Garter v. Metzdorf Associates

• Decision Date: 02 July 1963
• Citation: 32 Cal.Rptr. 113,217 Cal.App.2d 812
• Court: California Court of Appeals Court of Appeals
• Parties: Simon GARTER et al., Plaintiffs and Appellants, v. METZDORF ASSOCIATES et al., Defendants and Respondents. Civ. 185.

Page 113

32 Cal.Rptr. 113

217 Cal.App.2d 812

Simon GARTER et al., Plaintiffs and Appellants, v. METZDORF ASSOCIATES et al., Defendants and Respondents.

Civ. 185.

District Court of Appeal, Fifth District, California.

July 2, 1963.

Roland S. Woodruff, Bakersfield, for appellants.

Lawrence E. Silverton, Studio City, Paul P. Selvin and Selvin & Cohen, Beverly Hills, for respondents.

RALPH M. BROWN, Justice.

This appeal originated in an unlawful detainer action brought by members of two partnerships, Sands Management Company and Sands Associates, plaintiffs-appellants, against members of a partnership, Metzdorf Associates, defendants-respondents, to recover possession of premises consisting of a hotel-motel facility including cocktail lounge and restaurant, known as The Sands Caravan Inn, hereinafter referred to as 'Motel,' and for rent, damages for withholding possession, attorneys' fees and costs.

The evidence established the following facts:

Dr. Garter and Dr. Friedman, dentists by profession but experienced in the field of business properties investment, were instrumental in the formation of the two plaintiff partnerships, composed of investors, for the purpose of acquiring by lease or in fee the properties which now comprise the motel and managing the motel business to be conducted therein. On June 7, 1958, the two doctors, in their own names as lessors, entered into a lease with Metzdorf Associates, as lessee, which lease is the founding instrument of this controversy. The lease, in relevent part, provides that Metzdorf would operate the motel, the rental was fixed at $125,000 per annum plus taxes; and Metzdorf was obligated to equip and furnish the motel and expend approximately $220,000 therefor. It is then provided:

'The fixtures, furnishings and equipment shall, upon installation, not be removed by Tenant except as set forth hereinafter with respect to termination of this lease. Tenant further agrees to execute a chattel mortgage to Landlord securing Landlord against the obligations of this lease, which chattel mortgage shall list in detail all of the items of fixtures, furniture, furnishings and equipment and shall contain a provision covering after acquired personal property installed in, on or about the premises. This chattel mortgage, complete in every detail except for the enumeration of the items of fixtures, furnishings and equipment, shall be deemed executed by the execution of this lease, is attached hereto, marked Exhibit 'B' and by this reference expressly incorporated herein.'

The principal controversy revolves around the construction of paragraph 25 of the lease which provides:

'Notwithstanding anything to the contrary herein contained, Tenant's liability for damages for the breach of this lease shall be limited to the exhaustion of the security of furnishings, furniture and equipment subject to the chattel mortgage herein provided for.'

On the same day, by a separate contract between the same parties, it was agreed that the demised premises consisted of 67 motel units, and other improvements; that 30 or more units, a restaurant, bar and office building were to be constructed; that pending completion of the contemplated additional improvements, the rental was reduced to $850 per unit per annum.

On June 16, 1958, Metzdorf Associates, as general partner and operator, and Simon Garter and Monroe Friedman, as limited partners and non-operators, entered into a limited partnership agreement and executed a Certificate of Limited Partnership, whereby Garter and Friedman undertook, among other things, the obligation to provide all necessary furniture, furnishings and fixtures to the motel, cocktail bar, restaurant and other facilities 'and to transfer free and clear title to the operating company so that, in turn, said title may be assigned to the Landlord as security for the performance of the lease.' The furniture and equipment were to cost $200,000, more or less.

Subsequently and on June 26, 1958, Garter, Friedman, Max Garter and Edward Dienstag entered into an agreement forming Sands Management Company, a partnership; Joseph Cole, J. M. Shea, Jr., Morris Goldstein, Edward Lattig, Abe Casper, Samuel Casper, Michael Lekas and William Gitzes entered into an agreement forming Sands Associates; and the two partnerships so formed entered into an agreement specifying their respective interests and their respective rights, duties and returns from investments in the ownership and management of the motel.

On July 17, 1958, Garter and Friedman duly assigned their interest in the Metzdorf lease to Sands Associates and Sands management. The assignment was not recorded until February 25, 1960. No notice of the assignment was given to defendants.

