Friedman v. Isenbruck

• Decision Date: 27 May 1952
• Citation: 111 Cal.App.2d 326,244 P.2d 718
• Court: California Court of Appeals Court of Appeals
• Parties: FRIEDMAN et al. v. ISENBRUCK et al. Civ. 14976.

Page 718

244 P.2d 718

111 Cal.App.2d 326

FRIEDMAN et al. v. ISENBRUCK et al.

Civ. 14976.

District Court of Appeal, First District, Division 1, California.

May 27, 1952.

Charles M. Stark, Paul W. McComish, San Francisco, for appellants.

Harold B. Lerner, San Francisco, for respondents.

PETERS, Presiding Justice.

This action was brought by the lessors to recover from their lessee $7,500 rent claimed to be due and unpaid under the terms of a written lease. A non-suit was granted as to a second cause of action relating to a different subject matter, and no appeal has been taken from that portion of the judgment. The answer pleaded that the covenant to pay rent had been modified, that during the term of the lease the premises became unusable for the purpose for which they were leased, that the lessors had terminated the lease, and prayed for an apportionment of rent claimed to have been prepaid. The lessee also cross-complained for damages alleged to have been caused by the improper termination of the lease. On the lessors' cause of action, the trial court determined all basic issues in favor of the lessee, held that the rent had been prepaid and that the lessee was entitled to an apportionment, and granted the lessee a judgment for $3,750. No recovery was allowed on the lessee's cross-complaint. The lessors appeal.

The Facts:

On March 15, 1948, the parties entered into a three-year lease of certain real property located in Mountain View, California. The lease named Isenbruck as lessee, but granted him the right to assign to a corporation to be formed. The Calibest Canning Company, Inc., was thereafter organized and the lease assigned to it. Located on the leased property were two buildings, one a cannery, and the other a warehouse. The lease is entitled 'Lease and Option to Purchase' and expressly provides that the lessee shall use the premises as 'a cannery and food processing plant and for no other purpose.' It provided a minimum rental of $15,000 per year. For the first year the rent was made payable in installments, $2,500 upon the execution of the lease, $2,500 in 60 days, $2,500 in 120 days, and the balance of $7,500 payable as canning progressed at so much per case. If canning exceeded a certain number of cases the lessors were to receive additional amounts. Admittedly, the lessee paid the first year's rent in precise conformity with the agreement, paying not only the $15,000 minimum, but also some $3,000 additional.

The lease provided that the $15,000 minimum for the second year was payable in full 'on or before the 15th day of March, 1949.' The present controversy relates solely to the rent for this second year.

In the first week of March, 1949, a meeting was had between representatives of the Calibest company and the lessors and their attorney. There is some conflict as to what then occurred, but this conflict must be resolved in favor of respondents. Admittedly the parties then discussed the possibility of Calibest buying the property, and a modification as to how the rent should be paid for 1949 was made. Friedman, one of the lessors, stated that he agreed to accept $7,500 on March 15, 1949, and $2,500 at thirty-day intervals until the balance was paid. Isenbruck, representing Calibest, testified that Friedman was anxious to sell the property because the rentals were subject to high taxes, while if he sold the property the profit could be treated as a capital gain. Stark, one of the attorneys for the lessors, according to Isenbruck, stated that in order to accomplish this result the existing lease 'would probably have to be pretty well torn apart.' It was suggested that Stark look over the lease to see what changes should be made. Isenbruck then called attention to the fact that the rent for 1949 would be due in a short time, and suggested, in view of the proposed revision of the lease, that $7,500 instead of $15,000 be paid on March 15, 1949. Friedman, according to Isenbruck, agreed, and further agreed that the balance should be payable as in the previous year, and that the whole matter would be discussed again about in April when Isenbruck and Alden, president of Calibest, returned from a contemplated eastern trip.

