Sill Properties, Inc. v. CMAG, Inc.
| Citation | 219 Cal.App.2d 42,33 Cal.Rptr. 155 |
| Court | California Court of Appeals Court of Appeals |
| Decision Date | 05 August 1963 |
| Parties | SILL PROPERTIES, INC., a corporation, Plaintiff and Respondent, v. CMAG, INC., a corporation, and Albert L. Goetschalckx, Defendants and Appellants. Civ. 220. |
T. H. Werdel and Baker, Palmer, Wall & Raymond, Bakersfield, for appellants.
Bradley, Wagy, Bunker, Hislop & Gibbons and Bruce F. Bunker, Bakersfield, for respondent.
This appeal is from an adverse judgment on a complaint and a cross-complaint arising out of transactions concerning a lease of real property. Respondent, lessor, agreed to lease real property for restaurant purposes to appellants' predecessors in interest, C. D. May and his wife. The lease, executed December 1, 1954, provided for a ten-year term with an option for an additional ten years. Respondent was required to do certain remodeling, and lessees agreed to do even more extensive remodeling which cost them approximately $186,000. In addition, the lessees installed trade fixtures of their own at an alleged cost of $151,765.
The lessees formed a corporation, Cy's Restaurants, Inc., to operate the business, and began operations November 6, 1955. It was never profitable, and about October 15, 1957, Cy's Restaurants, Inc. assigned all of its assets for the benefit of creditors. Under the supervision of the assignee the business continued to lose money, and on May 1, 1959, C. D. May, the owner of the majority of the stock of Cy's Restaurants, Inc., resumed active management. Attempts to sell the business were unsuccessful until September 23, 1959, when appellant Albert L. Goetschalckx acquired the assets of Cy's Restaurants, Inc., exclusive of the lease. Goetschalckx took the business subject to an encumbrance of $43,075 on the fixtures, but he did not assume delinquent rent, as respondent landlord agreed to look to C. D. May and his wife for rent that had accrued prior thereto.
Goetschalckx and May then formed appellant corporation, CMAG, Inc. Goetschalckx transferred to the corporation the assets previously acquired by him and some cash, in exchange for 45% of CMAG, Inc. capital stock. C. D. May assigned the lease of the premises and some cash to CMAG, Inc. for 55% of the stock, in accordance with a lease provision requiring May to own not less than 55% of the stock of any corporation to which the lease might be assigned. On April 1, 1960, Goetschalckx, with the consent of respondent lessor, acquired all of C. D. May's stock in CMAG, Inc., and thereby became sole owner of the corporation which had acquired all of the lessees' interest in the lease.
Through CMAG, Inc., Goetschalckx operated the restaurant business until the premises were substantially destroyed by fire during the night of July 31, 1960. However, on July 12, approximately three weeks before the fire, respondent notified appellant CMAG by letter that the lease was terminated by reason of default in performance of paragraph 11 of the lease. That paragraph concerned payment of rent, but the letter failed to specify the delinquency. Although this notice was legally insufficient and no steps were taken to enforce it, appellant paid respondent $1,200 on account of unpaid rent. The period of time the payment purported to cover was not specified, and respondent accepted the payment without comment.
On August 3, following the fire, respondent notified appellants that the lease was terminated by reason of the default mentioned in the letter notice of July 12, 1960, and because of the fire. On August 8, 1960, appellants demanded in writing that respondent repair the building pursuant to paragraph 5 of the lease, which required lessor to rebuild in case of damage by fire. Respondent refused to repair.
In late August 1960, respondent learned that appellants were removing certain Respondent's complaint alleged three causes of action: one for declaratory relief, which was subsequently dismissed; a second cause of action for conversion of air conditioning equipment and other parts of the realty alleged to have been wrongfully removed from the premises and converted to appellants' use; and a third cause of action for unpaid rent.
equipment from the premises. On September 10, 1960, an officer of respondent corporation asked Goetschalckx not to remove any fixtures until the rights of the parties were determined. Appellants continued to remove equipment from the building, and on September 14, 1960, respondent filed an action against appellants and secured a restraining order.
