Opinion
January 31, 1950.
Appeal from Supreme Court, New York County, KOCH, J.
James N. Vaughan of counsel ( Jeremiah P. Lyons with him on the brief; Vaughan Lyons, attorneys), for appellants.
H. Jackson Sillcocks of counsel ( Tanner, Sillcocks Friend, attorneys), for respondent.
Plaintiffs leased to defendant property at 364 Lexington Avenue for a term of twenty-one years expiring February 28, 1950, at a graduated annual rental of $15,000 for the first ten years and $17,000 for the remainder of the term. The lease contains an option to renew for two additional terms of twenty-one years each. The lease provided a formula for fixing rent for the extended term by adding to $1,500, 6% of the value of the land. It provided for the appointment of arbitrators to fix said value, with a further provision that the arbitrators "shall in no event, however, fix for such renewal term a rental less than the maximum fixed annual rental then currently paid."
A modification agreement was entered into in September, 1940, which provided that the annual fixed rental for the last years of the lease should be reduced from $17,000 to $12,000. The question presented by the motion to dismiss is whether an action for declaratory judgment will lie at this time or whether it is prematurely brought because there is a possibility that the arbitrators may not fix an annual rent of less than $17,000 for the extended term.
We are of the opinion that there is a present dispute between the parties and that the situation is one where a declaratory judgment should be rendered before arbitration proceedings are had. The question to be adjudicated is whether the agreement for reduction of rent to $12,000 resulted in a modification of the formula for fixing the annual rent so as to substitute a current rent of $12,000 in place of the $17,000 provided in the original lease as the minimum rent to be fixed by the arbitrators. The arbitrators have no power to determine the effect of the modification agreement in this regard and if they attempted to do so they would be exceeding their powers. Assuming that a motion to correct or vacate any improper award would afford some remedy to plaintiffs if such procedure was followed, it would become necessary to have a new arbitration. This would seem to indicate that there is a present necessity for the declaratory judgment sought.
The order granting the defendant's motion to dismiss the complaint herein and ordering that judgment be entered in favor of defendant and against the plaintiffs should be reversed, with costs, and the motion denied.
GLENNON, J.P., COHN, CALLAHAN, VAN VOORHIS and SHIENTAG, JJ., concur.
Order unanimously reversed, with costs to the appellants and the motion denied. Settle order on notice. [See post, pp. 987, 1067.]