Opinion
Submitted February term, 1942.
Decided April 23d 1942.
1. The restrictive covenant against the sale of liquor contained in the defendant company's deed to complainant's predecessor in title, and which defendant caused to be included in its subsequent deeds for all other lots that it conveyed in the block in question, was to prevent business competition which might injuriously affect the benefit which the defendant proposed to retain for the remaining property in the block on which a hostelry was operated under lease from the defendant. Held, the covenant is binding and enforceable as against complainant's property.
2. To charge the defendant company with acquiescence in a violation of the restrictive covenant in question, which violation was of short duration, it must appear that the defendant had notice thereof and thereafter acquiesced in the violation. An immaterial violation which does not disclose an intention to abandon the restriction, cannot avail the complainant.
3. The general character of the buildings in the neighborhood of the block where complainant's property is located, and the business there conducted, has remained practically unchanged for 50 years. Complainant is not entitled to relief on the ground that the character of the neighborhood has so changed as to defeat the purpose of the liquor restriction in question.
4. The fact that there has been a falling off in business in the neighborhood of complainant's property due to the discontinuance of the use of neighboring docks and piers by steamship companies, does not present a valid reason why restrictive covenants of the type here involved should be voided. Moreover, the business change started more than twenty years ago, and presumably complainant was aware of its results when it purchased its property.
On appeal from a decree of the Court of Chancery advised by Vice-Chancellor Fielder, who filed the following opinion:
"By bargain and sale deed dated March 6th, 1939, complainant acquired title to lot 3 in block 230 as shown on the tax map of the City of Hoboken, the premises being known as street number 18-20 Hudson Place. The block is also known as county block 1776 and that designation will be used hereafter for convenience. Complainant's deed does not recite that the conveyance was subject to restrictions affecting the uses to which the premises may be put, but complainant acquired title with full notice that the premises had been conveyed by Hoboken Land Improvement Co. to a predecessor in title subject to restrictions. Under the guise of a bill to quiet title filed pursuant to R.S. 2:76-38, complainant seeks to avoid the effect of such restrictions, or of some or one of them.
"In and for many years prior to 1890 the entire block 1776 was owned by Hoboken Land Improvement Co. It is a small block, adjacent to the terminal and ferry of the Lackawanna Railroad, bounded on the east by Ferry Plaza, on the south by Hudson Place, on the west by River Street and on the north by Newark Street. In 1889 Hoboken Land Improvement Co. erected a three-story building on the Newark Street front, thereafter and to the present time occupied for general office purposes. That building has also a southerly frontage on a strip of land which extends through the center of the block from River Street to Ferry Plaza, on the city tax map, designated lot 9 and marked `ferry approach, no thoroughfare.' The remainder of the block is laid out in eight lots, all fronting on Hudson Place and running through to `ferry approach.' The first of those eight lots to be conveyed by Hoboken Land Improvement Co. was lot 3, the premises here in question. It was conveyed to one Lange by deed dated February 26th, 1890, and subsequently Hoboken Land Improvement Co. conveyed lots 1, 2, 4 and 5 to other grantees, all conveyances being made subject to identical restrictive covenants. The company retained and still owns lots 6, 7, 8 and 9, also the plot on which the office building was erected and the `ferry approach,' all wholly unrestricted. The covenants are, briefly, that certain described kinds of business of a noxious or dangerous nature shall not be permitted; that the premises shall not be used for the sale of alcoholic or fermented liquors; that no building other than of brick or stone shall be erected and that the covenants shall run with the land. The covenants provide a remedy for breach of the restrictions enforceable by the grantor and by its grantees of adjoining lots. The defendants named in the bill are alleged in the bill to be the present owners of all the lots in the block, including Hoboken Land Improvement Co., but there is no proof of such ownership as to any defendant other than Hoboken Land Improvement Co. The relief prayed for is that all defendants be decreed to have no right or interest under the restrictions in complainant's lot and that the restrictions be held to be of no force or effect as to complainant's property. Although the prayer is general as to all restrictions, the real objection urged by complainant is to that restriction which prohibits the use of its premises for the sale of alcoholic or fermented liquors. The Hoboken Land Improvement Co. (hereinafter called defendant) answered the bill, asserting the validity of the restrictions, and a decree pro confesso was taken against all other defendants.
