Ripani v. Liberty Loan Corp.

• Decision Date: 30 July 1979
• Citation: 95 Cal.App.3d 603,157 Cal.Rptr. 272
• Court: California Court of Appeals Court of Appeals
• Parties: Joseph A. RIPANI, doing business as Cal Pacific Development Co., Plaintiffs and Respondents, v. LIBERTY LOAN CORPORATION OF CARMICHAEL, a California Corporation, Liberty Loan Corporation of San Jose, a California Corporation, et al., Defendants and Appellants. Civ. 17791.

Page 272

157 Cal.Rptr. 272

95 Cal.App.3d 603

Joseph A. RIPANI, doing business as Cal Pacific Development Co., Plaintiffs and Respondents, v. LIBERTY LOAN CORPORATION OF CARMICHAEL, a California Corporation, Liberty Loan Corporation of San Jose, a California Corporation, et al., Defendants and Appellants.

Civ. 17791.

Court of Appeal, Third District, California.

July 30, 1979.

Davis & Sauer, Douglas A. Holloway, Robert L. Davis and Norman A. Sauer, San Francisco, for defendant and appellant.

Russell, Jarvis, Estabrook & Dashiell, Laurence B. Dashiell, Sacramento, for plaintiff and respondent.

KLEAVER, Associate Justice. ^*

Defendant Liberty Loan of San Jose ¹ appeals from a judgment of the Superior Court of Sacramento County in favor of plaintiff Joseph A. Ripani, doing business as Cal Pacific Development Company, on his complaint for monies due under a lease of office space. Defendant contends that the agent who purported to bind the company to the lease of office space was without written authority to do so and the lease is thus invalid under the statute of frauds. Defendant further contends the evidence is insufficient to support a finding that the agent had either actual authority or ostensible authority to bind defendant and the evidence is insufficient to establish that defendant ratified the acts of the agent. Finally, it is contended that the trial court failed to make necessary findings of fact and made ambiguous findings on material issues. We reject these contentions and affirm the judgment.

I

Plaintiff is the owner of commercial property located at 2371 Arden Way in Sacramento, California. In 1966 he leased office space to defendant for five years pursuant to a written lease that defendant prepared. In December 1970 plaintiff and defendant entered into a new written lease to commence March 1, 1971, and to terminate on February 28, 1974. Under the terms of that lease defendant had the option to renew the lease for an additional two years for $3600 per annum, by giving written notice to plaintiff at least 30 days prior to the expiration thereof. It was agreed that should defendant hold over at the expiration of the lease or any extension thereof, it would be deemed to be a tenant from month-to-month and that such tenancy could be terminated with one month's written notice.

On January 3, 1974, plaintiff went to defendant's offices to collect the rent and remind defendant that the lease would soon expire and of defendant's option rights. Michael D. Anderson, who was then the branch manager of the Arden office, prepared and signed a notice that defendant was exercising its option to renew the lease for two years. Plaintiff accepted the renewal. Anderson later informed his superiors that he had executed the notice exercising the lease option.

Defendant, by letter dated March 28, 1974, notified plaintiff that it would not renew the lease, and would vacate the premises on or before April 30, 1974. This was the first notice to plaintiff of defendant's desire not to renew the lease. Defendant paid the rent through April, 1974, and vacated the premises by April 4, 1974. Plaintiff made various efforts to relet the premises after defendant vacated, but was unsuccessful and the premises remained vacant throughout the period of the lease.

Plaintiff brought this action to recover the amount of the unpaid rent under the lease. At trial, the sole issue was whether the attempted exercise of the option to renew the lease by Anderson was valid. Defendant contended that Anderson was without authority to exercise the option and the company did not ratify his action. The trial court found in plaintiff's favor and entered judgment in the amount of the unpaid rent for the two-year renewal period less the amounts he had been paid in March and April, 1974.

II

Civil Code section 2309 provides: "An oral authorization is sufficient for any purpose, except that an authority to enter into a contract required by law to be in writing can only be given by an instrument in writing." Civil Code section 1624, subdivision (4), provides that a lease for a period longer than one year is invalid unless the lease, or a note or memorandum thereof, is in writing and subscribed by the party to be charged or his agent, and if by his agent, the lease is invalid unless the agent's authority is in writing and subscribed by the party to be charged. The requirement of written authorization for an agent to enter into a contract which is itself required by law to be in writing (the "equal dignity rule") does not apply where the agent is an executive officer of a corporation. (Jeppi v. Brockman Holding Co. (1949) 34 Cal.2d 11, 17, 206 P.2d 847.) The trial court found that Anderson was not an officer of the defendant, and that he had not received written directions from defendant to exercise the option in the lease. Defendant contends that the exercise of the option was therefore invalid.

