Asbestos Fibres, Inc. v. Martin Laboratories, Inc.

• Decision Date: 27 April 1953
• Docket Number: No. A--118,A--118
• Citation: 96 A.2d 395,12 N.J. 233
• Parties: ASBESTOS FIBRES, Inc. v. MARTIN LABORATORIES, Inc.
• Court: New Jersey Supreme Court

Page 233

12 N.J. 233

96 A.2d 395

ASBESTOS FIBRES, Inc. v. MARTIN LABORATORIES, Inc.

No. A--118.

Supreme Court of New Jersey.

Argued March 23, 1953.

Decided April 27, 1953.

Samuel H. Nelson, Newark, for appellant (Michael Breitkopf, Newark, attorney).

Jerome C. Eisenberg, Newark, for respondent (Eisenberg & Spicer, Newark, attorneys).

The opinion of the court was delivered by

BURLING, J.

This is an appeal in a civil action instituted in the Superior Court, Law Division, wherein the plaintiff, Asbestos Fibres, Incorporated, a New Jersey corporation, sought reformation of a lease and damages for unlawful eviction from the demised premises. The defendant Martin Laboratories, Inc., a New Jersey corporation, filed a counterclaim. The trial resulted in judgment of dismissal as to the plaintiff's complaint, of damages of $4,830.82 in favor of the defendant and against the plaintiff on the first count of its counterclaim, and against the defendant on the second count of its counterclaim. The plaintiff appealed to the Superior Court, Appellate Division. Prior to hearing there, certification was allowed upon our own motion.

The plaintiff initiated this action by filing a complaint in the Superior Court, Law Division, on January 5, 1951 alleging therein that on December 18, 1947 it had entered into a five-year lease with the defendant for premises owned by the defendant in the City of Newark, Essex County, New Jersey; that the defendant failed to carry out the terms of the lease and as a result the City of Newark ordered the closing of the building, forcing plaintiff to move to other quarters on September 1, 1949; and that the plaintiff as a result thereof suffered injury in several detailed respects. The plaintiff sought damages from the defendant in the amount of $250,000. The defendant answered denying that it had breached the lease or caused plaintiff's removal from the premises, and by counterclaim sought damages of $3,625 (on the first court) for nonpayment of monthly installments of rent due, and $2,500 (on the second count) for plaintiff's failure to comply with terms of the lease calling upon the lessee to make repairs. This analysis of the action was substantially set forth in a pretrial order entered December 18, 1951, as amended at the first trial in the cause.

The provision of the lease upon which the plaintiff had premised its action read as follows:

'36--A: It is agreed between the parties hereto that sewerage and water are available in the building and are in usable condition up to the building.'

During the course of the first trial, the trial court construed paragraph 36--A of the lease, supra, 'to be not a covenant on the part of the landlord that sewerage and water are available in the building and are in usable condition up to the building and will be so maintained and kept by the landlord during the term of the lease,' nor a warranty on the part of the landlord. After an extended colloquy between the trial court and counsel, during which the trial court advised counsel that 'equity will, upon a proper showing, reform the policy or contract' upon grounds such as mutual mistake, and the plaintiff admitted that its claim was based upon mistake in the wording of paragraph 36--A of the lease, the plaintiff moved to amend the complaint to include a prayer for reformation of paragraph 36--A. The defendant resisted the motion.

During the course of argument on the motion, the defendant admitted that if an equitable count for reformation were permitted and succeeded its counterclaim would be 'almost completely eliminated.'

After extended discussion the trial court granted the motion, conditioned upon plaintiff paying to the defendant costs in the amount of $100. Upon plaintiff's acceptance of this condition the trial court ordered the withdrawal of a juror and declared a mistrial.

Subsequently, the plaintiff filed an amended complaint and the defendant filed an amended answer and counterclaim. The issues raised thereby were in essence the same basic issues raised in the original pleadings and pretrial order, with the inclusion of pleadings relating to reformation. At the second trial, which began on October 16, 1952, an amended pretrial order stating these issues was filed on October 17, 1952. This amended pretrial order contained the following statement:

'It is agreed by consent of counsel that the pretrial order entered herein on December 18, 1951 be amended to show that the only remaining issue in the case is raised by the second count of the amended complaint filed herein on May 20, 1952, namely, whether a mutual mistake of fact was made to justify reformation of Paragraph 36 A of the lease attached to the complaint. The plaintiff contends that a mutual mistake of fact was made. This is denied by the defendant.'

During the course of the trial the defendant's evidence as to the amounts alleged to be due as rent under the lease was introduced by stipulation. Testimony and other evidence was introduced by both parties on the other issues, namely reformation, eviction and incidental damage to the property.

