Lack v. Western Loan & Building Co., 10158.

• Decision Date: 21 May 1943
• Docket Number: No. 10158.,10158.
• Citation: 134 F.2d 1017
• Parties: LACK v. WESTERN LOAN & BUILDING CO. et al.
• Court: U.S. Court of Appeals — Ninth Circuit

134 F.2d 1017 (1943)

LACK v. WESTERN LOAN & BUILDING CO. et al.

No. 10158.

Circuit Court of Appeals, Ninth Circuit.

April 9, 1943.

Rehearing Denied May 21, 1943.

John L. Schaefer and Henry S. Dottenheim, both of Los Angeles, Cal. (Henry S. Dottenheim, of Los Angeles, Cal., of counsel), for appellant.

George E. Lindelof, Jr., of Los Angeles, Cal., and H. L. Mulliner, of Salt Lake City, Utah, for appellee, Western Loan & Building Co.

Before MATHEWS, STEPHENS, and HEALY, Circuit Judges.

MATHEWS, Circuit Judge.

In the District Court of the United States for the Southern District of California, Western Loan and Building Company, a Utah corporation, hereafter called Western, brought an action against F. S. Lack, a citizen of California, and Pearl Assurance Company, Limited, a British corporation, hereafter called Pearl. Western prayed judgment against Pearl for $28,067.87 and prayed judgment against Lack quieting Western's title to the $28,067.87. Lack answered, praying judgment against Western for $28,067.87. Pearl deposited $28,067.87 in the registry of the court, there to abide the judgment of the court, and filed an answer stating that it had done so and praying to be discharged from further liability.¹

In a State court of California, Lack brought an action against Western for specific performance of a contract between him and Western or (in lieu thereof) damages in the sum of $100,217.87, and for such other relief as might seem meet and just. On petition of Western, this action was removed from the State court to the District Court of the United States for the Southern District of California. There Western answered, praying that Lack take nothing, and that Western have judgment quieting its title to a building called the Hotel Dunlack in Brawley, California, the land on which the building stood, and all furniture, furnishings, fixtures and equipment² located in the building.

The actions were consolidated, trial was had, findings of fact and conclusions of law were made and filed, and judgment was entered (1) discharging Pearl from further liability, (2) awarding the $28,067.87 to Western, (3) quieting Lack's title to all furniture, furnishings, linens, dishes and silver located in the building and to all restaurant equipment located in and not attached to the building, and (4) quieting Western's title to all other property, real and personal, hereinabove mentioned. From parts (2) and (4) of the judgment Lack has appealed. Parts (1) and (3) are not appealed from. The facts are as follows:

Prior to September 6, 1934, Western became the owner of the land and building hereinabove mentioned, and Lack became the owner of the furniture, furnishings, liens, dishes, silver and restaurant equipment located in the building. On September 6, 1934, Lack wrote Western a letter reading, in part, as follows:

"For your consideration, I respectfully submit the following offer for the Hotel Dunlack property, located in Brawley, California: The total purchase price to be $35,000.00, and to be paid as follows: Interest to be six per cent per annum, commencing January 1st, 1935, payable quarterly for the first year. Thereafter, in addition to the interest, $900.00 to be paid quarterly on the principal, until the full purchase price is paid. That is, principal payments shall commence January 1st, 1936. All taxes and assessments on the property to be paid by me, before delinquency. As a guarantee that all payments, outlined above, will be made promptly, I will give you bill of sale for all the furniture and fixtures now contained in the said property, free and clear of all encumbrance. * * *"

On October 30, 1934, Lack executed a bill of sale transferring to Western all furniture, furnishings, linens, dishes, silver and restaurant equipment then located or thereafter to be placed in the building. On November 10, 1934, Western and Lack executed a contract whereby Western leased all the property³ to Lack for the term of six years commencing January 1, 1935, and ending December 31, 1940, and granted him an option to purchase the property for $35,000. This was the contract of which Lack, in his action against Western, sought specific performance. The contract provided:

