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Food Fair Stores Inc. v. Blumberg

Decided: May 4, 1964.

FOOD FAIR STORES, INC., ET AL.
v.
BLUMBERG, ET AL.



Two appeals in one record from the Circuit Court of Baltimore City; Cullen and Jones, JJ.

Brune, C. J., and Hammond, Prescott, Marbury and Sybert, JJ. Prescott, J., delivered the opinion of the Court.

Prescott

This action involves the construction of a percentage lease contract. The lessor-appellees filed suit against the lessee-appellants, praying inter alia, a termination of the agreements between the parties and damages for the breach of an alleged implied

covenant and certain express provisions in the agreements. The lessees filed a combined demurrer and answer, and also a cross-claim, seeking the specific performance of an option to renew the aforesaid agreements. The demurrer was sustained by Judge Cullen as to the paragraphs which alleged the breach of an implied covenant that lessees would "use their best efforts to derive the maximum volume of business from plaintiffs' store." Lessors have appealed this action by Judge Cullen. The case was tried by Judge Jones, who granted lessees specific performance of their option to renew, and awarded the lessors $28,234.03 damages. The lessees appeal from that portion of the decree which awards the lessors damages.

Three questions are presented for our determination:

1. Do the assignments of April 30, 1956, from Food Fair Stores of Maryland, Inc. to Food Fair Stores, Inc. and from Food Fair Stores, Inc. to Food Fair Stores, Anne Arundel, Inc., fall within the purview of paragraph 12 of the main lease agreement?

2. Assuming, arguendo, that the assignments were of the type contemplated by paragraph 12 of the lease agreement, do the acts and conduct of the parties evidence a modification of said paragraph 12, or, in the alternative, have the lessors waived their right to the additional rental, or, in the further alternative, are the lessors estopped to assert their alleged claim for additional rental?

3. Do the allegations contained in the bill of complaint as amplified by the lease agreements establish the existence of an implied covenant on the part of the lessees to use their best efforts to derive the maximum volume of business from lessors' store?

On December 7, 1949, the appellees (hereafter, we sometimes refer to the lessors as "appellees") entered into a lease with Food Fair Stores, Inc., a Pennsylvania corporation, one of the appellants (hereafter, we sometimes refer to the lessees as "appellants") herein, wherein said appellant agreed to lease from the appellees a store building, in Glen Burnie, Maryland, which store building was to be built by the appellees in accordance with specifications furnished by Food Fair Stores, Inc. In addition to the store building, the lease covered approximately

30,000 square feet of land, contiguous thereto, which was to be used by the tenant for customer parking. On July 11, 1950, the lease agreement was amended, and on June 30, 1951, the lease, as amended, was assigned from Food Fair Stores, Inc., to Food Fair Stores of Maryland, Inc., a wholly-owned subsidiary corporation. The assignee, Food Fair Stores of Maryland, Inc., took possession of the premises on July 1, 1951, and began conducting the business of a retail food supermarket on July 10, 1951.

On October 19, 1951, the appellees entered into an additional lease agreement with Food Fair Stores of Maryland, Inc., covering two lots of ground contiguous to the aforesaid leased premises for additional parking and on February 15, 1954, a further agreement was entered into by and between the appellees and Food Fair Stores of Maryland, Inc., permitting Food Fair Stores of Maryland, Inc., to build an addition of some 2,600 square feet to the original store building.

The relevant paragraphs of the lease agreement, dated December 7, 1949, in pertinent part, are as follows:

"4. Tenant agrees to pay, and Landlord agrees to accept, as rental for each lease year (as hereinafter defined) of this lease an amount equal to one (1%) per cent of the gross sales (as hereinafter defined) made in Demised Premises in each such lease year, up to, but not exceeding Two Million ($2,000,000) Dollars; provided, however, that for and with respect to each full lease year, Tenant shall pay a minimum annual rental of Ten Thousand Five Hundred and Sixty ($10,560.00) Dollars.

"Said rental shall be payable as follows: * * *.

"12. Tenant may assign this lease or sublet the Demised Premises or any portion thereof to be used for any lawful purpose whatsoever subject to the provisions of Paragraph 10 hereof. In the event that such assignment or subletting is for Supermarket Purposes (as defined in Paragraph 10 ...


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