Defendant relies upon Hagenbuch v. Kosky (1956) 142 Cal.App.2d 296, 298 P.2d 875, for the proposition that the exercise of an option in a lease is required by law to be in writing. That case did not so hold. Hagenbuch Involved an alleged oral extension or renewal of a lease which did not contain an option for extension. The court of appeal held that such a renewal or extension of a lease in excess of one year is subject to the statute of frauds and therefore requires a writing. (id., p. 300, 298 P.2d 875.) The lease at issue herein contained a provision in writing giving defendant the right, upon written notice to plaintiff, to extend the lease for two years, and is thus inapposite from the lease in Hagenbuch.

An option contained in a lease is itself a contract, distinct from the lease to which the option relates. (Warner Bros. Pictures v. Brodel (1948) 31 Cal.2d 766, 771, 192 P.2d 949.) By entering into the option contract the parties effectively entered into a lease for the two-year period, subject to the defendant's exercise of the option. (id. at 772-774, 192 P.2d 949.) The original lease with option to renew was in writing and properly executed by defendant. The exercise of option to renew that lease does not violate the statute of frauds because the original written lease satisfies the statute. (Keller v. Pacific Turf Club (1961) 192 Cal.App.2d 189, 13 Cal.Rptr. 346.) ²

Since we conclude that the exercise of the option was not required by the statute of frauds to be in writing, it follows that the authority of an agent to exercise the option is not required by the statute of frauds to be in writing. Defendant contends, however, that since the lease called for a written exercise of the option, the agent's authority must be in writing.

It is the policy of California courts to construe the statute of frauds restrictively. Unless the statute clearly requires an agreement or authority to be in writing the statute is not to be applied. (Sunset-Sternau Food Co. v. Bonzi (1964) 60 Cal.2d 834, 838, 36 Cal.Rptr. 741, 389 P.2d 133. See also White Lighting Co. v. Wolfson (1968) 68 Cal.2d 336, 346, 66 Cal.Rptr. 697, 438 P.2d 345; 1 Witkin, Summary of Cal. Law (8th ed. 1973) Contracts, § 197, p. 180.) Civil Code section 2309 provides that an oral authorization is sufficient for Any purpose, except entering into a contract required by law to be in writing. The language of section 2309 commences with a broad statement of application, followed by words of limitation. (Sunset-Sternau Food Co. v. Bonzi, supra, 60 Cal.2d at pp. 838-839, 36 Cal.Rptr. 741, 389 P.2d 133.) The limitation would clearly apply to contracts required by statute or judicial decision to be in writing. However, the statute does not apply to the exercise of a right which is required to be in writing by agreement of the parties. In accordance with the California policy of strict construction of the statute of frauds, we hold that Civil Code section 2309 does not require an agent to have written authorization to exercise a right required by agreement, but not by law, to be in writing.

Likewise, we find that nothing in Civil Code section 1624 requires that any right exercised under a valid written agreement of the parties be supported by written authorization of the agent exercising the right. We conclude therefore that Anderson was not required to have written authorization from defendant in order to effectively exercise the option in the lease.

III

Defendant contends that there was insufficient evidence to support a finding that Anderson had the authority to exercise the option in the lease. The question whether an agent acted within his authority is a question of fact for the trier of fact, and on appeal the finding of the trial court will not be disturbed where it is supported by substantial evidence. (Tomerlin v. Canadian Indemnity Co. (1964) 61 Cal.2d 638, 643, 39 Cal.Rptr. 731, 394 P.2d 571.)

An agent has such authority as a principal actually or ostensibly confers upon him. (Civ.Code, § 2315.) Actual authority is such as a principal intentionally confers upon an agent, or intentionally or by want of ordinary care allows the agent to believe himself to possess. (Civ.Code, § 2316.) Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess. (Civ.Code, § 2317.) An agent will normally have the authority to do everything necessary or proper and usual in the ordinary course of business for effecting the purpose of his agency. (Civ.Code, § 2319.) Authority may be granted to an agent either by a precedent authorization or a subsequent ratification. (Civ.Code, § 2307.)

In order to establish actual or ostensible authority of an agent, the principal's consent need not be express, but may be implied from the facts of a particular case. (Kelley v. R. F. Jones Co. (1969) 272 Cal.App.2d 113, 120, 77 Cal.Rptr. 170.) An agent's authority may be established by circumstantial evidence, and the testimony of the...