A bench trial was held before me on August 24, 2005, in this commercial holdover proceeding, on petitioner-landlord's (petitioner) action seeking a final judgment awarding it possession of premises located at 438 Second Avenue, the issuance of a warrant to remove respondents from possession, fair value of the use and occupancy of the premises in the amount of $12,500 per month with interest from May 1, 2005, attorney fees, costs, and disbursements.

On or about April 5, 2005, petitioner served upon respondents a 10-day notice to quit based upon a surrender agreement dated March 29, 2005 pursuant to which the former tenant, respondent's licensor, surrendered possession of the premises as of March 29, 2005. On or about May 17, 2005, petitioner served upon respondents a notice of petition and petition, thereby commencing the instant proceeding.

On or about May 24, 2005, respondent Sakow served upon petitioner his verified answer [*2]to the petition, in which he interposed numerous affirmative defenses, including one based on "lack of capacity." Additionally, paragraph 19 of his answer reads as follows: "Shiraz Food Corp. has a written lease to occupy the subject premises." In a decision dated July 20, 2005, another judge of this court decided the parties' pre-trial motions, granting petitioner's motion for an order striking respondent's second and third affirmative defenses, and granting respondent's motion for an order dismissing the proceeding to the extent of ordering a traverse hearing.

On August 22 and 24, 2005, I conducted a traverse hearing and denied, for reasons stated fully on the record, respondent's motion for an order dismissing the petition on the ground that personal jurisdiction had not been obtained. In an oral decision and order rendered fully on the record on August 24, 2005, I denied respondent's motion for orders dismissing the petition on the ground that petitioner had not fully complied with respondent's demand for a bill of particulars and granting a protective order.

Testifying for petitioner was Jeffrey Davis, who also testified for petitioner on rebuttal. Respondent testified on his own behalf, and called John Ricciardi and Frank Ferraro to testify on his behalf.

Petitioner introduced in evidence a certified multiple dwelling registration for 422 Second Avenue, which respondent objected to on the ground that it related to an address unrelated to the instant proceeding. (Pet. Exh. 1). Over objection, petitioner's counsel offered an uncertified range printout and explained that the Department of Housing Preservation and Development had denied his request for a certified copy. Absent any evidence to the contrary, counsel's explanation sufficiently establishes a basis for the admission in evidence of the uncertified range printout. As the printout reflects that the registration covers 420 Second Avenue to 438 Second Avenue, I find that petitioner has satisfactorily established that the premises are registered pursuant to Multiple Dwelling Law (MDL) § 235.

Davis, petitioner's general manager for its New York City properties for the past 14 months, is responsible for ensuring that 438 Second Avenue is fully rented out and that its tenants pay their rent. A lease which he had retrieved from his file for Shiraz Food Corp. (Shiraz) (Pet. Exh. 2), was signed by Stanley Berkowitz, as vice president of petitioner by East 24th Commercial Corp., and by Bashir Esmaili, as president of Shiraz. According to Davis, petitioner is a subsidiary of East 24th Commercial Corp. Davis had spoken as many as 50 times to Esmaili, who repeatedly told him that he was the president of Shiraz, although Davis never saw Shiraz's corporate records.

Respondent objected to the admission in evidence of the lease on the grounds that petitioner failed to prove, by competent evidence, the relationship between the two entities, and that Berkowitz could not have been vice president of petitioner as partnerships are run by partners, not officers. In light of Davis's position with petitioner, I find that his testimony sufficiently established the relationship between petitioner and East 24th Commercial Corp. That Davis never personally observed Berkowitz or Esmaili execute the lease or any other document is of no moment, as Davis recognized both signatures from other documents in petitioner's files, and the possibly erroneous use of the title of vice president is immaterial. Moreover, respondent admitted in his answer that such a lease existed and provides no reason to believe the lease is invalid.

The lease was entered into on December 2, 1998, and provides for a monthly rental of $7,057 as of December 1, 2004. Pursuant to paragraph 11 of the lease, Shiraz agreed that it would not assign the lease without petitioner's prior written consent. That paragraph also provides, in relevant part, that "[t]ransfer of the majority of the stock of a corporate tenant . . . shall be deemed an assignment." (Id.).

