DAVENPORT v. STRATTON

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District Court of Appeal, Second District, Division 1, California.

DAVENPORT v. STRATTON.

Civ. 13766.

Decided: December 23, 1942

Mathes & Sheppard and Gordon F. Hampton, all of Los Angeles, for appellant. James V. Brewer, of Los Angeles, for respondent.

This action was commenced by plaintiff, as assignee of the lessor under a lease, to recover from a guarantor upon such lease damages allegedly resulting from the failure of the lessee to perform the covenants of the lease.

From an examination of the record, we epitomize the facts as follows: 11 West 42nd Street, Inc., hereinafter referred to as the lessor, is a corporation organized under the laws of the State of New York. On February 1, 1929, this corporation, without guarantors or security for performance, leased to one Albert De Windt certain premises designated as offices numbered 1454–1456 located at 11 West 42nd Street, New York. Occupancy commenced under this lease February 16, 1929, and was to continue for a period of five years, two and one–half months, or until April 30, 1934. The rental under this lease was $3,000 per annum, payable in monthly installments of $250 commencing the first of May, 1929; the lease providing that no rent was to be charged until the last–named date.

On April 5, 1929, lessee De Windt made application to the lessor for the rental of additional space. Considering the lessee's financial responsibility inadequate to warrant leasing to him an additional portion of the premises, the lessor requested lessee De Windt to provide guarantors. In compliance with such request, lessee named Stanley E. Comstock and respondent herein, George W. Stratton, as proposed guarantors. On April 8, 1929, both Stratton and Comstock signed the following contract of guaranty.

“Annexed to and forming part of agreement dated April 8, 1929, between 11 West 42nd Street, Inc., as Landlord, and Albert De Windt, as Tenant, which agreement refers to lease dated February 1, 1929, between 11 West 42nd Street, Inc., as Landlord, and Albert De Windt, as Tenant.

“That in consideration of the landlord entering into the said agreement dated April 8, 1929, hereto annexed, and the sum of One (1) Dollar to each of us paid and other good and valuable considerations, receipt of which is hereby acknowledged, we do hereby jointly and severally covenant and agree, to and with 11 West 42nd Street, Inc., the said landlord above named, and the landlord's legal representatives, successors and assigns, that if default shall at any time be made by Albert De Windt, the said tenant, in the payment of the rent, or the performance of the covenants contained in the said lease dated February 1, 1929 and/or the said agreement dated April 8, 1929, hereto annexed, on the tenant's part to be paid and performed or should the landlord institute summary proceedings or any other action or proceedings for the recovery of the possession of the said premises, by reason of the non–payment of the rent or otherwise, that we jointly and severally will well and truly pay the said rent or any arrears thereof, or any other sum or sums provided to be paid by the tenant under any of the terms of the said lease dated February 1, 1929 and the said agreement dated April 8, 1929 hereto annexed, that may remain due unto the said landlord or that may become due, and any or all damages that may arise in consequence of the non–performance of said covenants, or any of them, without requiring notice of any such default from the said landlord, and without requiring any proceedings to be taken against said tenant for the collection of said amount or amounts. This guarantee agreement is intended to apply to and to affect both the said lease dated February 1, 1929, and the said agreement dated April 8, 1929, hereto annexed.”

Fortified with this guaranty as added security, the lessor executed a new lease with lessee, De Windt. Such lease bore date of April 8, 1929 and covered the enlarged premises. The term of this lease was for five years with an annual rental of $6,000 payable at the rate of $500 per month commencing May 1, 1929, and terminating April 30, 1934. The last mentioned lease adopted by reference all of the general provisions contained in the original lease of February 1, 1929.

Because the enlarged premises were not suitable for occupancy on May 1, 1929, the lessee did not take possession until some few days later, and the lessor charged a rental of $426.02 for the month of May, instead of the agreed rental of $500. Thereafter, however, the tenant paid $500 rent for each of the months of June, July and August, 1929.

When the lessee failed to pay the September rent, the lessor commenced dispossess proceedings against him in the Municipal Court of the City of New York, as a result of which said court ordered possession of the demised premises restored to the lessor, and issued a warrant for removal of the lessee therefrom, which warrant was executed November 4, 1929. At this time the balance of the unpaid rental for the remainder of the term amounted to $28,000.

In contemplation of the possible default of the lessee in the payment of rent and the consequent restoration of the premises to the lessor, the lease contained the following provision hereinafter referred to as clause “Twenty–first.”

