Packard-Bamberger & Co. v. Maloof, PACKARD-BAMBERGER
| Decision Date | 13 April 1964 |
| Docket Number | PACKARD-BAMBERGER |
| Citation | 83 N.J.Super. 273,199 A.2d 400 |
| Parties | & CO., Inc., Plaintiff, v. Jack MALOOF, Defendant. Jack MALOOF, Third-Party Plaintiff, v. James KHOURY, Third-Party Defendant. No. l--23599. |
| Court | New Jersey Superior Court |
Daniel Amster, Waldwick, for plaintiff.
James A. Major, Hackensack, for defendant (Major & Major, Hackensack, attorneys).
John F. McCann, Ridgewood Park, for third-party defendant.
SCHNEIDER, J.C.C. (temporarily assigned).
A motion for summary judgment has been made in the case of Packard-Bamberger & Co., Inc. v. Jack Maloof. The decision in the case of Maloof v. Khoury, based upon a third-party complaint depends somewhat on the decision in the Packard-Bamberger case, and can be disposed of as soon as judgment is entered in the latter case.
The plaintiff was an owner of premises at Main Street and Hackensack Avenue in the City of Hackensack, and on April 9, 1958 leased said premises by written instrument to one George M. Pappas. This lease was for a period of ten years commencing May 1, 1958 and ending April 30, 1968, with a rental of $400 per month. The lease was the usual Gilsey form, and the fifth clause provided that the tenant shall not assign this agreement or underlet the premises. Tenant also agreed to pay the real estate taxes under clause 26 in the lease.
On October 26, 1961 George M. Pappas assigned said lease to the defendant Jack Maloof by a written assignment. At the bottom of the assignment there were written the words 'above assignment hereby accepted,' and it was signed by Jack Maloof. On September 12, 1961 James Pappas, a lawyer, wrote to Packard-Bamberger, Inc., stating that he represented George Pappas and that his client desired to assign his lease to Jack Maloof. By letter October 2, 1961 Packard-Bamberger wrote a letter to James Pappas stating that it was in complete agreement in having the lease assigned to Mr. Maloof personally. On October 26 James Pappas sent a signed copy of the assignment of the lease to Packard-Bamberger.
Maloof entered into possession of the premises and continued to occupy the premises for a year and paid rent to Packard-Bamberger which was accepted by it.
In October 1962, without any notice to the landlord and without the landlord's consent, Maloof assigned the lease to one James Khoury. Khoury tendered the rent to Packard-Bamberger, but it refused to accept payment from him and made clear its intention to hold Maloof responsible for the rent. Khoury continued to send the rent and Packard-Bamberger continued to refuse it. Packard-Bamberger instituted suit against Maloof for possession of the premises and for the payment of rent. He filed a third-party complaint against Khoury for the rent due. The court ordered the tenant evicted from the premises and there became due the sum of $1,200 for the period of time that the premises were occupied by Maloof and $4,800 for the period of time that the premises were occupied by Khoury together with taxes which have not yet been paid. Maloof admits he is obligated to pay the $1,200.
The sole issue in this case is the contention of Maloof that in accepting the assignment he obligated himself to pay the rent as a 'tenant in possession,' only for the period that he actually occupied the premises, and that he is not obligated to carry out all of the terms of the lease originally signed by Pappas. The question remains whether Maloof became obligated under the lease for the rental for the entire term where he accepted the assignment of the lease and the landlord consented and rent was paid to the landlord by Maloof. It is very obvious that the plaintiff never accepted Khoury as a tenant nor was it obligated to do so under the terms of the lease. Maloof contends that in the absence of an express assumption by him of the terms of the lease, he is responsible only for the period he occupied the premises.
In the assignment the following words were contained: 'Subject nevertheless to the rents covenants, conditions and provisions therein also mentioned.'
The defendant relies upon the case of Meyer v. Alliance Investment Co., 84 N.J.L. 450, 87 A. 476 (Sup.Ct.1913). In that case plaintiff leased property to one DeJong by written lease with a covenant to pay rent and not to assign without the written consent of the lessor. DeJong assigned to Alliance. Plaintiff consented in writing, 'subject to all the terms, conditions and covenants contained in the lease.' Thereafter defendant reassigned to DeJong without the consent of the landlord. Rent accrued and plaintiff lessor sued Alliance. Alliance denied liability on the ground that it had reassigned. Issue was joined when the landlord replied that he did not consent to the reassignment.
