Court Opinion

ID: 9749627
Source: CourtListenerOpinion
Date Created: 2023-08-27 16:54:17.663631+00
Date Added: 2024-06-11T07:25:54.038469
License: Public Domain

POLLOCK, J.,
concurring.
The Court reverses the Appellate Division’s affirmance of the Chancery Division’s grant of summary judgment invalidating the restrictive covenant and remands the matter to the Chancery Division for a plenary hearing. Although I concur in the judgment .of remand, I believe it should be on different terms.
My basic difference with the majority is that I believe the critical consideration in determining the validity of this covenant is whether it is reasonable as to scope and duration, a point that has never been at issue in this case. Nor has there ever been any question whether the original parties to the covenant, Davidson Bros., Inc. (Davidson), and D. Katz & Sons, Inc. (Katz) intended that the covenant should run with the land. Likewise, the New Brunswick Housing Authority (the Authority) and C-Town have never disputed that they did not have actual notice of the covenant or that there was privity between them and Katz. Finally, the defendants have not contended that the covenant constitutes an unreasonable restraint on trade or that it has an otherwise unlawful purpose, such as invidious discrimination. Davidson, moreover, makes the uncontradicted assertion that the covenant is a burden to the George Street property and benefits the Elizabeth Street property. Hence, the covenant satisfies the requirement that it touch and concern the benefitted and burdened properties.
The fundamental flaw in the majority’s analysis is in positing that an otherwise-valid covenant can become invalid not because it results in an unreasonable restraint on trade, but because invalidation facilitates a goal that the majority deems worthy. Considerations such as “changed circumstances” and “the public interest,” when they do not constitute such a restraint, should not affect the enforceability of a covenant. Instead, they should relate to whether the appropriate method *221of enforcement is an injunction or damages. A court should not declare a noncompetition covenant invalid merely because enforcement would lead to a result with which the court disagrees. This leads me to conclude that the only issue on remand should be whether the appropriate remedy is damages or an injunction.
Enforcement of the restriction by an injunction will deprive the downtown residents of the convenience of shopping at the George Street property. Refusal to enforce the covenant, on the other hand, will deprive Davidson of the benefit of its covenant. Thus, the case presents a tension between two worthy objectives: the continued operation of the supermarket for the benefit of needy citizens, and the enforcement of the covenant. An award of damages to Davidson rather than the grant of an injunction would permit the realization of both objectives.
-I-
I begin by questioning the majority’s formulation and application of a reasonableness test for determining whether the covenant runs with the land. The law has long distinguished between the validity of a covenant between original-contracting parties from the enforceability of a covenant against the covenantor’s successor-in-interest. Initial validity is a question of contract law; enforceability against subsequent parties is one of property law. Caullett v. Stanley Stilwell & Sons, 67 N.J.Super. 111, 116, 170 A.2d 52 (App.Div.1961); R. Cunningham, W. Stoebuck, and D. Whitman, The Law of Property 467 (1984) (Cunningham). That distinction need not foreclose a subsequent owner of the burdened property from challenging the validity of the contract between the original parties. The distinction, however, sharpens the analysis of the effect of the covenant.
In this case, the basic issue is enforceability of the covenant against the Authority and C-Town, successors in interest to *222Katz. Thus, the only relevant consideration is whether the covenant “touches and concerns” the benefitted and burdened properties. For the Chancery Division, the critical issue was “whether the restriction burdens the land in the hands of the Authority.” As the majority points out, “[i]n contrast to the trial court’s decision, the Appellate Division’s rationale was premised on the failure of the benefit of the covenant to run, not of the burden.” Ante at 202, 579 A.2d at 291. The majority correctly disagrees with the Appellate Division’s rationale, properly observing that a covenant can provide a benefit even without burdening most of the properties in the relevant market area. Ante at 214, 579 A.2d at 297. Concerning the running of the burden on the George Street property, the majority views Brewer v. Marshall & Cheeseman, 19 N.J.Eq. 537 (E. & A.1868), as an anachronism. It properly overrules the holding of Brewer “that a noncompetition covenant will not run with the land * * *.” Ante at 207, 579 A.2d at 293. Continuing, the majority observes that in most jurisdictions the “ ‘touch and concern’ test has * * * ceased to be * * * intricate and confounding,” and that “[cjourts have decided as an initial matter that covenants not to compete do touch and concern the land.” Ante at 209, 579 A.2d at 294. Instead of concluding its analysis, the majority adds: “We do not abandon the ‘touch and concern’ test, but rather hold that the test is but one of the factors a court should consider in determining the reasonableness of the covenant.” Ante at 210, 579 A.2d at 295.
