Maron v. Howard

• Citation: 258 Cal.App.2d 473,66 Cal.Rptr. 70
• Court: California Court of Appeals
• Decision Date: 31 January 1968
• Parties: Erwin P. MARON, Plaintiff, Appellant and Respondent, v. L. R. HOWARD, Martin V. Smith and Martha K. Smith, Defendants, Appellants and Respondents. Civ. 30968.

Page 70

66 Cal.Rptr. 70

258 Cal.App.2d 473

Erwin P. MARON, Plaintiff, Appellant and Respondent, v. L. R. HOWARD, Martin V. Smith and Martha K. Smith, Defendants, Appellants and Respondents.

Civ. 30968.

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

Jan. 31, 1968.

Hearing Denied March 28, 1968.

Gustafson & Cohen, Stanley E. Cohen and Theodore J. England, Oxnard, for defendants, appellants and respondents.

Dixon & Adams and James E. Dixon, Ventura, for plaintiff, appellant and respondent.

The Facts

FRAMPTON, ^* Associate Justice Pro Tem.

The defendant Howard was the owner of lots 1 through 16 of Industrial Underpass Tract of Ventura County. The combined area of these lots was approximately nine and one-half acres. For convenience these lots will be referred to as the Howard parcel. On or about January 21, 1960, the defendant Howard leased lots 12 and 13 of the above parcel to the plaintiff Erwin P. Maron. For convenience these lots will be referred to as the Maron parcel. The tenancy under this lease commenced on January 1, 1960, and was for a term of five years with an option to renew for an additional five years. In addition, the lease contained the following clause: 'Further if during the term hereof or any renewal thereof, Lessor desires to sell the demised premises, Lessee shall have the option, for a period of five (5) days, after written notification from Lessor, to meet the terms and conditions of any bona fide offer received by Lessor for such sale. If Lessee fails to accept the said terms and conditions of sale during the said five (5) day period, the option shall be of no further force and effect, and Lessor shall be free thereafter to sell such premises to third persons.' Maron exercised his option to renew the lease for the additional term of five years.

Prior to the time that defendant Martin V. Smith acquired the Howard parcel he owned about forty acres called the Wagon Wheel Junction area, which acreage was adjacent to the Howard parcel. The land had industrial, light manufacturing, trailer park, bowling alley, restaurants, and various types of industries on it. At the time Smith acquired the Howard parcel, there were two other parcels of land in the area not then owned by Smith. These have since been acquired by him. Smith wanted to create a restaurant row on Wagon Wheel Road on which the Maron parcel fronts. Smith had frequently but unsuccessfully sought to purchase the Howard parcel from Howard.

About January 1961, Smith again began negotiating with Howard for the purchase of the Howard parcel. Terms were finally agreed upon and an escrow was opened on June 1, 1961. Both Howard and Smith, at the time of escrow, were aware of the first refusal provision in plaintiff's lease, and by letter dated June 13, 1961, the escrow instructions were amended as follows: 'The Smiths are aware that certain of the leases covering the land include rights of the Lessees to purchase the property under certain circumstances after receiving notice of a proposed sale. The Smiths desire that such notices not be given to the Lessees and have agreed to take title subject to said leases including, but without limitation, any rights the tenants might have to purchase the property and further agree to indemnify Howards against any loss they might suffer by reason of their failure to give such notices.'

The escrow closed on September 30, 1961, and on October 12, 1961, plaintiff was notified by letter advising him to pay rent to Smith since Smith was the new owner. Plaintiff was not advised of the terms and conditions of the sale and was not offered an opportunity to purchase the Maron parcel upon any terms or conditions. Smith took title to the Maron parcel subject to the right of first refusal, as provided in the lease, on the part of plaintiff.

The 16 lots in the Howard parcel were not uniformly developed. Some were improved and some were not; some were leased and some were not. About one-half of the parcel was devoted to the manufacture and storage of concrete blocks. It was stipulated at the trial 'that the various parcels of land within the nine and a half acres known as the Howard parcel as shown on the diagram, which is marked Plaintiff's Exhibit 2, have varying values; that some of the parcels are improved with buildings, some buildings of which are more valuable than other buildings which may be on other parcels in the same nine and a half acres, and some parcels have no buildings on them.' In the sale of the Howard parcel the price paid was established on the basis of a sale and purchase of the entire parcel, and there was no breakdown or allocation of values, or terms and conditions to be applied to individual lots or buildings, or parcels consisting of one or more lots and buildings situated thereon. The Maron parcel was 100 feet by 140 feet in dimension and contained 14,000 square feet which placed its size at about 1/27th of the size of the Howard parcel. The Howard parcel was sold to Smith for the sum of $461,000, with a down payment of $30,000, and monthly payments of $5,000 until October 10, 1967, at which time the balance became due and payable.

