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Sosanie v. Pernetti Holding Corp.

Decided: June 22, 1971.


Trautwein, J.s.c.


Plaintiffs brought this action for a declaration of the validity of an exercise of a renewal option in a lease and to specifically enforce said renewal. This matter came on under R. 4:67-1(b) on a motion for an order to proceed summarily. On the return date it was shown palpably that there was no genuine issue as to any material fact pleaded and the parties agreed to try the action to final judgment on the pleadings, affidavits and briefs theretofore submitted. The following has been found by the court:

Plaintiffs Sosanie have owned and operated a stationery-luncheonette business in leased premises at 27 West Hudson Avenue, Englewood, N.J. since October of 1955. The building in which plaintiffs' business is located is also occupied by a pharmacy. The pharmacy was previously operated by a

Murray Selvin, who owned the building. He was plaintiffs' landlord under the lease here involved. Plaintiffs' business is what is best described as a "neighborhood" business. As such its success is dependent not only on the goodwill and reputation developed over the years by plaintiffs but also upon its location. Plaintiffs contend, and the court finds, that if the store were forced to relocate even a few blocks away, their business would suffer immediate and substantial harm.

On May 27, 1966 plaintiffs and Selvin, the aforesaid owner of the premises, entered into a lease agreement. The leasehold was to terminate on May 31, 1971 unless under paragraph Thirty-Seventh plaintiffs exercised their option to renew for an additional five-year period. That paragraph Thirty-Seventh provides in pertinent part:

The privilege is extended to the tenants to extend the term of this lease for an additional period of five (5) years from June 1, 1971 upon the same terms and conditions as herein set forth except that the rent during the renewal term shall be * * *. The tenants shall give written notice to the landlord of their intention to exercise the option to renew by certified mail, return receipt requested, no later than December 1, 1970. In the event such notice is not received by the landlord on or before such date, the option to renew shall be considered to have been waived.*fn1

On January 8, 1970 Selvin conveyed the subject premises to defendant Joseph Pernetti Holding Corporation, along with an assignment of the Sosanie lease. The corporation is apparently the "alter ego" of Joseph Pernetti, who also took over the operation of the pharmacy which is located on the subject premises. Plaintiffs do not deny that they had knowledge of the lease assignment. The December 1, 1970 deadline passed without their giving any outward indication of an intent to exercise their option to renew. On January 8,

1971 defendant Pernetti, personally informed plaintiffs of his intention to physically expand his own business and therefore plaintiffs were to vacate the premises by June 1, 1971. One or two days later (approximately January 10, 1971) defendant received a letter by certified mail dated November 29, 1970 and postmarked January 8, 1971 which purported to exercise the option to renew. Defendant refuses to honor this notification of intent to renew. At the hearing it was admitted by counsel for plaintiffs that the option to exercise was not, in fact, mailed until January 8, 1971.

While it is clear that the notice requirement for renewal of the lease is for the benefit of the lessor and thus can be waived or extended by the lessor, Wallworth v. Johnson , 25 N.J. Misc. 449, 55 A.2d 305 (Sup. Ct. 1947); Wolf v. Tastee Freeze Corp. of America , 172 Neb. 430, 109 N.W. 2d 733 (Sup. Ct. 1961); Dries v. Trenton Oil Co., Inc. , 17 N.J. Super. 591 (App. Div. 1953); Kearney v. Hare , 265 N.C. 570, 144 S.E. 2d 636 (Sup. Ct. 1965), such is not urged by plaintiffs here. In fact, their fundamental argument is that if defendant is permitted to terminate the leasehold at this point, an unjust and inequitable forfeiture will be permitted to occur.

The only other theory urged is that defendant sat back and surreptitiously waited until the notice deadline had passed, whereupon he pounced upon the unsuspecting plaintiffs and administered the coup de grace with a notice to vacate. This theory seemingly implies that a lessor has the affirmative duty of reminding a forgetful lessee that lessee's time to exercise an option to renew is running out. Such argument is without merit. Rounds v. Owensboro Ferry Co. , 253 Ky. 301, 69 S.W. 2d 350 (Ct. App., 1934).

As a general rule, the law of contracts holds that in an option contract, time is of the essence. 1A Corbin, Contracts (1963), ยง 273, at 593; Socony-Vacuum Oil Co. v. Pabian , 32 N.J. Super. 390 (Ch. Div. 1954); Monmouth Cty. ...

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