Ellis v. Klaff

• Court: California Court of Appeals
• Writing for the Court: SHINN
• Citation: Ellis v. Klaff, 216 P.2d 15, 96 Cal.App.2d 471 (Cal. App. 1950)
• Decision Date: 15 March 1950
• Parties: ELLIS et al. v. KLAFF et al. Civ. 17302.

Page 15

216 P.2d 15

96 Cal.App.2d 471

ELLIS et al. v. KLAFF et al.

Civ. 17302.

District Court of Appeal, Second District, Division 3, California.

March 15, 1950.

Nordman & Berenson and Gustafson & Rosenmund, Oxnard, for appellants Don Rose and Seymore Klaff.

William A. Reppy, Neil D. Heily, Oxnard, for respondents.

SHINN, Presiding Justice.

This action was brought against defendant Adams, as lessee, and defendants Rose and Klaff, as assignees, for rent and for damages for the alleged breach of a covenant in a written lease. The first cause of action of the complaint alleged the violation of a covenant for construction by the lessee of 'a building or buildings' on the leased premises. The second cause of action was for unpaid rent in the amount of $375. A nonsuit was entered in favor of Klaff on both counts; judgment went for plaintiffs Ellis against Adams and Rose on the cause of action for unpaid rent, and for defendants on the cause of action for breach of covenant to construct. Subsequently on motion of plaintiffs the court granted a new trial on all the issues as to all of the defendants 'on the grounds that the evidence is insufficient to justify the decision of the Court and that it is against the law.' Defendants Rose and Klaff have appealed from this order; defendant Adams has not appealed.

In their opening brief appellants state that they are raising no question as to the propriety of the order as against defendant Adams nor as to its propriety insofar as it relates to the cause of action for unpaid rent. It is said '[t]he only matter about which complaint is made is that the order for new trial should have been limited, as permitted by Code of Civil Procedure, section 657, so as to exclude any new trial on the first cause of action against appellants.'

In the summer of 1946 Adams was appointed sales agent for Kaiser-Fraser Automobiles for Ventura, California. Needing a location for conducting sales he executed the lease involved in the present action for a term of five years with an option to renew for an equal period, at a monthly rental of $125. The lease contained the following provisions:

'The lessee agrees to improve said premises by the construction of a building or buildings as soon as building conditions reasonably shall permit. It is understood that this obligation of the lessee is one of the elements of the consideration to be given by the lessee to the lessors for the execution of this lease. In connection with the construction and maintenance of any such improvements the lessee agrees to hold the lessors harmless from any liability whatsoever due to injury and/or damage to persons or property. Any building or structure constructed by the lessee shall comply strictly with the Building Code of the City of Buenaventura.

'Lessee agrees to carry adequate fire and earthquake insurance on structures erected by him on said property. Lessee also agrees to pay any increase in the City and County taxes on said property due to improvements placed or erected on said property by the lessee.

'It is understood that all buildings placed on or erected on the leased premises shall become a part of the real property and shall remain and shall inure to the benefit of the lessors at the termination of this lease.'

Parol evidence was admitted, some of it over the objection of appellants, in an attempt to prove an agreement on the part of Adams to construct either a brick or concrete-block building with glass front and service garage, suitable for an automobile salesroom and repair shop, and costing approximately $12,000. Shortly after the execution of the lease in July, 1946, Adams caused an architect to prepare plans and specifications for such a building and he filed an application with the Civilian Priorities Administration for a construction permit. The permit was finally granted in January, 1947, at which time building conditions were such as to permit construction to proceed. Meanwhile Adams had placed on the leased premises a construction shed approximately 8' X 10' containing a telephone, desk, and other office equipment from which he conducted his business. In December, 1946 Adams sold all of his assets, including the Kaiser-Fraser franchise, to defendant Rose and assigned the lease to him. The written assignment, which was signed by Rose, stated in part: 'I, Donald L. Rose, do hereby accept the foregoing assignment and do hereby agree to be bound by the terms, conditions and obligations in said lease contained and agree to save and hold W. B. Adams harmless from any further liability or obligations under the terms of said original lease.' Rose, who conducted the automobile agency as Buena Motors Inc., or his sublessee, paid rent under the lease through September, 1947. He moved the shed off the lot, and never physically occupied the property or used it in his business. Prior to the execution of the assignment he had leased other premises in Ventura upon which he conducted the Kaiser-Fraser agency; and he testified that he paid the rent on the leased premises for the sole purpose of retaining it for possible future use as a used car lot.