"The restrictive covenants were not intended to and did not create a neighborhood scheme as to block 1776 or as to other adjacent blocks owned by defendant. Neither the deed from defendant to complainant's predecessor in title nor its deeds to other grantees, contained a provision that similar covenants would be inserted in the grantor's subsequent conveyances of its retained lots, although they were included in the deeds for so much of defendant's lands as was subsequently conveyed. For sixteen years prior to and at the time of the conveyance to complainant's predecessor in title, there stood on lots 6, 7 and 8 owned by defendant, a hostelry known as Duke's House operated under lease from defendant, wherein from 1874 to 1935 continuously (except during prohibition) liquor was sold to the public. That structure was destroyed by fire in 1935 and defendant rebuilt on lot 8 a new one-story Duke's House which was thereafter operated under lease from defendant, wherein a saloon, cafe and package liquor store was opened and has been maintained to the present time. The evident purpose of the covenant against the sale of liquor contained in defendant's deed to complainant's predecessor in title and which defendant caused to be included in its subsequent deeds for all other conveyed lots in the block, was to prevent business competition which might injuriously affect the benefit defendant proposed to retain for its Duke's House property, which benefit it deemed and still deems to be a valuable property right. The restrictive covenants having been entered into solely for the benefit of defendant's retained lands, are binding and enforceable as against complainant's property unless merit can be found in reasons to the contrary urged by complainant and hereafter considered. ( Coudert v. Sayre, 46 N.J. Eq. 386; Hayes v. Waverly and Passaic Railroad Co., 51 N.J. Eq. 345; Cornish v. Weissman, 56 N.J. Eq. 610; Roberts v. Scull, 58 N.J. Eq. 396; Sanford v. Keer, 80 N.J. Eq. 240; Clarke v. Kurtz, 123 N.J. Eq. 174.)
"Complainant contends it is entitled to relief on the ground that defendant waived and abandoned the liquor restriction on complainant's premises because one Kackenmeister, a tenant of a former owner of the premises, conducted a saloon in part of the premises without objection from defendant. The City of Hoboken granted a retail license to Kackenmeister April 17th, 1934, for the sale of beer of a specified percentage on the premises 18 Hudson Place, which was renewed July 6th, 1934, and transferred to another block March 12th, 1935. I gather from the testimony that beside selling beer in that portion of complainant's premises to which the license applied, Kackenmeister sold spirituous liquor surreptitiously, but there is no evidence that defendant had notice that he was conducting a business on the premises in violation of a particular part of the restrictive covenants. To charge defendant with acquiescence in a violation of such short duration, it must appear that defendant had notice thereof and thereafter acquiesced therein. Immaterial violation which does not disclose an intention to abandon the restriction cannot avail complainant. ( Hemsley v. Marlborough Hotel Co., 62 N.J. Eq. 164; affirmed, 63 N.J. Eq. 804; Morrow v. Hasselman, 69 N.J. Eq. 612; Lignot v. Jaekle, 72 N.J. Eq. 233; Camp v. Krulewitch, 97 N.J. Eq. 384.)
"The main ground on which complainant bases its claim for relief is that the character of the neighborhood has so changed as to defeat the purpose of the liquor restriction and therefore enforcement thereof as against complainant's property would be unreasonable and inequitable. As has been said, the purpose of the restriction placed by defendant on complainant's property and other property in the block, was to limit competition by the owners of those properties as against defendant's retained Duke's House property. However, it does not appear that there has been any material change in the character of the neighborhood as it existed at the time defendant imposed the restriction in question. Defendant's office building erected prior to defendant's conveyance to complainant's predecessor in title, still stands and is used for office purposes. The south side of Hudson Place, opposite complainant's property, was devoted solely to railroad and trolley terminal uses and is still so used. On the east of the block was the Ferry Plaza which still exists. The only change in block 1776 may have been the erection thereon of business buildings in conformity with the restrictions contained in the deeds to defendant's grantees. Complainant refers to adjacent county block 1777 which fronts on the westerly side of River Street and to another adjacent block. Block 1777 was owned by defendant and lots therein facing on River Street, as well as all other lots in that block, were conveyed by defendant without liquor restrictions, and on some of those lots hotels and other buildings had been erected wherein liquor was sold at the time of the conveyance to complainant's predecessor in title, and those hotels and saloons are in operation to-day. It is true that there are saloons and cafes doing business in blocks in the neighborhood of blocks 1776 and 1777, one having been opened in the Lackawanna Railroad station about 1905, but that same character of business has been carried on in the adjacent blocks for years and the general character of the buildings in the neighborhood of block 1776 and of the business there conducted has remained practically unchanged since 1890.