"The rent for the premises hereunder demised, which rent the Lessor Western hereby reserves and which rent the Lessee Lack hereby covenants to pay shall be payable as follows:

"The Lessee agrees to pay and the Lessor agrees to accept the following sums: Five Hundred Twenty-five and no/100 Dollars ($525.00)⁴ on January 1, 1935; Five Hundred Twenty-five and no/100 Dollars ($525.00) on April 1, 1935; Five Hundred Twenty-five and no/100 Dollars ($525.00) on July 1, 1935; Five Hundred Twenty-five and no/100 ($525.00) on October 1, 1935; Fourteen hundred and no/100 Dollars ($1400.00)⁵ on January 1, 1936, and quarterly thereafter the sum of Eight Hundred Seventy-five and no/100 Dollars ($875.00) plus interest at the rate of six per cent (6%) per annum on the balance remaining under this lease;⁶ said rents falling due on the first day of January, April, July and October of each year until the expiration of this lease.

"Said rent is to be paid * * * to the Lessor at 1005 South Hill Street, Los Angeles, California, or at such other place as the Lessor may from time to time designate by written notice to the Lessee.

"In addition to the payments aforesaid, the Lessee agrees, in order to take care of the taxes herein agreed, to be paid by him, to pay or deposit with Lessor monthly, a sufficient amount so that the aggregate thereof on the date when taxes become due, shall be sufficient to pay the taxes on said premises and properties when due, * * *.

"The Lessee further covenants and agrees to keep said premises and properties, including but not limited to the roof, windows and side walls, in good order and repair during the term hereof. * * *

"All alterations, repairs, additions or improvements made upon the demised premises by the Lessee shall be the property of the Lessor and shall remain upon and be surrendered with the demised premises upon the expiration of this lease, * * *.

"If the demised premises be damaged by fire or other casualty so that they cannot be repaired or restored within twenty (20) working days after possession is given to the Lessor for that purpose, then and in that event this lease shall terminate and the parties hereto shall be released from all obligations hereunder thereafter accruing, but if such damage can be repaired within said period of twenty (20) days then and in that event the Lessor shall repair said demised premises at its own cost and expense, provided that labor and materials can be obtained at the then prevailing rates, reasonable allowance being made for any delay from strikes or other causes beyond the control of the Lessor. * * *

"The Lessee covenants and agrees to keep at all times during the term hereof all buildings and improvements, which are now or shall hereafter be erected upon said premises and the furniture and furnishings therein, insured against loss or damage by fire in an amount satisfactory to the Lessor, and such other insurance as the parties may agree upon, in some insurance company or companies approved by the Lessor, * * * and to pay all premiums upon such insurance promptly when due, the policies for all of which insurance shall be satisfactory in form and substance to the Lessor. All of said policies of insurance shall provide that loss thereunder shall be payable to the Lessor and shall be delivered to and held by the Lessor. The Lessor shall have full power to adjust, collect, receipt for and compromise any claims under any of said policies of insurance. * * *

"The Lessee further covenants and agrees to promptly pay or cause to be paid before delinquency all taxes, charges and assessments levied or assessed or payable on or before January 1, 1935, upon or against said demised premises and properties, or any part thereof, or any interest of the Lessor or the Lessee therein, * * * and to keep said demised properties free and clear of all claims, or encumbrances affecting or purporting to affect the title. * * *

"At any time during the term hereof, provided that the Lessee shall not be in default in the performance of any promise, covenant or condition herein contained provided to be performed by the Lessee, Lessee is hereby granted the option to purchase said demised premises and properties from the Lessor for a purchase price of Thirty-five Thousand and no/100 Dollars ($35,000.00), together with interest thereon at the rate of six per cent (6%) per annum from the 1st day of January, 1936, to the date upon which the Lessee agrees to purchase said property in accordance with the terms of the said option. Said option shall be exercised by the delivery of written notice of the exercise thereof to the Lessor at...