Glen Burnie Shopping Plaza, Inc. v. Schreiber Bros.

Prescott, J., delivered the opinion of the Court. Glen Burnie Shopping Plaza, Inc., (Shopping Plaza), and Two Guys From Harrison, Inc., (Two Guys, Md.) both Maryland corporations and defendants below, appeal from a decree of the equity court of Anne Arundel County, which permanently enjoined them from offering for sale and selling meats, poultry and other enumerated items of food, beverages and merchandise at the premises known as Glen Burnie Shopping Plaza. There is little dispute as to the facts themselves; rather the dispute is whether, under the facts, the defendants violated a covenant contained in a lease from Shopping Plaza to the appellee-plaintiff, Schreiber Bros. Inc., (Schreiber).

Shopping Plaza was the owner of a shopping center located at the intersection of 6th Avenue and Ritchie Highway in Glen Burnie, and, on January 18, 1957, it entered into a lease with Schreiber ³⁰⁶ for a portion thereof, which said lease contained among its provisions, the following: “4A. Tenant covenants and agrees that the demised premises shall be used by the Tenant for the following purposes and for no other purposes whatsoever— for the use of a retail food supermarket. “Sale and marketing at retail, and warehousing, storage and packaging incidental to sales of the following : “Exclusive Items: meats, poultry, beverages, groceries, grocery household items, grocery toilet articles, produce, fruits, vegetables, bakery products, sea food, dairy and delicatessen products, dried or canned or packaged in any manner whatsoever, all for consumption off the premises only. “Tenant will not sell any drugs or patent medicines. Landlord will not permit any other tenant of the shopping center (other than the within Tenant) to sell any food product items normally and generally sold by food markets or to sell any of the above ‘Exclusive Items’, except as noted below. “It is understood that Sun Ray Drug Co., as a tenant in the shopping center, may sell groceries normally sold in a drugstore.” After this and other leases were entered into by Shopping Plaza, all of its stock was acquired by Two Guys From Harrison, Inc., a New York corporation (Two Guys, N. Y.), which also owns all of the stock of Two Guys, Md., a Maryland corporation and an appellant herein. However, it is unmistakably clear that, before Two Guys, N. Y., bought the stock of Shopping Plaza, it tried to make certain that it would be able to carry on, as a part of its merchandising operation here, 1 the sale of produce generally sold by retail food markets. ³⁰⁷ In an attempt to effectuate this result, it evolved the following rather ingenious but somewhat callous plan.

Changes in several of the leases were first obtained, but Schreiber refused to agree to any change whereby it released its exclusive coverage under its lease. The Sun Ray Drug Company (Sun Ray) mentioned above in Schreiber’s lease, had been demised some 10,000 square feet in the shopping center by lease on February 4, 1958. It was claimed by the appellants that Sun Ray had set aside 5500 square feet of its space to sell “groceries normally sold in a drugstore.” Home Utilities of Glen Burnie, Inc., (Home Utilities), another totally owned subsidiary of Two Guys, N. Y., sub-leased this 5500 square feet of space from Sun Ray with the claimed privilege of selling groceries customarily sold by drugstores. This, in effect, made Two Guys, N. Y., landlord to itself as tenant of the 5500 square feet and tenant to itself as landlord thereof; and, after it started selling many grocery items in addition to those usually sold in drugstores—which it did—it was in direct competition with its tenant, Schreiber.

The 5500 square feet sub-leased from Sun Ray was separated from the drugstore operations of that concern by an iron fence, or similar structure, so that a customer in the drugstore was required to go out one door and in another in order to purchase groceries in the 5500 square feet area; however there was no fence or obstacle of any kind between this area and the general operations of Two Guys, Md. In other words, while the 5500 square feet of space is (theoretically or from a bookkeeping standpoint) being conducted by Home Utilities as a sub-lessee of Sun Ray, it, to the general public and in reality, is being operated as a part of the overall merchandising of Two Guys, Md. The pictorial, as well as the oral, evidence makes it definitely clear that the operation upon this space was very