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Carisi v. Wax

September 6, 1983

JOHN CARISI T/A ALBANO FASHION SHOES, PLAINTIFF,
v.
BERNARD WAX, T/A PETER PAN, DEFENDANT



Yanoff, J.s.c. (temporarily assigned retired, on recall).

Yanoff

This opinion is an extension of an oral opinion rendered September 6, 1983.

This case involves the question whether a commercial landlord has an obligation to mitigate damages upon tenant's breach of a commercial lease. This is precisely the issue reserved by our Supreme Court in Sommer v. Kridel, 74 N.J. 446 (1977), at 456 n. 4. In Ringwood Associates, Ltd. v. Jack's of Route 23, 166 N.J. Super. 36 (App.Div.1979), the trial court decided that question, but the Appellate Court concluded that it was not necessary to do so in the context of the facts there applicable. It said:

We disagree with the trial judge's contract law analysis to the extent that it relies upon an extension of the residential landlord's duty to mitigate damages to commercial landlords. See 153 N.J. Super. [294] at 306-308. This extension of Sommer v. Kridel, 74 N.J. 446 (1977), was unnecessary. Since the trial judge correctly determined that plaintiff's predecessor in title materially breached the assignment clause, thus entitling defendant to vacate, there was no need to reach the question of damages. Adoption of the Sommer approach was perfectly appropriate in reaching the conclusion that contract rather than property law principles controlled the analysis of this case. But there was no need to cast that conclusion in terms of the rule of mitigation of damages. Indeed, the Supreme Court in Sommer v. Kridel, supra at 456 fn. 4 specifically reserved 'for another day' decision on the extension of the duty to mitigate damages to commercial landlords. There is no need in this case to anticipate the ruling. [ Id. at 46.]

In my view, in this case it is necessary to consider the question.

Also involved here were whether the landlord had unreasonably refused to permit the tenant to sublet or assign the question decided in Ringwood Associates, Ltd., and whether the landlord had in fact attempted to mitigate damages. As to these issues, I made factual findings which resolve the problems.

I concluded that the landlord had not unreasonably refused to permit the tenant to sublet or assign. By applying instances described in Sommer, 74 N.J. at 459, in which the landlord had "utilized satisfactory efforts in attempting to mitigate damages" and the principle there enunciated that ". . . each case must be judged upon its own facts," I concluded that in the case at bar the landlord had made reasonable efforts to mitigate damages only when he consulted a realtor, or engaged a realtor, for the purpose of re-renting the premises in April 1983.

Another issue presented here was whether landlord had erroneously connected electrical services to tenant's meter, so that the tenant was paying for electricity consumed by the landlord. This too was resolved by a finding of fact in favor of the tenant. It needs no further discussion.

There is unquestionably a divergence of authority on whether there is any obligation upon a landlord to mitigate damages upon default by the tenant. The view that there is no such obligation is developed in Gruman v. Investors Diversified Services, 247 Minn. 502, 78 N.W. 2d 377 (1956). Cited therein, at page 379 is an impressive list of authorities. The same view is expressed in 1 Restatement (Second) of Property § 12.1(3), and 11 Williston on Contracts (3d 1968) § 1403 at 560.

In Marini v. Ireland, 56 N.J. 130 (1970), the origins of the present controversy were set forth. There, it was stated: "A lease was originally considered a conveyance of an interest in real estate. Thus, the duties and obligations of the parties, implied as well as express, were dealt with according to the law of property and not the law of contracts." [at 141] The court then proceeded to rule that, at least as to residential lettings, covenants in a lease were mutually dependent, controlled by contract principles. It expressly disavowed Peters v. Kelly, 98 N.J. Super. 441 (App.Div.1968), which applied the old law. In so doing, the Marini court followed Reste Realty Corporation v. Cooper, 53 N.J. 444 (1969). In that case, commercial premises had been flooded over a period of time, as a result of which the

tenant was forced to vacate. The question was whether the tenant was obligated to pay rent even though he had in effect been dispossessed. The court reasoned that the covenant to pay rent and the covenant of quiet enjoyment were mutually dependent, applied contract principles, and held that a ...


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