Weisberg v. Loughridge

• Decision Date: 10 August 1967
• Citation: 61 Cal.Rptr. 563,253 Cal.App.2d 416
• Parties: Murray WEISBERG and Tillie Weisberg, Plaintiffs and Appellants, v. Walter J. LOUGHRIDGE, Defendant and Respondent. Civ. 29737.
• Court: California Court of Appeals Court of Appeals

Page 563

61 Cal.Rptr. 563

253 Cal.App.2d 416

Murray WEISBERG and Tillie Weisberg, Plaintiffs and Appellants, v. Walter J. LOUGHRIDGE, Defendant and Respondent.

Civ. 29737.

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

Aug. 10, 1967.

Hearing Denied Oct. 5, 1967.

Miller, Vandegrift, Middleton & Sackin and Morse Taylor, Los Angeles, for plaintiffs and appellants.

John E. Crooks and Joseph R. Laird, Jr., Long Beach, for defendant and respondent.

PER CURIAM.

Plaintiffs, Murray and Tillie Weisberg ('Weisbergs'), appeal from a judgment declaring Walter J. Loughridge, the defendant, to be the owner of certain described property. Weisbergs filed the present action seeking declaratory relief and seeking to quiet title to the Best in the West Car Wash ('Car Wash'). After Loughridge's demurrer was overruled, he answered, denying the allegations of the complaint, and filed a counterclaim. The case was tried without a jury and judgment ensued, declaring title to the property in Loughridge.

The dispute arose over the ownership of the Car Wash fixtures and equipment. Weisbergs claimed title through the purchase at a foreclosure sale had on April 12, 1963, of their chattel mortgage. Loughridge claimed title as purchaser at a tax sale held on June 7, 1963, and also that Weisbergs had acquired no rights in the property at the foreclosure sale.

The Facts

Prior to April 20, 1959, Weisbergs were the owners of the Best in the West Car Wash in Long Beach, California. They leased the land upon which the business was located from White. The term of the lease was until May 14, 1960, with an option to renew the lease for an additional term of seven years, to May 14, 1967. Under the provisions of the lease the lessee promised to pay all taxes assessed against the personal property, fixtures and improvements upon the premises. Unless in default, the lessee had the right to remove the fixtures and equipment during the term of the lease. Any fixtures and equipment not removed during such term became the property of the lessor, White, or, at the option of White, the lessee was required to remove said property.

On April 20, 1959, Weisbergs sold the Car Wash to Hundley, taking a promissory note for the unpaid balance of $47,000, secured by a chattel mortgage, which was duly recorded, on the furnishings, equipment and fixtures of the Car Wash. Weisbergs assigned their rights in their lease with White to Hundley with White's consent. The Weisbergs remained as guarantors under the assigned lease. (Realty & Rebuilding Co. v. Rea (1930), 45 Cal.App. 673, 188 P. 621.) On November 18, 1959, Hundley and White entered into an 'Extension of Lease and Consent to Sublease,' whereby Hundley exercised the option and renewed the lease until May 14, 1967. White consented to the subleasing of the land to Loughridge from November 16, 1959, to November 15, 1961. Hundley sublet the property to Loughridge. Under the terms of the sublease, Loughridge agreed to pay all personal property taxes levied on the Car Wash. This provision restated the obligation under the White-Weisbergs lease and assignment to pay such taxes. He also obligated himself to pay to Weisbergs for the account of Hundley twenty-four monthly installments of $500 each, commencing November 21, 1959. Weisbergs were not aware of the sublease until they received a payment form Loughridge in November 1959. Weisbergs objected to this arrangement and thereafter received some payments from Hundley, which came late. When Hundley explained that the delay was caused by his first having to collect from Loughridge and then forward the payment to Weisbergs, the latter agreed to accept the payments directly from Loughridge. About six months after Loughridge started to operate the Car Wash under his sublease, he told Weisbergs that he wanted to buy the Car Wash, and that Hundley wanted to get off the lease. Efforts to negotiate such a sale and release fell through. No further payments were made by Hundley or Loughridge to Weisbergs after February 1962. When Weisbergs contacted Loughridge about further payments, Loughridge stated, 'I don't owe you anything. What payment are you referring to? Get your money from Hundley. I don't owe you a thing.' When Hundley was contacted by Weisbergs, he expressed surprise that Loughridge had discontinued paying. The last conversation with Hundley was in August 1962.

The sublease between Loughridge and Hundley granted an option to renew for a period of two years and an option to purchase the Car Wash upon the payment of the sum of $5,000, the assumption of the Weisbergs chattel mortgage, and the assumption of the terms and obligations of the Weisbergs-White lease, which had been assigned to Hundley.

