Milonas v. Harmony Country Club

• Decision Date: 13 July 1931
• Citation: 155 A. 610
• Parties: MILONAS et al. v. HARMONY COUNTRY CLUB.
• Court: New Jersey Court of Chancery

155 A. 610

MILONAS et al.

v. HARMONY COUNTRY CLUB.

Court of Chancery of New Jersey.

July 13, 1931.

Syllabus by the Court.

The Court of Chancery has jurisdiction to relieve against an injust forfeiture of a lease even though there may be a remedy at law, if the remedy here is more complete than at law.

Syllabus by the Court.

A landlord who has for a period of two years accepted rent from an assignee of his lessee, and thereby recognized the tenancy, will not be permitted to dispute the assignee's right to renew the lease, on the ground of a defective assignment.

Suit by Michael Milonas and James Milonas, partners, trading as the Milonas Brothers, against the Harmony Country Club.

Decree for complainants.

Quinn, Parsons & Doremus, of Red Bank, for complainants.

Karkus & Karkus, of Perth Amboy (Isaac Gross, of Jersey City, of counsel), for defendant.

BERRY, Vice Chancellor.

The bill seeks to restrain an attempted forfeiture of a lease under which the complainants are occupying a tract of land in Middletown township, Monmouth county, intersected by state highway route No. 4, owned by the defendant corporation, and upon which is erected a large roadway stand maintained and operated by the complainants. The facts out of which this controversy arose are as follows:

On October 5' 1923, one Coddington, who was then the owner of the premises in question, but who later conveyed to the defendant, made a written lease for the premises to Emil Sollaneck and Samuel Walters for a term of four years from January 1, 1924. The lease contained the following clause: "It is understood that the party of the second part will have the option of renewing this lease for an additional term of four years if they so desire on the same rental."

On October 16, 1923, Walters assigned his interest in the lease to Sollaneck by a written assignment attached to the original lease. Sollaneck entered into possession and erected the road stand now occupied by the complainants. On June 2d, he entered into an agreement with George E. Faurnier and James Milonas by which, in consideration of $6,600 to be paid as therein provided, he agreed to assign the lease to Fournier and Milonas. The actual assignment was not to be delivered until the consideration was fully paid. Possession of the premises was delivered to Fournier and Milonas on the date of the agreement. On December 2, 1925, Fournier assigned his interest in the premises under the lease to the complainant. From June 2, 1925, to December 2, 1925, Fournier and Milonas occupied the premises, and from December 2, 1925, to the present time, James Milonas and Michael (Manuel) Milonas have been in possession. Coddington conveyed to the defendant prior to the agreement between Sollaneck and Fournier and James Milonas, and since that time the rent has been paid to the defendant by the successive occupants. During the occupancy by the complainants and up until January 1, 1928, the rent was paid periodically as it fell due to Charles D. Merz, secretary of the defendant corporation. Checks were uniformly drawn to the order of Mr. Merz personally, and the proceeds accounted for by him to the defendant. Following this custom, on December 15, 1927, complainants sent their check for $133.33 to Mr. Merz, stating that it was for the first payment on the rent for 1928, and that they were thereby exercising their option to renew the lease for a further term of four years. Merz presented this check at a meeting of the board of directors of the corporation on December 31, 1927, which, apparently, took no action either to accept or reject it, but no objection was made to the fact that it was drawn to the order of Merz personally. On January 4th, Merz returned the check to the complainants in a letter stating that he had resigned as secretary of the club on December 31, 1927, and also "I submitted to the directors and stockholders of the Club that you were going to take advantage of the option of the renewal of the lease for the stand on the highway but nothing was done in the way of either accepting it or not. What the new Board of Directors have done or will do I do not know but you can get information from the new secretary" and "that the newly elected secretary is Edward A. Compton, Main Street, Keansburg, N. J." Complainants wrote to Compton on January 20th, asking to be notified of the next meeting of the defendant corporation, to which Compton replied on January 30, 1928, that the next meeting would be February second. Negotiations between the parties then ensued, complainants insisting upon their right to renew, and defendants pressing for a new lease, but without definite results. On February 18th, complainants sent to Mr. Compton, the new secretary, the same check which they had previously sent to Mr. Merz. Compton mailed the check back to the complainants in a letter dated February 21st, but the letter was never delivered, and was finally returned to the writer on March 8, 1928. In that letter, no objection was made to the form of the check, but the secretary said "The directors hold that the Sollaneck lease expired on January 1st, 1928. Therefore they refuse to renew the lease on the same conditions." On March second, Compton wrote to complainants proposing a new lease for a portion of the premises at an advanced rental, whereupon complainants immediately consulted counsel, the present solicitors, who, on March 12, 1928, wrote to the club, declining to discuss the proposed new lease, and insisting that complainants had exercised their option to renew and standing on that renewal. On May 1, 1928, complainants offered to pay the second installment of the 1928 rent in cash but it was refused. Nothing was said at this time about the check which had been delivered to Merz, the former secretary on December 15, 1927, although it is obvious that the new secretary had it in his possession at the time. The complainants remained in possession of the premises and no further communication was had between the parties until on June 5, 1928, when Compton returned the check to complainants with a letter stating that the club directed it returned "inasmuch as you did not exercise your option to renew the lease within sufficient time," having in the meantime retained the check in his possession. Compton's explanation of his retention of the check between March 8th and June 5th is that he did not know how to reach complainants as his former letter had been returned because not delivered. But after the receipt of the letter of March 12th from complainants' solicitors, Compton knew that complainants were represented by counsel...