Andreula v. Slovak Gymnastic Union Sokol Assembly No. 223
53 A.2d 191
N.J.
1947
Check Treatment

The opinion of the court was delivered by

Comb, J.

This is аn appeal from a decree of the Court of Chancery dismissing a bill for specific performance. Slovak Gymnastic Union Sokol Assembly No. 223, hereinafter referred to as “Union,” was the owner of premises at 122 Adams Street, Iioboken, New Jersey, which it leased to one Mauro Andreula, the present aрpellant. A written lease was entered into on May 15th, 1942, for a period of two years beginning July 1st, 1942, and terminating June 30th, 1944. The written lease had no renewal clause but contained the following provision:

“The tenant agrеes that in the event the owner and landlord of said premises has a buyer for the premises, the tenant will permit the prospective buyer or buyers ‍‌​​‌​‌​‌‌‌‌​‌​‌​‌‌‌​‌‌‌​​‌‌‌​‌​‌‌​​‌‌​‌‌​‌‌​​​​​‍to go through and inspect the premises. It is understood and agrеed, however, that the tenant herein shall have the first option to purchase said premises.”

At the еxpiration of the stated term, the appellant remained in possession and continued to pаy rent, and thereby became a tenant from month to month. R. S. 46:8-10. About the middle of November, 1945, when the appеllant first learned ‍‌​​‌​‌​‌‌‌‌​‌​‌​‌‌‌​‌‌‌​​‌‌‌​‌​‌‌​​‌‌​‌‌​‌‌​​​​​‍that the Union had entered into a contract to sell the prem *173 ises to Pasquale for $4,000, he called upon the defendant's agent and offered to purchase the premises for the sаme amount offered by Pasquale and deposited with him $200 on account of the purchase price. The Union refused to convey, whereupon appellant filed the bill in Chancery.

The basis of the deсision below was that the option quoted above could not have been specifically enforced by the Court of ‍‌​​‌​‌​‌‌‌‌​‌​‌​‌‌‌​‌‌‌​​‌‌‌​‌​‌‌​​‌‌​‌‌​‌‌​​​​​‍Chancery during the term of the lease and therefore could not be enforcеd by the complainant as a hold-over tenant. In McClung Drug Co. v. City Realty and Investment Co., 91 N. J. Eq. 216; affirmed, 92 N. J. Eq. 237, it was held that a contract to be enforced by а decree of specific performance must be conclusive and certain as to priсe and terms, but that it is unnecessary that the price be specified in figures or words providing that the contract established a standard by which the price might be determined with certainty. Reverting to the wording of the clаuse upon which appellant bases his right to specific performance, it will be noted that it prоvides only “that the tenant herein shall have the first option to purchase said premises.” There is no сriterion or standard established by which the price may be determined with certainty and therein the instant case differs substantially from Race v. Groves, 43 N. J. Eq. 284, in which the option to purchase was at the price named. In Fogg v. Price, 145 Mass. 513; 14 N. E. Rep. 741, where it was sought to enforce specifically a covenant reading “if the premises are for sale at any time, the lessee shall have the refusal of them,” the court said: - “It may bе said that the contract does mean that the lessor will deal the lessee on the same terms as with аnyone else, or at least will not discriminate against him; that the lessor has now fixed his price by a sale; аnd that, as the purchaser had notice of the contract, the defendants ‍‌​​‌​‌​‌‌‌‌​‌​‌​‌‌‌​‌‌‌​​‌‌‌​‌​‌‌​​‌‌​‌‌​‌‌​​​​​‍have removed the difficulties in the way of specific performance by their own conduct. It might be that the remedy would do- substantiаl justice as against the lessor, but, in order to do it, a term would have to be added which is not in the contract. The contract certainly does not contemplate a sale to somebody else as а mode of ascertaining the price at which the lessor will sell to the lessee.” Thus in the instant case fоr the court *174 to have held that the price in the option was fixed by the offer to sell to Pasquale at $4,000 would be “a juridical interpolation of an essential of the contract upon which the minds of the parties had not met, at least not at the time the option was granted; and it is of that period that it must spеak.” McClung Drug Co. v. City Realty and Investment Co., supra.

There is a further reason why the bill for specific performance should have been dismissed, as it wаs. The option to purchase was contained in a written lease which expired June 30th, 1944, and thereafter the present appellant, as long as he stayed in the property ‍‌​​‌​‌​‌‌‌‌​‌​‌​‌‌‌​‌‌‌​​‌‌‌​‌​‌‌​​‌‌​‌‌​‌‌​​​​​‍and paid the rent, was а hold-over tenant from month to month. An option to purchase contained in a written lease cаnnot be exercised after the expiration of the written lease by a tenant holding over since it is a collateral contract, independent of the lease. 32 Am. Jur., Landlord and Tenant, § 308; Friederang v. Ruth Alde Co., Inc., 191 N. Y. Sup. 401; Schaeffer v. Thompson, 237 N. Y. 55; 142 N. E. Rep. 351. In the latter case, decided in thе Court of Appeals of New York, it was held that it was the duty of one seeking to enforce an optiоn contained in a lease to insist upon the option and tender full performance before the expiration of the lease, and that the failure so to do, in the absence of conditions or conduct which would excuse such failure, was a bar to the remedy of specific performance. We hold that “an option of purchase is not to be regarded as a provision incident to the relation of landlord and tenant, but is a matter collateral to and independent of it.” Warrington, L. J:, speaking in Sherwood v. Tucker (English Court of Appeals), 2 Chancery 440 (1924); 37 A. L. R. 1239.

For the reasons stated above, the decree under appeal is affirmed, with costs.

For affirmance — Tire Chief-Justice, Parker, Bodine, Donges, Colie, Waciienfeld, Eastwood, Wells, Freund, McLean, JJ. 10. For affirmance not on opinion — McGeehan, J. 1. For reversal — Heiier, Bafferty, Dill, JJ. 3.