Bloor v. Chase Manhattan Mortgage and Realty Trust

In November 1974, James Bloor (plaintiff) was appointed as trustee in the bankruptcy of Invesco Holding Corporation. As part of the bankruptcy proceedings, Bloor took title to certain premises in New York, which included a ground lease. The tenants of the ground lease mortgaged their interest to Chase Manhattan Mortgage and Realty Trust (Chase) (defendant). The terms of the lease provided that the tenant would pay the landlord rent and additional rent, including all real estate taxes, water, sewage, and interest and principal on a mortgage, totaling a net rental of $200,000 per year. The lease also stated that upon termination the tenants should continue to be liable for additional rent as it became due. In April 1976, the tenants of the ground lease failed to meet their obligations, and Chase began making payments to Bloor. In July, Chase took assignment of the ground lease but did not assume the tenants’ obligations. In October, Chase assigned its interests and ceased making rental payments. Prior to the assignment, Chase failed to make water and sewer payments. In November, Bloor provided notice of default stating he was terminating the ground lease. In January 1977, Bloor sued Chase’s assignee, stating it was unlawfully holding over and was in default of its rental payments. In February, the parties stipulated to provide possession to Bloor and to withdraw the nonpayment claims. The parties also agreed that if payments were made within 60 days, the lease would be reinstated. In April, possession of the premises was delivered to Bloor, and in August, Bloor claimed liquidated damages against Chase, seeking all unpaid rent. Bloor also contended that the assignment was fraudulent and should be disregarded. Chase filed a motion for summary judgment, claiming that its assignment terminated its privity of estate with Bloor, and moreover, in any case it could not be held liable for any payments after Bloor reclaimed possession.