People ex rel. Dept. of Parks and Recreation v. West-A-Rama, Inc.

• Decision Date: 06 December 1973
• Docket Number: INC,WEST-A-RAM
• Citation: 35 Cal.App.3d 786,111 Cal.Rptr. 197
• Court: California Court of Appeals Court of Appeals
• Parties: The PEOPLE ex rel. DEPARTMENT of PARKS and RECREATION, Plaintiff, Cross-Defendant and Appellant, v., Defendant, Cross-Complainant and Appellant. Civ. 12247.

Page 197

111 Cal.Rptr. 197

35 Cal.App.3d 786

The PEOPLE ex rel. DEPARTMENT of PARKS and RECREATION, Plaintiff, Cross-Defendant and Appellant, v. WEST-A-RAMA, INC., Defendant, Cross-Complainant and Appellant.

Civ. 12247.

Court of Appeal, Fourth District, Division 1, California.

Dec. 6, 1973.

Hearing Denied Jan. 31, 1974.

[35 Cal.App.3d 788] Evelle J. Younger, Atty. Gen., Carl Boronkay, Asst. Atty. Gen., and Jeffrey C. Freedman, Deputy Atty. Gen., for plaintiff and appellant.

Gaylord L. Henry, Huntington, Bryans, Harper, Henderson, Burney & Newman-Crawford, San Diego, for defendants and respondents.

OPINION

KAUFMAN, Associate Justice.

From a judgment rendered by the superior court after trial to the court with an advisory jury, plaintiff and cross-defendant State of California by and through the Department of Parks and Recreation (hereinafter 'State') appeals. Defendant and cross-complainant West-A-Rama, Inc. (hereinafter 'West-A-Rama') cross-appeals from the judgment insofar as the court sustained without leave to amend a demurrer to the second cause of action of West-A-Rama's amended cross-complaint.

The dispute between the parties revolves around their respective rights and duties under a concession agreement entered into by State and West-A-Rama's predecessor in interest, Ray Bisel Company, Inc., for the operation of a concession at Salton Sea State Park.

State filed a complaint on October 31, 1969 against West-A-Rama and others ¹ seeking possession of the property covered by the agreement, rents allegedly owing for March through September 1969 and payment of a promissory note having an alleged unpaid balance of $6,528.84.

West-A-Rama filed an answer denying that State was entitled to possession of the property, admitting the nonpayment of rent, but denying that any rents or any amounts under the promissory note were due on the basis of an affirmative defense which alleged in substance that State had breached an implied covenant of good faith by substantially raising its fees to the public for the use of park facilities without notice to West-A-Rama. West-A-Rama also cross-complained for declaratory relief, requesting that the court 'declare the respective rights of plaintiff and this defendant under the lease (concession) agreement in question and particularly whether or not plaintiff is entitled to a forfeiture to it by this defendant of the subject buildings, improvements and appurtenances.'

Subsequently, West-A-Rama was permitted to file an 'AMENDED CROSS COMPLAINT FOR DECLARATORY RELIEF AND DAMAGES.' In the second cause of action set forth in the amended cross-complaint, West-A-Rama sought an affirmative monetary judgment in the sum of $63,000, the alleged unamortized value of the improvements made on the premises. The court sustained without leave to amend a demurrer to this second cause of action of the amended cross-complaint on the ground that no claim had been previously filed with the State pursuant to the provisions of the Government Code. ²

In due course, the case proceeded to trial. Over State's objections, the court received extensive extrinsic evidence under the guise of interpreting the concession agreement, particularly, an addendum thereto. Special advisory verdicts were taken from the jury. ³ Based on the jury's special advisory verdicts, the trial court found that, under the concession agreement, State was not permitted to repossess concession improvements for nonpayment of rent without paying the unamortized value thereof to West-A-Rama; that the concession agreement embodied an implied covenant that neither party would do anything to deprive the other of its benefits; but that State did not violate that covenant; and that even if State did violate the covenant West-A-Rama had waived the right to object to such violation; that the value of the concession improvements as of the date of their completion in 1965 was $52,000 as to buildings and $7,725 as to furniture, furnishings and equipment; and that Lawrence West, as an individual, was not a party to the promissory note.

Accordingly, the court rendered judgment in favor of State in the total amount of $9,133.76 representing rent due from March through September 1969 of $2,104.92, $6,528.84 due on the promissory note and $500 attorney fees with respect to the promissory note. The judgment also provided, however: 'Defendant and cross-complainant WEST-A-RAMA, INC. is entitled to be paid $52,000.00 less five percent (5%) for each year of the expiration of the lease subsequent to 1965 plus the amount of $7,725.00 . . . before the State enters into possession of the premises described in the concession agreement appended to the complaint on file herein.'

