Kilmer v. Carter

• Decision Date: 17 June 1969
• Citation: 274 Cal.App.2d 81,78 Cal.Rptr. 800
• Parties: Eugene D. KILMER, Plaintiff and Appellant, v. Joseph R. CARTER, Jr., and Roger C. Campbell, individually and doing business as Carter & Campbell, a copartnership, Defendants and Respondents. Civ. 32590.
• Court: California Court of Appeals Court of Appeals

Page 800

78 Cal.Rptr. 800

274 Cal.App.2d 81

Eugene D. KILMER, Plaintiff and Appellant, v. Joseph R. CARTER, Jr., and Roger C. Campbell, individually and doing business as Carter & Campbell, a copartnership, Defendants and Respondents.

Civ. 32590.

Court of Appeal, Second District, Division 5, California.

June 17, 1969.

Hearing Denied Aug. 13, 1969.

Milton Zerin and Morton Minikes, Beverly Hills, for plaintiff and appellant.

Joseph R. Carter, Jr., Culver City, in propria persona and Lewis D. Jones, Hawthorne, for defendant and respondent Carter & Campbell, a copartnership.

No appearance for Roger C. Campbell, individually.

KAUS, Presiding Justice.

Plaintiff appeals from a judgment based upon findings and conclusions to the effect that although the defendant attorneys were negligent in failing to file an opening brief in a previous appeal, thereby causing it to be dismissed under rule 17(a) of the California Rules of Court, plaintiff was not damaged because he failed to prove that the appeal would have been won.

We are thus called upon to determine whether the trial court in the case at bar correctly decided that plaintiff did not 'prove that the appeal * * * would have resulted in a reversal.' (Pete v. Henderson, 124 Cal.App.2d 487, 491, 269 P.2d 78, 80, 45 A.L.R.2d 58.) It is obviously necessary to determine what the first appeal would have been about.

Plaintiff Kilmer was one of the lessees of a ground lease signed June 1, 1961. The lessor was one Severance. The lease period was thirty years starting April 1, 1961. The lease provided for a graduated rental for the first fifteen years, rising in increments from $250.00 per month for the first thirty months to $1,500.00 per month for the last thirty months of the fifteen year period. Thereafter the monthly rental was to be the greater of two figures: $1,000.00 per month or thirty percent of the gross income derived from the use of the property. It was contemplated that the lessees would develop the property into a trailer park. The lease also contained a provision reading as follows: 'Lessees agree, concurrently with the execution of this lease, to assume the present existing encumbrance of $25,000.00, which is payable at the rate of $146.00 or more per month and shall make all payments thereon, including prepayment penalties, direct to Lessor, who agrees to forward such payments directly to the mortgagee. Due date of note is Feb. 1, 1964. Lessees have read and examined all of the terms and provisions of the note and deed of trust constituting such encumbrance, (and agree that the assumption of said encumbrance and the prompt payment of the note are and shall be a covenant and obligation of Lessees which shall be independent of and survive the termination or cancellation of this lease, by whatever cause; and upon payment of the note,) title to said property shall thereupon vest in Lessor in fee, subject only to this lease and subordinate only to the trailer park construction loan provided for hereinbelow.'

The two parentheses shown are inserted in ink, as is the comma just before the first parenthesis. Along the margin of the quoted paragraph the following notation appears: 'See letter dated 6--1--61.' This is followed by the initials of the lessors and the lessees. Pertinent parts of the letter dated June 1, 1961, are copied in the footnote. ¹

The lessees ran into zoning problems with respect to the trailer park development. Apparently they felt that Severance violated a covenant of the lease in opposing a rezoning which became necessary because of new zoning ordinances. It was eventually resolved at the first trial that Severance did not violate any covenant and that issue is out of the way. In any event, on August 1, 1962, the lessees failed to pay the rent then due. On August 15 Severance served a 'Notice to Pay Rent or Quit' which also declared a forfeiture of the lease. The rent claimed to be overdue consisted of the basic rental of $250.00 per month, plus the $146.00 necessary to service the trust deed. The lessees did not vacate the premises and had not done so when the subsequent unlawful detainer action went to trial.