The Court can decide the present case without introducing a new test. On the present record, no question exists about the running of the benefit of the covenant. First, the party seeking to enforce the covenant is Davidson, the original leaseholder, not a successor in interest, of the Elizabeth Street property. Second, as the language of the covenant indicates, the original contracting parties, Davidson and Katz, indicated that the covenant would run with the land. Third, Davidson makes the uncontradicted assertions that both stores were unprofitable before the sale, that the Elizabeth Street store after the sale of *223the George Street property enjoyed a twenty-per-cent sales increase, and that the reopening of the George Street property caused it to suffer a loss of income. Finally, as the majority recognizes, the lower courts erred in concluding that the covenant did not “touch and concern” the burdened and benefitted properties. Ante at 213, 579 A.2d at 296.
It is virtually inconceivable that the covenant does not benefit the Elizabeth Street property. New Jersey courts have declared variously that the benefit “must exercise direct influence upon the occupation, use or enjoyment of the premises,” Caullett, supra, 67 N.J.Super. at 116, 170 A.2d 52, and that the covenant must confer “a direct benefit on the owner of land by reason of his ownership,” National Union Bank at Dover v. Segur, 39 N.J.L. 173, 186 (Sup.Ct.1877). Scholars have written that a covenant’s benefit touches and concerns land if it renders the owner’s interest in the land more valuable, Bigelow, The Content of Covenants in Leases, 12 Mich.L.Rev. 639, 645 (1914), or if “the parties as laymen and not as lawyers” would naturally view the covenant as one that aids “the promisee as landowner,” C. Clark, Real Covenants and Other Interests Which Run with the Land 99 (2d ed. 1947) (Clark); see also 5 R. Powell & P. Rohan, Powell on Real Property ¶ 673[2][a] (1990) (Powell) (inclining towards Clark’s view). Like most courts, leading scholars, Powell, supra, § 675[3]; Cunningham, supra, at 474-75; and Clark, supra, at 106, believe that under the “touch and concern” test, the benefit of non-competition covenants should run with the land.
The conclusion that this covenant “touches and concerns” the land should end the inquiry about enforceability against the Authority and C-Town. The majority, however, holds that the “touch and concern” test is “but one of the factors a court should consider in determining the reasonableness of the covenant.” Ante at 210, 579 A.2d at 295. The majority’s inquiry about reasonableness, however, confuses the issue of validity of the original contract between Davidson and Katz with enforceability against the subsequent owner, the Authority. This *224confusion of validity with enforceability threatens to add uncertainty to an already troubled area of the law. As explained by one leading authority, “[t]he judicial reaction to this confusion [in the law of covenants and equitable servitudes] has often been to state the law so as to achieve the desired result in a particular case. Obviously, this has caused frequent misstatements of the law, which has deepened the overall confusion.” Powell, supra, ¶ 670[2].
