Gerber v. Pecht
15 N.J. 29, 1954 N.J. LEXIS 255, 104 A.2d 41 (1954)
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Rule of Law:
An original lessee who unconditionally assigns a lease as permitted by its express terms is not discharged from liability by a subsequent assignment made with the landlord's consent but without the original lessee's consent, provided the subsequent assignment does not materially vary the terms of the original lease.
Facts:
- The plaintiff's predecessor, as lessor, and defendant Pecht, as lessee, executed a five-year lease for a store.
- The lease contained a typewritten clause stating, 'The tenant may assign this lease, provided he gets a written consent from the landlord.'
- On November 9, 1948, Pecht assigned the lease to Moskowitz with the plaintiff's written consent, on the condition that both Pecht and Moskowitz would remain liable.
- On February 14, 1950, Moskowitz assigned the lease to Maria and Wilfred Christensen.
- This second assignment was made with the plaintiff's written consent, but without the consent of the original lessee, Pecht.
- The Christensens subsequently defaulted on rent and water charge payments and vacated the premises.
Procedural Posture:
- The plaintiff, Gerber, instituted an action against the defendant, Pecht, and his assignees in the Superior Court, Law Division (trial court) for rent, water charges, and damages.
- The Law Division entered a summary judgment in favor of the plaintiff.
- The defendant, Pecht, appealed the judgment to the Appellate Division.
- The Appellate Division affirmed the trial court's judgment.
- The Supreme Court of New Jersey granted certification to hear the appeal from the Appellate Division's decision.
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Issue:
Does a subsequent assignment of a lease, executed with the landlord's consent as permitted by the original lease terms but without the original lessee's consent, discharge the original lessee from their contractual obligations?
Opinions:
Majority - Jacobs, J.
No, a subsequent assignment of a lease under these circumstances does not discharge the original lessee from their contractual obligations. The assignment of a lease does not, by itself, relieve the original lessee of their contractual duties unless the lessor expressly releases them or the terms of the original lease are materially altered. Here, the lease expressly permitted assignment with the landlord's consent. When Pecht unconditionally assigned the lease to Moskowitz, he transferred all its privileges, including the right for a subsequent assignment under the same conditions. Since the second assignment complied strictly with the lease terms and did not enlarge its burdens, it did not constitute a material variation that would discharge Pecht's liability. Pecht remains liable as a surety because his original contractual undertaking with the lessor persists.
Analysis:
This case clarifies the durability of an original lessee's liability through subsequent assignments when the lease itself permits such actions. It reinforces the distinction between privity of contract, which persists between the lessor and original lessee, and privity of estate. The decision establishes that for an original lessee to be discharged, there must be a material and prejudicial variation to the lease terms, not merely a subsequent assignment that was contemplated and permitted by the original agreement. This holding protects lessors by ensuring the original contracting party remains a guarantor unless they are expressly released, thereby providing a stable source of recovery throughout the lease term.
