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Alexander''s Department Stores of New Jersey Inc. v. Arnold Constable Corp.

Decided: February 28, 1969.


Mintz, J.s.c.


[105 NJSuper Page 18] This matter is before the court on Arnold Constable Corporation's ("Arnold Constable") motion for summary judgment. In the first-captioned proceeding Alexander's Department Stores of New Jersey, Inc. ("Alexander's") and its subsidiary, Exander Properties, Inc. ("Exander"), seek a declaratory judgment that certain restrictions in Arnold Constable's recorded lease of premises in the Essex Green Shopping Plaza in West Orange, New Jersey, do not bar Alexander's from operating a proposed department store on properties adjoining the Arnold Constable store. In its answer Arnold Constable alleges that the operation of an Alexander's store on said properties would be in violation of its lease and counterclaims for an injunction to prevent the construction and operation of an Alexander's department store on all three parcels of land involved in this litigation. Although not specifically set forth in its answer, Arnold Constable also urges that it is entitled to specifically enforce restrictive covenants in deeds covering two of the three contiguous parcels upon which Alexander's

proposes to erect a department store. Since this issue was presented and argued without objection, the answer will be deemed amended to include the same. In the second-captioned action Arnold Constable seeks to hold defendants liable for damages, including legal fees, arising out of the alleged breach of the leasehold obligations to Arnold Constable. Defendant Doelger moved for summary judgment and his motion was granted.

In 1956 Ridge Holding Company conveyed three contiguous parcels of land in West Orange to three separate entities, namely, Essex Green, Inc., Pleasant Acres Company and Prospect Acres, Inc. The three deeds were each dated March 29, 1956 and were consecutively recorded in the Essex County Register's Office on April 30, 1956. Essex Green, Inc. acquired title to a tract consisting of 48.08 acres fronting on the northwesterly side of Prospect Avenue in West Orange. An adjoining parcel to the north was acquired by Pleasant Acres Company, and an adjacent parcel to the north and west of the Essex Green, Inc. property was acquired by Prospect Acres, Inc. The deeds to the Pleasant Acres Company and Prospect Acres, Inc. tracts each contained a restrictive covenant which reads as follows:

"The party of the second part, in accepting this deed, does for itself, its successors and assigns covenant and agree to and with the party of the first part, its successors and assigns, that no portion of the above described premises, nor any building or structure now or hereafter erected thereon shall be used for a shopping center or for a store or stores. This covenant shall attach to and run with the lands above described and this covenant is expressly made for the benefit of said lands of the party of the first part consisting of 48.08 acres fronting on the northwesterly line of Prospect Avenue, West Orange, New Jersey and to be conveyed by deed of even date herewith by the party of the first part to Essex Green, Inc., a corporation of New Jersey."

In 1959 Essex Green, Inc. constructed the Essex Green Shopping Plaza on part of the land acquired from Ridge Holding Company. On September 8, 1959 Arnold Constable as tenant, entered into a lease with Essex Green, Inc. as

landlord, for a portion of the shopping center premises for use as a department store and/or specialty store. The lease was executed on behalf of Essex Green, Inc. by its president, Sol G Atlas, then a leading developer of shopping centers. The lease is for a term of 25 years with three 10-year renewal options and a rental based upon a percentage of the tenant's gross annual volume of business. However, after the first five years of the term there is a guaranteed minimum annual rental based upon the average rent paid during the first five years.

Paragraph 27 (b) of the lease provides that:

"Landlord and Sol G. Atlas and William Doelger shall not directly or indirectly construct or own or operate or control or have a controlling interest in any shopping center and further agree not to lease to any of the stores as shown in Paragraph 51 herein within a radius of five (5) miles from the premises during the term of this lease or any extension or renewal thereof."

