Opinion
June 13, 1994
Appeal from the Supreme Court, Nassau County (Levitt, J.).
Ordered that the order is affirmed, with costs.
Defendant Evans Hughes Realty L.P. (hereinafter Evans Hughes) is the owner of the former Roosevelt Raceway and had leased part of the property to Plain Fancy Shows of Westbury, Inc., to operate a flea market. Evans Hughes collected the November 1991 rent from Plain Fancy, on October 4, 1991, one day after the plaintiff Chemical Bank commenced a mortgage foreclosure proceeding against Evans Hughes, but three days before a temporary receiver was appointed. Article 43 of the Rider to Plain Fancy's lease with Evans Hughes provided that the annual rent "shall be payable in monthly installments in advance on the first day of each month during the term of this Lease". Section 6.6 (A) of the Mortgage and Trust Indenture (hereinafter the Indenture), between Evans Hughes and Chemical Bank granted the owner a reasonable license to operate and manage the mortgaged property and to collect the rents, until its license to do so was revoked by the Trustee after a default was declared. Section 6.6 (B) of the Indenture, declared that "[t]he Owner * * * (iv) shall not collect any of the Rents more than one (1) month in advance".
The lease at bar thus expressly provides that rent is payable "in advance" of the month for which the rent is due — i.e., on the first day of that month (see, Giles v. Comstock, 4 N.Y. 270). Since the lease was assigned pursuant to the Indenture, the two documents must be reviewed together (see, BWA Corp. v. Alltrans Express U.S.A., 112 A.D.2d 850, 852), and "[t]hat interpretation is favored which will make every part of a contract effective" (Fleischman v. Furgueson, 223 N.Y. 235, 239; see also, Rentaways, Inc. v. O'Neill Milk Cream Co., 308 N.Y. 342, 347). When the lease provision requiring first-of-the-month payment is considered in conjunction with Section 6.6 (B) of the Indenture, it is clear that the Evans Hughes was entitled to demand November's rent of Plain Fancy as early as October 1, 1991.
Moreover, by the terms of the Indenture governing the assignment of Plain Fancy's lease, Evans Hughes retained the right to collect its rents until Chemical Bank had affirmatively revoked its license to do so following a default, or until a receiver was appointed (see, New York Life Ins. Co. v. Fulton Dev. Corp., 265 N.Y. 348, 352; Gomez v. Bobker, 124 A.D.2d 703; 1180 Anderson Ave. Realty Corp. v. Mina Equities Corp., 95 A.D.2d 169, 173-174). Although Chemical Bank declared Evans Hughes in default on September 16, 1991, it did not revoke the latter's right to collect rents. The receiver was not appointed until October 7th, some three days after the rents herein were collected; and he did not become "qualified" until October 11th when he posted his bond (see, Manufacturers' Trust Co. v. Sadenet Realty, 234 App. Div. 893; Smith v. Nannen, 231 App. Div. 236). In addition, in appointing the receiver, the court granted him authority only to collect such rents as were then "due and unpaid or [t]hereafter * * * bec[a]me due and payable". The receiver therefore had no authority to pursue rents that had already been legitimately paid to the owner before he became "qualified" to collect them (see, Manufacturers' Trust Co. v. Sadenet Realty, supra).
Finally, it cannot be concluded from this record that the advance collection of rent by Evans Hughes was fraudulent or motivated by the anticipation of foreclosure and the appointment of a receiver (see, Rider v. Bagley, 84 N.Y. 461; Argall v Pitts, 78 N.Y. 239; Manufacturers' Trust Co. v. Sadenet Realty, supra; cf., 570 Kosciusko Realty Corp. v. Kingdale Estates, 256 App. Div. 997). Sullivan, J.P., Balletta, Joy and Friedmann, JJ., concur.