Karbelnig v. Brothwell

• Decision Date: 18 August 1966
• Citation: Karbelnig v. Brothwell, 244 Cal.App.2d 333, 53 Cal.Rptr. 335 (Cal. App. 1966)
• Court: California Court of Appeals
• Parties: Ben A. KARBELNIG et al., Plaintiffs and Appellants, v. Lester Leroy BROTHWELL, Ruth V. Brothwell, Dr. I. Burbach, O. L. Holmes, doing business as Temple Air Convalescent Sanitarium, Defendants and Respondents. Civ. 28735.

Page 335

53 Cal.Rptr. 335

244 Cal.App.2d 333

Ben A. KARBELNIG et al., Plaintiffs and Appellants, v. Lester Leroy BROTHWELL, Ruth V. Brothwell, Dr. I. Burbach, O. L. Holmes, doing business as Temple Air Convalescent Sanitarium, Defendants and Respondents.

Civ. 28735.

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

Aug. 18, 1966.

Gyler & Gottlieb, Long Beach, for appellants.

Alexander H. Schullman and Herbert E. Selwyn, Los Angeles, for respondents.

FRAMPTON, Justice pro tem. ^*

This is an appeal from a judgment rendered in an action seeking declaratory relief.

The plaintiffs were doing business under the fictitious name and style of Medi-Sanco and were the successors in interest and assignees of a general partnership doing business under the fictitious name and style of Developments Unlimited.

On December 28, 1960, the plaintiffs' assignor, hereinafter referred to as the lessor, entered into a written lease contract with the defendants Lester Leroy Brothwell and Ruth V. Brothwell, hereinafter referred to as the lessees, for the rental of the premises situated at number 11135 West Hondo Parkway in the city of Temple City, for a term of fifteen years commencing on April 1, 1961, for a total rental of $612,000.

The lease contract provided in paragraph 22 thereof as follows: 'ASSIGNMENT OR SUBLETTING. Lessee shall not assign this lease, or any interest therein, and shall not sublet the said premises or any part thereof, or any right or privilege appurtenant thereto, or suffer any other person (the agents and servants of Lessee excepted) to occupy or use the said premises, or any portion thereof, without the written consent of Lessor first had and obtained, and a consent to one assignment, subletting, occupation, or use by another person shall not be deemed to be a consent to any subsequent assignment, subletting, occupation, or use by another person. Any such assignment or subletting without such consent shall be void, and shall, at the option of Lessor, terminate this lease. This lease shall not, nor shall any interest therein, be assignable, as to the interest of Lessee, by operation of law, without the written consent of Lessor. Any change in the ownership of 50% Or more of the capital stock of Lessee shall be deemed an assignment prohibited hereby.'

Paragraph 27 of the lease contract provided as follows: 'WAIVER. The waiver by Lessor of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant, or condition or any subsequent breach of the same or any other term, covenant, or condition herein contained. The subsequent acceptance of rent hereunder by Lessor shall not be deemed to be a waiver of any preceding breach by Lessee of any term, covenant, or condition of this lease, other than the failure of Lessee to pay the particular rental so accepted, regardless of Lessor's knowledge of such preceding breach at the time of acceptance of such rent.'

At the pre-trial hearing it was agreed, amongst other things, and incorporated in the pre-trial order, that subsequent to the acquisition of the real property by the plaintiffs and on or about December 10, 1962, the lessee informed the plaintiffs that they desired an assignment of their interest as lessees in the premises to the defendants Dr. I. Urbach (named in the title as Burbach) and O. L. Holmes and that the plaintiffs immediately thereafter notified the lessees that they would not consent to the assignment. It was further agreed at pre-trial and incorporated in the pretrial order that on or about January 15, 1963, the defendants Brothwell sold 49% Of their interest in the sanitarium, which was being operated by the lessees upon the leased premises, to the defendants Urbach and Holmes; that the defendants Brothwell and Urbach and Holmes had entered into a limited partnership agreement in connection with the acquisition of the 49% Interest and that such agreement was on record in the Office of the County Recorder of Los Angeles County; that the four above named defendants had signed a certificate to do business under the fictitious name and style of Temple Aire Sanitarium, had advertised the same and had filed it in the Office of the County Clerk of Los Angeles County, to be effective as of January 15, 1963; that the plaintiffs had regularly received the rent set forth in the lease contract from the defendants but that the plaintiffs had informed the defendants that the acceptance of the rental payments was in no way to be construed as an acceptance or waiver of the alleged violation of the lease contract.