On February 28, 2005, Davis met with respondent and Esmaili. Davis recalls the date

because it is his birthday and because he had entered the appointment in his calendar with which he had refreshed his recollection just prior to trial. At the meeting, respondent expressed his [*3]desire to become a partner in Shiraz. As Shiraz was in arrears with the rent, Davis denied respondent's request; petitioner never consented to the transfer of any shares.

On March 29, 2005, Davis observed Jean Pierre Vaganay, chief executive officer of

petitioner and Davis's supervisor, sign an agreement which Esmaili subsequently executed. (Pet. Exh. 3). Esmaili's signature matches the signatures on the lease and Davis received the executed lease from Esmaili's attorney. At that time, Davis was unaware of any change in Esmaili's position as president of Shiraz and made no inquiry as to why Esmaili failed to set forth his title under his signature on the agreement.

The agreement purports to effect the surrender of the lease by Shiraz to petitioner. It also reflects petitioner's awareness that respondent was occupying the premises and reads, in pertinent part:

Landlord is aware of the occupancy of [respondent] after the execution of this surrender and accepts the surrender by Bashir Esmaili. The reference to [respondent] in this paragraph "1" is nothing more than an acknowledgment by Landlord as to the current occupancy by [respondent] or his agent and shall not be deemed or construed to grant or extend to [respondent] or his agent any tenancy or occupancy rights in the Premises. Landlord also hereby represents its intention and desire to seek removal of [respondent] and his agent [illegible] from the Premises and preserves all its rights in that regard and otherwise as to [respondent].

Respondent testified as follows: In early 2004, he was in the construction business and was hired by Esmaili, on behalf of Shiraz, to rebuild part of the subject premises in exchange for $85,000. Shiraz did not pay respondent, and on May 27, 2004, in lieu of payment, Esmaili transferred to him all of Shiraz's stock in exchange for respondent's completion of the work. The stock certificate was filled out by respondent, signed by Esmaili, and impressed with the corporate seal of Shirazi Food Corp. (Shirazi).^[FN1] Based on something he had heard someone say, respondent believes that Shiraz and Shirazi are the same entity. Respondent's work on the premises was completed at the end of June or the beginning of July 2004.

From May 27, 2004 to February 2005, Shirazi operated within the subject premises with Esmaili in charge and an individual named John handling the daily operations. Believing that John was incompetent and was stealing from Shirazi, respondent instructed Esmaili to fire him and take over the daily operations. Although Esmaili fired John, he never assumed responsibility for the daily operations. Thus, at a director's meeting held in the beginning of January 2005, respondent dismissed Esmaili from his position as president of Shirazi, designated himself as president, hired Ferraro to run the business, and opened a new bank account with himself as signatory.

Admitted in evidence was a copy of a Corporate Banking Resolution (Resolution) signed by respondent in his capacity as secretary or assistant secretary of Shirazi and purporting to authorize the opening of a commercial bank account in the name of Shirazi. (Resp. Exh. D). The [*4]resolution is not certified, notarized, sealed, or complete, and does not support respondent's testimony that he became president of Shiraz or Shirazi. Neither does respondent's attorney's representation to the court that he had seen Shirazi's certificate of incorporation. Bank statements for Shirazi covering February 15, 2005 through July 28, 2005 reflect only that the bank paid checks for Shirazi that were signed by respondent. (Resp. Exhs. E1-5).

Respondent recalled meeting Davis in person some time before February 15, 2005 at a meeting with Esmaili during which respondent asked Davis for a longer lease after informing him that he now owned all of the stock in Shiraz. Respondent denied having asked Davis permission to become a shareholder in Shiraz or Esmaili's partner.

Invoices for purchases made for either the Texas Smokehouse or the Ziti Café at 438 Second Avenue between February 2005 and May 17, 2005 reflect that during that period, suppliers billed the Texas Smokehouse or Shirazi. (Resp. Exhs. F1-25). A field memorandum dated April 11, 2005 and issued by the New York State Department of Taxation and Finance to Shirazi advises of unresolved tax liabilities. (Resp. Exh. G). A real estate tax bill dated April 26, 2005 covering July 1, 2003 to June 30, 2004 was issued by petitioner to Shiraz. (Resp. Exh. A).

Some time after he was served with the notice of petition and petition, respondent learned from his lawyer of the surrender agreement executed by Esmaili. He asserts that he never authorized it.

