Popular Refreshments, Inc. v. Fuller's Milk Bar & Recreation Center, Inc.

• Decision Date: 08 December 1964
• Docket Number: No. A--989,A--989
• Citation: 85 N.J.Super. 528,205 A.2d 445
• Parties: POPULAR REFRESHMENTS, INC., a corporation, Plaintiff-Appellant, v. FULLER'S MILK BAR AND RECREATION CENTER, INC., etc., et al., Defendants-Respondents, and Township of Wayne, etc., Intervenor-Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 528

85 N.J.Super. 528

205 A.2d 445

POPULAR REFRESHMENTS, INC., a corporation, Plaintiff-Appellant, v. FULLER'S MILK BAR AND RECREATION CENTER, INC., etc., et al Defendants-Respondents and Township of Wayne, etc., Intervenor-Defendant-Respondent.

No. A--989.

Superior Court of New Jersey Appellate Division.

Argued Nov. 2, 1964.

Decided Dec. 8, 1964.

Newton M. Roemer, Paterson, for appellant (Gelman & Gelman, Paterson, attorneys).

Victor P. Mullica, Union City, for respondents.

Before Judges CONFORD, KILKENNY and LEWIS.

The opinion of the court was delivered by

KILKENNY, J.A.D.

Plaintiff, lessee of a portion only of a larger single tract of land, was denied specific performance of a written option to purchase the demised premises, solely because the local planning board had denied the lessor's application for approval of the subdivision. Plaintiff appeals from this adverse judgment of the Chancery Division.

The option to purchase at a price of $35,000 was contained in a written 10-year lease, dated January 4, 1955, 'to be exercised not sooner than five years from the commencement of this lease nor later than sixty days prior to the termination of this lease, by notice in writing addressed to the landlord.' Plaintiff duly exercised the option by written notice to the landlord, dated April 1, 1960 and admittedly received by the landlord. It has been ready, willing and presumably able to close title ever since that time.

The demised premises are particularly described in the lease by metes and bounds. They are on the northeasterly side of Route 23 in the Township of Wayne, with a frontage of 130.53 feet along that highway and a depth of about 200 feet more or less, as shown on a survey dated May 21, 1960 received in evidence. The lessor's entire tract of 3.8 acres has a frontage of 230.53 feet along Route 23 and varies in depth from 640 feet on the southerly side to 900 feet on the northerly side, both more or less. The basic width of the demised premises, computed at an angle of 90 , is only 118 feet, differing from the frontage of 130.53 feet because of the angle at which the highway runs at the premises. So, too, the basic width of the remainder of the plot is only about 87 feet, more or less, even though its frontage is 100 feet, for the same reason.

There is a building on the demised premises, in which plaintiff has been conducting its business commonly referred to as a 'Milk Bar.' The remainder of the tract is generally vacant land and has been used principally as a miniature golf course, a use discontinued in 1959, according to defendants, and in 1962, according to plaintiff. Plaintiff has had the privilege of using the front part of the retained portion for the parking of customers' vehicles.

After defendant lessor received notice of plaintiff's exercise of the option, an application for approval of a subdivision plat, dividing the entire tract into two lots, one covering the demised premises and the other representing the portion to be retained, was submitted by defendant on June 1, 1960 to the township planning board. When the board first considered the application at a meeting on June 23, 1960, attended by the attorneys for both parties, it indicated its dissatisfaction with the proposed subdivision especially because the portion of the tract to be retained by the lessor would have a width of less than 100 feet in this business district. The board suggested consideration of a revision of the subdivision to avoid this situation and reserved decision.

Thereafter, defendant lessor advised the planning board by letter of July 7, 1960 that a revised subdivision plat would not be submitted and requested a decision on the application that had been filed. Thereupon, the planning board, at a meeting held on July 12, 1960, denied approval of the subdivision, stating as its reason 'It is the Board's opinion that, in consideration of the protection of the health, safety and welfare of the citizens of the Township of Wayne, no subdivision in this Business Area should have a lesser minimum width than 125 feet.'

Obviously, neither of the subdivided lots along the highway business area would satisfy that minimum width requirement.

