Pursuant to the remand, the trial court took testimony, made findings, and struck the portions of the statutes which required that sellers of milk to State agencies and public schools certify that during the preceding year they had purchased New Jersey milk in an amount equivalent to the amount being sold by them to the State agencies and public schools during the current year. Garden State Dairies of Vineland, Inc. No appeal was taken from this action and since the portions of the statutes stricken were found to be severable, we may consider them exscinded and deal with the remaining statutory requirement under which the seller must agree that during the current year he will purchase New Jersey milk in an amount at least equal to the amount of milk he is currently selling to the State agencies and the public schools. The trial court upheld this requirement and the plaintiff's appeal, which we certified while pending in the Appellate Division, is from that determination alone.
The Supreme Court of New Jersey. Argued February 11, Decided July 30, Margulies and Jack Jay Wind, on the briefs. This is a property owner's action for breach of a lease by the lessee, a municipality.
The lease provided for a twenty-year term of occupancy in two adjoining buildings. The lessor was to renovate the buildings for use by the municipality's housing court and law department.
Before completion of the renovations or commencement of occupancy, the municipality notified the lessor that it would discontinue the lease at the end of the year. The municipality claimed that the ordinance approving the lease conditioned the payment of rentals on annual appropriations, and impliedly authorized the municipality to cancel the lease at the end of each year.
The lessor then brought this action, contending that the municipality had breached the twenty-year lease. The questions before this Court involve the municipality's liability for breach given the terms of the lease and enabling ordinance, the proper elements of damages if the municipality is indeed liable, and the propriety of awarding attorneys' fees Jersey dairies ltd case plaintiff.
I Inplaintiff, Hugh Jersey dairies ltd case. In earlyMcGuire began discussions with the City about renovating the premises for the City's housing court, law department, and related agencies. McGuire and representatives of the City negotiated a lease for a twenty-year term, to begin September 1, and to expire on August 31, At trial, McGuire testified that certain provisions of the lease had been drafted to ensure that he could receive federal investment tax credits for renovations to the buildings; however, the lease does not mention any such tax considerations.
McGuire signed the lease, which was subject to and contingent on City Council approval. Subsequently, on March 28,the City Council passed an ordinance to permit the City to enter into the lease. The ordinance contained the following relevant provisions: The Mayor or Business Administrator is authorized to execute the attached lease agreement in substantially the form attached, subject to such minor modifications as the Corporation Counsel of Jersey City shall deem necessary and advisable; 2.
This lease shall endure for a period of twenty 20 years, commencing on or about September 1, and terminating on or about August 31, The continuation of this lease beyond each fiscal year during the term shall be subject to the availability and appropriation of funds in the temporary and permanent budgets for the subsequent fiscal year.
McGuire did not receive a copy of the ordinance. The City's business administrator signed the lease shortly after passage of the ordinance. The copy signed by the business administrator was apparently in the same form as had been signed by McGuire, without any of the "minor modifications" referred to in the ordinance.
McGuire continued with the plans for renovations, working with City officials to determine the lessee's required specifications. The City's planning board approved a site plan for the project on May 8, Following elections in the late spring ofcontrol of the City's government changed hands.
On September 5,the City's corporation counsel notified McGuire of the cancellation and recommended that McGuire discontinue renovations. In DecemberMcGuire brought this action against the City for breach of the lease.
On July 2,the trial court granted partial summary judgment for McGuire on the issue of the City's liability. On liability, the trial court determined that a municipality has the legal power to enter into a long-term lease.
Although the City had argued that irregularities in the execution of the lease rendered it invalid, the court held that the subsequent conduct of the City's representatives in encouraging renovations either ratified the City's acceptance of the lease, or estopped the City from asserting the lease's invalidity.
After the damages trial, the court based its award on assertions of defendant's expert that the lease was a "tax free deal". Nonetheless, the court specifically refused to award damages for McGuire's lost investment tax credits.
The court also declined to permit a "gross up" of the damages award, i. Finally, the trial court denied McGuire's claim for counsel fees. However, the Appellate Division remanded for reconsideration of damages, concluding that McGuire had an obligation to mitigate his damages under case law and under the terms of the lease itself, which provided: While holding that the lease thus obligated McGuire to mitigate damages regardless of any common-law duty, the Appellate Division noted that it, like the trial court, accepted McGuire's argument that the liquidated damages clause should not apply because McGuire's loss was readily ascertainable.
While the continuing disputes over McGuire's damages presented on appeal may belie that his loss is so readily ascertainable, the effect of the liquidated damages clause has not been raised by the parties before this Court. Moreover, the lease's provision for liquidated damages is no more than a restatement of the usual measure of damages for breach of a lease, and even were the provision otherwise applicable, it does not seem to serve the proper objective of a liquidated damages clause, i.
In addition, the Appellate Division suggested that McGuire's sale of the buildings in should limit his recovery for breach. On the issue of taxes, the Appellate Division construed McGuire's arguments on appeal as a request for a "gross up" to offset the taxability of the award, and denied the claim.
Finally, the Appellate Division reversed the trial court's denial of attorneys' fees, finding a default provision in the lease to be a sufficient basis for granting fees, but cautioning that a contingent fee would be impermissible and that any fee award should be strictly limited to the reasonable value of counsel's services.January Issue No.
Inside this month’s issue .
OUR STORY OF THE MONTH: Pinnacle of Bull-Headed Stupidity: Plopping a 5,Cow CAFO on Low-Lying Acres. Jersey Dairies Ltd faced increasing competition that threatened its dominant market share.
Senior management at the employee dairy food processing company decided that the best way to maintain or increase market share was to take the plunge into a quality management (QM) program.
Since we have been cataloguing the artefacts and archives within the Heritage Centre. We currently have over records, it is now possible to .
Knevelbaard Dairies, a General Partnership Consisting of John Knevelbaard and Sam Knevelbaard, General Partners v. Kraft Foods, Inc., a Delaware Corporation Alpine Lace Brands, Inc., a Delaware Corporation Borden, Inc., a New Jersey Corporation the National Cheese Exchange, a Wisconsin Corporation, F.3d (9th Cir.
). An English case which seems on all fours is Wessex Dairies Ltd. v. Smith  2 K.B. There the court found that the defendant milkman violated his obligation of loyalty to his employer by soliciting patronage for himself on the last day of his rounds, and awarded the employer damages.
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