The opinion of the court was delivered by PRESSLER, J.A.D.
This appeal raises a novel question of interpretation of the Anti-Eviction Act, N.J.S.A. 2A:18-61.1 et seq.
Plaintiff Morristown Memorial Hospital, a nonprofit hospital corporation (hospital), has for some years functioned not only as a community hospital but also as a post-graduate teaching facility. It is represented to us that there are currently some 82 students and residents involved in the hospital's educational and training programs, most of which are of one year's duration.
Pursuant to the original arrangement between the hospital and the former owner of the apartment complex, an arrangement predating the Anti-Eviction Act, the hospital, as tenant, entered into a written one-year lease for each of the 26 apartments. Each lease was annually renewed thereafter by successive one-year extension-of-lease agreements. Although each lease contained the customary provision prohibiting assignment or sublease without landlord's consent, it nevertheless appears that the original owner gave what was tantamount to a blanket prior consent to the subleasing of the apartments by the hospital to such of its personnel, usually medical residents, as it selected. The hospital, as tenant, paid the rent on all 26 apartments by a single monthly check, deducting appropriate amounts from the salary of the occupants. It also claims to have undertaken a voluntary inspection and maintenance program covering the 26 apartments. On those occasions when an occupant vacated prior to the expiration of a year's tenancy, the hospital routinely placed another of its employees in the vacated apartment on an emergent, temporary basis pending the arrival of a new one-year resident.
In 1982 the apartment complex was purchased by defendant Wokem Mortgage & Realty Co. (Wokem). Wokem refused to renew the leases on the ground that the nature of the tenancy was encompassed neither by the Anti-Eviction Act nor by the municipal rent-levelling ordinance. The hospital, accordingly, brought this declaratory judgment action seeking an adjudication that its tenancy of the apartments was within the scope of both the state and the municipal legislation. Wokem appeals from a judgment entered in the hospital's favor following a non-jury trial. We reverse.
N.J.S.A. 2A:18-61.1 affords the protection of the act to the "lessee or tenant or the assigns, under-tenants or legal representatives of such lessee or tenant" of specified premises "leased for residential purposes." While it would appear, therefore, that these 26 units come within the literal definition of a protected tenancy since they are used for residential purposes, we are nevertheless persuaded that that conclusion is contrary not only to the policy of the act and its legislative intent but also to its substantive provision.
In the view of the trial judge, the decisive fact here was the residential use of the apartments in accordance with the hospital-tenant's plan of providing living accommodations for its transient personnel. Certainly, from the perspective of the hospital's subtenants, the units are both occupied and leased for residential purposes. But from the perspective of the tenant-hospital, the residential purpose of each of the leases is not an end in itself but is rather incidental to and a means of serving its larger and underlying institutional goals and objectives. As it explains in its brief, these objectives are served by "the
The purpose of the Anti-Eviction Act is clearly set forth in the statement appended to Assembly Bill 1586, enacted as L. 1974, c. 49, and codified as N.J.S.A. 2A:18-61.1. That statement reads as follows:
The fundamental aim of the act is thus to meet the rental housing shortage by affording residential tenants the right, absent good cause for eviction, to continue to live in their homes without fear of eviction or lease non-renewal and thereby to protect them from involuntary displacement. See, e.g., Puttrich v. Smith, 170 N.J.Super. 572, 575-576 (App.Div. 1979); Stamboulos v. McKee, 134 N.J.Super. 567, 572-573 (App.Div. 1975). This policy is evidently not implicated where, as here, the residential occupancy is intended to be and actually is of a transient nature. Clearly then, if the act were applied to this tenancy, it would not be for the purpose of protecting the rights of individual occupants to remain in their homes but rather for the purpose of advancing the institutional needs and interests of the hospital.
We disagree with the trial judge's further conclusion that the subtenancies here are analogous to those contemplated by N.J.S.A. 2A:18-61.1(m). That section permits eviction when "the landlord or owner conditioned the tenancy upon and in consideration
It is our view that the only manner in which the act could apply here would be to protect the subtenancies of those present occupants who wish to remain in their apartments after their short-term employment relationship with the hospital has come to an end. The trial judge held, however, that those occupants are not protected by the act. The only effect, then, of applying the act here would be to permit the hospital to extend its dormitory facilities onto another's private property against the will of the owner of that property. This was not the act's intent. We are therefore satisfied that the definitional phrase of N.J.S.A. 2A:18-61.1 limiting the act's applicability to premises "leased for residential purposes" means a lease whose purpose is fundamentally and primarily residential and excludes leases which, like these, serve to a substantial degree nonresidential purposes of the original, primary tenant.
In so concluding, we do not, of course, intend to deprecate the social utility, community benefit and enhancement of
With respect to the applicability of the municipal rent-levelling ordinance, we simply note that the issue is rendered virtually moot if the landlord is not required to renew the hospital's annual lease. We are, however, satisfied that so long as any of the apartments continue to be occupied by their present residential subtenants, those occupants are clearly entitled to the protection of the ordinance.
The judgment appealed from is reversed. We remand to the trial court for entry of judgment consistent with this opinion.