On appeal from a decree of the former Court of Chancery.
For modification -- Chief Justice Vanderbilt, and Justices Case, Heher, Burling and Ackerson. Opposed -- None. The opinion of the court was delivered by Ackerson, J.
Defendants appeal from a decree of the former Court of Chancery in a suit instituted for partition of certain real estate, and the sole question presented is whether or not certain fixtures installed therein by a tenant are removable as chattels.
In 1929, Henry Horns and his wife Augusta leased to their son, Fred Horns, the premises in question consisting of a five-story brick building on Mulberry Street, Newark, New Jersey, theretofore occupied by a dealer in seeds and garden supplies, who used the first floor as a store and the upper floors for storage. The lease to Fred Horns was for a term beginning September 1, 1929, and continuing until "the first day of the sixth month" following the death of the survivor of the two lessors, at a rental of $500 per month. This lease gave Fred Horns the privilege of installing a new front in the building and otherwise altering it for use as a plant for the processing, refrigeration and sale of meat, and he covenanted to keep the building and its appurtenances "in as good and sufficient repair as at the date of the execution hereof * * * and at the end or other expiration of the term, will deliver up the demised premises and its fixtures in as good condition as on the date hereof" -- ordinary wear and tear excepted. Additionally the tenant was given the option to purchase the premises any time before the expiration of the lease for $75,000.
The lessee, Fred Horns, promptly installed a refrigeration system in a considerable portion of the leased building. He placed in the basement refrigeration compressors, machinery, ammonia tanks, and piping which extended to the second, third, fourth and fifth floors. Partitions insulated with cork and fitted with refrigerator doors were built across the rear end of each of these floors. All windows in each of the refrigeration rooms thus formed were filled up with brick and the walls and floors were insulated with cork and properly covered. Inside these refrigeration rooms steel "I" beams were installed along the ceiling from wall to wall and between the "I" beams were suspended wooden beams to which in
turn were bolted tracks or rails for meat hangers, and above the beams and resting on them refrigerating coils were built in wooden troughs. So that, in effect, each floor above the first was a complete cold storage room with tracks for the meat hangers continuing on out from within the room to an elevator in the small service room to the rear. The ground floor of the building was not materially altered, and was at that time, and is still used as a store. The entire cost of the alterations and improvements was approximately $89,000.
Augusta Horns, who survived her husband, died on October 11, 1937, and by will devised the aforesaid premises to her three children, Hulda Muller, now deceased, Fred Horns, the tenant then in possession, and Clara Horns, who thereby became seized thereof as tenants in common. The complainant Hazel H. Handler is the only child and sole devisee of Hulda Muller, deceased.
After his mother's death, Fred Horns' lease expired according to its terms, on the "first day of the sixth month" thereafter, which was on April 1, 1938, and his option to purchase was never exercised. Nevertheless he continued on in possession as a hold over tenant paying the same rental and on April 14, 1939, he and the corporation which he had formed to carry on his business under the name of Fred Horns, Inc. (later changed to Fred Horns & Son), entered into a new lease with the then owners of the premises, who were himself and his two sisters, for a term of two years, from May 1, 1939, to April 30, 1941, at the same rental with an option of renewal for an additional term of three years. That lease provided, inter alia, as follows:
" Sixth: That no alterations, additions or improvements shall be made * * * without the consent of the Landlords * * *, and all additions and improvements made by the Tenant shall belong to the Landlords.
" Twenty-Seventh: It is further * * * agreed between the parties hereto that at the expiration of this lease or any renewal thereof, the Tenant shall have the right to remove any and all trade fixtures that may belong to it or which it may have installed in the premises, with the exception, however, of any fixtures that may be so affixed to the building as to become a part of the realty and not removable without causing material damage to the premises."
When the term of this lease expired, the tenants continued on under a tenancy from year to year at the same rental. Fred Horns died in 1945 bequeathing his meat business and any interest in the fixtures on the premises in question, and all shares of stock of the defendant corporation, Fred Horns & Son, through which he was conducting said business, to his son, the defendant, Henry W. Horns. The premises are still occupied by that ...