Masciotra v. Harlow
| Decision Date | 12 July 1951 |
| Court | California Court of Appeals Court of Appeals |
| Parties | MASCIOTRA v. HARLOW et al. Civ. 18358. |
Warner, Peracca & Cowan, of Los Angeles, for appellant.
Clifford A. Rohe, of Sherman Oaks, Harry J. Gross, Van Nuys, for respondent.
Plaintiff-lessor brought this action to recover damages for alleged nonperformance by defendant-lessee of covenants in a lease. This appeal is from a judgment in favor of defendants,.
In January, 1945, plaintiff as lessor leased to defendants certain premises on Ventura Boulevard in Los Angeles County for the purpose of operating a restaurant. The lease, which was for a term of five years from March 15, 1945, provided for a monthly rental of seven per cent of the gross receipts with a minimum of $250.
Defendants went into possession under the lease and began operating the cafe. They changed the name of the establishment to the 'Pump Room' and displayed a large sign with a pump painted thereon. A few months later defendant Loomis assigned his interest to defendant Harlow, who thereafter conducted the business alone. The venture was successful and for a period of three and a half years the average monthly rental payment to plaintiff was in excess of $1,000.
In November, 1948, Harlow opened a restaurant on property owned by him on Ventura Boulevard, about a mile and a half from that leased from plaintiff. He transferred from plaintiff's premises to the new location the name 'Pump Room', together with the painted sign of the pump and about two thirds of the personnel of the original Pump Room restaurant. The cafe on plaintiff's premises was changed to a Chinese restaurant. It was not successful and receipts from the business dropped. Rentals fell to some $300 and then to the minimum of $250 a month. A few months later Harlow changed the cafe back to an American restaurant but the business still did not prosper and plaintiff's rentals remained at the minimum.
On April 5, 1949, plaintiff sent defendant a notice of breach of the lease agreement but did not declare a forfeiture nor re-enter the premises or take possession until the term of the lease expired. By this action plaintiff seeks to recover damages for loss of rentals allegedly occasioned by the removal of the Pump Room restaurant prior to the expiration of the lease.
Paragraph 12 of the lease provides as follows: 'It is further expressly understood and agreed that it is in nowise the intention of the parties hereto to enter into or create a partnership or a joint venture in any shape, manner or form; that the care and/or restaurant business that shall be created and carried on by the Lessee, and the good will thereof, shall belong to and shall remain the sole property of the Lessee, with the full right to maintain and carry on its said business at any other place or places after the end or sooner termination of the within Lease; that the Lessor shall have no responsibility or liability by reason of the maintenance or conduct of the said business by the Lessee, who shall save the Lessor harmless from any and all claims and law-suits that shall be brought against the Lessor based on such claimed responsibility or liability.'
Plaintiff contends the removal by defendant of the business and the good will prior to the expiration of the lease was a violation (1) of the express provisions of paragraph 12 of the lease and (2) of an implied covenant.
Plaintiff asserts that the restraint imposed by paragraph 12 does not go so far as to prohibit defendant from carrying on a restaurant business in competition with that on plaintiff's premises at another place less than two miles distant during the term of the lease but that the 'activity prohibited was the carrying on in another place of the Lessee's 'said business,' that is, 'the business that shall be created and carried on by the Lessee, and the good will thereof.'' It is expressly provided in that paragraph of the lease that the 'business that shall be created and carried on by the Lessee, and the good will thereof, shall belong to and shall remain the sole property of the Lessee * * *.' Collas v. Brown, 211 Ala. 443, 100 So. 769, cited by plaintiff, does not support his contention. In that case the court held that a covenant not to compete is a thing apart from the 'good will' and such an implied covenant does not go with the sale of the good will nor can a written contract selling the good will only be enlarged by parol to include an express covenant not to engage in a competing business. The only language in paragraph 12 which lends any support to plaintiff's contention, and which might be construed as imposing a restriction, is that contained in the words following those quoted above '* * * with full right to maintain and carry on its said business at any other place or places after the end or sooner termination of the within lease.' Taking the instrument as a whole, however, this language cannot be construed as an express covenant upon the part of defendant not to carry on his business at another location until after the termination of the lease. In paragraph 17 of the lease plaintiff agrees that during the term thereof 'he will not have any interest in or conduct or carry on, directly or indirectly, under the name Palomine Cafe, or otherwise, any cafe or restaurant business within a radius of two square miles of the present location of Lessee's business * * *.' There is no corresponding agreement upon the part of defendant not to open other restaurants during the term of the lease, nor to operate a cafe elsewhere under the name 'Pump Room,' nor does defendant agree not to change the name or character of the restaurant to be operated on plaintiff's premises. Defendant did not purchase a going business but leased 'the physical equipment, facilities and contents of the cafe.' The parties had no means of knowing whether the venture would succeed or fail and by paragraph 12 it was expressly agreed that it was not their intention to engage in a partnership or joint venture and the business that was to be created would remain the sole property of defendant. The language following such express agreement, which is preceded by the word 'with' is permissive and not prohibitory and but emphasizes such intention.
Plaintiff cites four cases in support of his contention that there is an implied covenant that lessee would, during the term of the lease, so conduct his business on plaintiff's premises as to make it mutually profitable to both parties: Selber Bros. v. Newstadt's Shoe Stores, 194 La. 654, 194 So. 579; Cissna Loan Co. v. Baron, 149 Wash. 386, 270 P. 1022; Mayfair...
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