Reste Realty Corp. v. Cooper

OPINION BY: FRANCIS
Plaintiff-lessor sued defendant-lessee to recover rent allegedly due under a written lease. The suit was based upon a charge that defendant had unlawfully abandoned the premises two and a quarter years before the termination date of the lease.

On May 13, 1958 defendant Joy M. Cooper, leased from plaintiff's predecessor in title a portion of the ground or basement floor of a commercial (office) building at 207 Union Street, Hackensack, N.J. The term was five years, but after about a year of occupancy the parties made a new five-year lease dated April 1959 covering the entire floor except the furnace room. The leased premises were to be used as "commercial offices" and "not for any other purpose without the prior written consent of the Landlord." More particularly, the lessee utilized the offices for meetings and training of sales personnel in connection with the business of a jewelry firm of which Mrs. Cooper was branch manager at the time. No merchandise was sold there.

A driveway ran along the north side of the building from front to rear. Its inside edge was at the exterior foundation wall of the ground floor. The driveway was not part of Mrs. Cooper's leasehold. Apparently it was provided for use of all tenants. Whenever it rained during the first year of defendant's occupancy, water ran off the driveway and into the offices and meeting rooms either through or under the exterior or foundation wall. At this time Arthur A. Donigian, a member of the bar of this State, had his office in the building. In addition, he was an officer and resident manager of the then corporate-owner. Whenever water came into the leased floor, defendant would notify him and he would take steps immediately to remove it. Obviously Donigian was fully aware of the recurrent flooding. He had some personal files in the furnace room which he undertook to protect by putting them on 2 X 4's in order to raise them above the floor surface. When negotiating with defendant for the substitute five-year lease for the larger space, Donigian promised to remedy the water problem by resurfacing the driveway. The work was done as promised and although the record is not entirely clear, apparently the seepage was somewhat improved for a time. Subsequently it worsened, but Donigian responded immediately to each complaint and removed the water from the floor.

Donigian died on March 30, 1961, approximately two years after commencement of the second lease. Whenever it rained thereafter and water flooded into the leased floor, no one paid any attention to defendant's complaints, so she and her employees did their best to remove it. During this time sales personnel and trainees came to defendant's premises at frequent intervals for meetings and classes. Sometimes as many as 50 persons were in attendance in the morning and an equal number in the afternoon. The flooding greatly inconvenienced the conduct of these meetings. At times after heavy rainstorms there was as much as two inches of water in various places and "every cabinet, desk and chair had to be raised above the floor." On one occasion jewelry kits that had been sitting on the floor, as well as the contents of file cabinets, became "soaked." Mrs. Cooper testified that once when she was conducting a sales training class and it began to rain, water came into the room making it necessary to move all the chairs and "gear" into another room on the south side of the building. On some occasions the meetings had to be taken to other quarters for which rent had to be paid; on others the meetings were adjourned to a later date. Complaints to the lessor were ignored. What was described as the "crowning blow" occurred on December 20, 1961. A meeting of sales representatives from four states had been arranged. A rainstorm intervened and the resulting flooding placed five inches of water in the rooms. According to Mrs. Cooper it was impossible to hold the meeting in any place on the ground floor; they took it to a nearby inn. That evening she saw an attorney who advised her to send a notice of vacation. On December 21 she asked that the place be cleaned up. This was not done, and after notifying the lessor of her intention she left the premises on December 30, 1961.

It is true that as the law of leasing an estate for years developed historically, no implied warranty or covenant of habitability or fitness for the agreed use was imposed on the landlord. Because the interest of the lessee was considered personal property the doctrine of caveat emptor was applied, and in the absence of an express agreement otherwise, or misrepresentation by the lessor, the tenant took the premises "as is." Modern social and economic conditions have produced many variant uses and types of leases, e.g., sale and leaseback transactions, mortgaging of leasehold interests, shopping center leases, longterm leases. Moreover, an awareness by legislatures of the inequality of bargaining power between landlord and tenant in many cases, and the need for tenant protection, has produced remedial tenement house and multiple dwelling statutes. It has come to be recognized that ordinarily the lessee does not have as much knowledge of the condition of the premises as the lessor. Building code requirements and violations are known or made known to the lessor, not the lessee. He is in a better position to know of latent defects, structural and otherwise, in a building which might go unnoticed by a lessee who rarely has sufficient knowledge or expertise to see or to discover them. A prospective lessee, such as a small businessman, cannot be expected to know if the plumbing or wiring systems are adequate or conform to local codes. Nor should he be expected to hire experts to advise him. Ordinarily all this information should be considered readily available to the lessor who in turn can inform the prospective lessee. These factors have produced persuasive arguments for reevaluation of the caveat emptor doctrine and, for imposition of an implied warranty that the premises are suitable for the leased purposes and conform to local codes and zoning laws. Proponents of more liberal treatment of tenants say, among other things, that if a lease is a demise of land and a sale of an interest in land in the commercial sense, more realistic consideration should be given to the contractual nature of the relationship.

This brings us to the crucial question whether the landlord was guilty of a breach of a covenant which justified the tenant's removal from the premises on December 30, 1961. We are satisfied there was such a breach.

