Nelson v. Reisner

• Decision Date: 31 October 1958
• Court: California Supreme Court
• Parties: M. C. NELSON et al., Appellants, v. C. H. REISNER, Respondent. L. A. 24457.

Page 17

331 P.2d 17

51 Cal.2d 161

M. C. NELSON et al., Appellants, v. C. H. REISNER, Respondent.

L. A. 24457.

Supreme Court of California, In Bank.

Oct. 31, 1958.

Albert Picard, San Francisco, Mack, Bianco, King & Eyherabide, Bakersfield, Burton M. Greenberg, San Francisco, and D. Bianco, Bakersfield, for appellants.

Hackett & Hubbard, Ralph B. Hubbard, Los Angeles, Borton, Petrini, Conron & Brown, George A. Brown and James Petrini, Bakersfield, for respondent.

CARTER, Justice.

Plaintiffs, M. C. Nelson and W. K. Dunne, brought an action for damages and an accounting against defendant, C. H. Reisner. Reisner cross-complained for damages. The trial court gave judgment for Reisner on plaintiffs' complaint and in his favor for $30,643 ¹ on his cross-complaint. Plaintiffs appeal from the judgment.

Plaintiffs were the owners of certain real property in Kern County. On June 17, 1947, plaintiffs, as lessors entered into a written lease agreement with one Henry Schnaidt, whereby 160 acres were leased to him under what was called a 'development lease.' On February 1, 1949, plaintiffs leased another 160 acres to Schnaidt under a written lease known as a 'sharecrop lease.' On December 29, 1950, Schnaidt, in consideration of $28,000 paid to him by defendant, by written agreement assigned the development and sharecrop leases to defendant. Plaintiffs consented to this assignment in writing. On or about January 4, 1951, plaintiffs in writing extended the terms of these leases to December 31, 1952, with a reasonable time thereafter in which to harvest and remove any crops which might be growing on the property at the time. Defendant went into possession of the real property in the spring of 1951 and remained in possession until approximately April 5, 1953.

During Schnaidt's possession of the real property as lessee he constructed a dirt reservoir on the acreage covered by the development lease. Plaintiffs sought damages from defendant for the failure to remove this reservoir. Damages were also sought because of defendant's alleged failure to cultivate the real property in a good and farmerlike manner, and for double cropping the land subject to both the development and sharecrop leases.

Plaintiffs' second cause of action was for an accounting concerning the rental agreed to be paid under the sharecrop lease. Under the terms of said sharecrop lease plaintiffs were to receive from defendant one-fifth of the gross returns of the cotton and cotton seed and one-sixth of the gross returns of the potatoes raised on the 160 acres covered by said lease. As heretofore noted, damages were also sought because of defendant's alleged double cropping of the land.

Defendant's cross-complaint was for damages for the violation of Paragraph 13 of the development lease by plaintiffs. This paragraph provided: 'Lessors covenant and agree to extend to Lessee the right of first refusal in the event of the sale of the premises during the term of this lease and the right of first refusal of a new lease at the expiration of the term of this lease.' (Emphasis added.)

Although plaintiffs' briefs appear to be an attempt to reargue the evidence introduced at the trial and to set forth the portions thereof most favorable to them, their primary contention undoubtedly is that the evidence does not support some of the findings of the trial court.

The court found that Schnaidt constructed the reservoir with the consent of the plaintiffs; that it was an improvement; that it was not improperly constructed; that it did not constitute a nuisance; that defendant did not agree to remove the reservoir; and that plaintiffs were not damaged by any conduct of defendant with respect to the reservoir. The record shows that Schnaidt constructed the reservoir with plaintiffs' knowledge but that the ceased using it when he found he could not get sufficient pressure; that defendant, at plaintiffs' request, used certain dirt from the reservoir to fill in other land when other dirt was more accessible. There is nothing in the record to show that defendant ever agreed to remove the reservoir from the property or that it was ever used by him. While the evidence is conflicting as to whether or not the reservoir constituted an improvement, the resolution of that conflict was for the trier of fact who considered the facility for the storage of water in that vicinity an improvement under the terms of the development lease. The development lease made no provision for the removal of improvements but on the contrary expressly provided that such improvements should be left upon the property.