When the sublease expired in November 1961, Loughridge paid Hundley $5,000 for the purchase of the Car Wash and the assignment signment of Hundley's rights under the master lease. Loughridge did not assume the chattel mortgage, and Hundley's rights under the master lease were never assigned. An extension of the sublease until February 15, 1962, which also contained the terms of the purchase, was signed by Loughridge but not by Hundley. Loughridge testified that he did not purchase the Car Wash from Hundley but continued to occupy and use the premises.

On May 26, 1962, Hundley made a written offer to White to surrender his rights under the White-Weisbergs lease. On June 13, 1962, Weisbergs filed a complaint to foreclose their chattel mortgage, naming as defendants Hundley and Loughridge. On July 13, 1962, Loughridge and White entered into a lease covering the Car Wash for ten years, commencing June 15, 1962, and ending in 1972. This operated as an acceptance of Hundley's surrender of the lease. (Welcome v. Hess, 90 Cal. 507, 514, 27 P. 369.) The record does not disclose that either White, Hundley, or Loughridge notified the Weisbergs of the surrender of the White-Weisbergs lease. At the time of entering into the White-Loughridge lease, White had no right, title or interest in the property in controversy. ¹ Under the terms of this lease Loughridge promised to pay all personal property taxes upon the property of the lessee just as he had under the sublease with Hundley. The right to remove the Car Wash fixtures during the term of the lease under the same conditions imposed in the Weisbergs and Hundley leases was provided in the White-Loughridge lease, though for a period extending to 1972. While the record is not clear as to the relation between Hundley and Loughridge between November 15, 1961 (the expiration date of the Hundley-Loughridge sublease) and July 13, 1962 (the date of the execution of the White-Loughridge lease and the acceptance of Hundley's offer to surrender lease), it appears that Loughridge held over under the terms of his sublease with Hundley. (Shenson v. Shenson (1954), 124 Cal.App.2d 747, 753, 269 P.2d 170, i70 P.2d 896; Miller v. Stults (1956), 143 Cal.App.2d 592, 300 P.2d 312.) Under these circumstances Loughridge was obligated pursuant to the terms of his sublease with Hundley and under the terms of the subsequent White-Loughridge lease to pay the taxes assessed against the personal property and fixtures at all times subsequent to November 16, 1959.

On April 12, 1963, all of the property subject to the chattel mortgage was sold at a foreclosure sale of Weisbergs' chattel mortgage to Weisbergs' agent. The procedural validity of this sale is not disputed. Thereafter, Weisbergs demanded possession from Loughridge of the personal property bought in at the foreclosure sale. Loughridge has at all times thereafter refused to give possession to the Weisbergs.

On June 7, 1963, the same property was sold to Loughridge for delinquent taxes for the periods of July 1, 1961, to June 30 1962, and July 1, 1962, to June 30, 1963. These taxes were assessed to Hundley, and the bills for such taxes were sent to the Car Wash and were addressed to Hundley. Loughridge forwarded such bills to Hundley. Loughridge made tax payments only when requested to do so by Hundley. No one else requested that he pay the taxes though he was obligated to do so by his lease with White commencing June 15, 1962. Loughridge had notice of the tax delinquency prior to the sale, as the notice was posted on the Car Wash premises for the required statutory period. Weisbergs had no notice of either the tax delinquency or of the tax sale. Loughridge has been in continuous possession and his enjoyed the beneficial use of the Car Wash since November 1959 and is still in possession thereof.

Loughridge spent between $7,000 and $8,000 in repairing the Car Wash after the tax sale.

The trial court decreed that Loughridge was the owner of all of the Car Wash property and that Weisbergs had no right to possession of said property and no lien or encumbrance thereon.

Loughridge rested his title upon his purchase at the tax sale. ² We have concluded that Loughridge cannot successfully assert whatever interest he may have acquired at the tax sale against Weisbergs. As applied to real property, it has long been settled that 'one who is under a moral or legal obligation to pay the taxes is not in a position to become a purchaser at a sale made for such taxes. If such person permits the property to be sold for taxes, and buys it in, either in person or indirectly through the agency of another, he does not thereby acquire any right or title to the property, but his purchase is deemed one mode of paying the taxes.' (Christy v. Fisher (1881), 58 Cal. 256, 258; Garvey v. Byram (1941), 18 Cal.2d 279, 281, 115 P.2d 501, 136 A.L.R. 1137; People ex rel. Dept. of Public Works v. Taliaferro (1961), 188 Cal.App.2d 372, 10 Cal.Rptr. 724; Carberry v. Trentham (1956), 143 Cal.App.2d 83, 91, 299 P.2d 966; Gipson v. Spears (1955), 134 Cal.App.2d 370, 376, 285 P.2d 968; Dowd v. Glenn (1942), 54 Cal.App.2d 748, 755, 129 P.2d 771; Klumpke v. Henley (1914), 24 Cal.App. 35, 40, 140 P. 289, 313.) It has been...