Silver v. Atlantic-Pacific Auto Leasing, Inc.

• Decision Date: 29 August 1967
• Docket Number: ATLANTIC-PACIFIC
• Citation: 253 Cal.App.2d 1000,61 Cal.Rptr. 751
• Court: California Court of Appeals Court of Appeals
• Parties: Harry SILVER, Plaintiff and Appellant, v.AUTO LEASING, INC., a corporation, et al., Defendants and Respondents. * Civ. 29957.

Page 751

61 Cal.Rptr. 751

253 Cal.App.2d 1000

Harry SILVER, Plaintiff and Appellant, v. ATLANTIC-PACIFIC AUTO LEASING, INC., a corporation, et al., Defendants and Respondents. ^*

Civ. 29957.

Court of Appeal, Second District, Division 5, California.

Aug. 29, 1967.

Greenberg, Shafton & Bernhard, Herbert A. Bernhard and Arthur Karma, Los Angeles, for plaintiff and appellant.

Loeb & Loeb and Howard I. Friedman, Los Angeles, for defendant and respondent Beverly Hills Nat. Bank.

HUFSTEDLER, Associate Justice.

Appellant Silver filed a complaint seeking damages against Atlantic-Pacific Auto Leasing, Inc. ('Atlantic-Pacific') for breach of contract and against Beverly Hills National Bank ('National Bank') for a declaration of the respective interests of Silver and National Bank in certain equipment leases of which Atlantic-Pacific was lessor. Judgment was entered in favor of Silver against Atlantic-Pacific in the sum of $26,677.49, less certain credits, following Atlantic-Pacific's default, from which portion of the judgment there is no appeal. Following motions for judgment on the pleadings made both by Silver and National Bank, judgment was rendered declaring that Silver owned a divided one-half interest in the described leases and equipment and that Silver had no interest in the other half of the same leases and equipment as to which National Bank owned a security interest.

The two instruments upon which Silver's claims rest are two written contracts between Silver and Atlantic-Pacific, copies of which were incorporated into the complaint.

The first agreement, dated May 3, 1963, recited that Atlantic-Pacific wanted to sell and Silver wanted to buy 'a divided (sic) one-half (1/2) interest' in a lease between Atlantic-Pacific, as lessor, and Harris & Carr, Inc., as lessee. Following the recitals are the following covenants:

'1. By this document ATLANTIC-PACIFIC sells and transfers to the Second Party a divided one-half (1/2) interest in the above described lease, and a divided one-half (1/2) interest in the property attached hereto as exhibit 'B,' for a total of $33,379.10.

'2. It further covenants and agrees with the Second Party that the said Second Party has an absolute right to $639.32 on the 20th day of May, 1963, and the 20th day of each and every succeeding month during the entire term of the said lease, and ATLANTIC-PACIFIC guarantees that it will remit this amount on the day due without regard to the Lessees compliance with the payment schedule called for in the said lease.

'3. That Second Party has a divided one-half (1/2) interest in the residual of $5,114.54, and ATLANTIC-PACIFIC covenants and guarantees that within thirty (30) days from the end of the lease period to pay to the Second Party the sum of $2,557.27.

'In consideration of the above covenants, Second Party hereby covenants and agrees as follows:

'1. That he will remit to ATLANTIC-PACIFIC at the time of the execution of this document, $33,379.10.

'2. That he will refrain from interfering with the services and management of the above described lease.

'3. That he will look solely to ATLANTIC-PACIFIC for the carrying out of the provisions of this Agreement.

'4. Both parties to this Agreement hereby covenant and agree that in the event ATLANTIC-PACIFIC shall fail to carry out the terms of this Agreement as set forth, any such failure shall be deemed a material breach of this Agreement, and the Second Party shall have a right to look to the above named Lessee, and the above described lease, as well as ATLANTIC-PACIFIC And all collateral, for the enforcement of his rights herein.' (Emphasis added.)

The second agreement, dated May 14, 1963, recites that Atlantic-Pacific wants to sell and Silver wants to buy a divided one-half interest in twenty-five listed leases between Atlantic-Pacific, as lessor, and the named lessees. Following the recitals, the May 14 contract contains covenants substantially the same as those in the first agreement, except for the description of the property which is the subject of the agreement and the addition of a clause stating:

'5. Both parties to this Agreement hereby covenant and agree that ATLANTIC-PACIFIC shall file liens on the various chattels involved in exhibits E and J hereto, showing the SECOND PARTY as the mortgagee to the extent of his divided one half (1/2) interest in the residual as set forth in the above exhibits.'

The claim of National Bank stems from an agreement entitled 'Assignment' between National Bank and Atlantic-Pacific, dated June 6, 1963. The assignment states in part that Atlantic-Pacific assigns to National Bank as security for specified antecedent indebtedness owed by Atlantic-Pacific to National Bank 'all of Assignor's right, title and interest in and to * * * (t)he personal property leases herein below described (copies of which are attached hereto) and the personal property described therein. * * * Assignee does not assume any liability under any of the leases assigned to it either by virtue of this Assignment or by virtue of the receipt of any payments it may hereafter receive thereunder.' The assignment further provided: 'Assignee shall have all of the rights in connection with this Assignment that would accrue to it had Assignor executed a general collateral pledge agreement in favor of Assignee in the form attached hereto * * * except such rights as are inconsistent with the specific terms of this Assignment. * * *'

Annexed to the assignment was a list of the same leases ¹ and equipment which were the subject of the two agreements between Silver and Atlantic-Pacific.

Silver and National Bank argued in the trial court and here argue that the Silver agreements are clear and unambiguous, but Silver says the agreements clearly mean one thing, and National Bank says they clearly mean another.

Silver has advanced a variety of different constructions of the two agreements. In his complaint Silver averred that the effect of the agreements was to assign to him all of Atlantic-Pacific's right, title and interest in the several leases as security for the performance of Atlantic-Pacific's obligations to him, that upon default of Atlantic-Pacific all rentals became payable to him until the default was completely cured, and that National Bank's assignments were subsequent and subordinate to his own. In the joint pretrial statement the parties agreed that Silver purchased a half interest in all of the various personal property leases (the 'Silver half') and that he was entitled to receive one half of all rentals paid by the various lessees. Silver thereupon contended that Atlantic-Pacific assigned him a security interest in the remaining half of the property (the 'Atlantic-Pacific half') and all of the rentals until such time as the total payments contemplated by the two agreements were fully paid to him. When the motions were heard, Silver claimed that Atlantic-Pacific assigned him the Atlantic-Pacific half as security for Atlantic-Pacific's 'guarantee' to pay Silver the monthly payments and half the 'residuals,' which assignment became effective as soon as Atlantic-Pacific defaulted. Silver did not then contend that Atlantic-Pacific assigned Silver all the rents in the event of Atlantic-Pacific's default, excepting only as such assignment is embraced in the claimed assignment of the Atlantic-Pacific half as security. On appeal Silver sometimes contends that the agreements assigned him the Atlantic-Pacific half as security for accrued and unpaid sums owed by Atlantic-Pacific to Silver and as security for future sums to become due during the lives of the leases and thereafter at the end of the leasehold terms.

National Bank has consistently urged that although Silver's interest in the Silver half, however that interest should be properly characterized, is superior to National Bank's interest, Silver owns no interest whatsoever in the Atlantic-Pacific half, and that National Bank, succeeding to Atlantic-Pacific's...