Mannion v. Greenbrook Hotel Inc.

• Decision Date: 19 September 1946
• Docket Number: No. 202.,202.
• Citation: 48 A.2d 888
• Parties: MANNION v. GREENBROOK HOTEL, Inc.
• Court: New Jersey Supreme Court

48 A.2d 888

MANNION v. GREENBROOK HOTEL, Inc.

No. 202.

Court of Errors and Appeals of New Jersey.

Sept. 19, 1946.

Appeal from Court of Chancery.

Bill by Katherine Mannion against Greenbrook Hotel, Inc., to enjoin defendant from violating certain covenants of a lease. From an order denying motion to strike the bill, defendant appeals.

Order affirmed.

Herrigel, Lindabury & Herrigel, of Newark (Louis J. Dughi, of Newark, of counsel), for appellant.

Philip Blacher, of New Brunswick, for respondent.

On appeal from an order of the Court of Chancery, in which Court the following opinion was filed:

‘The object of the bill in this cause is to enjoin the defendant from violating certain covenants of a lease. The complainant obtained an order directing the defendant to show cause why immediate restraint operative pendente lite should not be imposed. The defendant not only resisted the application for the preliminary relief, but concurrently challenged the sufficiency of the bill pursuant to Rule 69. [N.J.S.A. tit. 2.] Although the bill is essentially one for an injunction, I resolved to deny the request for temporary restraint and nevertheless retain the bill until final hearing. In suits for injunctions, such action is no longer novel or particularly unique. McCarter v. Dungan, 74 N.J.Eq. 251, 68 A. 1096. The defendant, apprehending that it is aggrieved by the denial of its motion to strike the bill, has taken an appeal; hence this memorandum of the reasons for the course I pursued.

‘The covenants which in the prosecution of its motion the defendant acknowledges it made and now intends to infringe are three in number:

“Covenant 1: The party of the second part agrees that he will not during the termof this lease, nor at any time while he shall hold a municipal license for retail distribution of liquors in the Borough of Middlesex assign or negotiate any transfer of any such license without having first obtained in writing the approval therefore from the party of the first part. This covenant is made as being of the essence of this contract of lease.

“Covenant 2: And the party of the second part does further covenant and agree that at the close of each license period he shall during the term of this lease or any renewal or extension thereof make application in due time to the municipal authorities of the Borough of Middlesex for a renewal of the retail distribution liquor license held by the party of the second part with respect to the demised premises.

“Covenant 3: The party of the second part, in consideration of the covenants hereof, especially agrees with the party of the first part that he will not engage in the business of retail distribution of alcoholic beverages within the Borough of Middlesex for a period of two (2) years from the expiration of this contract of lease or any renewal or extension thereof.'

‘It was perceived that the first two covenants (Nos. 1 and 2) might well be regarded as inimical to the policy of our pertinent statutory law and therefore unenforceable. R.S. 33:1-26, N.J.S.A. 33:1-26; Walsh v. Bradley, 121 N.J.Eq. 359, 190 A. 88; Lachow v. Alper, 130 N.J.Eq. 588, 23 A.2d 595. The public policy, however, reflected by the cited cases arises from the explicit composition of the statute, wherein it is ordained that those licensed to sell intoxicating beverages shall hold their special privileges free from the control of other persons, and that such licenses shall not possess all the common elements of transferable property. The legislative policy is limitational, but it was not intended to abominate all the contractual or legal obligations of such licensees in any wise related to the business of selling liquor.

‘The defendant addressed its motion to the bill in its entirety, a motion which, if granted, would, practically speaking remove the bill from the court and bring the entire cause to an end. Consequently, the possible validity and effectiveness of the third covenant could not be ignored. I am unable to discern in the third covenant, if it is dislocated from the other, anything that is manifestly unreasonable in its restrictive character or offensive to public policy. Its ancillary attachment to the purchase of the tenancy is obvious. Of itself, it contains nothing more than the negative obligation against prospective business competition intrinsic in the ordinary run of such stipulations. To suggest that a person cannot lawfully agree to abstain from engaging in the business of selling liquors merely because its pursuit is under...