On April 18, 1960, defendant Metzdorf was in default in the sum of $50,500 as accrued rent and $20,272 as unpaid taxes. This action was commenced by the filing of a complaint on April 25, 1960. Concurrent therewith, the court granted a Writ of Possession Before Trial by virtue of which the plaintiffs were put into immediate possession of the motel premises and the furniture, furnishings and equipment therein.

Upon a nonjury trial the court confirmed possession in plaintiffs but denied a money judgment for accrued rental and unpaid taxes, decreed that Simon Garter and Monroe Friedman, two of the plaintiff members of Sands Management Company, are estopped from denying the validity of an unexecuted continuing indemnity agreement; that Garter and Friedman were found to be general partners with Metzdorf Associates in the operation of the motel; and left open three counterclaims interposed by defendants for other court action. Plaintiffs moved for a new trial, which was denied. Plaintiffs appeal from the judgment, and present two principal issues: (1) insufficiency of the evidence to support the findings and judgment, and (2) the findings in relation to a partnership between defendants and Garter and Friedman do not support the judgment.

Preliminarily, defendants complain, and justly so, about the nature and sufficiency of the plaintiffs' opening brief. A complex and complicated series of business transactions in which two of the plaintiffs, Dr. Simon Garter and Dr. Monroe Friedman, assumed shifting legal relationships to their coplaintiffs and to defendants, form the background against which this appeal is set. The record is voluminous. Numerous lengthy exhibits were received in evidence. Yet, appellants filed a 15-page opening brief, citing only four cases and three texts, all relating to general principles of law; abstained from filing a closing brief; waived oral argument; and rested. Language contained in In re Estate of Palmer, 145 Cal.App.2d 428, 302 P.2d 629, is here pertinent. At page 431 of 145 Cal.App.2d, at page 631 of 302 P.2d the court said:

'Instead of a fair and sincere effort to show that the trial court was wrong, appellant's brief is a mere challenge to respondents to prove that the court was right. And it is an attempt to place upon the court the burden of discovering without assistance from appellant any weakness in the arguments of the respondents. An appellant is not permitted to evade or shift his responsibility in this manner.'

In this case defendants have met the challenge by filing a well-considered brief. In the interests of justice, this court has accepted the uninvited burden and has made an independent study of the record. But by way of reproof to counsel for appellants and by way of warning to those who follow in his path, we say that a brief so grossly inadequate merits animadversion and violates the rules of appeal procedure.

Turning to the merits: The findings relate that the parties agreed that defendants would have no personal liability for breach of the lease and such agreement was embodied in paragraph 25 thereof; that the meaning and custom in the industry of the provisions of paragraph 25 is that the lessee shall have no personal liability for rents or any other payments required to be made by the provisions of the lease and that custom and usage in the industry was known to plaintiffs prior to the execution of the lease; that the terms of the lease created an equitable lien on the furniture, furnishings and equipment in favor of plaintiffs and that their consent to a chattel mortgage thereof (to a Bank) waived any requirement that defendants execute a formal chattel mortgage.

Plaintiffs attack these findings as being without support in the record and contend that the provisions of paragraph 25 (a) are without force and effect because of the failure of defendants to deliver a valid chattel mortgage to the lessor; (b) apply only to damages for breach as distinguished from past due rent; and (c) do not affect the obligation of defendants to pay rent but rather designate the source of assets from which damages for breach of lease may be collected. Stripped of detail, plaintiffs' real quarrel is with the interpretation placed on paragraph 25 by the trial court. These rules are here applicable:

'When a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the finding.' (E. K. Wood Lumber Co. v. Higgins, 54 Cal.2d 91, 94, 4 Cal.Rptr. 523, 351 P.2d 795; Brewer v. Simpson, 53 Cal.2d 567, 583, 2 Cal.Rptr. 609, 616, 349 P.2d 289, 296; Primm v. Primm, 46 Cal.2d 690, 693, 299 P.2d 231.)

'When there is substantial evidence or any inference to be drawn from the evidence to support the findings of the trial court, an appellate court will not make determinations of factual issues contrary to those made by the trier of fact. [Citations.]' (Smith v. Bull, 50 Cal.2d 294, 306, 325 P.2d 463; Ambriz v. Petrolane Ltd., 49 Cal.2d 470, 477, 319 P.2d 1.)

'In reviewing the evidence, all conflicts must be resolved in...