On appeal from the Supreme Court.
For the plaintiff, Hannoch & Lasser (Herbert J. Hannoch and Morris Weinstein, of counsel).
For the defendant, Quinn, Parsons & Doremus (John J. Quinn and Theodore D. Parsons, of counsel).
The opinion of the court was delivered by
CASE, J. These are cross-appeals by plaintiff and defendant, tenant and landlord respectively, from a judgment in the amount of $11,583.18 and costs awarded the plaintiff against the defendant at a trial in the Monmouth Circuit.
In 1920 the defendant, Conover, as landlord, entered into a lease with the plaintiff, as tenant, for a theatre property in the borough of Red Bank at a rental of $10,000 a year for
a term of ten years. By the terms of the lease the tenant agreed to keep the interior of the premises in good and proper repair, not to make any alterations without the written approval and consent of the landlord and that it would "use the premises demised herein only for the moving picture or theatre business during the duration of this lease." There were also these clauses:
"The party of the first part in consideration of the rental and the guarantee paid to him at the execution of these presents, the receipt of which is hereby acknowledged, further covenants and agrees, that during the period of said ten years he will not engage either directly or indirectly for himself, or any other person, firm or corporation, in the moving picture business in the borough of Red Bank aforesaid, or in any other entertainment or theatrical business, and hereby expressly conveys to the party of the second part all of the good will of the Strand Theatre, and that he will not during the said period either directly or indirectly erect any building or structure to be used for any such purpose or finance erection thereof. * * * The party of the second part agrees to pay, and does hereby pay, at the making of these presents, the sum of twenty thousand dollars, the receipt of which is hereby acknowledged, in consideration of the good will of the party of the first part and as a guarantee for the prompt payment of said rent. In case the party of the second part exercises the option to purchase the said premises, said sum of twenty thousand dollars shall be applied upon the purchase price. If the rent is not paid as herein agreed, within thirty days from the date upon which it shall fall due, the party of the first part reserves unto himself the right to declare the within lease null and void, the guarantee forfeited, and to enter the said premises and remove all persons therefrom."
There was no provision in the agreement for the application of the $20,000 payment to the final rental requirements or for the return of the money, on the completion of the term, to the tenant. The lease contained an option of purchase at a fixed price. By reason of transfer of stock ownership the tenant company came into new control, was affiliated with
another theatre and defaulted in the payment of rent under the present lease; whereupon on December 6th, 1926, it was dispossessed. It thereupon brought this action to recover the $20,000, with interest.
The landlord answered denying liability and also counter-claimed, setting up five counts. The first count of the counter-claim was for $2,500, rent due at the time of the dispossession. The second was for expenditures incurred by the landlord in restoring the premises because of tenant's violation of its obligation to keep the theatre clean and sanitary and the interior in good repair. The third was for violation of the alleged obligation upon the tenant to use the premises during the duration of the lease for a moving picture or theatre business. The fourth was for the conversion of certain articles of ...