Carteret Properties v. Variety Donuts, Inc., A--111

• Decision Date: 27 March 1967
• Docket Number: No. A--111,A--111
• Citation: 49 N.J. 116,228 A.2d 674
• Parties: CARTERET PROPERTIES, a copartnership of the State of New Jersey, Plaintiff-Respondent, v. VARIETY DONUTS, INC., a corporation of the State of New Jersey, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 116

49 N.J. 116

228 A.2d 674

CARTERET PROPERTIES, a copartnership of the State of New Jersey, Plaintiff-Respondent, v. VARIETY DONUTS, INC., a corporation of the State of New Jersey, Defendant-Appellant.

No. A--111.

Supreme Court of New Jersey.

Argued Jan. 24, 1967.

Decided March 27, 1967.

Sam Weiss, Newark, for appellant (Sumner N. Weener, Carteret, attorney).

Francis X. Journick, Hazlet, for respondent (Wilentz, Goldman & Spitzer, Perth Amboy, attorneys).

The opinion of the court was delivered by

FRANCIS, J.

In this action for possession of leased premises the Middlesex County District Court entered judgment for Carteret Properties, the plaintiff-landlord. The relief was based upon a finding that defendant-tenant, Variety Donuts, Inc., had been guilty of breach of a covenant in the lease for which a right of re-entry was reserved. The Appellate Division affirmed and we granted the tenant's application for certification. 48 N.J. 353, 225 A.2d 365 (1966).

On October 31, 1958, Variety and Carteret Shopping Center, Inc. entered into a five-year lease covering a store in a shopping center in Carteret, New Jersey. The premises were to be used only 'for the retail sale of donuts, coffee, and the incidental sale of cold sandwiches, together with juices, soft drinks, pre-packaged ice cream (and) machine vended cigarettes.' The lease provided that 'if default be made in the performance of any of the covenants' the landlord reserved the right to re-enter and repossess the store. Thereafter, on March 5, 1963, a second lease for five years from April 1, 1963 was made between Variety and Office Buildings of America, Inc., a successor in title of the shopping center. This lease provided that the store would be used only 'for the retail sale of food and allied products.' A rider attached said:

'c. The tenant shall have the sole right and option to operate his business As heretofore and no other lease agreement with any other tenant may be entered into encompassing the same operating powers. * * * The tenant is hereby permitted to install and utilize any and all equipment for the purpose of preparing and serving hot meals; shall be allowed and permitted to display and sell newspapers and nickel candy; display and sell any and all types of bakery goods; subject to existing leases; install additional dining tables; install and operate a soda and ice cream fountain.

d. In the event business conditions in the opinion of the tenant requires (sic) a change in the character of the aforesaid business, then and in that event, the tenant shall have the right to change the character of his business with due notice being served upon the landlord, subject to the consent of the landlord, which shall not be unreasonably withheld.' (Emphasis added).

The right of re-entry for breach of covenants was continued.

On August 17, 1964 the lease was assigned to the plaintiff as new owner of the shopping center by Robert Cronheim, Receiver of Carteret Center Associates, successor in title to Office Buildings of America, Inc.

The parties agreed in writing after this suit was started that since about October 20, 1959 Variety has continuously sold in its store to its patrons and to members of the public bus transportation tickets of the Public Service Co-ordinated Transport Co. The dispossess action was tried on this written stipulation, copies of the leases and assignment of the current one; no testimony was submitted. There is nothing in the stipulation indicating whether the sale of the bus tickets was simply a De minimis incident of defendant's business, or constituted a substantial activity. It is plain from the tenor of the stipulation and from the oral argument before us that the various landlords, including plaintiff, were aware of the practice, and continued to accept the monthly rent from defendant to and including that payable on November 1, 1965 for the month of November.

On November 6, 1965 plaintiff gave written notice to defendant that it had violated the lease, that the occupancy was terminated 'for the reason that you have committed a breach of that covenant in your lease providing that the store premises aforesaid are 'to be used and occupied only for the retail sale of food and allied products,' for which breach a right of re-entry is reserved to the landlord.' Removal from the premises was demanded within five days after receipt of the notice.