"Complainant's further contention under this head is that business conditions in Hoboken have deteriorated and therefore complainant should not be hampered in the use to which it might devote its property. It contends that poor business conditions have resulted from the discontinued use of Hoboken docks and piers by steamship companies and that defendant has caused the `ferry approach' to be closed as a public thoroughfare, thus limiting access to the rear of complainant's property which abuts on that private way. The docks and piers referred to are located north of block 1776 and the land they occupy has a frontage on River Street of about a quarter of a mile. It is common knowledge that those docks and piers had been used by the Hamburg-American and North German Lloyd Lines and during the World War were taken over and are still held by the United States government. Undoubtedly the occupancy of those docks and piers by the steamship companies contributed materially to the business prosperity of Hoboken, and since they are no longer put to such use there has been a resultant loss to the whole business and residential community of the city, but that situation applies to all of Hoboken and does not present a valid reason why restrictive covenants such as those with which we are concerned should be voided as to all Hoboken land. Moreover, that business change started more than twenty years ago and presumably complainant was aware of its results when it purchased its property, for one contemplating the acquisition of business property does not actually purchase without inquiry or investigation of surrounding business conditions. The `ferry approach' never was a public thoroughfare and there never was a time when the public was entitled to the absolute use of that private way. The deed to complainant states specifically that no right or interest therein was intended to be conveyed, except a right-of-way to and from River Street, which right-of-way was never vested in complainant's predecessor in title.
"The reason for complainant's desire to be relieved from the burden of the restrictions is that it has found itself unable to operate its building with profit; it hopes that if it or a part thereof could be leased for saloon purposes complainant would be better off financially. It is not perceived how complainant would benefit by being permitted to open another saloon in competition with the many saloons it says are now established in the neighborhood. Kackenmeister, who complainant says attempted to operate a saloon on the premises, was dispossessed for non-payment of rent, and if the restriction complained of were voided, the effect would be to void it also as to the immediately adjoining lots and thus open the way for saloons on all those lots. Complainant's inability to derive a profit from its building may be due to any number of causes other than the restrictions as, for instance, high taxes, interest charges on encumbrances and repairs. Complainant purchased its property about a year prior to filing its bill of complaint with full knowledge that it was acquiring a restricted title. Its deed states the consideration for its conveyance as $200, subject to mortgages and municipal liens, and presumably that small cash consideration was paid because of the restrictions. It now wants to be relieved from a losing venture by voiding the restrictions and thus be given a chance to realize a profit on its speculation.
"No evidence has been produced which would justify granting the prayer of complainant's bill to have all restrictions voided and the evidence on which complainant relies to have the restriction against the sale of liquor alone voided, is insufficient. The relief sought by complainant will be denied and there will be a decree that the restrictive covenants in question are valid and binding as against complainant's property ( R.S. 2:76-44)."
Mr. Barnett Berr, for the appellant.
Messrs. Besson Applegate ( Mr. John B. Applegate, of counsel), for the respondents.
The decree appealed from will be affirmed, for the reasons expressed in the opinion filed by Vice-Chancellor Fielder in the Court of Chancery.
For affirmance — THE CHIEF-JUSTICE, PARKER, BODINE, DONGES, HEHER, PERSKIE, PORTER, COLIE, DEAR, WELLS, RAFFERTY, HAGUE, THOMPSON, JJ. 13.
For reversal — None.