“That if the rent, additional rent or any other sum payable hereunder or any part of installment thereof shall be unpaid when due * * * then in any of such events, the Landlord may reenter and/or repossess the demised premises and remove all persons and property therefrom by summary proceedings. * * * In any such case or in any other case in which the Landlord shall resume possession of the demised premises by summary proceedings or otherwise, the Landlord at its option may repair, subdivide, alter or change the character of the demised premises and from time to time as the Landlord shall deem best, may let the demised premises or any part or parts thereof for the whole or any part or parts of the residue of the original term hereof, and receive the rents therefor, applying the same, first, to the payment of any and all expenses which the Landlord may have incurred in recovering possession of and in repairing or altering and in letting the demised premises and in collecting such rents and then to the fulfillment of the covenants of the tenant hereunder, and the overplus, if any, shall be paid to the tenant after all the liabilities and obligations of the tenant under this lease have been terminated. After the Landlord shall have re–entered or resumed possession of the demised premises in any of the contingencies or by any of the methods provided for in this lease, the Tenant, notwithstanding such re–entry or re–possession by the Landlord, shall pay to the Landlord at the times herein fixed for the payment of the several installments of rent and of the several items of additional rent and other sums that may or would have become payable hereunder, such part of the amount of any such installment of rent or of any such item of additional rent or of any such other sums as shall remain unpaid after the application as aforesaid of the rents theretofore collected by the Landlord from such reletting. The Tenant shall make such payments whether the demised premises remain vacant or shall have been relet by the Landlord as provided for above. * * * No reentry and/or repossession of the demised premises by the Landlord, whether by summary proceedings, or otherwise, shall be deemed to absolve or discharge the Tenant from any liability hereunder. * * *”

After eviction of the tenant De Windt from the premises, the lessor listed the vacancy with its own salesmen; with other real estate brokers, and as well, advertised the rentable premises in New York newspapers. Thereafter, on December 26, 1929, a portion of the premises numbered as offices 1446–1450 were leased to Beauty Culture, Inc. To meet the needs and demands of such new tenant, the lessor made certain alterations on the premises, such as closing an archway opening into the offices 1454–1456; removal of a steel and glass partition, and changing the entrance door into the corridor by increasing the size of the vestibules. The cost of these alterations approximating $100 is not sought to be recovered herein. From this tenant the lessor received in rentals the total sum of $10,266.80.

The lessor was unable to rent the remainder of the surrendered premises until April 8, 1931, and to meet the requirements of this new tenant, the lessor likewise made changes in the arrangement of the quarters, but does not seek to recover the cost of such alterations amounting approximately to $1,200. As an inducement to this last named tenant, the lessor granted free rent from May 1st to September 30, 1931. Thereafter total rental in the sum of $5,900.03 was collected by the lessor. The lease to De Windt upon which respondent appears as a guarantor required the tenant to pay a total sum of $30,000 as rental for the term of the lease. De Windt paid $2,000 of this sum which, added to the total re–rentals of $16,166.83, left an unpaid balance at the conclusion of the rental term, April 30, 1934, of $11,833.17. It was to recover this amount that plaintiff instituted this action on March 30, 1937. Trial was had before a jury which returned a verdict in favor of defendant Stratton. From the judgment entered upon such verdict and from the trial court's order denying a motion for judgment notwithstanding the verdict, plaintiff prosecutes this appeal.

The appeal from the order denying plaintiff's motion for judgment notwithstanding the verdict must be dismissed because the motion made herein for a directed verdict was not timely. Although defendant made such a motion prior to the submission of the case to the jury and plaintiff opposed such motion, the latter did not at that time make a similar motion, but on the contrary, proceeded to and did argue the case to the jury, submitted instructions which were given to the jury and then, after the jury had retired and deliberated for some time in charge of the bailiff, the plaintiff presented for the first time her motion for a directed verdict. This course of action on the part of plaintiff amounted to a waiver of her right to a directed verdict, and the court properly denied plaintiff's belated motion therefor. Manifestly, the court committed no error in denying the motion subsequently made by plaintiff for judgment notwithstanding the verdict. § 629, Code Civ.Proc.

Respondent urges a dismissal of the appeal from the judgment on the ground that appellant failed to comply with section 2, rule VIII of the Rules for Supreme Court and District Courts of Appeal, which requires that a statement of the question involved on an appeal in a civil action shall be set forth on the first page of the appellant's opening brief. Having in mind the limited space allowed by our rule, we are satisfied that counsel for appellant, under the circumstances of this case, has substantially complied with the judicial council requirement and has stated in the opening brief the general nature of the essential question submitted to this court.

