Goldmann, Freund and Conford. The opinion of the court was delivered by Freund, J.A.D. Goldmann, S.j.a.d. (dissenting).
The issue here is whether a clause in a written lease for land and buildings which provides that "Landlord agrees to pay promptly municipal real estate taxes * * * and upon demand of the tenant to submit" evidence of payment can be interpreted to mean that the lessor is required to pay taxes only for the premises as improved at the time of the execution of the lease and the tenant to pay any taxes in excess thereof attributable to improvements made by the lessee.
This is an action at law by the landlord against the lessees to recover that portion of realty taxes assessed against the property and paid by the landlord, attributable to the improvements made by the lessees. Plaintiff appeals from a summary judgment in favor of the defendants, F. Charles Feiler and Morris West, entered on defendants' motion for dismissal pursuant to R.R. 4:58-2, before answer filed, on the ground that the complaint, together with plaintiff's affidavit in support thereof, shows palpably that there is no genuine issue as to any material fact and that said defendants have a right to such judgment as a matter of law. The defendant, Feiler, did not file any answering affidavit. Defendant West filed an affidavit incorporating
as a part thereof an agreement of release but he does not dispute any of the statements in plaintiff's affidavit.
The statement of proceedings, filed pursuant to R.R. 1:6-3, declares that the court determined the matter upon consideration of the pleadings, affidavits and the lease, which was submitted as an exhibit. Accordingly, for the purposes of defendants' motions for summary judgment, the allegations in the complaint and in the plaintiff's supporting affidavit are uncontradicted and are accepted as true. Judson v. Peoples Bank & Trust Co. of Westfield , 17 N.J. 67, 73 (1954).
The plaintiff, The Crewe Corporation, formerly known as Orange & Domestic Laundry, Inc., had for many years conducted a general family laundry business in premises which it owns, commonly known as 177 Oakwood Avenue, in the City of Orange, New Jersey. Plaintiff decided to liquidate the business and sell the property and placed them in the hands of agents for sale. The president of the plaintiff corporation was introduced to the defendants who said they could not purchase for lack of available cash. "They said they were not interested in the laundry business such as we (plaintiff) had been operating but that they wanted to open up a quick service laundry business" on the first floor of the building and "proposed to sublet the 2nd floor * * * to a tenant like a dress manufacturer." The parties carried on negotiations resulting in the execution of a lease on October 30, 1953 for a term of 15 years commencing January 1, 1954 and ending on December 31, 1969, at a total rental of $112,500 payable in equal monthly installments of $625 per month. It is apparent that there is an error in the termination date; it should have been December 31, 1968. The lease grants the tenants an option to purchase for $60,000 upon stipulated terms, to be exercised before July 1, 1969. It may well be that this, too, is erroneous and that the parties meant 1968, but this is not in issue, and we are not called upon to make any decision either with respect to the termination date of the lease or for the exercise of the option.
Several buildings stood on the premises in which plaintiff's laundry business was conducted. The lease contains a brief description of the lands and buildings demised, referring to five separate units, and annexed to the lease is a schedule containing a metes and bounds description consisting of four tracts.
Concerning the use of the demised premises, the lease provides that they are
"* * * to be used and occupied as a retail and commercial laundry, dry cleaning plant, and any other sundry and kindred enterprises which might be considered an adjunct of a laundry business, or such other lawful purpose as the tenant or any sub-tenant may require whether related to the laundry or dry-cleaning business, or not." (Emphasis added.)
The lease further stipulates that:
"The tenants are hereby granted permission immediately upon the execution of this lease to enter into and upon the premises for the purpose only of completing plans and making measurements in connection with the alterations which they contemplate."
Plaintiff's affidavit asserts that defendants purchased some of its laundry equipment in the building, moved in other laundry equipment, "organized a laundry firm known as 'Three Hour Cleaning and Laundry Company' and erected a sign on the front of the building and proceeded to make alterations to the building for their proposed laundry." The affidavit further states that
"* * * the defendants before completing the alterations to the building for a quick service laundry above mentioned, abandoned such alterations and instead turned the building into an office building. To make such changes required a complete renovation of the building. All the laundry equipment and fixtures were removed as well as the old plumbing and heating system, light fixtures, partitions and sky-lights. New metal windows and light fixtures were installed, the floors, walls, ceilings and roof refinished, and new wash rooms and toilet facilities were installed on the 1st and 2nd floors. An open driveway was enclosed and added to the 1st floor, the front and side of the building was refaced with brick and a new front entrance and 2nd floor stairway were erected. The building was
completely air conditioned. The defendant Feiler told me that the costs of these improvements amounted to $75,000.00. Later the frame garage building was demolished and all the open area of the property was covered with black top for the parking of vehicles."
The lease contains no provisions respecting improvements or alterations of the premises. It merely provides:
"That the Tenant shall take good care of the premises and shall at their own cost and expense make all repairs of every kind without limitation, and at the end or other expiration of the term, shall deliver up the demised premises in good order or condition, damages by the elements excepted."
The affidavit of the president of plaintiff corporation states that he lives near the property and knew that the improvements were being made. He talked with the defendants about the improvements and, although defendants did not ask for his consent to make the improvements "except in a few instances when the municipal authorities required it * * * in each instance I gave my consent promptly." The affidavit does not indicate that plaintiff at any time offered any objection to the making of any of the alterations or improvements. During the course of the negotiations for the lease, he said "there was no discussion between us about the use of the premises for office purposes and such use was not contemplated by the parties. There was no discussion between us of large, extensive and expensive alterations and improvements and none were contemplated. The only thing contemplated was the continued use of the property for industrial purposes."
Having converted the buildings into an office building, defendants sublet the second floor to an insurance company by written lease for a term of five years from October 1, 1955 at an annual rental of $13,500, and the first floor to another tenant for a term of five years from January 1, 1956 at a rental of $56,750 for the full term. Both leases have options of renewal for a further term of five years.
For the years 1954, 1955 and 1956 the buildings were assessed for real estate taxes at $17,000, $20,000 and $20,200,
respectively, but for the year 1957, after the improvements were made by the defendants, the assessment on the building was increased to $57,100, while the land, which had been assessed for $6,400, was reduced to $5,400. Plaintiff alleges that by reason of the improvements the assessed valuation rose from $20,200 to $57,100, resulting in an increase of the municipal real estate taxes against the demised premises from about $2,000 to $4,700 per annum. The complaint seeks a money judgment for the taxes paid for the years 1956 and 1957 attributable to the improvements made ...