Plaintiffs-lessees in this declaratory judgment proceeding seek judicial construction of a covenant contained in a written lease agreement and declaration of their rights thereunder.
The single question presented is whether a special assessment is a tax within the meaning of the term "all taxes," as used in the agreement.
On or about April 2, 1956 plaintiffs, for an annual rental of $3,000 leased from the defendants a certain unimproved tract of land located in Wall Township, Monmouth County. The initial term was for 52 years, with an option to renew on the same basis for an additional period of 23 years.
The covenant in question reads as follows:
"The said party of the second part, [plaintiffs-lessees] in addition to the above rent, covenant to pay 'all taxes' on said premises during the term of this lease and any renewal or renewals thereof."
There also appears in the agreement the following covenant:
"At the expiration of said term or expiration of this lease the said tenant will quit and surrender the premises hereby demised in as good a state and condition as reasonable wear and tear thereof will permit, damages by the elements excepted."
Subsequent to the entry into the said lease agreement plaintiffs constructed a store building on the leased premises at a cost in excess of $150,000 which, on April 26, 1956, they rented to the Great Atlantic and Pacific Tea Company, Inc., (A & P) for a term of ten years, at an annual rental of $22,800. This lease agreement contained the following provision:
"That the said lessor [plaintiff] shall pay all taxes, assessments and other charges imposed upon the premises hereby demised."
In 1959 the Township of Wall installed a water system and levied a special assessment against the demised premises for a portion of the cost thereof. At oral argument it was stated that the amount of said assessment was approximately ...