The majority inaccurately asserts, ante at 208, 579 A.2d at 294, that most jurisdictions “have focused on whether the covenant is reasonable enough to warrant enforcement.” Not one case cited by the majority has concluded that a covenant that is reasonable against the original covenantor would be unreasonable against the covenantor’s successor who takes with notice. For example, in Hercules Powder Co. v. Continental Can Co., 196 Va. 935, 945, 86 S.E.2d 128, 133 (1955), only after first concluding that the restriction was reasonable did the court consider “whether it is enforceable by Continental Can, an assignee of the original covenantee, against Hercules, an assignee of the original covenantor.” In determining that Hercules was subject to the restriction, the court considered only whether it purchased the land with notice of the restriction. Id. at 946-48, 86 S.E.2d at 134-35. Similarly, in Quadro Stations v. Gilley, 7 N.C.App. 227, 234, 172 S.E.2d 237, 242 (1970), the court first concluded that the restriction was valid, and then held that it was enforceable against defendants, successors in interest to the original covenanting parties. Nothing in the opinion implies that a restriction that was reasonable between the original parties would be unenforceable against a purchaser of the burdened property who bought with notice. Doo v. Packwood, 265 Cal.App.2d 752, 756, 71 Cal.Rptr. 477, 481 (1968), is likewise unavailing to the majority. There, when purchasing a lot on which Doo had operated a grocery store, Packwood agreed to a noncompetition covenant. After concluding that the covenant was reasonable as between the original parties, the court found that it would be binding on *225a future purchaser with notice. Ibid. In effect, future purchasers would be bound so long as Doo continued to operate a competitive grocery store. Ibid. To conclude, the cited cases hold that a reasonable noncompetition covenant binding on the original covenantor likewise binds a subsequent purchaser with notice. Hence, the majority misperceives the focus of the out-of-state cases. The result is that the majority’s reasonableness test introduces unnecessary uncertainty in the analysis of covenants running with the land.
As troublesome as uncertainty is in other areas of the law, it is particularly vexatious in the law of real property. The need for certainty in conveyancing, like that in estate planning, is necessary for people to structure their affairs. Covenants that run with the land can affect the value of real property not only at the time of sale, but for many years thereafter. Consequently, vendors and purchasers, as well as their successors, need to know whether a covenant will run with the land. The majority acknowledges that noncompetition covenants play a positive role in commercial development. Ante at 210, 579 A.2d at 295. Notwithstanding that acknowledgement, the majority’s reasonableness test generates confusion that threatens the ability of commercial parties and their lawyers to determine the validity of such covenants. This, in turn, impairs the utility of noncom-petition covenants in real estate transactions.
As between the vendor and purchaser, a noncompetition covenant generally should be treated as valid if it is reasonable in scope and duration, Irving Inv. Corp. v. Gordon, 3 N.J. 217, 221, 69 A.2d 725 (1949); Heuer v. Rubin, 1 N.J. 251, 256-57, 62 A.2d 812 (1949); Scherman v. Stern, 93 N.J.Eq. 626, 630, 117 A. 631 (E. & A.1922), and neither an unreasonable restraint on trade nor otherwise contrary to public policy. A covenant would contravene public policy if, for example, its purpose were to secure a monopoly, Quadro Stations, supra, 7 N.C.App. at 235, 172 S.E.2d at 242; Hercules Powder Co., supra, 196 Va. at 944-45, 86 S.E.2d at 132-33, or to carry out an illegal object, *226such as invidious discrimination, see, e.g., N.J.S.A. 46:3-23 (declaring restrictive covenants in real estate transactions void if based on race, creed, color, national origin, ancestry, marital status, or sex).
Applying those principles to the validity of the agreement between Davidson and Katz, I find this covenant enforceable against defendants. The majority acknowledges that “[t]he parties do not specifically contest the reasonableness of either the duration or the area of the covenant.” Ante at 213, 579 A.2d at 296. I agree. The covenant is limited to one parcel, the George Street property. Defendants do not assert that Davidson has restricted or even owns other property in New Brunswick. Furthermore, they do not allege that other property is not available for a supermarket. In brief, the Authority has not alleged that at the time of the sale from Davidson to Katz, or even at present, the George Street property was the only possible site in New Brunswick for a supermarket. Consequently, the covenant may not be construed to give rise to a monopoly. In all of New Brunswick it restricts a solitary one-half acre tract from use for a single purpose. Indeed, the record demonstrates that the Authority explored other options, including expansion of a food cooperative and increasing the product lines at nearby convenience stores. Nothing in the record supports the conclusion that the covenant might be unreasonable respecting space.