Ricciardi, an attorney employed by counsel for respondent, testified without dispute that as of August 24, 2005, no partnership certificate in petitioner's name was on file in the county

clerk's office at 60 Centre Street. Petitioner objected to Ricciardi's testimony, claiming, without

dispute, that respondent had failed to raise the issue sufficiently in his answer. As respondent asserted in his answer a lack of capacity, I agreed to consider Ricciardi's testimony, although I reserved decision on its merits. (See IV.A.).

In lieu of closing remarks, the parties submitted to the court their respective memoranda of law on September 9, 2005.

Respondent argues that the proceeding should be dismissed for the following reasons:

1) petitioner failed to comply with General Business Law § 130 by not filing a partnership certificate in the New York County Clerk's Office; 2) petitioner failed to prove that 438 Second Avenue is registered pursuant to MDL § 235; 3) the surrender agreement is void as Esmaili was neither actually nor apparently authorized by Shiraz to enter into it; 4) respondent is not in possession of the premises; and 5) petitioner has failed to set forth, prima facie, that respondent was a licensee, that his license was terminated, or that it has recovered possession from Shiraz. He suggests that petitioner's failure to subpoena Esmaili to testify at trial warrants that an inference be drawn that Esmaili did not possess actual authority to surrender possession of the premises on behalf of Shirazi. (Respondent's Post-Trial Memorandum of Law, dated Sept. 8, 2005 [Resp. Post-Trial Memo]).

Petitioner contends that this court is without jurisdiction to entertain respondent's argument concerning the surrender agreement in as much as such a determination requires a declaratory judgment. However, even if the court were authorized to make such a determination, petitioner maintains that respondent has failed to demonstrate, by a preponderance of the evidence, that Esmaili was stripped of his authority to execute the agreement, and that even assuming that he was, his apparent authority bound Shiraz to the terms of the agreement. (Petitioner's Post-Trial Memorandum of Law, dated Sept. 8, 2005).

As respondent did not specify in his answer the ground upon which he asserts that petitioner lacks capacity, it was improperly raised at trial. (CPLR 3013). In any event, respondent's contention is without merit for the following reasons.

General Business Law (GBL) § 130 provides, in pertinent part, that:

1. No person shall hereafter (I) carry on or conduct or transact business in this state under [*5]any name or designation other than his or its real name, or (ii) carry on or conduct or transact business in this state as a member of a partnership, unless: (a) [s]uch person . . . shall file in the office of the clerk of each county in which such business is conducted or transacted a certificate setting forth the name or designation under which and the address within the county at which such business is conducted or transacted, the full name or names of the person or persons conducting or transacting the same, including the name of all partners, with the residence address of each such person, and the age of any person less than eighteen years of age. . . .

9. . . . Any person or persons carrying on, conducting or transacting business as aforesaid who fails to comply with the provisions of this section shall be prohibited from maintaining any action or proceeding in any court in this state on any contract, account or transaction made in a name other than its real name until the certificate required by this section has been executed and filed in accordance with the provisions set forth herein.

The Legislature's purpose in enacting GBL § 130 is "to protect the public, to afford the public information as to the identity of the persons conducting the business, to prevent deception and confusion." (Holiday Point Realty Co. v Kemper Corp., 118 AD2d 545, 547 [2d Dept 1986]; Parks v Steinbrenner, 115 AD2d 395, 396-397 [1st Dept 1985]; Reed v Pelley, 112 Misc 2d 382 [Sup Ct., Broome County 1982]).

A certificate of doing business under an assumed name is not jurisdictional. (Cohen v OrthoNet New York IPA, Inc., 19 AD3d 261 [1st Dept 2005]). In Cohen, the plaintiff did business in the names "Aster Search Group" and "Aster Place Group," but filed a certificate of doing business in the latter name only. The court observed that there was no showing that the plaintiff harbored either an intent to defraud or an intent to sign a personal services contract in a purely corporate capacity and that the certificate is "not jurisdictional, and may be amended prior to entry of any judgment." (19 AD3d at 261). In support of the latter proposition, it cited William T. Schmitt Assoc. v Loveless, 126 Misc 2d 480 (Dist Ct, Suffolk County 1984). In Schmitt, the court held that a certificate of doing business under an assumed name is not jurisdictional, analogizing GBL § 130 to Business Corporation Law (BCL) § 1312^[FN2] and relying upon decisions holding that a foreign corporation's failure to obtain authorization to sue in New York State pursuant to that statute was nonjurisdictional and could be cured at any time prior to entry of judgment. (126 Misc 2d at 481).