The transcript of the oral proceedings had at the trial disclosed that the plaintiff Karbelnig, who appeared to act as the spokesman and agent of the other plaintiffs, first offered to purchase the interest of the Brothwells in the subject property thinking that they owned it. After learning that the Brothwells were lessees, Karbelnig offered to purchase their leasehold interest but these negotiations failed. After the negotiations with the Brothwells failed the plaintiffs purchased the property from the owner and lessor, subject to the lease.

Upon the close of the escrow relating to the purchase of the property, about November 10, 1962, Mr. Young, of Developments Unlimited, and Karbelnig called upon Mr. Brothwell and informed him that Medi-Sanco was the new owner of the property. Brothwell stated that we was pleased that they had taken over but he really did not care because he had sold his interest to someone else; he did not say to whom he had sold.

On December 10, 1962, a letter was sent by counsel for the Brothwells to Medi-Sanco and Karbelnig, enclosing a written consent to the assignment of the lease and requesting that the assignment be executed. The written consent of assignment provided that the defendants Urbach and Holmes were to assume all of the obligations under the lease it further provided that the Brothwells should remain liable under its terms. The written assignment and request were accompanied by financial statements of both Holmes and Urbach.

Karbelnig arranged for a meeting in his office on December 27, 1962. On this date, Holmes, Urbach, the attorney for the Brothwells, and Mallett, a real estate broker, met with Karbelnig and a discussion was had wherein Karbelnig was asked to sign the consent to the transfer of the lease. Karbelnig refused to sign the consent whereupon 'They said they were going to go ahead without it, without our consent, and just go right ahead and make the assignment.'

On February 14, 1963, Karbelnig visited the sanitarium premises where he met Holmes. Karbelnig asked Holmes where Brothwell was and what was going on, whereupon Holmes advised him that Brothwell was out and that Holmes had purchased a 50% Interest in the facility.

On January 4, 1963, Karbelnig addressed a letter to Brothwell in which he stated, in substance, that he had conferred with his associates and their attorney and that in reference to paragraph 22 of the lease 'We wish to place you on notice that any agreements that you execute will constitute a breach of the lease, and we will be forced to take action.'

On February 18, 1963, counsel for the plaintiffs sent a letter addressed to the Temple Aire Convalescent Sanitarium stating, in substance, that Karbelnig on behalf of Medi-Sanco, had advised them that Holmes had stated to Karbelnig that the former was acquiring a 50% Interest in the sanitarium. The letter directed attention to paragraph 22 of the lease and stated, in substance, that any such change, without first securing the written consent of Medi-Sanco, would be void. The letter continued that 'if you pursue such assigning * * * we will be obligated to advise you of the fact that such actions have constituted the termination of the Lease with the Lessor and we will then proceed to secure the premises from you.'

On February 22, 1963, counsel for the defendants, in response to the letter of February 18, 1963, wrote to plaintiffs' counsel advising them that Holmes had only acquired a 49% Interest in the sanitarium, and stating further that 'This is strictly in accord with Paragraph XXII of said Lease.'

Commencing with the month of March 1963 and down to the time of the trial (March 23, 1964), the rental under the terms of the lease, in the sum of $3400 per month, was paid and was accepted by the plaintiffs. The rent was paid each month by a check signed by the defendant Holmes. Upon the receipt of each check the plaintiffs wrote a letter addressed to Mr. Brothwell and signed by Karbelnig stating, except for the month shown: 'Dear Mr. Brothwell: We (Medi-Sanco) are accepting a check for $3,400.00 which is the rental payment for March in you behalf pursuant to your lease.

'The acceptance of said rental payment is in no way to be construed as an acceptance or waiver to an assignment or transfer or sub-leasing of the lease which we have with you.'

The plaintiffs filed their action on April 10, 1963. The complaint bears the caption 'COMPLAINT FOR DECLARATORY RELIEF.' The allegations thereof set forth the relationship of the parties, the provisions of the lease and in particular those provisions against the assignment of it, the request for a consent to assignment and the refusal of such a consent. It is there alleged that the defendant lessees have attempted to assign a 49% Interest in and to the sanitarium and the lease contract to the defendant Holmes and have attempted other similar assignments, and that such attempted assignments constitute a breach of the lease contract. The complaint further alleges that the plaintiffs have elected to terminate and void the lease contract in accordance with the provisions of paragraph 22 thereof, and have notified the defendants of their election; that the defendants claim that they have not breached the terms of the lease contract and that a controversy exists as to the interpretation of paragraph...