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Irving Investment Corp. v. Gordon

Decided: May 2, 1949.

IRVING INVESTMENT CORPORATION, A CORPORATION OF NEW JERSEY, AND NEWARK HARDWARE & PLUMBING SUPPLY COMPANY, A CORPORATION OF NEW JERSEY, PLAINTIFFS,
v.
DAVID GORDON AND IRWIN GORDON, DEFENDANTS



Civil Action. On defendants' motion for summary judgment.

Stein, J.s.c.

Stein

[3 NJSuper Page 388] The defendants moved under Rule 3:56-2 for summary judgment in their favor. The motion was based not alone on the allegations of the complaint but on two affidavits submitted by the defendants and one affidavit submitted by the plaintiffs and on the deposition of David Meyers, taken on the motion. With a single exception, later noted, there is no factual controversy between the parties. On a motion of this character the court is confined to those material facts which are either admitted or uncontroverted.

In disposing of this motion the court will disregard the lone fact on which there is some controversy between the parties. That fact, as will be herein presently shown, is altogether immaterial on the meritorious questions raised by the motion for summary judgment.

The suit is one in which the plaintiffs seek to enforce by injunction certain restrictive covenants contained in a lease made by the plaintiff Irving Investment Corporation to the two defendants under date of August 29, 1946, leasing for a term of five years beginning September 1, 1946, the entire building known as 147 Mulberry Street in the City of Newark and located on the southwest corner of that street and Edison Place. The lease recites that the demised premises are to be used and occupied only for the uses and purposes expressed in the thirty-first paragraph of the lease. That paragraph and the thirtieth paragraph are pertinent to the controversy. They read as follows:

"Thirtieth: It is the general intention of the parties hereto that the tenants are to have the right to use the demised premises for the business now conducted by them at No. 145 Mulberry Street, Newark, N.J. and are not to enter into competition with the business of the Newark Hardware & Plumbing Supply Co. at 148 Mulberry Street, Newark, N.J., and whereas the lessees are now dealing with a few items which are also carried by the said Newark Hardware & Plumbing Supply Co., and for the purpose of avoiding misunderstanding, it is agreed that lessees may sell the items set forth in Schedule 'A' annexed hereto.

"Thirty-First: Lessees covenant and agree not to engage in same or similar line of business as the said Newark Hardware and Plumbing Supply Co. except as hereinto set forth, within a radius of one-eighth of a mile from demised premises, nor place signs advertising such a business within said area, so long as Newark Hardware & Plumbing Supply Co. shall continue in said business at 148-50 Mulberry St., Newark, N.J., either directly or indirectly, as principals, agents, servants or otherwise."

It is admitted that the plaintiff Irving Investment Corporation is the sole owner of the leased building and that its co-plaintiff, Newark Hardware & Plumbing Supply Company, has no property interest in the demise. The latter company, however, has for many years been engaged in the business

of selling hardware and plumbers' supplies at 148 Mulberry Street, in a building located on the easterly side of Mulberry Street, a short distance south of Edison Place. Depositions taken on the motion establish that the property occupied by the hardware and plumbing concern is owned personally by Mr. David Meyers, the president of the Irving Investment Corporation, that the two companies have several common stockholders but that neither company owns any of the capital stock of the other. The complaint recites that the lease in question, in so far as it refers to the Newark Hardware & Plumbing Supply Company, was entered into for the benefit of that company. On that claim that company joins in this suit for injunctive relief and damages.

For over sixteen years the defendants' business has been conducted at 145 Mulberry Street, in a building located at the northwesterly corner of Mulberry Street and Edison Place. That business consists generally of the sale of electrical supplies. Before the lease in question was taken, and at all times since, the plumbing business on the easterly side of the street and the electrical supply business on the westerly side of the street were competitive in a number of articles. This fact is recognized in the lease itself, which contains a schedule of articles sold by both concerns and which the lessees (the defendants herein) were free to continue to sell despite the restrictions imposed by the lease.

The property at 145 Mulberry Street, which the defendants have occupied for many years for the transaction of their business, was held by them without a lease and as tenants from month to month. They were notified before August of 1946 by the owners of that building that the latter planned to sell the property at 145 and that before or at the time of such sale the defendants would be compelled to vacate the building. The defendants' good will attached to that business was considerable and they were concerned about having substitute premises if compelled to vacate the building then occupied by them. For that reason they sought and obtained from the Irving Investment Corporation the lease involved in this suit. The defendants' purpose was to transfer their

business from their present location at 145 to the newly-leased location at 147 and to make that transfer when compelled to move from their present location. That transfer was never made for the reason that the necessity to do so disappeared. Subsequent to taking the lease for the property at 147 Mulberry Street, the defendants purchased the property occupied by them at 145, and they have continued to own that property to the present time. The defendants claim that when they negotiated for the lease at 147 Mulberry Street they informed Mr. Meyers, the president of the lessor company, of their purpose to transfer their business from 145 to 147. This claim is denied in Meyers' reply affidavit, notwithstanding the fact that the lease itself in the thirtieth paragraph recites that the leased premises were to be used by the tenants "for the business now conducted by them at 145 Mulberry Street," and that Meyers himself, when previously examined under oath, admitted that during the negotiations for the lease he was told and understood that the lessees intended a transfer of their business from 145 to 147. Because of Mr. Meyers' self-contradiction it will on this motion be assumed that he was not informed by the defendants of the intended transfer. Whether he knew or did not know of the defendants' underlying purpose is altogether immaterial in considering the validity of the restrictions as here sought to be enforced. It is, however, important to remember that the defendants never used the demised building for the sale of any merchandise. The ground floor of that building was in August of 1946 used as a saloon and that use has remained unchanged. The two upper floors were then used for living quarters and are still used as such. Except for a period of two weeks in 1946 when the defendants used the upper floors for storing some cases, they have made no use of the demised premises except to collect the rent from their subtenants.

Plaintiffs charge that during the late summer or fall of 1948 the defendants commenced to violate and breach the restrictive covenants contained in the lease by selling from their stand at 145 Mulberry Street merchandise of a kind

competitive with the business of the Newark Hardware & Plumbing Supply Company and, therefore, forbidden by the restrictive covenants of the lease. The plaintiffs seek not alone ...


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