Town of Kearny v. Municipal Sanitary Landfill Authority

Decision Date30 July 1976
Citation143 N.J.Super. 449,363 A.2d 390
CourtNew Jersey Superior Court

Shanley & Fisher, Newark, for plaintiff (John J. Francis, Jr., Newark, of counsel, appearing).

Water, McPherson & Hudzin, Jersey City, for defendant (Walter J. Hudzin, Jersey City, appearing).

YOUNG, J.C.C., Temporarily Assigned.

The issues submitted on motions filed by both parties for an order granting summary judgment necessitate an analysis of the elements which distinguish a lease, a license and an easement. That analysis is prefatory to a determination of whether a covenant against subletting or assignment has been breached in the circumstances of the case. This is the most recent of a multiplicity of litigation spawned by the garbage dumping operations managed by the defendant Municipal Sanitary Landfill Authority in the Hackensack Meadowlands.

The initial pleading was filed by plaintiff Town of Kearny in the Hudson County District Court as a tenancy action praying for a judgment of possession of land leased to defendant Municipal Sanitary Landfill Authority, (Municipal). The action was transferred to the Superior Court, Law Division, upon motion of Municipal pursuant to the provisions of N.J.S.A. 2A:18--60. Kearny predicates its entitlement to such a judgment of possession upon an alleged breach of covenants in a lease--covenants which proscribed assignment or subletting. The parcels of land in question have been utilized for sanitary landfill operations.

Kearny asserts that the covenant against assignment and subletting was breached when Municipal and the City of Newark entered into an agreement dated November 5, 1969, supplemented by an agreement dated December 24, 1972. The legal tenor of the agreement, whether a lease, a license or some other species of interest, frames the threshold, and indeed the controlling, legal issue.

The agreement between Municipal and Newark, dated November 5, 1969, represented the culmination by settlement of an action filed by Newark in April 1969 against the separate corporations which today comprise Municipal, namely Delaware Sanitation Co., Peter Roselle and Sons, Inc., William A. Keegan, Inc., and Reclamation and Improvement Co. The genesis and course of the earlier litigation is not of continuing interest except for the fact that Kearny was also a party defendant therein. The resolution of that prior dispute took the form of an agreement which granted permission to Newark to deposit its refuse on the land which is the subject of the present action. Kearny now contends that the agreement constituted a subletting which violates a provision of the lease between Kearny and Municipal forbidding Municipal to sublet the demised premises or to assign the lease without prior consent. A breach of the restraint described would entitle Kearny to invoke a re-entry clause.

Municipal points to the acceptance of rental monies by Kearny under their lease notwithstanding knowledge by all of the parties of the terms of the resolution of the earlier litigation. Kearny denies that it was privy to the terms of settlement. Municipal also argues that the same conduct on the part of Kearny would support an estoppel. Lastly, although Municipal does not mention waiver, it may be noted in passing that Kearny's conduct would also make such a defense relevant.

One final fact requires mention before the legal relationships of all parties, Kearny, Municipal and Newark, are analyzed. Kearny first notified Municipal on November 20, 1975 of a breach of the clause which prohibited subletting. The notification pointed out that the lease provided for a ten-day period within which Municipal was to cure a breach. In reply, Municipal maintains that it took effective action within the parameters of the agreement.

A determination of the issue of the legal relationship negotiated between Municipal and Newark upon which Kearny bases its claim for right of re-entry on grounds of breach of its lease with Municipal is the central issue. The focus of the inquiry is clause 16 of the Kearny-Municipal lease which reads:

16. The tenant shall not subject (sic) the demised premises nor any portion thereof, nor shall the lease be assigned by the tenant without the prior written consent of the landlord.

The provisions of such a clause encounters the disfavor of our law for restraints against assignment of leases and subletting of premises. See Corp. Bd. Union Lodge, etc. v. J. R. Evans Co., 102 N.J.L. 435, 437 (E.&A.1926). A review of the case law in this jurisdiction discloses that the provisions of such clauses are strictly construed and accorded a narrow interpretation. See 24 Broad St. Corp. v. Quinn, 19 N.J.Super. 21, 87 A.2d 759, (Ch.Div.1952); Stark v. Nat. Research and Design Corp., 33 N.J.Super. 315, 110 A.2d 143, (App.Div.1954); Posner v. Air Brakes and Equipment Corp., 2 N.J.Super. 187, 62 A.2d 711, (Ch.Div.1948). See also, 3 Powell, Real Property, § 246(1) at 372.82--372.85 (1975).