Nor does anything indicate that the forty-year length of the restriction between Davidson and Katz is unreasonable in time. As we have stated, “where the space contained in the covenant is reasonable and proper there need be no limitation as to time.” Rubin, supra, 1 N.J. at 256-57, 62 A.2d 812. That statement echoes the words “certainly it is no objection to an agreement not to compete with a mercantile business that the restraint is unlimited in point of time when [as here] it is reasonably limited in point of space.” Stern, supra, 93 N.J.Eq. at 630, 117 A. 631. To sustain the subject covenant we need not go so far as to say that a covenant could never be unreason*227ably long. In an appropriate case, a court, drawing on the analogy to restrictive covenants in employment contracts, might reform a covenant so that it lasts only for a reasonable time. Solari Indus. v. Malady, 55 N.J. 571, 264 A.2d 53 (1970). This is not such a ease.
Here, Davidson holds a lease on the Elizabeth Street property for a term of twenty years, with two renewable five-year terms. Those lease terms are substantially, if not precisely, coextensive with the term of the covenant. If, on remand, the Chancery Division should find that the additional ten-year period is not enforceable by Davidson, it should also find that the restriction is valid for the thirty-year period during which Davidson’s lease may run. In sum, I believe that the covenant is reasonable at least for the term of Davidson’s lease.
To the extent that noncompetition covenants in real estate transactions are deemed valid if reasonable in scope and duration, they are more readily upheld than similar covenants arising out of employment contracts. Solari Indus., supra, 55 N.J. at 576, 264 A.2d 53. In this regard, Williston points out that “[rjestriction upon the use of real property is considered less likely to affect the public interest adversely than restraint of the activities of individual parties and accordingly, such covenants are usually held not contrary to public policy.” 14 Williston on Contracts § 1642 (3d ed. 1972) (Williston). Nothing in the record supports the conclusion that when made or at present the subject covenant was an unreasonable restraint on trade or otherwise contrary to public policy.
Certain of the factors identified by the majority must be present for a covenant to run apart from the considerations of reasonableness. Such factors are the intent of the parties that the covenant run, clarity of the express restrictions, whether the covenant was in writing, and whether it was recorded. Caullett, supra, 67 N.J.Super. at 116, 170 A.2d 52; Petersen v. Beekmere, 117 N.J.Super. 155, 166-67, 283 A.2d 911 (Ch.Div.1971); Clark, supra, at 94; Cunningham, supra, at 470. As *228previously indicated, all those factors are present in this ease. If they had not been present, the covenant would have been unenforceable without reference to a reasonableness test. Duplicating those factors in such a test is counterproductive.
The majority’s three remaining factors also pose troubling problems. Without citing any authority, the majority invites review of “[wjhether the covenant had an impact on the considerations exchanged when the covenant was originally executed.” Ante at 210, 579 A.2d at 295. As the majority acknowledges, however, Davidson has made the uncontradicted assertion “that the purchase price negotiated between it and Katz took into account the value of the restrictive covenant and that Katz paid less for the property because of the restriction.” Ante at 213, 579 A.2d at 296.
In contract matters, courts ordinarily concern themselves with the existence, not the adequacy, of consideration. Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43, 161 A.2d 717 (1960). Because a noncompetition covenant in a commercial-real-estate sale involves the sale of property in exchange for the payment of the purchase price and the noncompetition covenant, it would be difficult to argue that the covenant was not supported by consideration. In fact, the majority does not cite to a single case in which a noncompetition covenant in a real-estate transaction has been declared invalid for lack of consideration.
Recognizing that the covenant should run is consistent with the intent of the contracting parties and reflects the economic consequences of their transaction. As Chief Justice Beasley wrote in National Union Bank at Dover, supra, 39 N.J.L. at 187, “[s]ince these parties most manifestly have thought that the stipulation in question gave additional value to the property, why, and on what ground, should the court declare that such was not the case?” See DeGray v. Monmouth Beach Club House Co., 50 N.J.Eq. 329, 333, 24 A. 388 (Ch. 1892) (“The equity thus enforced arises from the inference that the covenant has, to a material extent, entered into the consideration of *229the purchase, and that it would be unjust to the original grantor to permit the covenant to be violated.”); Tulk v. Moxhay, 2 Phil. 774, 777-78, 41 Eng.Rep. 1143, 1144 (1848) (“Of course, the price would be affected by the covenant and nothing could be more inequitable than that the original purchaser should be able to sell the property the next day for a greater price, in consideration of the assignee being allowed to escape from the liability which he had himself undertaken.”).
