Township of Bloomfield v. Rosanna's Figure Salon, Inc.

Decision Date30 January 1992
Citation602 A.2d 751,253 N.J.Super. 551
PartiesTOWNSHIP OF BLOOMFIELD, Plaintiff-Respondent, v. ROSANNA'S FIGURE SALON, INC., a New Jersey Corporation, Rosanna Imbriano and Dino Imbriano, Defendants-Appellants.
CourtNew Jersey Superior Court — Appellate Division

Daniel Leff, South Orange, for defendants-appellants.

John A. Bukowski, Jr., Bloomfield, for plaintiff-respondent (Vincent A. Pirone, attorney; Vincent A. Pirone, on the brief).

Before Judges DREIER and BROCHIN.

The opinion of the court was delivered by

BROCHIN, J.A.D.

Plaintiff Rosanna's Figure Salon, Inc. was the lessee of premises in a building owned by Universal Transmission, Inc. The termination date of Rosanna's lease was May 31, 1995, but paragraph 12 of the lease gave the landlord the option to terminate it at an earlier date if the premises were taken by eminent domain or sold to a public body in lieu of condemnation. 1

On May 24, 1989, Bloomfield acquired the property by a conveyance from Universal. Universal did not notify Rosanna's that it was terminating the lease. Rosanna's and Bloomfield both agree that the conveyance was in lieu of condemnation. Following the conveyance, Rosanna's paid its rent directly to Bloomfield pursuant to Bloomfield's direction.

On November 21, 1989, Bloomfield notified Rosanna's "to vacate and quit the premises ... now occupied by Rosanna's Figure Salon, Inc. ... and to deliver possession thereof to the Township of Bloomfield or its duly authorized agents." Rosanna's refused, contending that Bloomfield had accepted its attornment, that its lease would remain in effect until May 31, 1995, and that Bloomfield could acquire possession of the premises before that date only by condemning its leasehold interest.

On March 26, 1990, Bloomfield commenced a summary eviction proceeding in the Special Civil Part of the Law Division, Superior Court, to compel Rosanna's to vacate the premises. Bloomfield's complaint alleged that it had acquired title to the premises on March 24, 1989, that the written lease between the Rosanna's and the prior owner "has been terminated by the plaintiff, Township of Bloomfield, pursuant to the terms therein and is void and of no force and effect," that the Township had demanded possession and served a notice to vacate, and that Rosanna's had refused to comply. Bloomfield asked for immediate possession.

Rosanna's moved to transfer the suit to the Law Division, General Civil Part, pursuant to N.J.S.A. 2A:18-60 and R. 6:4-1(g), and to file an answer asserting that the lease had not been terminated, that the Township had ratified the lease, and that the lease would continue in effect until 1995. Rosanna's also sought to counterclaim for damages and to compel the Township to condemn its leasehold interest. The motion was denied.

Following a trial, the court held that Bloomfield, as the successor landlord, was entitled to exercise the landlord's option to terminate the lease and that its November 21, 1989 notice was effective both as a notice to terminate and, in accordance with N.J.S.A. 2A:18-53 and -56, as demand for possession and notice to quit.

Rosanna's has appealed. It contends that the trial court committed error by refusing to grant its transfer motion; that Universal did not purport to terminate the lease in accordance with paragraph 12 of its terms and Bloomfield did not have the power to terminate it; and that the Special Civil Part lacked jurisdiction to enter a judgment of eviction because Rosanna's had not been served with a valid notice to quit and demand for possession. The Township of Bloomfield argues that by virtue of N.J.S.A. 2A:18-59, the judgment of possession entered in its favor is not appealable. Appealability

N.J.S.A. 2A:18-59 declares that judgments entered in summary actions for possession "shall not be appealable except on the ground of lack of jurisdiction." In Housing Authority, Newark v. West, 69 N.J. 293, 296-301, 354 A.2d 65 (1976), the Supreme Court interpreted that language in a way which substantially reduced or eliminated any practical difference between the scope of appellate review of final judgments entered in summary actions for possession and final judgments entered in ordinary non-jury actions in the Law Division. See Housing Auth. of City of E. Orange v. Mishoe, 201 N.J.Super. 352, 358, 493 A.2d 56 (App.Div.1985); see also Marini v. Ireland, 56 N.J. 130, 140, n. 1, 265 A.2d 526 (1970).