In the trial court defendant argued principally that when the second and existing lease was negotiated and its terms agreed upon, the them landlord knew of the sale of bus tickets, did not regard it as a breach of the expiring lease, and consented to the continuance of the practice. That understanding, Variety asserted, was one reason why the March 5, 1963 lease contained the addendum reciting, among other things, that 'the tenant shall have the sole right and option to operate his business As heretofore * * *.' Additionally, defendant contended that even if the sale of tickets could be considered a use covenant violation, plaintiff had waived it. In this connection Variety claimed (and the argument seems to encompass equitable estoppel as well as waiver) that such additional agreement as to use was binding on plaintiff by virtue of the revised lease, and also because inquiry by plaintiff before its purchase was consummated would have revealed the full nature of the agreement as to use under which defendant was occupying the premises. The contentions were rejected and judgment granting possession to plaintiff was entered.

This action for possession of the leased premises is a summary statutory proceeding based upon N.J.S. 2A:18--53 to --57, N.J.S.A. Section 53 provides that an order for possession may be entered by the appropriate county district court where a lessee 'shall commit any breach or violation of any of the covenants * * * contained in the lease for the premises where a right of re-entry is reserved in the lease for a violation of such covenants * * *, and shall hold over and continue in possession of the demised premises * * * after the landlord or his agent for that purpose has caused a written notice of the termination of said tenancy to be served upon said tenant, and a demand that said tenant remove from said premises within 3 days from the service of such notice.' The notice is required to 'specify the cause of the termination of the tenancy,' and proof that such notice has been served is prerequisite to judgment. N.J.S. 2A:18--56, N.J.S.A. The cause of termination is jurisdictional, and if at trial evidence is adduced from which a finding could reasonably be made that a proper notice was served and that the specified statutory cause existed, a judgment for possession is conclusive Vineland Shopping Center, Inc. v. De Marco, 35 N.J. 459, 462--464, 173 A.2d 270 (1961); 18 N.J. Practice § 1568 (Fulop-Kain, District and Municipal Courts) (Supp.1965).

Since jurisdiction of the district court to apply the stern remedy of dispossession stems from the statute, courts have always demanded strict compliance with its terms and conditions. Departures therefrom invariably result in dismissal of the action. The burden of showing compliance and proving the alleged breach of lease covenant rests heavily upon the landlord. And as Vineland dictates, the tenant may not only offer evidence contesting the alleged breach of covenant, but he may also present proof of equitable defenses thereto. 35 N.J., at pp. 468, 469, 173 A.2d 270; 18 N.J. Practice § 1569 (Fulop-Kain, District and Municipal Courts) (Supp.1965).

These observations bring us to a consideration of the sufficiency of the notice to remove served upon defendant. The statute clearly makes a proper notice essential to the exercise of the district court's jurisdiction. N.J.S. 2A:18--56, N.J.S.A.; Standard Realty Co. v. Gates, 99 N.J.Eq. 271, 276--277, 132 A. 487 (Ch.1926). The notice is required to 'specify' the cause of the termination of the tenancy. 'Specify' means to name in a specific or explicit manner; to state precisely or in detail, to point out, to particularize, or to designate by words one thing from another. Cf. Duke Power Co. v. Essex County Board of Taxation, 122 N.J.L. 589, 7 A.2d 409 (Sup.Ct.1939), aff'd, 124 N.J.L. 41, 11 A.2d 21 (E. & A.1940); Brazil v. Dupree, 197 Or. 581, 250 P.2d 89, 254 P.2d 1041 (Sup.Ct.1952); Webster's Third New International Dictionary (1961) 2187.

The notice served upon defendant here simply says the tenancy is terminated 'for the reason that you have committed a breach of that covenant in your lease providing that the store premises aforesaid are 'to be used and occupied only for the retail sale of food and allied products. " Such notice does not satisfy the mandate of the statute. It merely states a legal conclusion. Duke Power Co. v. Essex County Board of Taxation, supra; Weller v. Kelly, 136 N.J.L. 281, 283, 55 A.2d 55 (Sup.Ct.1947). The lease does not limit defendant's use to the retail sale of food and allied products. Although that limitation appears on the first page of the current lease, it is qualified as has been noted above to allow sale of newspapers and nickel candy, operation of a dining room or restaurant and installation and operation of a soda and ice cream fountain. But of more crucial significance in appraising the sufficiency of the notice is the failure to specify the nature of the alleged breach. It contains no particularization, no explicit or detailed statement as to the action or conduct of defendant which allegedly constituted such a violation of the use covenant as warranted a demand for a judgment for possession. The shortcoming is especially momentous because, as it later appeared by stipulation in the suit, the sale of bus tickets, whether it was De minimis or substantial, had been going on for six years before the notice was served. The sufficiency of the notice as a jurisdictional prerequisite must be judged within its four...