Plaintiffs argue that defendant did not cultivate the real property in a good and farmerlike manner. The court found that 'At all times referred to in the complaint and cross-complaint on file herein, defendant tilled and cultivated the real property subject to said development and sharecrop leases in a good and farmerlike manner. The defendant double cropped portions of said property subject to said leases with potatoes, which was done by defendant in a good and farmerlike manner and in accordance with the custom and practice prevailing in the community where the said property is located, and no damage or destruction of said real property resulted therefrom. The said real property was not damaged or destroyed or deteriorated as a result of said double cropping so as to prevent re-planting for five years or for any period whatsoever or at all as a result of defendant's conduct or activities with respect to double cropping said real property or with respect to his occupancy and use of said real property.' On this point, also, the evidence is conflicting. The record shows that double cropping potatoes was apt to result in scabby (diseased) potatoes; that it was, however, done in the vicinity. The record further shows that Smith, defendant's successor on the land in question, had a good yield from his potato crop. There was evidence that defendant worked and 'gyped' (gypsum) the soil; that he applied fertilizers and insecticides; that he followed the advice of those experienced in the care of soil; that he raised good seed. There was evidence that he allowed a ditch to become overrun with weeds and willows; and evidence that perhaps he had not worked the soil as deeply as he should have. ² Inasmuch as we are here concerned, not with the weight of the evidence, but with whether the evidence supports the findings of the court, we cannot say, as a matter of law, that there is no evidence that the defendant used good and farmerlike methods.

Concerning the 'right of first refusal' clause which was contained only in the development lease, the trial court found: 'Prior to the termination of said development lease, as extended as aforesaid, plaintiffs were informed by defendant, and plaintiffs at all material times, including on February 20, 1953, knew that defendant desired and intended to make a new lease with plaintiffs for the said property subject to said lease at the expiration of said lease with the term thereof as extended as aforesaid, and that he intended to claim and exercise his rights under said right of first refusal clause in the event that plaintiffs desired and intended to make a new lease on said property upon the expiration of said development lease, as extended.'

Under a first refusal clause the right to a new lease is conditioned upon the lessor's willingness to rent the property. Falkenstein v. Popper, 81 Cal.App.2d 131, 137, 183 P.2d 707. In Barling v. Horn, Mo., 296 S.W.2d 94, 97, a clause providing that 'the Lessees shall have the first opportunity to purchase the premises' was involved. The court there held that 'The clause 'd' did not amount to a contract of purchase and sale; and the clause was not an option to purchase in a true sense; although some courts speak of similar clauses as 'options.' But the clause did amount to a contract or agreement of another kind. It was an agreement that if defendants Horn decided to sell, plaintiffs were to have the first right to buy, the first opportunity to purchase to the exclusion of a purchase by another a right a pre-emption, one might say. The agreement, so considered, was supported by a consideration the lessees' covenants in the contract of lease. The right was peculiarly a valuable one to these plaintiffs because, deprived of it, plaintiffs, upon a sale to another, lost their opportunity to purchase and also lost their option privilege to renew the lease for the further term of five years on the same terms and conditions as those of the current five-year term.

'This court has recognized a distinction between an option to purchase and a right or pre-emption in Beets v. Tyler, 365 Mo. 895, 290 S.W.2d 76, 81, quoting from Vol. VI, American Law of Property, § 26.64, p. 507, as follows, "A pre-emption differs materially from an option. An option creates in the optionee a power to compel the owner of property to sell it at a stipulated price whether or not he be willing to part with ownership. A pre-emption does not give to the pre-emptioner the power to compel an unwilling owner to sell; it merely requires the owner, when and if he decides to sell, to offer the property first to the person entitled to the pre-emption, at the stipulated price. Upon receiving such an offer, the pre-emptioner may elect whether he will buy. If he decides not to but, then the owner of the property may sell to anyone."'

In Ablett v. Clauson, 43 Cal.2d 280, 284, 286, 287, 272 P.2d 753, 755, we were concerned with a lease which gave to the lessees a "* * * first right and a prior option * * *" to lease the premises "* * * before the same are offered to any other person, firm or corporation for lease or rental * * *." We held that 'The clear meaning of the provision is to give the lessee a first refusal or right to lease, conditioned upon the lessor's leasing of the property again. This construction is in accordance with the Falkenstein...