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Robert McKee v. Wellington Estates, Ltd.

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Robert McKee v. Wellington Estates, Ltd.

Postby TenantNet » Fri Jun 30, 2006 8:07 am

Robert E. McKee, Appellant, v. Wellington Estates, Ltd., et al, Respondents

[NO NUMBER IN ORIGINAL]

Court of Appeals of New York

60 N.Y.2d 853; 458 N.E.2d 380; 470 N.Y.S.2d 139; 1983 N.Y. LEXIS 3519

November 3, 1983, Decided

PRIOR HISTORY: [***1]

Appeal from an order of the Appellate Division of the Supreme Court in the First Judicial Department, entered May 24, 1983, which (1) reversed, on the law, a judgment of the Supreme Court at Special Term (Richard Lee Price, J.), entered in New York County, denying defendants' motion to dismiss the complaint and plaintiff's cross motion for summary judgment, and declaring the rights of the parties, (2) vacated the judgment, (3) granted defendants' motion to dismiss the first cause of action for failure to state a cause of action, and (4) awarded defendants costs and disbursements.

Plaintiff lessee of an apartment in a building with more than six apartments, signed his initial lease with defendant landlord on February 1, 1972; the lease provided for a security deposit equal to one month's rent and terminated on January 31, 1975. Plaintiff's present renewal lease expired on January 31, 1982. On each subsequent lease renewal, plaintiff paid an additional sum as a security deposit equal to the amount of the increase in the monthly rent, although he had unsuccessfully requested defendants to apply the accrued interest on the security deposit toward the amount due. Plaintiff commenced [***2] the instant action for a declaration that defendants were required to accept as a portion of the payment for the increase in the security deposit all interest accrued and payable, less administrative expenses, on plaintiff's security deposit.

Special Term concluded, inter alia, that plaintiff was entitled to have accrued interest on his security deposit applied toward an increase in the security deposit since, on its face, subdivision 2 of section 7-103 of the General Obligations Law supported such a finding. The Appellate Division concluded that there was no obligation on the defendants under said statute to apply the accrued interest toward an increase in the security deposit when new leases were entered into at higher rents, and that defendants have complied with the statute by annually paying the interest, less appropriate administrative expenses, to plaintiff.

McKee v Wellington Estates, 94 AD2d 686.

DISPOSITION: On review of submissions pursuant to rule 500.2 (b) of the Rules of the Court of Appeals (22 NYCRR 500.2 [g]), order affirmed, with costs, in a memorandum.

HEADNOTES:
Landlord and Tenant -- Security Deposits -- Interest

In an action brought by a tenant who sought [***3] to compel his landlord to apply the interest accrued on his security deposit to increases in the amount of the security, an order of the Appellate Division, which reversed a judgment granting the relief requested, is affirmed since subdivision 2 of section 7-103 of the General Obligations Law provides two alternatives for the disposition of accrued interest, less administration expenses, by a landlord (hold it in trust or make annual payments to the tenant), and neither the statutory language nor the legislative history mandates that a landlord apply the accrued interest to a subsequent increase in the security deposit. The Appellate Division did not abuse its discretion in awarding costs and disbursements to the landlord.

SYLLABUS: APPEAL

COUNSEL: Grant S. Lewis for appellant.

Norman Flitt for respondents.

JUDGES: Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Meyer, Simons and Kaye concur.

OPINION: [*855] OPINION OF THE COURT

[**139] Memorandum.

The order of the Appellate Division should be affirmed, with costs.

The language of the General Obligations Law ( § 7-103, subd 2) provides two alternatives for the disposition of accrued interest, less administration expenses, [***4] by a landlord: to hold the interest in trust or to make annual payments to the tenant. Neither the statutory language nor the legislative history mandates that a landlord apply the accrued interest to a subsequent increase in the security deposit. Nor did the Appellate Division abuse its discretion in awarding costs and disbursements to defendants.

On review of submissions pursuant to rule 500.2 (b) of the Rules of the Court of Appeals (22 NYCRR 500.2 [g]), order affirmed, with costs, in a memorandum.
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