On appeal from the Supreme Court.
For the plaintiff-appellant, Klein & Klein (Morris Klein, of counsel).
For the defendant-respondent, Osborne, Cornish & Scheck.
The opinion of the court was delivered by
BODINE, J. The plaintiff sued for the rent reserved in a written lease covering premises in Newark. The defendant counter-claimed seeking damages for the breach of a covenant contained in the lease. The plaintiff had judgment for the rent reserved during actual occupancy, and the defendant prevailed upon its counter-claim recovering the earned interest upon moneys deposited as security for rent and damages for the breach of the covenant.
The covenant was contained in the twenty-eighth paragraph of the lease as follows: "The landlord agrees that it will not rent any other store in the building in which the demised
premises are a part, for the sale of jewelry, silverware and other articles usually sold in a jewelry store, or for the demonstration or sale of any such articles, except the demonstration and/or sale of clocks, watches and shaving paraphernalia, which articles are sold and demonstrated by the landlord herein in the store occupied by it in the said premises."
The proofs tended to show that the plaintiff landlord had violated the covenant and had competed with the defendant's jewelry store business to his detriment. The breach of the covenant seems not to have been seriously disputed because in response to complaint sometime prior to defendant's vacation of the premises, the plaintiff wrote: "Your complaint about the conflicting articles of merchandise which you handle in your store and which we handle in our store is well taken, and we are going to correct the nature of the merchandise we handle so it will not conflict with yours, except we will continue to handle clocks and watches as we did heretofore." Other promises of compliance were disregarded before defendant vacated.
"A lessee when sued for the rent may interpose a claim by way of recoupment, set-off or counter-claim. Thus the lessee may in a proper case recoup, set-off, or counter-claim damages resulting from the landlord's breach of covenant, or other agreement concerning the tenancy, or the amount of a deposit made to secure performance. The claim relied upon by way of recoupment, set-off, or counter-claim, must be one which is based on an actual liability." 36 Corp. Jur. 408, § 1326.
The appellant, however, relies upon Hunter v. Reiley, 43 N.J.L. 480, where it is held that the tenant in an action for rent cannot recoup damages for breach of a covenant in the lease at common law or by our statute. That case was decided in 1881, and the matter was controlled by section 129 of the then existing Practice act, which confined the right of recoupment to action on contract not under seal.
Section 105 of the Practice act of 1903 permits recovery under a counter-claim whether the action is brought on a simple contract or one under seal. This section was not repealed by the ...