Renee Cleaners, Inc. v. Good Deal Super Markets of N. J., Inc.

• Decision Date: 01 November 1965
• Docket Number: No. A--735,A--735
• Citation: 89 N.J.Super. 186,214 A.2d 437
• Parties: RENEE CLEANERS, INC., a corporation of New Jersey, Plaintiff, v. GOOD DEAL SUPER MARKETS OF N.J., INC., a corporation of New Jersey, Ivy Hill Stores, Inc., a corporation of New Jersey, Rickarjef, Inc., a corporation of New Jersey, and W.M.S. Co., a corporation of New Jersey, Defendants.
• Court: New Jersey Superior Court — Appellate Division

Page 186

89 N.J.Super. 186

214 A.2d 437

RENEE CLEANERS, INC., a corporation of New Jersey, Plaintiff, v. GOOD DEAL SUPER MARKETS OF N.J., INC., a corporation of New Jersey, Ivy Hill Stores, Inc., a corporation of New Jersey Rickarjef, Inc., a corporation of New Jersey, and W.M.S Co., a corporation of New Jersey, Defendants.

No. A--735.

Superior Court of New Jersey

Appellate Division.

Argued Sept. 20, 1965.

Decided Nov. 1, 1965.

Joseph F. Walsh, Newark, for appellants (Bracken & Walsh, Newark, attorneys).

Norman Bruck, Newark, for respondents (Hellring, Lindeman & Landau, Newark, attorneys).

Before Judges GAULKIN, LABRECQUE and BROWN.

The opinion of the court was delivered by

LABRECQUE, J.A.D.

Plaintiff Renee Cleaners, Inc. (Renee), appeals from the entry of summary judgment in favor of defendants Good Deal Super Markets of N.J., Inc. (Good Deal), Ivy Hill Stores, Inc. (Ivy Hill) and Rickarjef, Inc. (Rickarjef), and from denial of summary judgment in its favor.

Ivy Hill and Rickarjef are wholly owned subsidiaries of Good Deal. On April 18, 1959, Ivy Hill leased to plaintiff store 1 in the Irvington Avenue Shopping Center, Maplewood, New Jersey, for a period of ten years. The lease covers 36 pages in the appendix, contains 57 paragraphs--a number with subparagraphs--and has annexed to it a schedule containing an additional 13 paragraphs. It provided, among other things, that:

'The Tenant shall use and occupy the store premises for no purpose other than as a retail store for the on premises dry cleaning and pressing of clothes, fur storage and glazing, finished laundry service, and for no other purpose without the express written consent of the Lessor.'

It further provided:

'51. The Landlord shall not lease any other stores in the group of stores of which the demised premises are a part to any Tenant for the operation of a dry cleaning and pressing store, including tailoring, finished shirts and finished laundry. In addition the Landlord or any person, firm or corporation, directly or indirectly controlled by Landlord will not lease to such a store within 500' of the premises.' (Emphasis added)

The leased premises were located on what might be called parcel A. In addition, Rickarjef was the owner of parcel B, adjoining. Defendants have stipulated that they were all included in the aforementioned reference to the 'Landlord or any person, firm or corporation, directly or indirectly controlled by the Landlord,' and that if Rickarjef still owned parcel B, the Leasing of any portion thereof within 500 feet of plaintiff's store would have come within the interdiction of the quoted paragraph.

Subsequent to the execution of the lease and plaintiff's entry into possession, defendants Rickarjef and Good Deal sold parcel B to a corporation known as W.M.S. Co. Two months later Ivy Hill and Good Deal sold the premises upon which plaintiff's store was located to Avon Enterprises, which assumed the obligations of the lease only insofar as they related to that specific parcel.

Thereafter W.M.S. Co entered into a lease with a competing automatic dry cleaning business known as Norge Villa, covering premises located in parcel B which, plaintiff asserts, are within 500 feet of its store.

Plaintiff thereupon instituted the present suit against Ivy Hill, Good Deal, Rickarjef and W.M.S. Co. The count against W.M.S. Co. was later dismissed when it was made to appear that it had had no knowledge of the terms of the lease between Renee and Ivy Hill. The sole issue remaining in the case was plaintiff's right to damages from defendants for violation of the covenant referred to. The trial judge held that the covenant had not been breached by the sale of the premises to W.M.S. Co. See Renee Cleaners, Inc. v. Good Deal, etc., N.J., 83 N.J.Super. 85, 198 A.2d 837 (Ch.Div.1964).