The settled judicial policy of strict construction of restraints of the type under review represents the frame of reference within which the court will examine the agreement between Municipal and Newark. The prefatory paragraphs of the agreement indicate the intention of the parties, more specifically, the paragraph which reads: 'Whereas, the City is desirous of entering into an agreement to permit it to deposit its garbage, refuse and other waste materials on property leased by the Venture from the Town of Kearny, New Jersey.' The designation 'Venture' has reference to the joint venture more correctly described as the Municipal Sanitary Landfill Authority, defendant herein. Paragraph F provides for the compensation scheme which is a schedule of charges based on a number of cents per cubic yard of garbage, escalating over the three-year life of the agreement from an initial charge of $.16 a cubic yard the first year, to $.18 a cubic yard the second year, and $.20 a cubic yard for the third and final year. Paragraph B of the agreement reserved to Municipal the right to designate the areas, described as parcels, to which Newark was to have access to deposit its garbage. The terms of paragraph E extended the right to dump to the City of Newark, which, according to the terms of paragraph 5, comprised the city and its own agencies, including the board of education and Newark Housing Authority. Although the paragraph noted contains the phrase 'shall be exclusively used by the City,' in reference to areas designated for deposit of the city's refuse, the entire agreement was made 'subject to the terms of the Lease,' I.e., Kearny also enjoyed access for dumping its refuse. (Paragraph C). Lastly, paragraph 20 provides that in case of violation by city of any covenant or condition, Municipal may re-enter the area assigned to city, and no waiver by 'the landlord' of any violation of any covenant shall be construed as a waiver of any other covenant.

Kearny views the agreement between Municipal and Newark as a lease, contending that the provisions collated in the preceding paragraph establish a grant of 'exclusive possession' of the premises in the City of Newark. Kearny concludes that the agreement falls within the proscription of paragraph 16 of its own lease with Municipal which prohibits subletting of the premises or assignment of the term. Municipal views the agreement as a license and therefore argues that there is no violation of its lease with Kearny.

The agreement between Municipal and Newark lacks significant requisites of both a lease and a license. The opinion in Thiokol Chem. Corp. v. Morris Cty. Bd. of Tax., 41 N.J. 405, 197 A.2d 176 (1964), provides not only a design for analyzing the subject agreement, but reiterates (at 417, 197 A.2d at 182) the established principle of interpretation that 'whether a particular agreement is a lease depends upon the intention of the parties as revealed by the language employed in establishing their relationship, and, where doubt exists, by the circumstances surrounding its making as well as by their course of operation under it.'

The major distinction between a lease and lesser interests in land devolves upon the element of possession which, in turn, is dispositive of whether an estate in land is created. The creation of interests in land less than a leasehold do not give rise to an estate in land. The case law defines a lease as 'a hiring of land, or a sale of the possession, occupancy and profits of land for a term.' Id. at 416, 197 A.2d at 182. The term 'lease' was recently the subject of definition by Judge Allcorn in Sandyston Tp. v. Angerman, 134 N.J.Super. 448, 341 A.2d 682 (App.Div.1975), in the following excerpt:

* * * a lease is a grant of exclusive possession to use the land for any lawful purpose, subject to the reservation of a right of possession in the landlord for any purpose or purposes 'not inconsistent with the privileges granted the tenant.' (at 451, 341 A.2d at 683)

A lease vests exclusive possession in the tenant for the term even as against the owner in fee; less than exclusive possession militates against a finding of the landlord-tenant relationship. The transfer of the exclusive possessory right results in the creation of an estate in land termed a leasehold or an 'estate for years.' Lesser interests in land are distinguished by the absence of the creation of an estate in land.

Justice Francis delineated the distinguishing features of agreements which give rise to the creation of a leasehold interest:

Ordinarily when a lease is made we find an agreement by the owner-lessor to turn over specifically-described premises to the exclusive possession of the lessee for a definite period of time and for a consideration commonly called rent. Although no absolute requirement exists for the use of particular words, the instrument is usually studded with terms (lacking here)...

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