On appeal from Superior Court of New Jersey, Law Division, Bergen County.
Michels, Gruccio and D'Annunzio.
The issue is whether the voluntary dissolution of a corporate lessee, after the valid assignment of its rights under the lease, constitutes a breach of the lease entitling the lessor to a judgment of possession.
On July 28, 1954, plaintiff, as lessor, leased a one-acre lot to defendant, Alstores Realty Corp. (Alstores) for a 99 year term. The lease was for an annual rent of $10,500 for the first four
years and $12,600 per year for the next 95 years. The lease does not contain a rent escalator clause. The lot is located in Paramus, N.J. and has frontage on State Highway Route 4. It is now part of a valuable retail center known as the Bergen Mall.
Section 11.01 of the lease provides:
Section 11.01. Tenant shall have the right at any time and from time to time, without the consent of Landlord to assign this Lease or to sublet the Demised Premises or a part thereof. Notwithstanding any such assignment or subletting, or any further assignment or subletting, and notwithstanding the acceptance of rent by Landlord from any assignee or subtenant, Tenant shall remain liable for the payment of the rent reserved herein and for the performance of all of the covenants and conditions on the part of Tenant to be kept observed and performed.
Alstores was a subsidiary of defendant Allied Stores Corporation (Allied). On or about December 31, 1986, all of the outstanding stock of Allied was acquired by an indirect subsidiary of Campeau Corporation (Campeau) known as Campeau Acquisition Corp. (CAC). Since Alstores was a subsidiary of Allied, ownership of Alstores stock also passed to Campeau. After a series of transactions involving numerous corporations, Allied was restructured. According to Joseph Calandro, Jr., Senior Vice President of Allied:
Alstores was dissolved and its assets and corresponding liabilities were distributed to those CAC subsidiaries holding Alstores stock at the time of its dissolution in a manner consistent with new management's plan of operation for the restructured Allied.
Among the . . . CAC subsidiaries which received Alstores' assets upon dissolution were two Delaware corporations, known as CAC IL, Inc. (subsequently known as Bergen Mall I, Inc.) and CAC L, Inc. (subsequently known as Bergen Mall II, Inc.). Each of these corporations received an undivided [50%] interest in the assets and assumed the corresponding liabilities (including the obligations under the plaintiff's lease) in the Bergen Mall.
In order to facilitate the ultimate sale of Bergen Mall, which was contemplated at the time of the restructuring, the assets and liabilities of Bergen Mall I, Inc. and Bergen Mall II, Inc. were contributed to a partnership known as Bergen Mall Partnership on December 31, 1986.
On December 30, 1986, Alstores executed a series of documents which resulted in it being divested of all of its assets,
including the Bergen Mall. These documents, a "Deed and Assignment of Leasehold Interests," and "Assignment and Assumption of Lease," provided that Alstores real estate interests in Bergen Mall, including its lease with Sadie Kelly, were conveyed directly to Bergen Mall Partnership ...