No appeal was taken by either party from this decision of the planning board. Instead, the lessor refused to convey, relying upon N.J.S.A. 40:55--1.23 which prohibits a contract to sell or a conveyance of only part of a plot or tract of land, without having obtained municipal approval of the subdivision, and subjects violators to a fine or imprisonment. This section also allows the municipality to obtain injunctive relief and to have a conveyance set aside and invalidated where a certificate of compliance with the statute has not been issued. Plaintiff filed its specific performance action on August 1, 1960, joining the lessors as defendants but not joining the planning board or the municipality as parties to the action. Thus, specific performance alone was demanded against defendant property owners and no relief was sought as to the municipal disapproval of the subdivision.

After the matter was pretried, the trial court made an order on January 17, 1963 granting the Township of Wayne leave to intervene in this action.

The matter was submitted for decision on a stipulation of facts supplemented by oral argument, with the result first noted above. The trial court was not asked to review the propriety of the action taken by the planning board. In fact, the local planning board has never been a party to the proceedings. The Township of Wayne intervened, but, as their attorney remarked during oral argument at the trial, its only interest was 'to protect the power of the Planning Board, and as a safeguard for the residents of the Township of Wayne.'

One other fact requires notation. When the planning board made its decision in July 1960, the local zoning ordinance did not contain any minimum size or area provision for lots in this business district. Thereafter, on September 6, 1960, the zoning ordinance was amended to require a minimum lot area of 40,000 square feet and a minimum width of 200 feet for any lot in this business district. The validity of that zoning amendment has not been challenged. In effect, it would have precluded, from and after the time of its adoption, planning board approval of the proposed subdivision herein. N.J.S.A. 40:55--1.15. Also, specific performance of plaintiff's option to purchase the demised premises would now leave the lessor with an undersized vacant lot so far as the minimum width requirement is concerned, which would require the grant of a variance for erection of a business building thereon.

The lease containing the option to purchase made no reference to the obtaining of planning board approval of the subdivision, if the lessee exercised the option. But the Municipal Planning Act of 1953, N.J.S.A. 40:55--1.1 et seq., antedated the 1955 lease and both parties must be presumed to have known of its requirements. There was, therefore, an implied condition precedent that conveyance of the demised premises, being only a part of a single plot, was dependent upon the obtaining of the statutorily required subdivision approval.

Plaintiff's primary contention is that defendant lessor acted in bad faith, in order to get out of the bargain made, by thwarting the possibility of planning board approval when it refused to modify the proposed subdivision map to comply with the suggestion of the planning board, that the portion of the lot retained should be at least 100 feet wide. Plaintiff says that it was willing to surrender as much of the demised premises as would be needed to accomplish that result, including a partial demolition of the 'Milk Bar' building, and would have paid the full option price of $35,000, without diminution for the part not conveyed to it. Plaintiff also claims bad faith on the lessor's part in refusing its offer to purchase the entire tract at any fair price. It notes that when it made the latter proposal, defendant property owner asked a price of $100,000 for the portion of vacant land being retained, as compared with the option price of $35,000 for the larger frontage and business building, constituting the demised premises.

It would not be difficult to infer from all the facts and circumstances herein that the lessor found welcome escape from the option to purchase, given five years earlier, in the providential refusal of the planning board to approve the subdivision. Presumably, property values had increased in the interim, as indicated by defendant's demand of $100,000 for the unleased portion as against the option price of $35,000 for the improved demised premises. At the same time, defendant lessor was legally justified in refusing to convey the demised premises in the absence of subdivision approval, or a certificate of exemption. Such a conveyance would not have been valid under the Municipal Planning Act and would have exposed the lessor to penal sanctions.

If the lessor had revised the subdivision map, so that the retained portion would have had a minimum width of 100 feet, as suggested at the original planning board hearing, there was no assurance that the modified subdivision would have then been approved. The planning board made no commitment that it would grant approval if that were done. In the light of its final decision, based upon its policy that subdivision approval would not be given in this business district where the subdivision would result in a lot or lots less than 125 feet wide, the suggested revision might very well have met the same fate as the original plan. Thus, the proofs do not establish that the subdivision would have been approved and the sale consummated but the defendant's unwillingness to resubmit a modified subdivision map, in which it retained more land and parted title with less.

Plaintiff argues that the planning board had no authority to withhold approval of the...