Under date of March 8, 1949, McComish, attorney associate of Stark's, wrote to Isenbruck referring to this meeting 'regarding the revamping' of the lease agreement and stating that 'it is taking us some time to assemble the necessary figures to the end that the agreement may be properly redrafted.' The letter then called attention to the fact that the 1949 rent was due on March 15th, and 'Mr. Friedman desires that at least $7,500.00 of the amount due be paid at this time.' Isenbruck replied to this letter on March 9, 1949. In this letter he stated that he appreciated 'that it would take probably a little longer than originally anticipated to redraft the agreement.' In reference to the payment of rent, the letter states that payments, as agreed, will be made 'on the same type of arrangements we had last year; we enumerate: $7500.00 to be paid March 15th; $2500.00 May 15th; $2500.00 July 15th; $2500.00 September 15th.'

On March 12, 1949, Isenbruck sent to Friedman a check for $7,500, and a letter stating that such payment was 'in accordance with our understanding.' The letter also states that all reference to rents had been omitted from the check voucher because 'to put it on may defeat the purposes, at a later date, of those certain changes being made in contract.' Isenbruck and Alden then left on their eastern trip. It is a reasonable inference from this evidence that it was contemplated by all concerned that the 1948 lease would be canceled for a purchase agreement, and that any payments made on the 1949 rent would be applied on the purchase price as provided in the proposed new agreement. Certainly the evidence supports the finding that the parties agreed to modify the lease in reference to payment of rent for 1949.

Some reference should now be made to the physical condition of the cannery building. The lease contains a clause to the effect that by entry thereunder the lessee acknowledged that the premises are 'complete and in good order, condition and repair.' However, early in 1948 when the cannery was about to be opened, the cannery building needed some major repairs and alterations, which were made at the request of Thomas, superintendent of public works for Mountain View. These repairs were apparently made before the lessee took possession, and, although the record is not too clear, were apparently paid for by both the lessors and lessee.

Late in March of 1949 the cannery building was seriously damaged by windstorms. Thomas observed repairs being made to the building, without a permit from the city. He was convinced that the building was basically unsafe and should be removed rather than repaired. Thomas gave the superintendent of the cannery a written list of what had to be done to render the building safe, and stated that all such work had to be performed under city permits. Calibest was most anxious to operate at least until the materials on hand were canned. To secure this permission from the city, the superintendent of the cannery wrote to Thomas giving his estimate of how much time would be required to clean up present contracts, agreeing to make no repairs without city permits, and agreeing to make no new contracts for vegetables without city clearance.

The lessors had knowledge of what was going on, and knew that the city officials believed that the cannery building should be torn down. Early in April, Stark had a conversaion with Thomas about conditions, and, as a result of this conversation, Thomas, under date of April 12, 1949, wrote to Stark outlining his views. This letter, referring to the cannery building, states:

'At no time, even when new, has this building ever met any of the requirements of any building code or any of the common sense requirements of even 'country' construction. Numerous alterations through the years have further weakened the whole setup.

'Last year, the present tenant was permitted to strengthen and brace the structure against collapse, which was imminent.

'The recent windstorms have again reduced the entire structure to the point of collapse.

'A portion of the building is constructed out over the entire sidewalk area of Jackson Street.

'It is not the purpose of this department to create hardship for any person or firm in the orderly conduct of their daily affairs. We are willing to go along to the point of cleaning up the present tenant's contracts for vegetables, as outlined in his letter of April 7th, but not one day beyond that point.

'This structure cannot be made safe. It must be abandoned and it must be torn down.'

Sometime later, probably towards the end of April, Friedman also had a talk with Thomas in which Friedman requested that the cannery be permitted to operate until December 31, 1949, promising to tear down and remove the building at that time. Thomas stated orally that if Friedman would post a bond agreeing so to remove the building, and would insure the city against any liability, this could be worked out. This bond and this insurance policy were never furnished by Friedman, he explaining that he and his attorneys waited for the city attorney to draft the appropriate papers, but such was never done. At any rate, Friedman notified the lessee that it could operate until the end of 1949.

Towards the end of April, another windstorm further damaged the building. The city officials then posted the building with notices declaring that the building was unsafe for occupancy and that those who entered it did so at their own risk. There is some dispute over the date of posting but the trial court found, and the finding is supported, that the correct date was May 13, 1949. Both lessors and the lessee knew of the posting, and apparently the lessee knew some time prior to the posting that the city officials were...