Years before Cohen and subsequent to Schmitt, the court in Supreme Realty Assoc. Co. v Korovessis, 171 Misc 2d 996 (Civ Ct, Bronx County 1997), held that the failure to file a partnership certificate barred the petitioner from maintaining a commercial holdover proceeding. An issue thus arises as to whether Supreme, which addresses partnership certificates, survives Cohen, which addresses certificates of doing business under an assumed name.

As the Legislature sought to protect the same interest in requiring the filing of either kind

of certificate, I hold that Cohen is authority for the proposition that a partnership certificate is not jurisdictional. Thus, petitioner's failure to file a partnership certificate may be cured at any time prior to the entry of judgment. I also observe that here, as in Cohen, there is no showing that petitioner intended to defraud anyone in failing to file the certificate.

To the extent that a multiple dwelling registration constitutes a necessary element of petitioner's case in this judicial department, I reject respondent's argument that petitioner failed to satisfy that element. (See supra, II.). [*6]

I reject petitioner's contention that I have no jurisdiction to rule on the validity of the surrender agreement, as the determination as to its validity is incidental to this proceeding. (See Cohen v Goldfein, 100 AD2d 795, 797 [1st Dept 1984] [civil court has jurisdiction to decide petitioner's right to possession of premises based on its determination of validity of two leases]; Byer v Hippolite, 2003 WL 1873745 [Dist Ct, Nassau County 2003], and authorities cited therein).

Business Corporation Law (BCL) § 909(a) provides, in relevant part, that the approval of a corporation's shareholders is required whenever the corporation seeks to dispose of "all or substantially all [its] assets, if not made in the usual or regular course of the business actually conducted by such corporation." The recitation in "a deed, lease or other instrument of conveyance executed by a corporation to the effect that . . . the shareholders have duly authorized such disposition, shall be presumptive evidence of the fact so recited." (BCL § 909[b]). The Legislature's intent in enacting BCL § 909 was "to prevent a corporation from disposing of a major portion of its property without obtaining prior approval of its shareholders." (Dukas v Davis Aircraft Products, Co., Inc., 131 AD2d 720, 721 [2d Dept 1987]).

In invoking this statute in support of his affirmative defense that the surrender agreement is invalid and because the evidence pertaining to it is within his knowledge and control, respondent undertakes the burden of proving in the first instance that the surrender agreement constituted a disposition of the sale of all or substantially all Shiraz's assets and that the surrender was not made in the usual or regular course of the business actually conducted by Shiraz.

Although respondent correctly maintains that "[t]he transfer of a corporation's sole piece of real estate is not within its regular course of business" (Resp. Post-Trial Memo., at 11), apart from its corporate name and evidence that Shiraz operated a restaurant on the premises, he offered no affirmative evidence at trial as to the usual or regular course of the business actually conducted by Shiraz or that the lease constituted Shiraz's sole asset. Consequently, there is no factual basis upon which to find that the surrender of the lease required shareholder approval.

In Vig v Deka Realty Corp., 143 AD2d 185 (2d Dept 1988), as in the other decisions cited by respondent, there was a factual basis for finding that the defendant's regular business was managing the one property at issue, that the property was its sole asset, and that the defendant was not actually engaged in the business of selling real property. (See eg, Lindenbaum v Albany Post Property Assoc., Inc., 297 AD2d 661 [2d Dept 2002] [note and mortgage executed by a corporate president to guarantee his personal debt was not part of corporation's ordinary course of business]).

The absence in the agreement of a recital that the surrender was part of Shiraz's regular business and that the lease did not constitute all or substantially all of its assets merely deprives petitioner of the benefit of the presumption set forth in BCL § 909(b). The statute does not provide that the absence of such recitals warrants a presumption that a transaction requires shareholder approval.