Defendant Klaff became associated with Rose for the first time in either January or February, 1947, as a stockholder in Buena Motors. He became Vice-President or Secretary of the corporation. There was no evidence that Klaff became at any time a party to the assignment, or that he entered into an agreement with plaintiffs or Adams to assume the obligations of the lease other than testimony by Mr. Ellis that Klaff had stated to him that 'somewhere in their dealings for the Kaiser-Fraser agency they assumed a lease'; that Klaff asked Ellis to give his consent to a sublease in May, 1947; and also requested that the lease be cancelled in September, 1947. The present action was brought after the refusal of defendants in November, 1947, to comply with plaintiffs' written demand that they construct a building and pay the rent due.

Since the lease agreement was for a term of more than one year, its essential provisions were required by the Statute of Frauds, Civ.Code, sec. 1624(4) to be in writing. Appellants contend that the construction clause of the lease, as written, is unenforceable due to uncertainty, and that the statute forbids its deficiencies to be supplied by parol evidence. It does not appear from the record that the applicability of the Statute of Frauds was urged in the trial court. Although appellants' general denial may have been sufficient to raise the point, Howard v. Adams, 16 Cal.2d 253, 257, 105 P.2d 971, 130 A.L.R. 1003, it was evidently not pursued with any show of diligence. The objections to introduction of evidence were not made on this ground, nor was the statute argued on appellants' motion for nonsuit. Appellants claim that the question was raised in connection with an unsuccessful motion to strike portions of the pleadings referring to parol understandings; and respondents admit that they presented points and authorities as to admissibility of extrinsic evidence in their trial brief. Neither of these documents, nor any transcript of oral argument pertaining thereto, was incorporated in the record, however. Conceding that the bar of the Statute of Frauds is being asserted for the first time upon the appeal, we nevertheless are constrained under the particular circumstances to exercise our discretion to consider the matter. See Solorza v. Park Water Co., 86 Cal.App.2d 653, 195 P.2d 523. If the order granting a new trial is affirmed, the case will be restored to the same situation as any other contested case prior to trial. Kent v. Williams, 146 Cal. 3, 7, 79 P. 527; Miller & Lux v. Enterprise Canal etc. Co., 169 Cal. 415, 419, 147 P. 567; Gruben v. Leebrick & Fisher, 32 Cal.App.Supp.2d 762, 766, 84 P.2d 1078. The trial court, in its discretion, may permit the pleadings to be amended, National City Finance Co. v. Lewis, 216 Cal. 254, 14 P.2d 298; Stinnett v. Superior Court, 36 Cal.App. 275, 171 P. 1076, and may relieve the parties from the effect of stipulations, admissions, or waivers occurring at the previous trial. Daneri v. Gazzola, 2 Cal.App. 351, 355-358, 83 P. 455; 39 Am.Jur., secs. 217-218, pp. 208-209; 46 C.J., secs. 581-583, pp. 462-463. The issues being set at large, it cannot be assumed that the parties would rely upon the same theory or be restricted to the same evidence as before. Morton v. Superior Court, 105 Cal.App. 143, 286 P. 1072. Since appellants are vigorously contending before us that the Statute of Frauds is a conclusive defense to plaintiffs' first cause of action, it may be assumed that they would so contend upon a retrial. Also, if respondents are correct in their position, it is appropriate that the issue be determined upon this appeal in order, if possible, to reach a final determination of the controversy without the need for a retrial and possible additional appeal, with attendant expense and delay.

The evidentiary consequences of the Statute of Frauds, Civ.Code, sec. 1624, are in many respects similar to those of the parol evidence rule, Code Civ.Proc. sec. 1856. Both require exclusion of extrinsic evidence which would vary, contradict, or add to the terms of the written agreement under consideration, Craig v. Zelian, 137 Cal. 105, 69 P. 853, statute of frauds; Germain Fruit Co. v. J. K. Armsby Co., 153 Cal. 585, 96 P. 319, parol evidence rule, but both permit reception of such evidence to identify the subject matter of the contract from the written description, explain the meaning of ambiguous, abstruse, or technical expressions, and assist in interpreting the expressed intentions of the parties in the light of circumstances existing at the time of execution. 10 Cal.Jur., 'Evidence', sec. 186, pp. 916-919; 12 Cal.Jur., 'Statute of Frauds', sec. 65, p. 902; Gibson v. De La Salle Institute, 66 Cal.App.2d 609, 152 P.2d 774; Balfour v. Fresno Canal & Irrigation Co., 109 Cal. 221, 225, 41 P. 876; ...