Another provision of the lease, paragraph 39, provided that:

'39. The conditions, covenants and agreements in the aforesaid lease contained, to be kept and performed by the parties hereto shall be binding upon and inure to the benefit of said respective parties, their legal representatives, successors and assigns. This clause shall not be construed to permit any assignment or subletting, without Landlord's consent. The term 'Landlord' as used in this Lease means the owner of the building of which the demised premises form a part, so that in the event of any sale of said building or in the event of a lease of said building, the said Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder and it shall be deemed and construed without further agreement between the parties or their successors in interest, or between the parties and the purchaser, at any such sale or the said leasing of the building, that the purchaser or lessee of the building has assumed and agreed to carry out any and all covenants and obligations of Landlord hereunder. If the Landlord shall lease the building in which the demised premises are located, and said building-lessee defaults, the Tenant under this lease shall not be deemed in default and said lease shall continue with this Landlord.'

Plaintiff concedes in its brief that if defendants desired to sell parcel B, they were not precluded by the lease from so doing, provided they made provision for the further performance of the obligation they had assumed by virtue of paragraph 51 thereof.

The basic questions involved are: (1) the extent of defendants' obligation under the lease, and (2) depending upon the nature of their obligation, whether they could sell the premises affected thereby without making provision for the purther performance of such obligation. Neither the industry of counsel nor our own research has unearthed a New Jersey decision which is dispositive of the issue.

An agreement, such as the one here involved, is to be construed in its entirety. Washington Construction Co., Inc. v. Spinella, 8 N.J. 212, 84 A.2d 617, 28 A.L.R.2d 863 (1951). In general, the polestar of construction is the intention of the parties as disclosed by the language used, taken in its entirety, and evidence of the attendant circumstances may be considered, not to change the agreement made but to secure light by which to measure its actual significance. Casriel v. King, 2 N.J. 45, 65 A.2d 514 (1949). Terms may be implied therein where the parties must have intended them 'because they are necessary to give business efficacy to the contract as written, or to give the contract the effect which the parties, as fair and reasonable men, presumably would have agreed on if, having in mind the possibility of the situation which has arisen, they contracted expressly in reference thereto.' William Berland Realty Co. v. Hahne & Co., 26 N.J.Super. 477, 487, 98 A.2d 124, 129 (Ch.Div.1953), modified on other grounds 29 N.J.Super. 316, 102 A.2d 686 (App.Div.1954).

In Cragmere Holding Corp. v. Socony-Mobil Oil Co., 65 N.J.Super. 322, 167 A.2d 825 (App.Div.1961), plaintiff-landlord had leased certain premises on Route 17 in Mahwah Township to defendant for use as a gasoline service station. The lease contained a provision that, with one exception, no other property located on the westerly side of Route 17 within 1000 feet of the leased premises would be developed in whole or in part for the sale or distribution of petroleum products. Approximately a year later plaintiff purchased additional real estate on the westerly side of Route 17 and within 1000 feet of the leased premises. It thereupon sought a judicial declaration that it could utilize its purchase for the operation of a service station notwithstanding the restriction contained in the original lease, on the ground that the restriction applied only to property owned by it at the time the lease was executed. In rejecting this contention it was held '* * * The covenant in question must be construed in the light of both the circumstances under which it was written, and the purpose, express or implied, of the parties in effecting their arrangements, in order that we may attribute to their language a rational meaning consonant with that purpose. Casriel v. King, 2 N.J. 45, 50, 65 A.2d 514 (1949); Broad & Branford Place Corp. v. J. J. Hockenjos Co., 132 N.J.L. 229, 236, 39 A.2d 80 (Sup.Ct.1944); William Berland Realty Co. v. Hahne & Co., 26 N.J.Super. 477, 497, 98 A.2d 124 (Ch.Div.1953), modified 29 N.J.Super. 316, 102 A.2d 686 (App.Div.1954); See 3 Williston on Contracts (rev. ed. 1936) § 618, pp. 1777--81. So viewed, the crucial feature of this covenant is its applicability 'during the term of this lease and any renewal or extension thereof.' It is clear from the stipulation that plaintiff was already operating a service station in the vicinty (sic) of the leased tract, namely, the station excepted from the restriction contained in the provision under consideration. Defendant was seeking and, by virtue of the covenant, obtained protection against competition, direct or indirect, from its landlord for the duration of the lease.' (at p. 325, 167 A.2d at p. 826.)

and further:

'We note, additionally, that the rule of strict construction is counterbalanced in the instant case by an evolving principle to the effect that covenants to refrain from competition, or to refrain from leasing to a competitor, if sufficiently reasonable in scope to avoid being labelled in restraint of trade, will be realistically construed in furtherance of their obvious purpose.' (at p. 326, 167 A.2d at p. 827)

In Cragmere, by way of illustration of the extent to which modern-day tribunals will go in recognizing the commercial facts of life and sheltering a tenant who has contracted for exclusive rights, the opinion quotes from Carter v. Adler, 138 Cal.App.2d 63, 291 P.2d 111 (D.Ct.App.1955), to the effect that:

'A restrictive covenant, such as the grant of the exclusive mercantile rights to respondents, is not merely ornamental words inserted to please the eye. It...