When Housing Authority, Newark v. West, supra, 69 N.J. 293, 354 A.2d 65, was decided, summary eviction proceedings were heard in the County District Courts. See N.J.S.A. 2A:18-53. Following the adoption of the 1978 constitutional amendment which abolished the County Courts, N.J.Const., Art. VI, § 1, the County District Courts were eliminated by statute effective December 30, 1983, N.J.S.A. 2A:4-3a et seq. A Supreme Court order effective December 31, 1983 established the Special Civil Part within the Law Division of the Superior Court and provided that summary actions for possession would be cognizable there. Those actions are now heard in the Special Civil Part by virtue of R. 6:1-2(a)(3) 2.

The County District Courts were not constitutional courts. Established by statute, they were "courts of limited jurisdiction" within the meaning of N.J.Const., Art. VI, § 1, p 1. 3 Since such "courts and their jurisdiction may from time to time be established, altered or abolished by law," Art. VI, § 1, p 1, the appealability of their judgments was subject to restriction by statute. Cf. McGann v. La Brecque, 91 N.J.Eq. 307, 311, 109 A. 501 (E. & A.1919) But appeals from the Special Civil Part of the Law Division, where summary actions for possession are now cognizable, are protected from statutory restrictions by N.J.Const., Art. VI, § 5, p 2 ("Appeals may be taken to the Appellate Division of the Superior Court from the Law and Chancery Divisions of the Superior Court and in such other causes as may be provided by law.") See Hager v. Weber, 7 N.J. 201, 205-06, 81 A.2d 155 (1951) (Appellate review is secured against legislative interference by the Judicial Article of the New Jersey Constitution.) We need not decide whether the appealability of judgments resulting from summary actions for possession could be restricted by amendment of our court rules; no such rule amendment has been adopted. See R. 2:2-3(a) ("[A]ppeals may be taken to the Appellate Division as of right (1) from final judgments of the Superior Court trial divisions....") Consequently, we conclude that there is an appeal as of right from a final judgment of the Special Civil Part in a summary dispossess action, and we review the judgment in the present proceeding to determine whether the trial court committed reversible error, not solely to determine whether it exceeded its jurisdiction. See Housing Auth. of City of E. Orange v. Mishoe, supra, 201 N.J.Super. at 357 n. 2, 493 A.2d 56. 4

Termination of the Lease

When private property is taken for a public purpose, the condemnor is constitutionally required to pay only the fair market value of the property, see State v. Gallant, 42 N.J. 583, 587, 202 A.2d 401 (1964), whether or not a tenant has a leasehold interest. See New Jersey Highway Authority v. J. & F. Holding Co., 40 N.J.Super. 309, 314, 123 A.2d 25 (App.Div.1956). But if the tenant's interest is valuable because it is paying less than fair market rent at the time when the property is taken, the tenant may be entitled to a share of the award. See id. at 316, 123 A.2d 25. The evident purpose of the condemnation clause in Rosanna's lease was to enable its landlord to terminate the leasehold interest in the event of condemnation or its equivalent so as not to be obliged to share the condemnation proceeds with a tenant. In order to acquire the property at issue here, Bloomfield presumably paid what it and Universal agreed was full fair market value. If the municipality has to compensate Rosanna's for its leasehold, Bloomfield will have paid more than fair market value. The result reached by the trial court avoids that unfair result. It has effectuated the intent of the condemnation clause by preventing Rosanna's from gaining a windfall and Bloomfield from having to pay more than fair market value for the property which it acquired. Consequently, we should sustain the trial court's construction of the lease if any fair reading of its language will bear that construction.

The material language of the condemnation clause reads, "If ... the landlord shall ... sell and convey the said premises or any portion thereof to a governmental or other public authority seeking to take said land and premises ..., then this lease, at the option of the landlord, shall terminate, and the term hereof shall end as of such date as the landlord shall fix by notice in writing...." (Emphasis added.) The premise of Rosanna's argument is that the "landlord" that exercises the option to terminate and gives written notice of the exercise of the option must be the same as the "landlord" that sells and conveys. No logical reasons are offered to support that premise, and there are at least two substantial considerations that lead to the contrary interpretation.

The first reason is textual. The lease states, "All the terms, covenants and conditions herein contained shall be for and shall inure to the benefit of and shall bind the respective parties hereto, and their heirs, executors, administrators, personal or legal representatives, successors and assigns." [Emphasis added.] Bloomfield therefore succeeded to all of Universal's rights, including the option to terminate the lease. The condition precedent, the transfer in lieu of condemnation, had already occurred.

The second consideration arises from the evident purpose of the condemnation clause of the lease at issue in this case, to maximize the landlord's compensation in the event of a public taking of the property. When property is...

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