On appeal from Superior Court, Law Division, Essex County.
For reversal -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Wachenfeld, Burling and Ackerson. For affirmance -- None. The opinion of the court was delivered by Case, J.
Plaintiff sued in the Superior Court to recover liquidated damages on defendant's alleged breach of contract. The court granted a judgment of dismissal at the close of plaintiff's case. An appeal was taken therefrom by plaintiff to the Appellate Division and comes to us on our own motion.
Plaintiff rented a gasoline service station on yearly lease from Gulf Oil Corporation and owned the business there conducted as well as the goods, chattels and tools thereof. On August 3, 1945, the parties entered into a written agreement, prepared by defendant's attorney, wherein Jennings undertook to sell to Pinto the business with stock and good will, to procure a lease running to Pinto from the Gulf Oil Corporation with terms similar to those of the Jennings lease, to refrain from engaging in the gasoline business within a radius of two miles of the location and not to attempt to solicit the patrons of the business for a period of three years; and Pinto agreed to pay $1,600 forthwith and $100 each
month, for a period of eight years, out of the proceeds of the business. There were these provisions:
"Said party of the first part agrees that he will procure for the party of the second part from the landlord, Gulf Oil Corporation, a new lease * * * under terms similar to the one now in operation under a lease agreement between Gulf Oil Corporation and the said party of the first part. Under the terms of said lease the Gulf Oil Corporation receives 1 1/2c on each gallon of gasoline sold which at no time is to be less than $150.00 a month. If it should be less, then the lessor must pay the difference. If the party of the first part cannot procure said lease, then these presents, at the option of the party of the second part, may be declared null and void, and the parties hereto shall be discharged from all liability hereunder."
"As to the One Hundred ($100.00) Dollars payable to the party of the first part as mentioned above, the same shall be contingent upon the retention by the party of the second part of the leasehold agreement with the Gulf Oil Corporation. If prior to the expiration of the eight (8) years the Gulf Oil Corporation shall rescind this lease or agreement under its ten day clause which gives them a right to do so, this agreement to pay One Hundred ($100.00) Dollars to the party of the first part shall be void at the option of the party of the second part."
The word "rescind" was not used in the technical sense which implies an act of both parties. Cf. City of Bridgeton v. Fidelity & Deposit Co., 88 N.J.L. 645, 650 (E. & A. 1915). It was a reference to "the option of terminating" the lease reserved by that instrument to either party on ten days' notice to the other.
After the sale, Jennings went to Florida and there engaged in business. He received the $1,600 as agreed and for a time the sum of $100 monthly. In the latter part of May, 1946, he received a letter, dated May 21, 1946, written on behalf of Pinto, containing a copy of a letter purporting to have been received by Pinto from the Gulf Oil Corporation and also containing the statement that under the terms of the Jennings-Pinto agreement a letter such as the one last mentioned terminated the obligation for monthly payments. The Gulf Oil Corporation letter to Pinto was dated May 18, 1946, and said that in accordance with the clause in the lease
whereby either party could terminate the lease on ten days' written notice the company thereby exercised the option and, effective May 31, 1946, cancelled the lease. Jennings, understanding from those letters that Pinto's right to the occupancy of the service station had terminated and that the latter's right to conduct the business at that stand was at an end, acknowledged the receipt of the correspondence and reminded Pinto that there was due under the agreement, as of May 31st, the sum of $435. Later in the summer Jennings came north and found that Pinto was still doing business at the same location. The Gulf Company had, following the notice of termination, made a new lease with Pinto. It has annually renewed those lease relations continuing up to the present time or, at least, to May 31, 1950, when the record was compiled, and Pinto has, throughout, continued his ownership and operation of the business.
Thus is presented the question whether the letter of May 18, 1946, from the Gulf Oil Corporation to Pinto constituted such an application of the pertinent clause in the Jennings-Pinto agreement as that the trial court was justified in holding, as a matter of law, that Pinto could elect to void his obligation to make ...