevators to operate on the first through third and fifth floors. The lessor brought an action against the lessee, arguing that it was owed additional rent in the form of the sales percentage from the fur sales. The trial court ruled in favor of the lessor. The Appellate Division of the Supreme Court in the First Judicial District (New York) affirmed the judgment but lowered the amount of damages awarded. Both parties appealed.
Was the lessee required to pay percentage lease under the circumstances?
On appeal, the court held that there was nothing in either lease to forbid the lessee from moving its fur department to the fifth floor. The court held that sales referred from the lower three floors were sales on, in, or from those floors and that those sales, pursuant to the lease on the first three floors, should have been included in the sales percentage rent for the first three floors. Accordingly, the court affirmed the judgment from the appellate court.