The court denied recovery, holding that the law is settled that a lease may be assigned so as to terminate the privity of estate, notwithstanding the covenant not to assign. The court stated further that defendant assignee was not personally bound by the terms of the lease (contract) because the landlord qualified his consent by the words 'subject to all the terms, conditions and covenants contained in the lease,' which indicated that the landlord still looked to the original lessee for compliance. The court stated, 'These are words of qualification and not of contract.'
The case at bar is distinguishable from the Meyer case in at least one material particular. The facts of this case show that the words 'subject nevertheless to the rents, covenants, conditions and provisions' were written in the contract of assignment executed by the lessee and defendant assignee, whereas in the Meyer case the words of similar import were contained in the written consent of the landlord. Thus, while the words were words of qualification in Meyer, they are clearly words of contract in the case Sub judice.
The two pertinent terms of the lease are that the lessee will pay a stipulated rent and that the tenant will not assign without the landlord's consent. Since the landlord did not consent to the assignment to Khoury, which the landlord had a right to do under the lease, Maloof remained the tenant and was liable to the landlord for the rent. See Duncan Development Co. v. Duncan Hardware, 34 N.J.Super. 293, 112 A.2d 274 (App.Div.1955), where it was held that to constitute a surrender of a lease by act and operation of law, there must be an acceptance by the landlord.
The defendant further relies on Sapienza v. Milmoe, 10 N.J.Misc. 135, 158 A. 114 (Sup.Ct.1932), affirmed 110 N.J.L. 12, 163 A. 662 (E. & A. 1932), and Linke v. Greenfield, 104 N.J.L. 320, 140 A. 314 (E. & A.1928). The court held that the assignee taking from the original tenant's receiver was not liable for the rent after reassignment, notwithstanding the prohibition contained in the lease against assignment without the lessor's consent. Acceptance of the assignment by the assignee was held not to constitute an assumption of the lease so as to render the assignee liable for rent after the assignment. It should be noted that these cases involved receivers, and therefore may not be dispositive of the issue at hand because of other policy considerations. Moreover, in the case at bar the assignee not only accepted possession but also expressly accepted the terms and conditions of the lease by contract. And it has been held that upon proof of acceptance of assignment, the assignee is liable for the rent under the lease. Iarussi v. Eagle Brewing Co., 93 N.J.L. 466, 108 A. 181 (E. & A.1919). The contract of assignment signed by Maloof stated, 'above assignment hereby accepted.'
Assuming, however, that the cases relied on by the defendant correctly state the law, they would seem at first glance to cover our situation. There is no question that the original lessor and lessee by their agreement entered into privity of contract. Where an assignment takes place in the ordinary situation, a privity of estate between the lessor and assignee comes into being, and the above law holds that in such event, in the absence of an assumption of the obligations of the lease, removal from possession ends the assignee's liability for future rent. See 89 A.L.R. 433; 2 Taylor, Landlord and Tenant, sec. 449; 2 Underhill, Landlord and Tenant, sec. 649, p. 1090.
But when we look at the facts of this case, we are struck by the unfairness of applying this law to this situation. The facts clearly show that plaintiff agreed to substitute the assignee for the original lessee and that he intended to hold defendant as his tenant. In reply to the request for his consent to the assignment plaintiff said:
'We wish to advise that we are in complete agreement to having this particular lease assigned to Mr. Jack Maloof Personally.' (Emphasis added)
The word 'personally,' taken alone and in conjunction with the...
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...addendum "F." In an assignment, privity of estate is created between the lessor and the assignee, Packard-Bamberger & Co., Inc. v. Maloof, 83 N.J.Super. 273, 280, 199 A.2d 400 (Law Div.1964), rev'd on other grounds 89 N.J.Super. 128, 214 A.2d 45 (App.Div.1965), and, as a result, the assigne......
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