Appellants by way of answer denied the allegations of respondent's complaint, and concurrently with the answer filed a cross-complaint for damages predicated upon respondent lessor's wrongful refusal to rebuild the damaged premises as required by the lease. The cross-complaint alleged various items of damage, totaling $566,275.
The original lessees, C. D. May and his wife, were named defendants in the action, but the lower court ordered a separate trial as to them, and the case went to trial between respondent corporation as plaintiff and cross-defendant, and appellants CMAG, Inc., a corporation, and Albert L. Goetschalckx, as defendants and cross-complainants.
The jury returned a verdict for respondent on its second cause of action for conversion, in the sum of $18,042, and on its third cause of action for rent, in the sum of $678.86. On the cross-complaint the verdict was for respondent and against appellants.
The lease provided for attorney's fees under conditions discussed hereinafter; this issue was determined by the court following completion of the jury phase of the case. The court allowed attorney's fees only as to the third cause of action of the complaint for unpaid rent. Judgment was entered pursuant to the verdict of the jury and the order of the court for attorney's fees, and defendants and cross-complainants have appealed. Since Goetschalckx is the sole owner of CMAG, Inc., and their interests are the same, reference to appellants will hereinafter be in the singular.
Cause of Action for Conversion. Appellant contends that the property alleged to have been converted was inadequately described in the complaint and in the instructions to the jury. In this regard, appellant complains also that under the jury's lump sum verdict is is impossible to determine the individual items and the value of each that comprised the jury's verdict, and whether some of appellant's trade fixtures might not have been included in the verdict for $18,042.
The description of the personal property alleged in the complaint to have been converted was subject to a special demurrer, but since none was filed on this particular ground, the defect was wavied. The pretrial order, although more specific than the complaint, was nevertheless too general, but, again, appellant waived the defect by not objecting to this aspect of the pretrial order. Criticism of the description of the property in the instruction is without merit. Much evidence was introduced concerning whether items of equipment were trade fixtures and the property of appellant, or fixtures attached to the building and the property of respondent. On this issue the court instructed the jury that:
The categories of equipment in controversy were specified and the determination of which individual items were the property of the lessee and which belonged to the lessor was properly left to the jury. The trial court is under no duty to itemize the evidence in the instructions.
Appellant's complaint that it is impossible to determine which items the jury considered in arriving at its verdict, is not an uncommon one. Yet a jury is not required to itemize its verdict or relate the facts it has found in arriving at its verdict, except when a special verdict may be required; and such was not the case here.
Appellant next asserts that there was no substantial evidence that he wrongfully withheld possession of the equipment from respondent, or that he asserted title in himself, or that he repudiated respondent's right of ownership. He argues, first, that he was required as a matter of law to remove the fixtures under the provisions of Civil Code section 1928, which reads: 'The hirer of a thing must use ordinary care for its preservation in safety and in good condition.'
No authority is cited for the proposition that a lessee is required by Civil Code section 1928 to enter leased premises after substantial destruction by fire, and remove fixtures would are attached to and a part of the landlord's building. Nor is it contended that appellant was award of the Code section at the time he took the equipment from the building. Section 1928 is cited as justification for the taking, not as the reason for the taking. In any event, it is a question of fact whether the lessee removed the fixtures for the protection of the lessor, or whether he removed them under claim that appellant was aware of the Code them in repudiation of the lessor's right of ownership.
Appellant makes the further assertion that he was simply complying with the requirements of his fire insurance coverage in storing the property for his and for respondent's benefit. Although the argument bears on appellant's intent, apparently the jury was not persuaded by it.
In support of the verdict, there is evidence that an officer or respondent corporation ordered appellant to stop removing the equipment, that ap...
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