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Barr and Sons Inc. v. Cherry Hill Center Inc.

Decided: February 28, 1966.

BARR AND SONS, INC. OF CHERRY HILL, NEW JERSEY, PLAINTIFF, CROSS-APPELLANT, RESPONDENT,
v.
CHERRY HILL CENTER, INC., AND BAILEY, BANKS AND BIDDLE OF CHERRY HILLS, INC., DEFENDANTS-APPELLANTS AND CROSS-RESPONDENTS



Conford, Kilkenny and Leonard. The opinion of the court was delivered by Leonard, J.A.D.

Leonard

Defendants Cherry Hill Center, Inc. (Center) and Bailey, Banks and Biddle of Cherry Hills, Inc. (Bailey) appeal from a judgment entered in the Superior Court, Chancery Division, which in part enjoined Bailey from selling on long-term credit and from advertising in the manner hereinafter discussed at its store located in the Cherry Hill Mall, Cherry Hill Township, Camden County, New Jersey. The judgment also awarded plaintiff, Barr and Sons, Inc. of Cherry Hill, New Jersey (Barr), damages in the sum of $5,914 and costs against both defendants.

Plaintiff cross-appeals from the damage award, alleging that the amount allowed was improperly computed and inadequate.

Center operates a large shopping mall in Cherry Hill Township in Camden County. On September 16, 1960 it entered into a lease with plaintiff for the rental of a store therein. The terms of a restrictive covenant to be placed in this lease were the subject of considerable prior negotiation between the parties. Plaintiff desired an exclusive right to sell jewelry on an installment basis and had attempted to get a commitment from Center that no other jewelry store would be "permitted to occupy space in the center unless said tenant operates as a strictly cash, class jeweler who does not offer, advertise or grant payment terms in excess of 90 days * * *." It objected to a clause that would permit occasional advertising or the placing of window signs by said tenant stating that "convenient terms" would be available.

Kenneth A. Gorman, vice-president of Center, testified that he had explained to Meyer Barr, plaintiff's then president, that the Center expected to have more than one jewelry operation therein and hoped to have both a quality jeweler and a credit jeweler; and that Barr had said on several occasions, "Well, okay, if you have Bailey, Banks or Caldwell, or somebody else like that, we have no problem."

In the course of the negotiations Barr wrote a letter to Center and stated:

"Neither Bailey, Banks & Biddle, J. E. Caldwell or Coopers grant any convenient terms whatsoever. If they are the type of competition we are to have, we have no objection * * *."

As a result of these negotiations the following clause was inserted in the afore-mentioned lease between Center and plaintiff:

" Sec. 25

The leased premises shall be used by Tenant solely for the purpose of conducting therein the business of an installment-type jewelry operation for the sale, at retail, of jewelry, which includes diamond rings, plain wedding rings, mountings, settings, diamonds and other precious stones, stone rings, lockets and crosses, compacts, charms, brooches, watches (both men's and ladies), bracelets, watch attachments, lighters, pen and pencil sets, cuff links, scarf pins, earrings, pins, pearls, and all other similar and kindred articles of merchandise generally sold in other Barr's Jewelry Stores.

Landlord covenants and agrees that during the term of this Lease Agreement provided Tenant is not in default under any terms or conditions of this Lease Agreement, it will not lease or consent to the leasing of any store in Phase One of the Center (which shall mean 535,000 square feet of gross floor area) for the principal business of the sale, at retail, of installment-type jewelry. This restriction, however, shall not prohibit Landlord from leasing premises in the Center to 'class and cash' jewelry stores of the type of Bailey, Banks and Biddle, or J.E. Caldwell Company provided the following use clause is inserted in such leases:

'The leased premises shall be used by Tenant solely for the purpose of conducting and maintaining therein the business of a quality jewelry store, and in all other departments of the business carry top level quality manufacturers. Tenant covenants and agrees that it will not engage in an installment type jewelry operation. The term "installment type jewelry operation" shall be interpreted to prohibit a holding out by Tenant either by newspaper, radio, direct mail or television advertisement, or within the windows of the leased premises that it offers long term credit or refers to weekly or monthly payment. However, Tenant shall have the right to make sales on a charge basis.'

In the event Landlord leases premises in the Center to 'class and cash' jewelry store with the above use clause inserted therein, and the operation of any of the 'class and cash' jewelry store becomes such that Tenant in good faith regards such operation to be in violation of said use clause, Tenant shall so notify Landlord in writing. Landlord shall in thirty (30) days after receipt of said notice, proceed to correct said violation, if it determined there is such a violation, or if it determines that there is no violation it shall so notify Tenant. * * *

Provided further that in the event it is determined, as hereinbefore set forth, that the operation of any of the 'class and cash' jewelry stores is such that it is in violation of its use clause, then Tenant shall be entitled to a rebate of all rentals paid from the expiration of the thirty (30) day period subsequent to the date of Tenant's notice to Landlord, until the date when said violation ceases."

Plaintiff commenced in business at the leased premises in October 1961 and is still operating therein. In May 1962 it became aware that Center was negotiating with Bailey as a prospective lessee. Josef A. Barr, who by that time had become plaintiff's president, testified that in May 1962 he learned from advertisements Bailey had run in Philadelphia newspapers that it proposed to open a store in the mall, and that Bailey's character as a "class and cash" jewelry store had changed and it was now soliciting trade on an "extended payment" basis. He therefore communicated this information to his lawyer.

On May 21, 1962 this attorney wrote a letter to Center objecting to any lease between Center and Bailey because Bailey "is under new management and is presently engaged in installment jewelry selling and advertising the same." Receiving no response to that letter he wrote again on June 19, 1962, calling attention to his prior letter. In response thereto he received a letter written on behalf of Center stating, "we do have a lease with Bailey, Banks & Biddle, but in entering into it we were aware and took into account our lease with Barr."

In fact, a lease between Center and Baiey had been signed on April 18, 1962. This lease contained the following clause:

"Sec. 25:

The leased premises shall be used by Tenant solely for the purpose of conducting therein the business of a quality jewelry store, carrying in all departments therein merchandise of top level quality manufacturers. Tenant covenants and agrees that it will not engage in an 'installment type jewelry operation.' The term 'installment type jewelry operation' shall be interpreted to prohibit a holding out by tenant either by newspaper, radio or direct mail or television advertisement or within the windows of the leased premises that offers a long term

credit or refers to weekly or monthly payments. However, Tenant shall have the right to make sales on a charge basis."

Bailey opened its store around the middle of October 1962. For the period of October 21, 1962 to April 1, 1963 it advertised both in the Philadelphia and Camden newspapers, using the following phrases:

"extended payments available";

"extended payments if desired";

"terms if desired";

"extended terms if you desire";

"convenient terms may be ...


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