Contentions, Issues and Disposition

Each party advances numerous contentions. There are two contentions, however, one relating to the appeal and one relating to the cross-appeal, both of which are meritorious and compel reversal.

Admission of Extrinsic Evidence

State contends that the trial court prejudicially erred in receiving parol evidence on the interpretation of the concession agreement and the addendum thereto. We agree.

Extrinsic evidence is admissible to interpret or explain the meaning of language used in an instrument when that language is reasonably susceptible to the interpretation suggested by the extrinsic evidence. (Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co., 69 Cal.2d 33, 37--40, 69 Cal.Rptr. 561, 442 P.2d 641; Delta Dynamics, Inc. v. Arioto, 69 Cal.2d 525, 528--529, 72 Cal.Rptr. 785, 446 P.2d 785; see Parsons v. Bristol Development Co., 62 Cal.2d 861, 865, 44 Cal.Rptr. 767, 402 P.2d 839.) But extrinsic evidence is not admissible to give the language used in a written instrument a meaning to which it is not reasonably susceptible. (Tahoe National Bank v. Phillips, 4 Cal.3d 11, 16--17, 92 Cal.Rptr. 704, 480 P.2d 320; Coast Bank v. Minderhout, 61 Cal.2d 311, 315, 38 Cal.Rptr. 505, 392 P.2d 265; Imbach v. Schultz, 58 Cal.2d 858, 860, 27 Cal.Rptr. 160, 377 P.2d 272; see Parsons v. Bristol Development Co., Supra, 62 Cal.2d at p. 865, 44 Cal.Rptr. 767, 402 P.2d 839.) As a matter of substantive law, extrinsic evidence 'cannot serve to create or alter the obligations under the instrument.' (Tahoe National Bank v. Phillips, Supra, 4 Cal.3d at p. 23, 92 Cal.Rptr. at p. 714, 480 P.2d at p. 330; see Code Civ.Proc., § 1856; Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co., Supra, 69 Cal.2d at p. 39, 69 Cal.Rptr. 561, 442 P.2d 641.)

The pertinent portions of the concession agreement are paragraphs 18 and 20 and the addendum to the agreement which was executed simultaneously with the agreement or shortly after execution of the agreement. Paragraph 18 reads in pertinent part as follows:

'18. Title to Improvements: Title to all structures or buildings constructed by Concessioner upon the subject premises, and all alterations, additions or betterments thereto made by Concessioner, shall remain in Concessioner until the termination of this contract; and upon such termination, whether by expiration of the term of this contract, cancellation, forfeiture or otherwise, title to said structures, buildings, and all alterations, additions or betterments thereto and all improvements made to or upon said premises shall vest in the State, and said structures, buildings and improvements shall remain upon and be surrendered with the premises as part thereof upon termination of this contract . . ..'

Paragraph 20 provides in pertinent part:

'20. Forfeiture: This contract is made upon the condition that if the rents or other sums which Concessioner herein agrees to pay, or any part thereof, shall be unpaid on the date on wich (sic) the same shall become due, or if default be made in any of the terms, agreements, conditions or covenants herein contained on the part of Concessioner, or should Concessioner abandon and cease to use the premises for a period of sixty (60) days at any one time . . . then and in such event, at the option of the State, this contract shall be forfeited, and the State may exercise all rights of entry and reentry upon the subject premises. . . . No default shall be declared by the State as to any breach which may be cured or obviated by Concessioner until the expiration of Thirty (30) days after written notice by the State to Concessioner of such default and if, during such thirty (30) day period, such default shall have been cured or obviated, provided that only Ten (10) days' written notice shall be required in the case of a default in the payment of rent or other sums herein provided to be paid by Concessioner.' (Emphasis supplied.)

The addendum provides in pertinent part that there be added to paragraph 20 the following:

'In addition to the foregoing remedies, State reserves the right to terminate this agreement and all rights of Concessioner thereunder Upon giving Concessioner ninety (90) days notice thereof, provided, however, that within thirty (30) days of such termination date, State shall be obligated to pay Concessioner the unamortized value of the improvements erected by Concessioner and the furniture, furnishings and equipment installed therein pursuant to the terms of this agreement.' (Emphasis supplied.)

Several witnesses were called and permitted to testify as to the circumstances under which the concession agreement and addendum thereto were executed and their understanding of the meaning of the several provisions quoted above, particularly the addendum. We do not deem it necessary to discuss the testimony of all these witnesses. Crucial testimony was given by Mr. Raymond Bisel, president of Ray Bisel Company, Inc. He testified in substance that, before he executed the concession agreement, he was concerned about the possibility of the concession agreement being terminated by State without compensation for the improvements constructed or provided by his company as concessioner. He, therefore, had a meeting with representatives...