On May 8, 1962, plaintiff wrote a letter to Howard in which he advised Howard of his intention to exercise the right of first refusal. A carbon copy of this letter was sent to Smith. Smith responded that the property was not for sale at any price. On July 10, 1962, plaintiff filed suit in his name alone wherein he sought judgment to compel the defendants to sell the Maron parcel to plaintiff on the same terms and conditions that such parcel was sold to the defendants Smith, and at a price to be determined by ascertaining the value of the Maron parcel as a part of the Howard parcel, or in the alternative that the defendants be ordered to sell the Howard parcel to plaintiff on the same terms and conditions as applied to the sale of such parcel to the defendants Smith, or in the alternative for damages in the sum of $58,000. Plaintiff also sought, as a further alternative, a decree setting aside the sale and restoring the parties to their original positions prior to sale.

After the trial and on April 13, 1966, judgment was entered as follows: '* * * 2. Within 30 days from the date this Judgment becomes final, the parties are ordered to open an escrow at an escrow company agreed on by the parties; but if no agreement thereon is reached, then at Title Insurance & Trust Company, to carry out the terms of the balance of this Judgment. The escrow shall provide for the usual division of escrow charges and expenses between buyer (Maron) and seller (Smith); and shall provide that seller furnish buyer with a policy of title insurance in standard form insuring buyer's title in accordance with this Judgment in the sum of $50,000.00.

'3. Within 45 days from the date this Judgment becomes final:

'A. Defendants Martha K. Smith and Martin V. Smith are ordered to cause a deed to be prepared and executed conveying title to the Maron parcel to plaintiff Erwin P. Maron from the present record owner of the property; said deed to be deposited with the escrow to be established hereunder, under instructions that it is to be delivered to Maron and recorded upon the payment by Maron of the sum of $50,000.00 within the time allowed by this Judgment.

'B. Defendant L. R. Howard is ordered to execute or cause to be executed a release of any security interest in his favor on the Maron parcel and to cause the same to be deposited in the same escrow mentioned in the preceeding (sic) paragraph under instructions that it is to be delivered and recorded if plaintiff pays the $50,000.00 purchase price for the property within the time provided in this Judgment.

'4. Defendants Martin V. Smith and Martha K. Smith are ordered to refrain from granting or conveying any interest of any kind in the Maron parcel to any other person, firm or corporation until such time as plaintiff either indicates his intention not to purchase the property or until his right to purchase the property under the terms of this Judgment has expired. Said defendants Martin V. Smith and Martha K. Smith are further ordered not to cause or allow any person or entity subject to their control to make any other conveyance (sic) of any interest in the Maron parcel during said period of time.

'5. Defendants Martin V. Smith and Martha K. Smith are ordered to remove all liens, encumbrances, easements or rights of any nature which would be clouds upon Maron's title, which have come into existence against the Maron parcel since the acquisition of title by defendants Smith; or, if the same cannot be removed because there is some dispute of their validity, to execute an agreement holding Maron harmless therefrom in all respects. If and to the extent that any such liens, encumbrances or similar clouds exist, an adequate amount is to be withheld from the purchase price to be paid by Maron and retained in escrow until such liens, encumbrances or clouds are removed; but if the same cannot be removed within a reasonable time, then the amount so withheld is to be returned to Maron and the purchase price of the property reduced accordingly.

'6. Plaintiff Erwin P. Maron shall have the right for a period of 60 days from the date this Judgment becomes final to purchase the Maron parcel for the sum of $50,000.00, said right to be exercised through the escrow to be established as heretofore mentioned in this Judgment; said money to be deposited in said escrow on or before the 60th day mentioned herein under escrow instructions requiring that it be paid over to defendants Martin V. Smith and Martha K. Smith upon the recording of a deed vesting title in Erwin P. Maron or his nominee free and clear of any encumbrances, except encumbrances placed thereon by Maron, and free and clear of any easements, covenants, conditions, or rights of any nature which had not attached to or been imposed upon the property prior to the...