Kress v. Corey

• Citation: 189 P.2d 352,65 Nev. 1
• Decision Date: 12 January 1948
• Docket Number: 3423.
• Parties: KRESS v. COREY et al.
• Court: Supreme Court of Nevada

189 P.2d 352

65 Nev. 1

KRESS v. COREY et al.

No. 3423.

Supreme Court of Nevada

January 12, 1948

Appeal from District Court, Eighth District, Clark County; George E Marshall, Judge.

Action by M. C. Kress against Gus D. Corey and others for a declaratory judgment, and other relief. From a judgment dismissing the complaint, plaintiff appeals.

Reversed and case remanded with instructions.

Morse & Graves, of Las Vegas, for appellant.

Thruston & McNamee, of Las Vegas, for Gus D. and John D. Corey respondents.

Lewis & Hawkins, of Las Vegas, for Arthur C. and Harry C. Pauff respondents.

BADT Justice.

Plaintiff in the court below, M. C. Kress, has appealed to this court from the order and judgment of the lower court dismissing his complaint for a declaratory judgment, assigning error, among other things, in the sustaining of the general and special demurrers of the defendants Gus D. Corey and John D. Corey and of the defendants Arthur C. Pauff and Harry C. Pauff. Other errors are assigned and will be discussed later. The case is the first one to reach this court in which there has been brought into question the right of a plaintiff to seek relief under the uniform declaratory judgment act by reason of the various relationships existing between the parties as alleged by the plaintiff. ^[1]

Plaintiff's original complaint, denominated 'complaint for a declaratory judgment,' sought a declaration of plaintiff's rights and liabilities under an executory written contract set forth as an exhibit wherein the defendants Corey undertook to sell and the plaintiff and one C. B. Turner, not named as a party to the action, undertook to buy a going restaurant and cafe business, the merchandise, personal property and fixtures appertaining thereto and the unexpired term of the lease of the premises held by defendant Gus D. Corey as assignee of the original lessee of the defendants Pauff.

Plaintiff prayed for a declaration determining the validity of this contract and the respective rights of the parties thereto as against the claim of the defendants Pauff that said contract was in breach of a purported covenant in their lease with defendant Gus Corey, prohibiting assignment or underletting without the written consent of the lessors. Declaration of the rights and liabilities of the parties under the lease was also sought. Injunctive relief and general equitable relief were also prayed.

Upon application of plaintiff, the district court issued a preliminary injunction, enjoining the defendants, pendente lite, from interfering with plaintiff's peaceful use and occupation of the premises in controversy and the personal property located thereon, and restraining the defendants from negotiating or otherwise hypothecating a certain promissory note in the sum of $17,442.48, payable at the rate of $1,000.00 per month, which had been executed by plaintiff in part payment of the purchase price under the disputed agreement, the note then being in the possession of defendant bank as security for a certain indebtedness of the Coreys to the bank. On the same day, the district court made its order, providing that, pending the further order of the court, the plaintiff should deposit with the clerk of the court, certain sums falling due each month under the provisions of the contract of sale between plaintiff and the defendants Corey in lieu of making such payments to them.

Thereafter, plaintiff having by leave of court filed an amended complaint, the defendants Corey and the defendants Pauff separately filed their general and special demurrers thereto. In substance, the demurrer of the defendants Corey was directed to the sufficiency of the complaint to state a cause of action against them for declaratory or equitable relief or otherwise, in view of the asserted absence of a justiciable controversy. The Pauff demurrer averred in addition a misjoinder of parties defendant and a misjoinder of causes of action, in the absence of a showing of privity of contract between plaintiff and said defendants or community of interest in any question of fact or law. The defendants Corey also filed their notice of motion to strike certain portions of the amended complaint and their notice of motion to dissolve the preliminary injunction and to vacate or set aside or modify the order directing deposit in court. The defendants Pauff filed their separate notice of motion to dissolve the preliminary injunction. Defendant First National Bank of Nevada failed to appear or plead and its default was duly entered. Plaintiff filed a notice of motion to continue in full force and effect, pendente lite, the preliminary injunction and the order directing the deposit of monies with the clerk of the court, which motion the court granted. After hearing, the court made its order and judgment sustaining the demurrers of the defendants Corey and the defendants Pauff to plaintiff's amended complaint without leave to amend, dismissing the action, dissolving the temporary injunction, and releasing the deposits paid into court by plaintiff.