The majority’s other two factors are “whether the covenant interferes with the public interest,” and “whether, even if the covenant was reasonable at the time it was executed, ‘changed circumstances’ now make the covenant unreasonable.” Ante at 212, 579 A.2d at 295. In this regard, the majority adds that
[t]he trial court must first determine whether the covenant was reasonable at the time it was enacted. If it was reasonable then, but now adversely affects commercial development and the public welfare of the people of New Brunswick, the trial court may consider whether allowing damages is an appropriate remedy. C-Town could continue to operate but Davidson would get damages for the value of his [sic] covenant. On the limited record before us, however, it is impossible to make a determination as to the reasonableness of the covenant or whether damages, injunctive relief, or any relief is appropriate. [Ante at 215, 579 A.2d at 297.]
Implicit in the statement is the notion that a court might declare a covenant invalid even if it is reasonable in scope and duration, does not have a pernicious objective, and creates neither a monopoly nor an unreasonable restraint of trade. In brief, merely because it does not like a covenant, a court may find it invalid. This implication infects the usefulness of such covenants and represents an unwarranted intrusion of the judiciary in private transactions. The statement also points up the problem of blurring the contractual and property aspects of the covenant. Supra at 221-222, 579 A.2d at 300-301. Fairly read, the factors are not relevant to the determination of enforceability, as the Court initially indicated, but to the determination whether the appropriate relief is the award of damages or an injunction. See Welitoff v. Kohl, 105 N.J.Eq. 181, 189, 147 A. 390 (E. & A.1929).
*230The decided cases suggest that changed circumstances justify the refusal to enforce an otherwise-enforceable covenant only when the change defeats the covenant’s purpose. Thus, in Doo, supra, 265 Cal.App.2d at 756, 71 Cal.Rptr. at 481, a claim of changed circumstances could not defeat a restrictive covenant against a grocery store as long as the benefitted party continued to operate a competitive store on another property. Analogous New Jersey cases imply a similar conclusion. In Weinstein v. Swartz, 3 N.J. 80, 89, 68 A.2d 865 (1949), when business development elsewhere did not affect the residential character of the neighborhood in which the burdened property was located, the Court recognized the continuing validity of restrictions limiting the use of the property to a single-family residence. Similarly, in Leasehold Estates v. Fulbro Holding Co., 47 N.J.Super. 534, 565, 136 A.2d 423 (App.Div.1957), the court refused to enforce a 103-year-old covenant limiting the use of the front of an alley to barns and stables because enforcement would not provide the “contemplated benefit to the covenantee.”
Perhaps the majority’s opinion'is best read as holding that Davidson is entitled to damages but not an injunction if the covenant was reasonable when formed, but now adversely affects the public welfare of the people of New Brunswick. See Gilpin v. Jacob Ellis Realties, 47 N.J.Super. 26, 31-34, 135 A.2d 204 (App.Div.1957). Such a holding would ensure that Davidson will not be “left without any redress; * * * [it will be] given what plaintiffs are given in many types of cases — relief measured, so far as the court reasonably may do so, in damages.” Id. at 34, 135 A.2d 204.
Nothing in the record provides any basis for finding that in the six years that elapsed between 1980, when Davidson sold to Katz, and 1986, when Katz sold to the Authority, circumstances changed so much that they render the covenant unenforceable. The record is devoid of any showing that anything has happened since 1980 that has deprived the Elizabeth Street store of the covenant’s benefit. Notions of “changed circumstances” *231and the “public interest” thinly veil the Authority’s attempt to avoid compensating Davidson for the cost of the lost benefit of an otherwise-enforceable covenant. I am left to wonder whether the majority would so readily condone the Authority’s taking of Davidson’s property if the interest taken were one in fee simple and not a restrictive covenant. It is wrong to take Davidson’s covenant without compensation just as it would be wrong to take its fee interest without paying for it. Shopkeepers in malls throughout the state will be astonished to learn that noncompetition covenants that they have so carefully negotiated in their leases are subject to invalidation because they run counter to a court’s perception of “changed circumstances” and the “public interest.”
