Goldmann, Freund and Schettino. The opinion of the court was delivered by Freund, J.s.c. (temporarily assigned).
The plaintiff, Helen Marmor Stark, is the lessee of a room in a building in Passaic, New Jersey, for a term of three years from March 1, 1952 to February 28, 1955, under a written lease which provides that it not be assigned nor the premises underlet without the landlord's written consent. In March 1953 she negotiated with the defendant an agreement whereby she orally agreed to assign her interest in the lease from May 1, 1953 for the remainder of the term at the rental stipulated in the lease and to sell to the defendant the venetian blinds and linoleum tile installed in the room. The defendant acknowledged this agreement by letter dated April 2, 1953, which reads as follows:
"This is to acknowledge our agreement to take over your contract with Kanter Building for leasing room No. 201 in Kanter's Building at 30-34 Howe Avenue, Passaic, New Jersey from May 1, 1953 up
to the expiration date of said lease on March 1, 1955. We agree to reimburse you for venetian blinds installed in said room and linoleum floor tiles at actual cost to you. As we have no use for the wood partitions, we would rather have you dispose of same, any way you please.
This agreement is subject to approval by the owner of the building."
The landlord gave his approval and he so testified. Thereafter, the plaintiff removed the wooden partitions and her personal property. On May 1, she tendered the key and possession to the defendant, but it refused to accept, informing her that other premises had been rented. This suit was brought to recover rent which the defendant had agreed to pay, but did not pay, for eight months, totalling $870, and $130 for the blinds and linoleum -- in all, $1,000. The Passaic County District Court entered judgment in the plaintiff's favor for the full amount, and the defendant appeals.
In its memorandum the court below found as a fact "that the defendant agreed to sub-lease and rent * * * from the plaintiff for the balance of the term," and concluded "as a matter of law that the writing dated April 2, 1953, is an agreement by the defendant to lease from the plaintiff Room 201 in the Kanter Building, at 30-34 Howe Avenue, Passaic, New Jersey, for a period beginning May 1, 1953 and to terminate and expire on March 1, 1955 under the same terms and conditions as set forth in the original lease as held by the plaintiff * * *." We agree with the court's conclusion, but we do not agree that the arrangement was a subletting.
The distinction between an assignment and a subletting is well defined. An assignment is the transfer of the whole interest of the assignor; a sublease occurs where the lessee lets the premises for a lesser term than he has in the premises or where he leases a part of the premises. The test is whether the original lessee retains a reversionary interest or transfers his entire term. Where the whole term of the lease for all the premises is transferred by the lessee to a third party, the transfer amounts to an assignment and not a
sublease. Firth v. Rowe , 53 N.J. Eq. 520 (Ch. 1895); Wilson v. Cornbrooks , 104 N.J.L. 418 (E. & A. 1928); Dries v. Trenton Oil Co., Inc. , 17 N.J. Super. 591 (App. Div. 1952). A covenant against one does not include the other. A covenant against assignment of a lease is not violated by a subletting, nor is a covenant against underletting breached by an assignment. Posner v. Air Brakes & Equipment Corp. , 2 N.J. Super. 187 (Ch. Div. 1948).
Here, the parties contemplated an assignment of the lease and not a subletting. The plaintiff was not to retain any reversionary interest. Her entire interest in the lease and the premises for the balance of the term was to be transferred to the defendant, and the defendant so agreed. The trial court's ruling that the transaction was to be a subletting was error. Nor was it an assignment of the lease. The plaintiff established an agreement for an assignment of the lease, and a breach of the agreement by the defendant. Whether a transaction constitutes an assignment of a lease or an agreement for an assignment is for the determination of the court in accordance with the generally recognized legal rules for the construction of contracts, and an important element is the intention of the parties. LeWine, New Jersey Landlord and Tenant (2 nd ed.), § 137, p. 347; 51 C.J.S., Landlord and Tenant , § 53, p. 589.
Manifestly, there is a distinction between the rights and liabilities of parties to an assignment of a lease and parties to an agreement for an assignment. The assignee takes all the interest in the premises which the assignor had. It is not necessary that he actually enter into possession of the demised premises in order to charge him with liability. Upon proof of acceptance of the assignment, an assignee is liable for rent under the lease. Iarussi v. Eagle Brewing Co. , 93 N.J.L. 466 (E. & A. 1919); Taylor, Landlord and Tenant (9 th ed.), §§ 16, 109 and 426. Where there is an agreement for an assignment of a lease, the proposed assignee who refuses to ...