After both parties had rested, the defendant moved for judgment in its favor on the issue of reformation 'without submitting the case to the jury.' The defendant grounded the motion on the plaintiff's alleged failure to introduce sufficient evidence to 'justify submitting this case to the jury on the issue of reformation.' The trial court granted the motion, stating:

'I am completely satisfied from the proof there is no evidence to establish a mutual mistake of fact and Thereby submit the case to the jury. * * *' (Emphasis supplied.)

The defendant then moved for judgment for rent due. This motion was also granted.

The trial court thereupon instructed the jury that the sole remaining issue was defendant's counterclaim for damages to the property. On this issue the jury returned a verdict of no cause of action.

Judgment was entered on October 22, 1952, dismissing the plaintiff's complaint. The judgment also ran in favor of the defendant in the amount of $4,830.82 on the rent count of the counterclaim and against the defendant on the incidental damage count. The plaintiff appealed from so much of the judgment entered as went in favor of the defendant, as hereinbefore noted.

The questions involved on this appeal are whether the plaintiff is entitled, on the evidence, to reformation of paragraph 36--A of the subject lease, and whether defendant's failure to perform its duty (under paragraph 36--A in the event of reformation in accordance with plaintiff's claim for reformation) constituted a constructive eviction of the plaintiff entitling plaintiff to damages and defeating defendant's counterclaim for rent. This latter question is not reached in the disposition of this appeal. Adjective.

The plaintiff argues on this appeal as an incident of its assertion that the trial court erred in entering judgment for the defendant on the issue of reformation, that there was sufficient evidence introduced to require the issue to go to the jury. Plaintiff asserts that the court was 'committed to submit factual issues to the jury, on the theory that the parties had requested it, at least impliedly' under Rule 3:39--1.

There is no merit in this argument. It is settled in New Jersey that reformation of a contract is an issue peculiarly and solely of equitable cognizance. Italian-American Building & Loan Ass'n v. Russo, 132 N.J.Eq. 319, 324, 28 A.2d 196 (E. & A.1943); Canter v. Seiden, 128 N.J.L. 156, 158, 24 A.2d 802 (Sup.Ct.1942); Carter v. Mishell, 4 N.J.Super. 310, 314, 67 A.2d 199 (App.Div.1949). Cf. Ross v. Orr, 3 N.J. 277, 282, 69 A.2d 730 (1949).

Art. VI, Sec. III, pars. 2, 3 and 4, and Art. XI, Sec. IV, par. 3 of N.J.Const.1947 have merged law and equity jurisdiction in the Superior Court, Mayor, etc., of Alpine Borough v. Brewster, 7 N.J. 42, 51 80 A.2d 297 (1951), and an aim of the Judicial Article of the 1947 charter and of the rules of this court was to facilitate and expedite the hearing of causes by disposing of all matters, whether legal or equitable, arising in a controversy in one trial and thus avoid multiple trials of the same case. Massari v. Einsiedler, 6 N.J. 303, 307, 308, 78 A.2d 572 (1951). We have held that reformation, an affirmative equitable remedy, to be availed of, must be asserted in a law action where germane or cognate as a defense to an affirmative claim of a party in that law action. Massari v. Einsiedler, supra, 6 N.J., at pages 312--313, 78 A.2d 572. Rule 3:12--2.

These verities in our present practice do not, however, give new absolute rights to trial by jury, nor do they justify deviation from the rules. It is settled that:

'* * * By Rule 3:39--2 all issues of fact not triable of right by a jury shall be decided by the court without a jury, subject to the provisions of Rule 3:39--1. This rule, 3:39--1, insofar as it concerns us here, provides merely that the court May try with an advisory jury any issue of fact not triable of right by a jury.' Steiner v. Stein, 2 N.J. 367, 380, 66 A.2d 719, 725 (1949).

And it is likewise settled that under N.J.Const.1947, Art. VI, Sec. III, par. 4, supra, and the rules, the trial court, i.e., either the Law Division or the Chancery Division in the Superior Court, shall full dispose of all equitable issues (or other issues not triable as of right by a jury) before or during the trial, leaving only purely legal issues for determination by the jury, O'Neill v. Vreeland, 6 N.J. 158, 166--168, 77 A.2d 899 (1951), unless Rule 3:39--1 is invoked.

In the present case the record is clear that Rule 3:39--1 was not invoked by the trial court, either on its own initiative or by order entered on consent of the parties. Per contra, the record demonstrates that the trial court, at both the first and second trials, recognized the reformation count as a purely equitable issue. At the second trial the court unmistakably exercised equity...