The great weight of authority throughout the country is to the effect that ordinarily a covenant of quiet enjoyment is implied in a lease. The early New Jersey cases laid down the strict rule that such a covenant would not be implied simply from the relationship of landlord and tenant. An express agreement to that effect or the use of words from which it could be implied was required. We need not deal here with problems of current serviceability of that rule because as has been indicated above, the lease in question contains an express covenant of quiet enjoyment for the term fixed. Where there is such a covenant, whether express or implied, and it is breached substantially by the landlord, the courts have applied the doctrine of constructive eviction as a remedy for the tenant. Under this rule any act or omission of the landlord or of anyone who acts under authority or legal right from the landlord, or of someone having superior title to that of the landlord, which renders the premises substantially unsuitable for the purpose for which they are leased, or which seriously interferes with the beneficial enjoyment of the premises, is a breach of the covenant of quiet enjoyment and constitutes a constructive eviction of the tenant.

Examples of constructive eviction having close analogy to the present case are easily found. Failure to supply heat as covenanted in the lease so that the apartment was "unlivable" on cold days amounted to constructive eviction. Higgins v. Whiting, supra; Anderson v. Walker Realty Co., 1 N.J. Misc. 287 (Sup. Ct. 1923). So too, when the main waste pipe of an apartment building was permitted to become and remain clogged with sewage for a long period of time causing offensive odors and danger to health, the covenant of quiet enjoyment was breached and justified the tenant's abandonment of his premises. McCurdy v. Wyckoff, supra. If a landlord lets an apartment in his building to a tenant as a dwelling and knowingly permits another part to be used for lewd purposes which use renders the tenant's premises "unfit for occupancy by a respectable family," his failure to terminate the use when he has the legal power to do so constitutes a constructive eviction. Weiler v. Pancoast, supra. The same rule was applied in White v. Hannon, 11 N.J.L.J. 338 (Dist. Ct. 1888) where it appeared that the plumbing in the rooms to the rear of the demised premises became so old and worn out as to emit strong and unhealthy odors which came through into the tenant's quarters. The tenant's removal was held justified.

As noted above, the trial court found sufficient interference with the use and enjoyment of the leased premises to justify the tenant's departure and to relieve her from the obligation to pay further rent. In our view the evidence was sufficient to warrant that conclusion, and the Appellate Division erred in reversing it. Plaintiff argued and the Appellate Division agreed that a constructive eviction cannot arise unless the condition interferes with the use in a permanent sense. It is true that the word "permanent" appears in many of the early cases But it is equally obvious that permanent does not signify that water in a basement in a case like this one must be an everlasting and unending condition. If its recurrence follows regularly upon rainstorms and is sufficiently serious in extent to amount to a substantial interference with use and enjoyment of the premises for the purpose of the lease, the test for constructive eviction has been met. Additionally in our case, the defective condition of the driveway, exterior and foundation walls which permitted the recurrent flooding was obviously permanent in the sense that it would continue and probably worsen if not remedied. There was no obligation on the tenant to remedy it.

[W]hether the landlord's default in the present case is treated as a substantial breach of the express covenant of quiet enjoyment resulting in a constructive eviction of the tenant or as a material failure of consideration, (i.e., such failure as amounts to a substantial interference with the beneficial enjoyment of the premises) the tenant's vacation was legal. Thus it is apparent from our discussion that a tenant's right to vacate leased premises is the same from a doctrinal standpoint whether treated as stemming from breach of a covenant of quiet enjoyment or from breach of any other dependent covenant. Both breaches constitute failure of consideration. The inference to be drawn from the cases is that the remedy of constructive eviction probably evolved from a desire by the courts to relieve the tenant from the harsh burden imposed by common law rules which applied principles of caveat emptor to the letting, rejected an implied warranty of habitability, and ordinarily treated undertakings of the landlord in a lease as independent covenants. To alleviate the tenant's burden, the courts broadened the scope of the long-recognized implied covenant of quiet enjoyment (apparently designed originally to protect the tenant against ouster by a title superior to that of his lessor) to include the right of the tenant to have the beneficial enjoyment and use of the premises for the agreed term. It was but a short step then to the rule that when the landlord or someone acting for him or by virtue of a right acquired through him causes a substantial interference with that enjoyment and use, the tenant may claim a constructive eviction. In our view, therefore, at the present time whenever a tenant's right to vacate leased premises comes into existence because he is deprived of their beneficial enjoyment and use on account of acts chargeable to the landlord, it is immaterial whether the right is expressed in terms of breach of a covenant of quiet enjoyment, or material failure of consideration, or material breach of an implied warranty against latent defects.

Plaintiff's final claim is that assuming the tenant was exposed to a constructive eviction, she waived it by remaining on the premises for an unreasonable period of time thereafter. The general rule is, of course, that a tenant's right to claim a constructive eviction will be lost if he does not vacate the premises within a reasonable time after the right comes into existence. What constitutes a reasonable time depends upon the circumstances of each case. In considering the problem courts must be sympathetic toward the tenant's plight. Vacation of the premises is a drastic course and must be taken at his peril. If he vacates, and it is held at a later time in a suit for rent for the unexpired term that the landlord's course of action did not reach the dimensions of constructive eviction, a substantial liability may be imposed upon him. That risk and the practical inconvenience and difficulties attendant upon finding and moving to suitable quarters counsel caution.

Here, plaintiff's cooperative building manager died about nine months before the removal. During that period the tenant complained, patiently waited, hoped for relief from the landlord, and tried to take care of the water problem that accompanied the recurring rainstorms. But when relief did not come and the "crowning blow" put five inches of water in the leased offices and meeting rooms on December 20, 1961, the tolerance ended and the vacation came ten days later after notice to the landlord. The trial court found as a fact that under the circumstances such vacation was within a reasonable time, and the delay was not sufficient to establish a waiver of the constructive eviction. We find adequate evidence to support the conclusion and are of the view that the Appellate Division should not have reversed it.