Paragraph 51 of the lease states that:

"Provided the Tenant is not in default of the payment of the fixed annual minimum rental, Landlord will not, without the prior written consent of Tenant, lease or permit the occupancy of any portion of the Shopping Center for any store to be used, occupied, operated or managed, directly or indirectly, by the following persons, firms or corporations, or any parent, subsidiary or affiliate thereof: S. Klein of Union Square, New York, N.Y., May's of Fulton Street, Brooklyn, N.Y., Ohrbach's of 34th Street, New York, N.Y., Lane's of 14th Street, New York, N.Y., Alexander's of Fordham Road and Grand Concourse, Bronx, N.Y., E.J. Korvette of New York, N.Y., Master's, Inc. of New York, N.Y., Strauss Stores Corp., Modell's, Vim or Davega of New York, Inc., or any other discount-house type of retail business. Landlord shall not without Tenant's prior consent lease or permit the occupancy of any portion of the Shopping Center by any competing department or specialty store."

A "short form" of lease including the foregoing restrictions was duly recorded in the Essex County Register's Office and constitutes constructive notice to Alexander's and Exander. Cwiakala v. Giunta, 23 N.J. Super. 261 (Ch. Div. 1952).

In 1961 Essex Green, Inc. sold a 40-acre tract upon which the shopping center is constructed to Essex Green Freeway,

Inc., which in turn conveyed it to Essex Green Property Plaza Associates ("Associates") the present owner. Essex Green, Inc. retained title to an eight-acre tract north of and immediately adjacent to this tract. Approximately one-half an acre of this parcel has been taken by the State for highway purposes.

On October 21, 1965 Essex Green, Inc., Prospect Acres, Inc. and Pleasant Acres Company entered into a contract with Exander to convey their contiguous lands to Exander. It is upon this assembled tract that Exander proposes to erect an Alexander's Department Store with parking facilities. On November 30, 1965 Associates and Essex Green, Inc. released the covenant prohibiting the use of the Prospect Acres, Inc. and Pleasant Acres Company tracts for a shopping center or store. Associates also entered into an agreement with Exander wherein it granted Exander, its successors and assigns a perpetual easement over the parking facilities now in being or to come into being on its shopping center property. Apparently Associates has received a reciprocal easement over the proposed Alexander's parking area and the plan is to integrate the Alexander's store with the Essex Green Shopping Plaza. On May 27, 1966, by a single common deed from Essex Green, Inc., Prospect Acres, Inc. and Pleasant Acres Company, the aforesaid three properties were conveyed to Exander.

In view of the fact that Exander has acquired title to the three tracts from three separate entities, it is necessary in the first instance to deal separately with the applicability of the lease restrictions to the 7 1/2-acre tract. This tract, acquired by Exander from Essex Green, Inc., immediately adjoins the present shopping center and was originally a part of the 48-acre tract owned by Essex Green, Inc. when it entered into the lease arrangement with Arnold Constable. Attached to the lease agreement is a map entitled "Essex Green Shopping Plaza." On this map the original eight-acre tract, now reduced to 7 1/2 acres, is labeled "For Future

Construction." Paragraph 28(b) of the Arnold Constable lease states:

"Landlord hereby reserves the right at any time to construct other buildings or improvements in the Essex Green Shopping Plaza or to make alterations or additions to buildings or improvements in the Essex Green Shopping Plaza, as shown on the attached Exhibit 'D', except that Landlord shall not (subject to paragraph 51) rent to any tenant who will occupy retail selling space of 25,000 square feet or more in the Shopping Center without first obtaining Tenant's written consent, which consent shall not be unreasonably withheld."

Clearly, the parties to the lease contemplated the expansion of the shopping center to include the area on the map attached to the lease designated "For Future Construction," and intended that paragraph 51 of the lease apply to the area so specified. See Daitch Crystal Dairies, Inc. v. Neisloss, 16 Misc. 2 d 504, 185 N.Y.S. 2 d 188 (Sup. Ct. 1959), affirmed 8 A.D. 2 d 965, 190 N.Y.S. 2 d 737 (App. Div. 1959), affirmed on opinion below 8 N.Y. 2 d 723, 201 N.Y.S. 2 d 101, 167 N.E. 2 d 643 (Ct. App. 1960).

Alexander's argues that while the 7 1/2-acre tract may have been a part of the proposed shopping center as originally contemplated in 1959 when the Arnold Constable lease was signed, the shopping center has not been expanded and, in fact, there has been a severance in the ownership of the original 48-acre tract. It is therefore urged that the 7 1/2-acre parcel is freed from the restrictive effect of paragraph 51 of the lease. I find no merit in this argument. Arnold Constable did not consent to a release of the ...

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