The Opinion of the Superior Court Law Division is reported at 153 N.J. Super. 294 (1977). On appeal from the Superior Court of New Jersey, Law Division, Passaic County.
Conford, Pressler and King. The opinion of the court was delivered by King, J.A.D.
The principal issue in dispute between plaintiff landlord, owner of a neighborhood shopping center, and defendant tenant, formerly the operator of a small clothing store in the center, is whether the tenant was justified in vacating the premises before the end of the term because the landlord breached the lease by unreasonably withholding its consent to an assignment of subletting. The trial judge, in an opinion reported at 153 N.J. Super. 294 (Law Div. 1977), found that consent was unreasonably withheld by the landlord and accordingly held that the tenant was entitled to vacate the premises and to terminate the lease without liability for subsequent rent.
The facts, as clearly stated in the opinion of the trial judge, and fully supported by the record in this nonjury trial, are as follows:
Defendant, which operates a men's and boy's retail clothing store, entered into a ten-year lease with the previous owner, Ringwood Plaza, Inc., the leasehold to commence on April 1, 1970. The leased premises, designated as Store No. 10, was located in a "strip"-type, neighborhood shopping center in Ringwood, New Jersey. The shopping center consisted of about 15 stores, with tenants engaged in various small business enterprises. On December 31, 1975 the present owner, Ringwood Associates, purchased the property with an assignment of all existing leases and now brings suit as a successor in interest.
With about five years remaining on the lease, defendant, having determined that the store was too small for its expanding business, decided to move to a larger location in another shopping center across the street. In January 1975 Louis Vento, secretary of defendant corporation, advised the lessor, through counsel, that defendant, pursuant to paragraph five of the lease, wished to assign the lease or sublet the premises to Comtap, Inc., which sells and repairs televisions and other appliances.
Paragraph five of the lease states:
That the tenant shall not assign this agreement, or underlet or underlease the premises, or any part thereof, or occupy, or permit or suffer the same to be occupied for any business or purpose deemed disreputable or extra hazardous on account of fire, under penalty of damages and forfeiture, without the consent of the landlord, which consent shall not be unreasonably withheld.
Having received no response from the lessor after several requests, Vento, along with Joseph Leto, president of Comtap, directly contacted Dr. Harold Linn, a substantial stockholder in the lessor corporation, concerning the assignment of the lease to Comtap. On several occasions both Vento and Leto informed Dr. Linn that Comtap was willing to take an assignment of the lease or enter into a new leasing arrangement directly with the lessor under the same terms and conditions contained in the lease with defendant. Further, Dr. Linn was advised that defendant was willing to guarantee performance of all tenant covenants contained in the lease.
Dr. Linn did not request information concerning the financial condition of Comtap, nor did he find that the proposed tenant was unacceptable to the lessor. Rather, he informed Vento that the lessor would not consent to a tripartite assignment arrangement, but would be willing to enter into an entirely new leasing agreement directly with Comtap at an increased rent. This proposal was rejected by Leto. Thereafter, Dr. Linn directly negotiated with Leto, who again rejected the lessor's consistent demand for an increased rent within the context of a direct rental by Comtap.
It should be noted that the original lease provided for periodic ...