Lyke v. Pursley

• Decision Date: 17 June 1959
• Citation: Lyke v. Pursley, 340 P.2d 709, 171 Cal.App.2d 417 (Cal. App. 1959)
• Parties: John LYKE and Naomi Lyke, Plaintiffs, Cross-Defendants and Appellants, v. C. E. PURSLEY and Louie Zeravica, Defend ants, Cross-Complainants and Respondents. Civ. 5680.
• Court: California Court of Appeals

Page 709

340 P.2d 709

171 Cal.App.2d 417

John LYKE and Naomi Lyke, Plaintiffs, Cross-Defendants and Appellants, v.C. E. PURSLEY and Louie Zeravica, Defend ants, Cross-Complainants and Respondents.

Civ. 5680.

District Court of Appeal, Fourth District, California.

June 17, 1959.

Maas & Nairn, Bakersfield, for appellants.

Schwabacher & Cosgrove, Lancaster, for respondents.

STONE, Justice pro tem.

This is an appeal from a judgment in favor of defendants-respondents and against plaintiffs-appellants for balance of rent due for use of motel property.On August 9, 1955, respondents obtained a permit to construct a motel on property located near Rosamond in Kern county.While construction was in progress during January, 1956, appellants discussed leasing the premises from respondents.Approximately a month later all parties agreed upon the conditions of a proposed lease for a five year term.As the improvements had not been completed, the beginning date of the five year term was not inserted in the lease.This was the situation on March 5, 1956, when appellants moved onto the property and paid respondents $3,000 advance rental.The lease provided no forfeiture clause, but did state that the $3,000 covered the rent for the last two months.The record indicates that respondents were in need of money to complete construction of the improvements and requested this advance payment of $3,000 before the lease had been completely executed.Beginning on March 5th, appellants lived on the property and helped with the construction work.Late in March or early April the parties inserted March 20, 1956, in the lease as the beginning date of the five year term.This date was used because that was when the first room was rented.Upon backdating the beginning of the term, the lease was completely executed.

Although appellants rented some rooms beginning March 20th, the motel was only partially completed, and on May 20, 1956, an inspector for the Division of Housing found the premises incomplete and improperly constructed in ten specific respects.Written notice of the defects and an order to correct them was served on respondents and appellants on June 6.The notice contained a statement that no permit to occupy the premises had been issued.By July 16, 1956, the defects had not been corrected and appellants refused to pay and more rent.Whereupon, respondents served them with a three-day notice to pay rent or quit the premises.Appellants countered on July 18 with a notice of rescission of the lease agreement upon the ground of failure of consideration.Respondents finally completed the premises and secured a license to occupy the same for motel purposes on August 14, 1956.

Appellants' first assignment of error if that the trial court erred in denying them damages by reason of respondents' alleged fraud and misrepresentation.The gist of appellants' contention is that respondents agreed to have the motel completed at the time appellants took possession of the property.However, the evidence discloses that appellants were well aware of the condition of the property and the motel buildings when they went into possession.They viewed the premises when they negotiated for the lease in January, 1956, and also when the terms of the lease were verbally agreed upon in February, 1956.Most significant is the fact that they occupied the property for several weeks before executing the lease.Hence, there is ample evidence of a substantial nature to support the trial court's finding that appellants were not the victims of fraud or misrepresentation.An appellate court will not attempt to reweigh the evidence under such a state of the record.Berniker v. Berniker, 30 Cal.2d 439, 182 P.2d 557;In re Estate of Bristol, 23 Cal.2d 221, 223, 143 P.2d 689.

Appellants contend they had the right to rescind the lease because it was an illegal agreement.Their argument is that the state law, section 18600 et seq. of the Health and Safety Code, prohibits the use or lease of a motel without the approval of and licensing by the Division of Housing of the State of California.The undisputed evidence is that respondents secured a permit to construct a motel and that the premises were not completed or approved nor licensed for occupancy until August 14, 1956.Thus, the operation of the motel pursuant to the lease from March 20, 1956, to July 18, 1956, was contrary to law, as neither lessors nor lessees had obtained a permit or license.Not all contracts which involve an illegal or unlicensed undertaking are unenforceable.Norwood v. Judd, 93 Cal.App.2d 276, 209 P.2d 24.The court must consider the nature of the undertaking in the light of the licensing statute.If the purpose of the regulation is primarily for public protection, public policy requires that contracts within the purview of the statute between unlicensed persons must be held to be unenforceable.Loving & Evans v. Blick, 33 Cal.2d 603, 607, 204 P.2d 23;Lewis & Queen v. N. M. Ball Sons, 48 Cal.2d 141, 150, 308 P.2d 713.It is not necessary that the licensing statute contain a provision that contracts between unlicensed persons are unenforceable.The court said in Orlinoff v. Campbell, 91 Cal.App.2d 382, at page 385, 205 P.2d 67, at page 69:

'The Highway Carriers' Act is clearly one for regulation of the industry and not for revenue alone.There is no provision in the act that contracts made by unlicensed carriers are void or unenforceable.The question whether the courts should impose that additional penalty seems not to have been decided in any reported case.As we shall see, the broad basis for the doctrine that contracts of certain unlicensed persons are unenforceable is that the courts should not lend their aid to the enforcement of contracts where perfomance would tend to deprive the public of the benefits of the regulatory measures.'

A permit or license to occupy or lease a motel quite obviously is required for the protection of the public.Section 18600 et seq. of the Health and Safety Code places the duty of enforcing the provisions relating to motels under the jurisdiction of the Division of Housing.The permit for construction requires the filing of the proposed plans and specifications for approval, and they must meet certain health and sanitary requirements.The final permit to occupy or lease the premises issues only when those conditions have been fulfilled.In this case the application for permit to construct was approved August 9, 1955, and contained a written warning that the document was simply a permit to start construction, and that a separate permit or license was required before the premises could be occupied.The respondents gave...