Sommer v. Kridel

• Decision Date: 29 June 1977
• Citation: 378 A.2d 767,74 N.J. 446
• Parties: Abraham SOMMER, Plaintiff-Respondent, v. James A. KRIDEL, Jr., Defendant-Appellant. RIVERVIEW REALTY CO., Plaintiff-Respondent, v. Carlos PEROSIO, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 446

74 N.J. 446

378 A.2d 767

Abraham SOMMER, Plaintiff-Respondent, v. James A. KRIDEL, Jr., Defendant-Appellant.

RIVERVIEW REALTY CO., Plaintiff-Respondent, v. Carlos PEROSIO, Defendant-Appellant.

Supreme Court of New Jersey.

Argued Oct. 26, 1976.

Decided June 29, 1977.

Melvyn H. Bergstein, Verona, for appellant James A. Kridel, Jr. (Margolis & Bergstein, Verona, attorneys; Donald T. Okner, Newark, on the brief).

William Goldberg, Hackensack, for appellant Carlos Perosio.

James A. Major, Hackensack, for respondent Abraham Sommer (Major & Major, Hackensack, attorneys).

Solomon Weinstein, Englewood, for respondent Riverview Realty Co.

The opinion of the court was delivered by

PASHMAN, J.

We granted certification in these cases to consider whether a landlord seeking damages from a defaulting tenant is under a duty to mitigate damages by making reasonable efforts to re-let an apartment wrongfully vacated by the tenant. Separate parts of the Appellate Division held that, in accordance with their respective leases, the landlords in both cases could recover rents due under the leases regardless of whether they had attempted to re-let the vacated apartments. Although they were of different minds as to the fairness of this result, both parts agreed that it was dictated by Joyce v. Bauman, 113 N.J.L. 438, 174 A. 693 (E. & A. 1934), a decision by the former Court of Errors and Appeals. We now reverse and hold that a landlord does have an obligation to make a reasonable effort to mitigate damages in such a situation. We therefore overrule Joyce v. Bauman to the extent that it is inconsistent with our decision today.

I

A. Sommer v. Kridel

This case was tried on stipulated facts. On March 10, 1972 the defendant, James Kridel, entered into a lease with the plaintiff, Abraham Sommer, owner of the "Pierre Apartments" in Hackensack, to rent apartment 6-L in that building. ¹ The term of the lease was from May 1, 1972 until April 30, 1974, with a rent concession for the first six weeks, so that the first month's rent was not due until June 15, 1972.

One week after signing the agreement, Kridel paid Sommer $690. Half of that sum was used to satisfy the first month's rent. The remainder was paid under the lease provision requiring a security deposit of $345. Although defendant had expected to begin occupancy around May 1, his plans were changed. He wrote to Sommer on May 19, 1972, explaining

I was to be married on June 3, 1972. Unhappily the engagement was broken and the wedding plans cancelled. Both parents were to assume responsibility for the rent after our marriage. I was discharged from the U.S. Army in October 1971 and am now a student.

I have no funds of my own, and am supported by my stepfather.

In view of the above, I cannot take possession of the apartment and am surrendering all rights to it. Never having received a key, I cannot return same to you.

I beg your understanding and compassion in releasing me from the lease, and will of course, in consideration thereof, forfeit the 2 month's rent already paid.

Please notify me at your earliest convenience.

Plaintiff did not answer the letter.

Subsequently, a third party went to the apartment house and inquired about renting apartment 6-L. Although the parties agreed that she was ready, willing and able to rent the apartment, the person in charge told her that the apartment was not being shown since it was already rented to Kridel. In fact, the landlord did not re-enter the apartment or exhibit it to anyone until August 1, 1973. At that time it was rented to a new tenant for a term beginning on September 1, 1973. The new rental was for $345 per month with a six week concession similar to that granted Kridel.

Prior to re-letting the new premises, plaintiff sued Kridel in August 1972, demanding $7,590, the total amount due for the full two-year term of the lease. Following a mistrial, plaintiff filed an amended complaint asking for $5,865, the amount due between May 1, 1972 and September 1, 1973. The amended complaint included no reduction in the claim to reflect the six week concession provided for in the lease or the $690 payment made to plaintiff after signing the agreement. Defendant filed an amended answer to the complaint, alleging that plaintiff breached the contract, failed to mitigate damages and accepted defendant's surrender of the premises. He also counterclaimed to demand repayment of the $345 paid as a security deposit.

The trial judge ruled in favor of defendant. Despite his conclusion that the lease had been drawn to reflect "the 'settled law' of this state," he found that "justice and fair dealing" imposed upon the landlord the duty to attempt to re-let the premises and thereby mitigate damages. He also held that plaintiff's failure to make any response to defendant's unequivocal offer of surrender was tantamount to an acceptance, thereby terminating the tenancy and any obligation to pay rent. As a result, he dismissed both the complaint and the counterclaim. The Appellate Division reversed in a per curiam opinion, 153 N.J.Super. 1 (1976), and we granted certification. 69 N.J. 395, 354 A.2d 323 (1976).