I also observe that in attempting to prove the invalidity of the surrender agreement, respondent relied on his own testimony and upon documentary evidence that was either questionable (the stock transfer certificate, the corporate banking resolution) or otherwise lacking in probative value (the bank statements, invoices, tax documents). He did not produce a

certificate of incorporation^[FN3] or Esmaili, provided no documentary evidence in support of his [*7]claim that Shiraz and Shirazi are the same corporation,^[FN4] and is an interested witness. That petitioner offered no evidence disproving respondent's allegations is of no moment as it was respondent's burden to come forward with credible evidence in support of his affirmative defense and a fact finder need not credit evidence even in the absence of opposing evidence. Thus, even if shareholder approval of the surrender of the lease was required, respondent's testimony and the Shirazi certificate memorializing the transfer are of insufficient probative value to sustain respondent's burden of coming forward with credible evidence in support of his allegation that Esmaili transferred to him any shares in Shiraz, the corporation that had leased the premises and then surrendered them.

Moreover, in light of the prohibition in the lease against assignments and absent any allegation that petitioner consented in writing to the assignment, petitioner was not obliged to honor the alleged transfer of shares to respondent in regard to the lease, even if Davis was aware of it and it was a legitimate transfer, and respondent has no right, as against petitioner, to benefit from any misrepresentation allegedly made by Esmaili.

As respondent failed to sustain his burden of coming forward with credible evidence in support of his argument that shareholder approval of the surrender was required, Esmaili's authority to enter into the agreement pursuant to BCL § 909 is not in issue.

To the extent that respondent argues, apart from his argument based on BCL § 909, that Esmaili had been fired and could not surrender the lease on behalf of Shiraz and even assuming the truth of respondent's testimony, it is undisputed that Esmaili was the president of Shiraz when the lease was executed. Although respondent testified that he advised Davis about the transfer of the shares, he did not testify that he advised Davis that Esmaili was no longer the president. Thus, petitioner had no reason to question Esmaili's authority to enter into the surrender agreement and I need not draw an inference against petitioner for its failure to subpoena Esmaili.

For all of these reasons, I find that respondent has failed to satisfy his burden of coming forward with credible evidence in support of his affirmative defense that the surrender agreement is invalid.

Respondent denies possession of the premises and claims that petitioner failed to offer any evidence in support of its allegation that he occupied the premises in his individual capacity. However, the surrender agreement constitutes proof that upon Shiraz's surrender, respondent

occupied the premises in his individual capacity. Given respondent's interest in the case, the quality of his evidence (see IV.C.2.), and the valid surrender agreement (see IV.C.), I reject his testimony and find that he occupied the premises solely in his individual capacity. Again, absent any contention that petitioner consented in writing to the assignment, petitioner was not obliged to honor the alleged transfer of shares to respondent and respondent acquired no right to occupy the premises other than in his individual capacity.

As the surrender agreement satisfactorily establishes that petitioner recovered legal possession of the premises from Shiraz and that respondent thereupon became a licensee, and in view of the notice to quit that had been served upon respondent, I find that petitioner has established, prima facie, its right to evict him. That deliveries continued to be made and were paid for by Shirazi after the surrender does not prove that either Shiraz or Shirazi has any legal right to possess the premises.

An award for use and occupancy should reflect the current fair market value of the premises. (Rock-Time, Inc. v The Lutin Central Services Co. Inc., NYLJ, Nov. 25, 1985, at 13, col 1 [App Term, 1st Dept]). The fair market value is the amount that a willing buyer would pay for the premises and a willing seller would accept. (Beacway Operating Corp. v Concert Arts Society, Inc., 123 Misc 2d 452, 454 [Civ Ct, New York County 1984]).

Davis's conclusory testimony is insufficient to establish that petitioner is entitled to $12,500 in use and occupancy. As the lease constitutes sufficient evidence as to value, I find that the monthly use and occupancy for the premises is $7,057.

For all of the foregoing reasons, I find that petitioner sustained its burden of proving, by a preponderance of the credible evidence, that respondent was a licensee whose license was terminated by a valid notice to quit, and that petitioner is thereby entitled to a final judgment of possession, along with a money judgment in the amount of $42,342 representing use and occupancy for May 2005 through October 2005, with interest from May 1, 2005, plus costs, and disbursements.

The clerk is directed to enter judgment accordingly. Issuance of the warrant is ordered forthwith and execution is stayed through and including five days from service upon respondent of a copy of this order with notice of entry. The parties are directed to jointly contact me to set a date for an attorney fee hearing.

This constitutes the decision and order of the court.

_______________________________

Barbara Jaffe, JCC

DATED:October 11, 2005

New York, New York