Pollock v. Ives Theatres, Inc.

• Decision Date: 03 August 1933
• Docket Number: 24396.
• Citation: 24 P.2d 396,174 Wash. 65
• Parties: POLLOCK et al. v. IVES THEATRES, Inc.
• Court: Washington Supreme Court

24 P.2d 396

174 Wash. 65

POLLOCK et al. v. IVES THEATRES, Inc.

No. 24396.

Supreme Court of Washington

August 3, 1933

Department 2.

Appeal from Superior Court, Skagit County; George A. Joiner, Judge.

Action by E. W. Pollock and Alice D. Pollock, his wife, individually and in their marital capacity, and another, against Ives Theatres, Inc. (Ben Driftmier, receiver). From a judgment in favor of plaintiffs, defendant appeals.

Affirmed.

Roberts Skeel & Holman and W. E. Evenson, Jr., all of Seattle, and R V. Welts, of Mt. Vernon, for appellant.

Hyland Elvidge & Alvord, of Seattle, for respondents.

TOLMAN Justice.

This is an appeal from a judgment for rental due and damages accruing from the breach of the terms of a written lease of improved real property; directing the foreclosure of a chattel mortgage given to secure the performance of the terms of the lease and making awards for receivership expenses, attorney's fees, and costs.

Since the judgment was entered below a receiver has been appointed for the appellant Ives Theatres, Inc., and duly authorized to prosecute this appeal.

Respondents as owners of the property and lessors, executed the original lease in 1925 to one Halberg for a term of fifteen years. In 1927, Halberg assigned his interest to one Ives who personally covenanted to perform the terms and conditions of the lease. Various modifications of the lease were made, some written and some oral, but there seems to be no dispute concerning the terms or effect of any of them.

In June, 1930, by a written agreement between respondents as first parties, W. B. Ives as second party and the appellant corporation as third party, after a full recital making the purpose clear, it was expressly covenanted that respondents thereby consented to assignment of the lease by Ives to the appellant corporation; that Ives was released from all liability under the lease; that the appellant assumed and agreed to perform all of the terms and conditions of the original lease as modified, and contemporaneously therewith it executed a chattel mortgage to respondents covering all furnishings, furniture, machinery, and equipment in the leased building 'as security for the rent and faithful performance of the terms of said lease and supplemental agreements hereinabove referred to.'

The chattel mortgage was executed and delivered accordingly and duly filed for record. It contains the following provision: 'As security for the payment of the rent and the full and faithful performance of the obligations of the lessee contained in a lease of said Lincoln Theatre dated October 16th, 1925, made by Alice D. Pollock and E. W. Pollock, wife and husband, and Edith Decatur, a spinster, as lessors, to Edwin A. Halberg, as lessee, and in certain supplemental agreements pertaining to said lease, which said lease has been assigned to and assumed by mortgagor herein.'

Appellant entered into possession under the assignment of the lease from Ives and under the conditions and covenants just recited.

On March 22, 1932, there was due from the appellant to the respondents, under the terms of the lease and these agreements, two months rent totaling $850, heating charges of $400, and for water service $32.80, or a grand total of $1,282.80. On that day, in accordance with the modified terms of the lease, respondents prepared and served upon the appellant a notice in the alternative to pay the amounts indicated or surrender the premises.

The particular language contained in the notice which is of importance here is:

'This is to notify you that in the event that you do not comply with this notice and make the aforesaid payments or surrender said premises within thirty days from and after the date of the service of this notice upon you, that you will be guilty of unlawful detainer and the lessors will oust you from said premises and seek recovery of the rent doubled, and damages.

'This is to notify you further that in the event you do not make the aforesaid payments within thirty days from and after the date of this service upon you, that the lessors will elect and do by this notice elect to declare the lease breached, in default and forfeited, and will bring suit against you for the breach and for damages, and will foreclose such security as is provided to them under and by virtue of that chattel mortgage made and entered into on the 20th day of June, 1930.'

On April 15, 1932, appellant made its only response to that notice in the form of a letter addressed to the respondents, which reads:

'Mt. Vernon, Washington, April 15, 1932.

'E. W. Pollock

'Alice D. Pollock

'Edith Decatur

'Elden D. Pollock

'We have your 'Notice to Pay Rent or Quit and Suffer Cancellation' dated March 22, 1932, respecting the Lincoln Theatre in Mt. Vernon, Washington. In this notice you declare your election to declare the lease therein described forfeited, cancelled and terminated pursuant to provisions of the lease relating to forfeiture.

'This is to notify you and each of you that the undersigned accepts the cancellation of the lease in question and the same may now be regarded as terminated and at an end for all purposes. In view of your notice we have now made other arrangements for our business. This will further notify you that on April 21, 1932 we will move from the premises all our personal property and equipment and deliver the keys to you. Please arrange to have a representative present at the premises on April 21, 1932, at 10 A. M. to whom we can deliver possession of the property. We may not have all our property moved by that time but we will be able to turn the premises over to you and get our property out within the time limited in your notice.

'Yours truly,

Ives Theatres, Inc.

'Formerly Fox-Ives Theatres, Inc.,

'By Waldole Ives, Sec-Treas.'

Thereafter respondents promptly brought this action for the recovery of the sum due, as specified in the notice, for damages for a breach of the lease, for a foreclosure of the chattel mortgage, and for the appointment of a receiver to hold the mortgaged property intact pending foreclosure.

Upon a showing of a sufficient emergency, a temporary receiver was appointed who took such possession of the mortgaged property as was necessary to prevent any part from being removed from the leased building, but appellant was permitted to and did use all of the property in the usual was until April 22, 1932, when it turned over the keys, which were accepted without prejudice, and gave up possession of the premises and the mortgaged property.

After a trial on the merits, the trial court found fully upon all the matters already suggested herein, and further found that the appellant was insolvent, that the mortgaged property in place in the theater building was worth not more than $12,500, and that, if removed, its value would at once decrease by substantially one-third, and that appellant would have removed it except as prevented by the appointment of a receiver. Further, the court found:

'That the defendant did deliver the keys to the premises to the plaintiffs on the 22nd day of April, 1932, and did thereupon quit and abandon said premises, but the plaintiffs did accept the said keys...