B. Riverview Realty Co. v. Perosio

This controversy arose in a similar manner. On December 27, 1972, Carlos Perosio entered into a written lease with plaintiff Riverview Realty Co. The agreement covered the rental of apartment 5-G in a building owned by the realty company at 2175 Hudson Terrace in Fort Lee. As in the companion case, the lease prohibited the tenant from subletting or assigning the apartment without the consent of the landlord. It was to run for a two-year term, from February 1, 1973 until January 31, 1975, and provided for a monthly rental of $450. The defendant took possession of the apartment and occupied it until February 1974. At that time he vacated the premises, after having paid the rent through January 31, 1974.

The landlord filed a complaint on October 31, 1974, demanding $4,500 in payment for the monthly rental from February 1, 1974 through October 31, 1974. Defendant answered the complaint by alleging that there had been a valid surrender of the premises and that plaintiff failed to mitigate damages. The trial court granted the landlord's motion for summary judgment against the defendant, fixing the damages at $4,050 plus $182.25 interest. ²

The Appellate Division affirmed the trial court, holding that it was bound by prior precedents, including Joyce v. Bauman, supra. 138 N.J.Super. 270, 350 A.2d 517 (App.Div.1976). Nevertheless, it freely criticized the rule which it found itself obliged to follow:

There appears to be no reason in equity or justice to perpetuate such an unrealistic and uneconomic rule of law which encourages an owner to let valuable rented space lie fallow because he is assured of full recovery from a defaulting tenant. Since courts in New Jersey and elsewhere have abandoned ancient real property concepts and applied ordinary contract principles in other conflicts between landlord and tenant there is no sound reason for a continuation of a special real property rule to the issue of mitigation. * * * (138 N.J.Super. at 273-74, 350 A.2d at 519; citations omitted)

We granted certification. 70 N.J. 145, 358 A.2d 191 (1976).

II

As the lower courts in both appeals found, the weight of authority in this State supports the rule that a landlord is under no duty to mitigate damages caused by a defaulting tenant. See Joyce v. Bauman, supra; Weiss v. I. Zapinski, Inc., 65 N.J.Super. 351, 167 A.2d 802 (App.Div.1961); Heyman v. Linwood Park, 41 N.J.Super. 437, 125 A.2d 345 (App.Div.1956); Zucker v. Dehm, 128 N.J.L. 435, 26 A.2d 564 (Sup.Ct.1942); Heckel v. Griese, 12 N.J.Misc. 211, 171 A. 148 (Sup.Ct.1934); Muller v. Beck, 94 N.J.L. 311, 110 A. 831 (Sup.Ct.1920); Tanella v. Rettagliata, 120 N.J.Super. 400, 407, 294 A.2d 431 (Cty.Ct.1972); but see Zabriskie v. Sullivan, 80 N.J.L. 673, 675, 77 A. 1075 (Sup.Ct.1910) (characterized as dictum and rejected in Muller v. Beck, supra ), aff'd 82 N.J.L. 545, 81 A. 1135 (E. & A. 1911); Carey v. Hejke, 119 N.J.L. 594, 596, 197 A. 652 (Sup.Ct.1938). This rule has been followed in a majority of states, Annot. 21 A.L.R.3d 534, § 2(a) at 541 (1968), and has been tentatively adopted in the American Law Institute's Restatement of Property. Restatement (Second) of Property, § 11.1(3) (Tent. Draft No. 3, 1975).

Nevertheless, while there is still a split of authority over this question, the trend among recent cases appears to be in favor of a mitigation requirement. Compare Dushoff v. Phoenix Co., 23 Ariz.App. 238, 532 P.2d 180 (App.1975); Hirsch v. Merchants National Bank & Trust Co., 336 N.E.2d 833 (Ind.App.1975); Wilson v. Ruhl, 277 Md. 607, 356 A.2d 544 (1976) (by statute); Bernstein v. Seglin, 184 Neb. 673, 171 N.W.2d 247 (1969); Lefrak v. Lambert, 89 Misc.2d 197, 390 N.Y.S.2d 959 (N.Y.Cty.Ct.1976); Howard Stores Corp. v. Rayon Co., Inc., 36 A.D.2d 911, 320 N.Y.S.2d 861 (App.Div.1971); Ross v. Smigelski, 42 Wis.2d 185, 166 N.W.2d 243 (1969); with Chandler Leas. Div. v. Florida-Vanderbilt Dev. Corp., 464 F.2d 267 (5 Cir. 1972) cert. den. 409 U.S. 1041, 93 S.Ct. 527, 34 L.Ed.2d 491 (1972) (applying Florida law to the rental of a yacht); Winshall v. Ampco Auto Parks, Inc., 417 F.Supp. 334 (E.D.Mich.1976) (finding that under Michigan law a landlord has a duty to mitigate damages where he is suing for a breach of contract, but not where it is solely a suit to recover rent); Ryals v. Laney, 338 So.2d 413 (Ala.Civ.App.1976); B. K. K. Co. v. Schultz, 7 Cal.App.3d 786, 86 Cal.Rptr. 760 (App.1970) (dictum); Carpenter v. Riddle, 527 P.2d 592 (Okl.Sup.Ct.1974); Hurwitz v. Kohm, 516 S.W.2d 33 (Mo.App.1974).

The majority rule is based on principles of property law which equate a lease with a transfer of a property interest in the owner's estate. Under this rationale the lease conveys to a tenant an interest in the property which forecloses any control by the landlord;...