Gilman v. Nemetz

• Citation: 94 A.L.R.2d 1332,21 Cal.Rptr. 317,203 Cal.App.2d 81
• Court: California Court of Appeals Court of Appeals
• Decision Date: 30 April 1962
• Parties: , 94 A.L.R.2d 1332 Joseph GILMAN, Plaintiff and Respondent, v. Leo NEMETZ, Defendant and Appellant. Civ. 25572.

Page 317

21 Cal.Rptr. 317

203 Cal.App.2d 81, 94 A.L.R.2d 1332

Joseph GILMAN, Plaintiff and Respondent, v. Leo NEMETZ, Defendant and Appellant.

Civ. 25572.

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

April 30, 1962.

Seltzer, Fried & Notrica, Los Angeles, for appellant.

Haig Kehiayan, Los Angeles, for respondent.

FORD, Justice.

The defendant has appealed from a judgment for damages in favor of the plaintiff. The controversy arose out of a transaction in which the defendant sold a retail liquor business to the plaintiff and executed a sublease of business premises.

The evidence which gave support to the findings of fact of the trial court will be stated. On May 24, 1948, the defendant Nemetz and another leased from persons named Greenhagen premises which were described as lots 149, 150 and 151 and were located on Figueroa Street near Century Boulevard in Los Angeles. A store building was on lot 151. The other lots were used for the parking of vehicles. The lease was for a period of ten years ending May 31, 1958, and the premises were to be used for the conduct of the business of a general retail food market.

Lot 152 adjoined the Greenhagen property and was on the southwest corner of Century Boulevard and Figueroa Street. It was improved with a store building. On October 1, 1953, the defendant Nemetz leased that property from Wilhemina Bardelli for a term of five years at a rental of $200 a month. Under the terms of the lease the lessee was given an option to renew the lease for an additional period of five years at a rent of not less than $250 per month. Thereafter the defendant used the buildings on the Greenhagen and Bardelli properties as though they constituted a single market building.

On November 5, 1953, as part of a transaction wherein the business other than the retail liquor business was sold by the defendant Nemetz, he and Earl Rosenthal and Aaron Frankel executed two instruments, each being entitled 'Sub-Store Lease.' In one the property involved was described as being 'Prenises [sic] occupying front and side of building No. 10001 on Figueroa Street.' The term was stated to be 'four years and seven months commencing on the 5th day of November, 1953, and ending on the 31st day of May, 1958.' It was further stated as follows: 'This lease is a Sub-Lease of a lease dated May 24, 1948 between * * * Greenhagen, Lessors, and Louis Friedkin and Leo Nemets [sic], Lessees, * * *.' In the other document executed on the same date it was stated that Nemetz leased 'that certain store Premises occupying Front and side of building No. 10001 on So. Figueroa Street' for a term of four years and eleven months commencing on November 5, 1953, and ending on May 30, 1958. Therein it was further stated as follows: 'This lease is a Sub-lease of a lease dated October 1, 1953, between Wilhelmina Bardelli, lessor, and Leo Nemetz, lessee, * * *.'

As a part of the transaction between the defendant Nemetz and Rosenthal and Frankel, it was agreed that Nemetz would pay to Rosenthal and Frankel rent in the amount of $150 per month for the premises of the liquor department.

About September 1954, the transaction in which the retail liquor business was sold by the defendant Nemetz to the plaintiff had its inception. In that month they executed a document entitled 'Sub-Store Lease' wherein it was provided that Nemetz did thereby lease to the plaintiff 'a portion of that certain store described as the area approximately 20 feet by 16 feet of the Southwest corner of the building together with a storage space in the rear portion of the building, which area is now being used as a liqour store in building No. 10001 on South Figueroa Street * * * to be used for the purpose of conducting and carrying on the business of dealing in the retail sale of beer, wine and alcoholic beverages generally * * * for the time which remains to Leo Nemetz by virtue of a Lease entered into between him as the Lessee and Wilhelmina Bardelli as the Lessor, which lease runs to October 1, 1958, together with an additional option of five (5) years at the same rental as provided herein, to-wit, $150.00 per month.' In addition to such amount of rent, the plaintiff was required to pay 'the sum of $15.00 per month for the use of the utilities.' It was further stated therein as follows: 'This lease is a Sub-Lease of a Lease dated October 1, 1953, between Wilhelmina Bardelli, Lessor, and Leo Nemetz, Lessee, and the terms of said Lease are made a part of this Sub-Lease * * *. Leo Nemetz hereby agrees that he will exercise his option to renew the Lease herein referred to.'