-II-
For me the critical issue is whether the appropriate remedy for enforcing the covenant is damages or an injunction. Ordinarily, as between competing land users, the more efficient remedy for breach of a covenant is an injunction. R. Posner, Economic Analysis of Law 62 (1986) (Posner); R. Epstein, Notice and Freedom of Contract in the Law of Servitudes, 55 S.Cal.L.Rev. 1353-67 (1962); Calabresi and Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 Harv.L.Rev. 1089, 1118 (1972) (Calabresi and Melamed). But see Posner, supra, at 59; Calabresi and Melamed, supra, at 119 (discussing situations in which damages are a more efficient remedy than an injunction). If Katz still owned the George Street property, the efficient remedy, therefore, would be an injunction. The Authority, which took title with knowledge of the covenant, is in no better position than Katz insofar as the binding effect of the covenant is concerned. Although an injunction might be the most efficient form of relief, it would however deprive the residents of access to the George Street store.
*232The economic efficiency of an injunction, although persuasive, is not dispositive. The right rule of law is not necessarily the one that is most efficient. Saint Barnabas Medical Center v. Essex County, 111 N.J. 67, 88, 543 A.2d 34 (1988) (Pollock, J., concurring); see also R. Coase, The Problem of Social Cost, 3 J. Law & Econ. 1, 19 (1960). In other cases, New Jersey courts have allowed cost considerations other than efficiency to affect the award of a remedy.
For example, in Gilpin, supra, 47 N.J.Super. 26, 135 A.2d 204, the court refused to approve an injunction, but upheld an award of damages to the victim of a breach of a covenant. The property right at issue was a covenant restricting the building of any structure more than fifteen feet tall within four feet of one of the parties’ common boundaries. Defendant, a builder, was the successor to the land of the original covenantor. Plaintiff succeeded to ownership of the land originally benefited by the covenant. Defendant and plaintiff were neighboring landowners. Defendant breached the covenant. Remodeling the structure would have cost defendant $11,500. The trial court had found that the breach harmed plaintiff to the extent of $1,000 in damages. Invoking the “doctrine of relative hardship,” the Appellate Division held that the differences in these two figures were “so grossly disproportionate in amount as to justify the denial of the mandatory injunction.” 47 N.J.Super. at 35-36, 135 A.2d 204. At the same time, the Appellate Division upheld the $1,000-damages award to plaintiff. Id. at 36, 135 A.2d 204. Thus, the court concluded that the appropriate remedy for enforcing the covenant was an award of damages, not an injunction.
Injunctions, moreover, are ordinarily issued in the discretion of the court. Id. at 29, 135 A.2d 204. Hence, “[t]he court of equity has the power of devising its remedy and shaping it so as to fit the changing circumstances of every case and the complex relations of all the parties.” Sears, Roebuck & Co. v. Camp, 124 N.J.Eq. 403, 412, 1 A.2d 425 (E. & A.1938) (quoting Pomeroy, Equity Jurisprudence § 109 (5th ed. 1941)). In the *233exercise of its discretion, a court may deny injunctive relief when damages provide an available adequate remedy at law. See Board of Educ., Borough of Union Beach v. N.J.E.A., 53 N.J. 29, 43, 247 A.2d 867 (1968).
In the past, however, an injunction in cases involving real covenants and equitable servitudes “was granted almost as a matter of course upon a breach of the covenant. The amount of damages, and even the fact that the plaintiff has sustained any pecuniary damages, [was] wholly immaterial.” J.N. Pomeroy, Equity Jurisprudence, § 1342 (5th ed. 1941). The roots of that tradition are buried deep in the English common law and are not suited for modern American commercial practices. In brief, the unswerving preference for injunctive relief over damages is an anachronism.
