For affirmance -- Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For reversal -- None. The opinion of the court was delivered by Jacobs, J.
The Law Division directed that judgment for possession be entered in favor of the plaintiffs-landlords unless, within thirty days, the defendant-tenant resumes its supermarket operations at the leased premises. The defendant appealed and we certified while the matter was awaiting argument in the Appellate Division. R. 2:12.
The plaintiffs own a small shopping center in the Borough of Dumont. It consists of a supermarket, which occupies about one-third of the total floor space in the center, and eleven satellite retail stores including, inter alia, a drugstore, a beauty salon, a delicatessen, a bakery, a confectionery and stationery store, a hardware store, a dry goods store, a children's clothing store, and a laundromat. In 1957 the plaintiffs leased the supermarket, which was then being operated by Acme Food Markets, to Dumont Valley Fair, Inc. for a term of ten years commencing February 1, 1958 with a five year renewal option. For several years Valley Fair operated the supermarket under the terms of its lease which provided, in pertinent part, that the leased store was "to be used and occupied only for a supermarket for the sale of all kinds of food, groceries, vegetables and refreshments, expressly excluding
the sale of drugs, cosmetics, hardware, stationery, dishes, and on the premises bakery." The lease prohibited the landlord from letting premises in the "shopping center to other stores to be used as a butcher shop, fruit or vegetable store or fish market" and, so far as appears, this prohibition was strictly observed. It also provided that the parking area shall be maintained by the landlord and "shall be used for the benefit of all the tenants of the shopping center," and apparently this was strictly observed.
Early in 1961 there were negotiations with regard to an assignment of the supermarket lease from Valley Fair to defendant Kings Super Markets. The landlord's consent was required and there were relevant conversations between representatives of the landlord and Kings. Testimony introduced in the Law Division indicated that Mr. Bildner, president and general manager of Kings, had made site inspections, was told about the need for a fully operative supermarket with an adequate complement of food products, and was also told about the adverse economic effects on the shopping center from Valley Fair's inadequacies. Bildner deposed that he knew the Ingannamortes "wanted a supermarket as the nucleus of that particular center," and that he was told "that the merchants in the center were complaining about the operation" and that "the operation had to be improved." The Law Division found, on ample evidence, that Bildner had indicated "that Kings would conduct the type of active operation desired if Kings took the assignment." On May 31, 1961 the lease was assigned by Valley Fair to Kings with the landlord's written consent and Kings duly commenced its operation.
Kings operated the supermarket without interruption until October 8, 1966. At that time it ceased operation, closed its doors, and removed its exterior signs from the leased premises. However, it did not remove its equipment and continued to pay the monthly rental. On several occasions the Ingannamortes discussed the reopening of the supermarket with Bildner. At one point he told them that Kings was still interested in the area and was arranging for a study as to
the feasibility of expansion. At another point, in April 1967, he told them that Kings was not interested in expanding but was "still contemplating the operation there." Finally, in July 1967, the Ingannamortes wrote to Kings notifying that its tenancy was being terminated because it had vacated and abandoned the premises and had neglected and refused "to occupy and conduct a supermarket business as set forth in said leasehold agreement. * * *"
The plaintiffs refused to accept a tender of the August rent and on August 31, 1967 they instituted an action for possession. In the meantime Kings had notified the plaintiffs that it was renewing the lease for an additional five years, commencing with the termination of the original ten year term on February 1, 1968. Kings continued to make monthly tenders of rent until a stipulation was entered into on December 29, 1967 dispensing with further tenders until the determination of the plaintiffs' action. After taking testimony and considering the various legal contentions advanced before him, Judge Dalton filed an opinion in which he found that the use and occupancy clause of the lease was both restrictive and mandatory and that Kings had violated it by ceasing to actively operate a supermarket at the leased premises. He also found that the landlord's notice of termination was technically defective but sensibly disposed of this subordinate issue in the following fashion:
The court finds that the termination notice [dated July 1967] is defective since not in accord with paragraph No. 35 of the lease, which requires that before the landlord declares a default he must give thirty days' written notice to the tenant specifying the nature of the default in order to afford said tenant an opportunity to cure same.
On representations of both counsel, the court has been informed that the plaintiff is, and has always been, willing to allow the defendant to continue on the premises provided they conduct an active supermarket operation thereon, but that the defendant is not now, nor will they be in the foreseeable future, able to make a decision as to the conduct of any future operation on the site in question. This being the case, it would be a useless ...