On appeal from the First District Court of the City of Newark.
For the appellant, David H. Yonneff (Charles C. Trelease, of counsel).
For the respondent, Milton M. Unger.
Before Justices Parker, Heher and Colie.
The opinion of the court was delivered by
HEHER, J. The essential question here is whether a landlord's refusal to sanction the subletting of the demised premises and the use thereof for a purpose not authorized by the lease was "unreasonable," and therefore a breach of covenants obliging the tenant to devote the premises to a particular use and not to sublet or underlet them, without the landlord's consent.
The granting clause of the lease provided that the premises were "to be used and occupied for the business" thereinafter specified, "and for no other use or business whatsoever (except with written consent of lessor, which consent shall not be unreasonably withheld);" and the letting was expressed to be made on certain "terms and conditions, all of which lessee covenants and agrees with lessor, and its successors and assigns, to keep and perform" -- these among others: "2. The demised premises shall be used and occupied by lessee for the purpose of the sale at retail of paint, varnish, painters' and artists' supplies and kindred articles, usually sold in retail paint stores;" and "5. This lease shall not be mortgaged or assigned without the written consent of lessor first had and obtained, nor shall the whole or any part of the demised premises be sublet or underlet without the prior written consent of lessor in each instance, which consent shall not be unreasonably withheld." The lessee also bound itself not to make any alteration or improvement without the written consent of the lessor; and it was stipulated that such consent "shall not be unreasonably withheld."
The demised premises consisted of a ground floor store and basement, 15 feet 6 inches X 43 feet, at the southeast corner of Branford Place and Treat Place, in the City of Newark, known as 14 Branford Place. The term was set to begin on April 1st, 1939, and end on April 30th, 1944; and rent was reserved at the rate of $260 per month. The agreed state of the case discloses that "previous to April 22d, 1943, the defendant had removed from the leased premises to another location because of business exigencies and that the premises were then idle;" and that on that day the tenant advised the landlord of its "receipt of an offer of one Melvin Levine
to sublet the premises, to be used by the latter for the retail sale of dressed poultry," and requested the landlord's "consent thereto," which was refused. There is an intimation in correspondence between counsel for the parties, but no proof otherwise so far as the agreed case shows, that other tenants in the building of which the particular premises were but a part, abutting on Broad Street and Branford Place, holding under the respondent landlord, had voiced objection to the proposed use of the premises as one injurious to their interests, and that this had influenced the disapproving action. An ex parte affidavit submitted by the landlord's president to the Essex Circuit Court, on a motion to transfer the cause to that court (of this, more hereafter), states that the landlord is a corporate "subsidiary" of 823 Broad Street Corporation, the owner of the property known as Nos. 823-825-827 Broad Street, fronting 65 feet on Broad Street and extending 172 feet along Branford Place to Treat Place, and that it "controls the premises of which the demised premises are a part."
The landlord sued for the rent for the month of May, 1943. The tenant, by way of an answer and specification of defenses, pleaded that the landlord's refusal of assent to the proposed subletting was unreasonable, and thereby it was "deprived of and evicted from the beneficial use of the premises;" and, by counterclaim, it demanded damages for breach of covenant in the sum of $2,700, i.e., "the rental to be paid to defendant under the terms of the proposed subletting," for the remainder of the term, at the rate of $225 per month. Defendant thereupon moved the Essex Circuit Court for an order adjudging that there was reasonable cause to believe that the counterclaim was founded on fact, and there was a reasonable chance for success by the counterclaimant upon the trial of the action, and thus to secure the transfer of the action to the Circuit Court pursuant to R.S. 2:8-44 and 2:8-45. The motion was denied, to quote the language of Judge William A. Smith, "principally on the ground that the matter set up in the counterclaim is mainly by way of set-off and there could be no recovery under it which would exceed the jurisdiction of the District Court." The order
refusing the transfer recites that "the matter set up * * * in the counterclaim is available to the defendant, if at all, only by way of set-off, and that there could be no recovery therein which would exceed the jurisdiction of the District Court." Seemingly, this theory was acquiesced in by the parties and adopted by the District Court judge on the trial of the action. The counterclaim was considered as one for the recovery of one month's rent under the proposed sublease. The state ...