At English common law, as between grantors and grantees, covenants running with the land violated the public policy against encumbrances. See Powell, supra, § 670 n. 27 (citing Keppell v. Bailey, 39 Eng.Rep. 1042 (Ch. 1834)). The policy becomes understandable on realizing that England originally did not provide a system for recording encumbrances, such as restrictive covenants. See Berger, A Policy Analysis of Promises Respecting the Use of Land, 55 Minn.L.Rev. 167, 186 (1970). Without a recording system, a subsequent grantee might not receive actual or constructive notice of such a covenant. As the Court points out, “[a]dequate notice obliterated any express requirement of ‘touch and concern.’ ” Ante at 204, 579 A.2d at 292.
For centuries, New Jersey has provided a means for recording restrictive covenants. Hence, the policy considerations that counselled against enforcement of restrictive covenants at English common law do not apply in this state. In the absence of an adequate remedy at law, moreover, the English equity courts filled the gap by providing equitable relief, such as an injunction. Tulk, supra, 2 Phil. 774, 41 Eng.Rep. 1143 (discussed by the majority, ante at 204, 579 A.2d at 292.) In this *234state, unlike in England, covenants between grantor and grantee are readily enforceable. Roehrs v. Lees, 178 N.J.Super. 399, 429 A.2d 388 (App.Div.1981) (covenant between neighboring property owners arising from a grantor-grantee relationship between original covenanting parties enforceable; matter remanded to trial court to determine whether damages or injunction was appropriate); Gilpin, supra, 47 N.J.Super. at 29, 135 A.2d 204. Hence, the need for injunctive relief, as distinguished from damages, is less compelling in New Jersey than at English common law, where damages were not always available. I would rely on the rule that a court should not grant an equitable remedy when damages are adequate. N.J.E.A., supra, 53 N.J. at 43, 247 A.2d 867.
Here, moreover, the Authority holds a trump card not available to all other property owners burdened by restrictive covenants — the power to condemn. By recourse to that power, the Authority can vitiate the injunction by condemning the covenant and compensating Davidson for its lost benefit. That power does not alter the premise that an injunction is generally the most efficient form of relief. See Calabresi and Melamed, supra, at 1118; Posner, supra, at 62. It merely emphasizes that the Authority through condemnation can effectively transform injunctive relief into a damages award. Arguably, the most efficient result is to enforce the covenant against the Authority and then remit it to its power of condemnation. This result would recognize the continuing validity of the covenant, compensate Davidson for its benefit, and permit the needy citizens of New Brunswick to enjoy convenient shopping.
Forcing the Authority to institute eminent-domain proceedings conceivably would waste judicial resources and impose undue costs on the parties. A more appropriate result is to award damages to Davidson for breach of the covenant. That would be true, I believe, even against a subsequent grantee that does not possess the power to condemn.
*235Money damages would compensate Davidson for the wrong done by the opening of the George Street supermarket. Davidson would be “given what plaintiffs are given in many types of cases — relief measured, so far as the court reasonably may do so, in damages.” Gilpin, supra, 47 N.J.Super. at 34, 135 A.2d 204. The award of money damages, rather than an injunction, might be the more appropriate form of relief for several reasons. First, a damages award is “particularly applicable to a case, such as this, wherein we are dealing with two commercial properties * * *.” Id. at 35, 135 A.2d 204. Second, the award of damages in a single proceeding would provide more efficient justice than an injunction in the present case, with a condemnation suit to follow. Davidson would be compensated for the loss of the covenant and the needy residents would enjoy more convenient shopping. That solution is both efficient and just.
I can appreciate why New Brunswick residents want a supermarket and why the Authority would come to their aid. Supermarkets may be essential for the salvation of inner cities and their residents. The Authority’s motives, however noble, should not vitiate Davidson’s right to compensation. The fair result, it seems to me, is for the Authority to compensate Davidson in damages for the breach of its otherwise valid and enforceable covenant.
Justice CLIFFORD joins in this opinion.
Justices CLIFFORD and POLLOCK concurring in the result.
For reversal and remandment — Justices CLIFFORD, HANDLER, POLLOCK, O’HERN, GARIBALDI and STEIN — 6.
For affirmance — None.