Two lawsuits were filed as a result of these disagreements. Plaintiff Kilmer and one Horn, the other lessee, filed an action for declaratory relief on September 4, 1962. Essentially they wanted a declaration that Severance had breached a covenant to assist them in connection with the rezoning and that they themselves were under no obligation under the lease until Severance was more cooperative. Severance answered and counterclaimed. One of his counterclaims was for the sum of $25,000.00, the unpaid balance of the note. Another was for the August rent of $396.00.

In the meanwhile, however, Severance himself had filed an unlawful detainer action in which he sued for:

1. The August rent;

2. $85.00 per day damages for the lessees' continued holding over; and

3. $25,000.00 on account of the unpaid note.

The two matters were eventually consolidated for trial. Severance did very well indeed. The judgment in the declaratory relief action made various declarations adverse to Kilmer and Horn. The findings also recite that Severance was entitled to recover $10,000.00, rather than $25,000.00, on account of the unpaid note, but concluded that on such award should be made in the declaratory relief judgment, because it was being made concurrently in the judgment in the unlawful detainer action.

The judgment in that action found the lessees guilty of unlawful detainer, restored Severance to possession, declared the lease forfeited, awarded damages in the sum of $396.00 for rent, $21,360.00 for the unlawful detainer and $10,000.00 based on the letter agreement.

The record on appeal was filed with this court on August 19, 1964, but on October 23, 1964, the appeal was dismissed, no opening brief having been filed.

The argument that plaintiff would have obtained some benefit from an appeal in the two prior actions is predicated on the following points:

1. The award of $10,000.00 would have been set aside as a matter of law because:

a. once Severance declared the lease forfeited, he could not enforce it to the extent of exacting the $10,000.00, declared in the June 1, 1961, letter to be a 'condition precedent' to termination;

b. such payment was, by the terms of the contract, due only if the lessees cancelled or terminated the lease;

c. the award of $10,000.00 in addition to the damages for holding over was a 'double recovery'; and

d. the enforcement of the $10,000.00 payment amounted to an enforcement of liquidated damages unauthorized by section 1671 of the Civil Code.

2. The expert evidence did not support the award of damages in the sum of $21,360.00 because Severance's expert never testified that the land in question was rentable. ²

I.

We have come to the conclusion that had the appeal in the Severance litigation been pursued, there would have been no reversal with respect to the $10,000.00 item, but rather a certain amount of puzzlement why, in view of the issues and proof in the Severance action, the amount was not $25,000.00.

The record does not show how much was due on the $250,000.00 note. ³ No extrinsic evidence concerning the meaning of the interlocking provisions of the lease and the June 1, 1961, letter was offered at the Severance trial. The Court of Appeal would have had nothing to guide it except the documents themselves. The most plausible explanation of the intent of the parties appears to be this: the $25,000.00 payment the lessees were to make on Severance's behalf when the note became due was in the nature of a bonus for the execution of the lease. The reference to 'prepayment penalties' means that if lessees wanted to incur them, they could pay off the bonus as soon as they wished to do so. As long as they did not, it was their duty to service the note and trust deed by paying the monthly interest as rent.

The letter of June 1, 1961, is of course, a puzzler. The lease itself has no escape clause for the lessees' benefit. Were there such a clause, the letter could be construed to mean that the lessees could cancel upon payment of $10,000.00 without further duty to pay the note. The letter itself could be read as implying such a power. A third alternative is the one which apparently appealed to the judge who presided at the Severance trial: that the $10,000.00 payment became due even when Severance, in effect, terminated the lease.

We agree with plaintiff's present counsel that this interpretation does some violence to the language of the letter which makes the $10,000.00 payment a 'condition precedent' to termination. This implies that the payment is something the lessees had to make before they could enforce a termination, not something they owed when Severance pushed a forfeiture down their throats. But where does this leave plaintiff? The lease in the clearest possible language states that the obligation to pay the note was independent of and survived...