At the time the plaintiff purchased the liquor business from the defendant, the structures on lots 151 and 152 appear to have been arranged so as to be operated as a single market building. When the plaintiff first discussed the matter of the purchase with the defendant Nemetz, he understood that Nemetz was the 'master tenant.' The liquor store occupied the northeast portion of the building on lot 152, although it was described in the lease given to the plaintiff by the defendant as being '20 feet by 16 feet of the Southwest corner of the building.' The remaining portion of the building on lot 152 was used by the operators of the food market except that, at the back of the building, space in a garage was used by the defendant Nemetz for the storage of soft drink containers. In the southwest portion of the structure on lot 151 were spaces which were used by the defendant Nemetz for the storage of liquor and for office purposes in connection with his operation of the liquor business. The defendant represented to the plaintiff that all of such was being obtained by the plaintiff for use in the operation of the liquor business. In the area where the retail sales of liquor were made the storage space was inadequate. The plaintiff relied on the representation made by the defendant and would not have entered into the transaction without the inclusion of the designated space. Mr. Nemetz did not give him the Bardelli and Greenhagen leases to take to his attorney before the agreement was consummated. The plaintiff did not take possession of the premises until June 1955 because of proceedings with respect to the suspension of the liquor license. In the operation of the liquor business thereafter, the plaintiff used all of the space which the defendant had shown him. William Giragosian succeeded to the interests of Rosenthal and Frankel before the plaintiff took over the liquor store. The defendant told him to pay his rent to Mr. Giragosian and he did so. In the early part of 1958, the plaintiff told Mr. Giragosian that he desired to exercise his option so as to extend the term of his lease for a five-year period, but Mr. Giragosian denied that the plaintiff had any such right. Although requested by the plaintiff to do so, the defendant did not cause the option to be exercised. As a result of negotiations through his attorney, the plaintiff obtained a new lease from Mr. Giragosian, who then had leases from the owners of both parcels of property, but at a rent of $250 a month. The plaintiff's new sublease was for a term commencing on January 1, 1959, and ending on May 31, 1963.

With respect to the matter of damages, it was stipulated that the plaintiff was entitled to recover the sum of $165 which he had paid to Mr. Nemetz as the last month's rent under the lease of September 1954. In addition, it was stipulated that the plaintiff would testify that he paid attorney's fees in the amount of $500 for services relating to the difficulty with respect to the exercise of the option and relating to the negotiations which resulted in the new lease received from Mr. Giragosian.

The trial court found that the 'plaintiff was damaged in the sum of $165.00 prepaid rent deposit, $500.00 attorney fees, $4,845.00 additional rent, a total of $5,510.00.' Judgment was rendered in favor of the plaintiff for that amount.

The instrument of lease as to lot 152 between the defendant Nemetz and Rosenthal and Frankel, to whose interests Giragosian later succeeded, was a sublease and did not operate as an assignment of the Bardelli lease since it was for a term which expired several months before that set forth in the Bardelli lease. As stated in Barkhaus v. Producers' Fruit Co., 192 Cal. 200, at pages 205-206, 219 P. 435, at page 437: 'It is elementary that a sublease, in order to operate as an assignment, must transfer to the sublessee the entire term of the original lessee in the whole or some part of the demised premises; and, of course, the assignment of the term, in order to terminate the privity of estate between the assignor and the original lessor, must transfer his term in the entire premises. * * * The term to be transferred to his assignee by such a tenant must be for a period of time at least equal to the remainder of the term of the original lease.' (See also Ericksen v. Rhee, 181 Cal. 562, 567, 185 P. 847; Williams v. Hinckley, 109 Cal.App. 574, 575-576, 293 P. 644; Kendis v. Cohn, 90 Cal.App. 41, 58, 265 P. 844; Jordan v. Scott, 38 Cal.App. 739, 744-745, 177 P. 504.) Consequently, at the time of the transaction between the plaintiff and the defendant Nemetz, the latter still retained the right to exercise at the proper time the option for a renewal of the term under the Bardelli lease. Only Nemetz was entitled to exercise that option. (Ablett v. Clauson, 43 Cal.2d 280, 283, 272 P.2d 753.) Whether the defendant Nemetz retained any rights under the Greenhagen lease as to lots 149, 150 and 151 need not be discussed at this point because that lease had no provision with respect to a renewal of the term.

The instrument of lease between the plaintiff and defendant did not relate to all of lot 152 and, consequently, the right to exercise the option under the Bardelli lease remained in the defendant. But, as has been noted, he agreed with the plaintiff that he would 'exercise his option...