The amended complaint alleged that on or about March 26, 1940, defendants, Arthur C. Pauff, and Harry C. Pauff, as fee owners of the real property in controversy, entered into a ten year lease of the premises with one G. C. Christopher, terminating May 1, 1950, and providing for a rental of $170 per month, this lease being embodied in a written instrument, pleaded in haec verba as plaintiff's Exhibit 'A'; that plaintiff had never been furnished with an original or duplicate original of the lease, but only with what purported to be a typewritten copy of said lease bearing the typewritten signature of said G. C. Christopher but bearing no signature of the Pauffs whatsoever; that this typewritten copy does not contain as a term or condition that the lessee shall not 'let or underlet the whole or any part of said premises,' but that plaintiff has been informed that such term was included in the original lease; that in view of these facts, plaintiff does not know whether or not this alleged term is in fact one of the terms of the lease; that on or about December 25, 1940, Christopher made a written assignment of the lease to defendant Gus D. Corey with the written consent of defendants Pauff; that, thereafter, defendants Gus D. Corey and John D. Corey entered into possession and occupation of the demised premises, operating thereon a restaurant and cafe business.

That on April 5, 1943, defendants Corey entered into an instrument in writing with plaintiff and with defendant C. B. Turner, to whose interest thereunder plaintiff has since succeeded; that by the terms of this instrument, pleaded in haec verba as plaintiff's Exhibit 'B,' plaintiff and Turner, as buyers, paid to defendants Corey, as sellers, the sum of $7,000 cash, signed a promissory note in favor of defendants Corey in the sum of $17,442.48, payable at the rate of $1,000 per month with interest at the rate of 5 per cent per annum, and agreed to pay, on account of defendants Corey, the sum of $1,067.52 to the First Industrial Loan Company of California, or a total consideration of $25,510; that it was mutually understood and agreed by the parties to this instrument that the consideration for this $25,510 paid, and agreed to be paid, by the buyers, consisted solely of the value of the unexpired term of the lease, and of the value of the restaurant and cafe business being conducted upon said premises together with such merchandise, furniture, furnishings, fixtures and equipment as pertained thereto, which it was contemplated that the buyers would take over as a going concern and operate as such for the full unexpired term of the lease; that 'the entire consideration of $25,510.00 was mutually predicated upon the mutually assumed fact that the defendants, Gus D. Corey and John D. Corey, could legally contract to sell and plaintiff could legally contract to purchase the entire unexpired term of said lease and said business as a going concern, and that plaintiff could legally continue to operate the same as a going business and have legal and peaceful possession of said premises to and until May 1, 1950 at a rental of $170 per month, being the unexpired term of the said Gus Corey lease.'

That by the further terms of the agreement of April 5, 1943, the sellers undertook to have the lease of the demised premises assigned to the buyers, but with the further proviso that in the event that the owners should refuse to consent to such assignment 'nevertheless, in such event, it shall not affect, diminish, or nullify this agreement or the terms thereof, but the sellers shall allow the buyers to occupy the said premises under the terms of said lease without further consideration to sellers as if buyers were the assignees thereof, provided buyers pay to said Gus Corey the rentals in amount, time and manner provided for therein, which sellers agree to pay to the person or persons entitled thereto under said lease'; that the sellers undertook further, within sixty days, to deliver to the escrow holder defendant First National Bank of Nevada, a corporation, either the lease of the demised premises assigned to the buyers, or, in lieu thereof, the affidavit of the sellers that the owners of the premises refused to consent to an assignment of the lease; that the promissory note executed by the buyers in part payment of the consideration should be deposited with defendant corporation for collection, with the proviso that when said note had been paid in full, defendant corporation, as escrow holder, should deliver to the buyers sellers' bill of sale, affidavit showing compliance with the Bulk Sales Law, and the assigned lease, or in lieu thereof, the affidavit of sellers above mentioned; that it was further...