Appellant's main ground of appeal is that, under the evidence presented in this case, he was clearly entitled to recover from the guarantor the unpaid balance of the tenant De Windt's rent, and that the judgment in favor of defendant is without legal support in the evidence. We are persuaded that in this claim appellant must be sustained because, stripped of all technicalities with which the law surrounds leasehold interests, the clear intention of the parties was this: Plaintiff's assignor negotiated a lease with one De Windt, but required as a consideration for executing such lease that the tenant obtain two guarantors, one of whom was the defendant herein. The liability assumed by defendant as such guarantor was simply that should the tenant Albert De Windt at any time default in payment of the rent, the guarantors would pay such rent or any arrears thereof, in the amount as well as in the manner provided by the terms of said lease, which document, it might also be added, specifically stated that the guarantors executed the contract of guaranty in consideration of the execution by the landlord of the lease in question. That the tenant defaulted in the payment of his rent is undenied and the claimed amount of such default under the terms of the lease is unquestioned. Respondent contends that appellant has failed to call to the court's attention all of the evidence favorable to the verdict and judgment, and that we must so assume in the light of the asserted meagerness of the statement of the evidence contained in appellant's brief. However, when appellant claims, as herein, that there is no evidence to support a finding or judgment, then there is nothing for him to print, and when a total absence of evidence to support a verdict and judgment is claimed and respondent asserts that there is some evidence, the duty devolves upon him to direct the court's attention to such evidence. Lange v. Curtin, 11 Cal.App.2d 161, 165, 53 P.2d 185.

In recognition of this obligation, respondent does direct our attention to evidence showing that after the tenant was dispossessed, the landlord made certain alterations in the premises, all of which allegedly rendered the premises unadaptable to use by one tenant, and therefore less rentable and less valuable after being so altered. This course of conduct on the part of the landlord, respondent argues, served to relieve the guarantors. In support of this claim respondent cites the case of Salomon v. Cawston Ostrich Farm, 43 Cal.App. 465, 185 P. 314. However, the cited case impresses us as not being pertinent or having any application to the case at bar, for the reason that, insofar as the decision in the case relied upon by respondent is concerned, there was contained in the lease there under consideration no provision permitting the landlord to re–enter the premises and make the changes complained of. In fact, it is stated in the aforesaid decision that the appellant relies upon the doctrine announced in New York that “The spirit of the agreement required him to lease again the same subject which he had demised to the first lessee.” Page 468 of 43 Cal.App., page 315 of 185 P. Again, it is stated in the same decision (page 468 of 43 Cal.App., page 315 of 185 P.): “The respondent maintains that its obligation as a guarantor could not be extended beyond the terms of the guaranty.” In the case with which we are here concerned, however, the “Twenty–first” clause of the lease contains the specific provision for a re–entry by the lessor; the making of physical changes and alterations at the option of the lessor; re–letting the premises as so remodeled, and then holding the defaulting tenant for the unpaid balance after any such reletting and remodeling. The contract of guaranty having been executed in consideration of the execution of the lease, the lease and the guaranty must be construed to be but one instrument, amounting to a single contract upon which the liability of the guarantors, to the extent of their obligation, was co–extensive with that of the lessee. Reios v. Mardis, 18 Cal.App. 276, 281, 122 P. 1091. The cases seem to be in harmony that where, as here, the lease and the guaranty each constituted consideration or an inducement for the other, the two instruments are not to be treated as though they were two separate instruments, but under such circumstances, for the purpose of interpretation, the instruments are to be considered as one. Throughout the guaranty, we find provisions of the lease being adopted therein by incorporation and reference, and in one of such provisions in the guaranty, we find the statement: “This guarantee agreement is intended to apply to and to affect both the said lease dated February 1, 1929, and the said agreement dated April 8, 1929, hereto annexed.”

Respondent guarantor was therefore bound by the terms of the lease he guaranteed, and the last named instrument authorized the landlord after default by the tenant to make the alterations concerning which complaint is here made.

Respondent's claim that, because he did not receive the $1.00 named as consideration for the execution of the guaranty, he is relieved of responsibility thereunder is without merit, for the reason that the underlying and real consideration for executing the guaranty was the execution by the lessor of the lease, and where a sufficient consideration for a contract is shown by the evidence and is revealed to be the actual consideration, it is sufficient to give vitality and legality to the contract, even though a different consideration appears in the writing. Bowman v. Union Trust Co. of San Diego, 41 Cal.App.2d 397, 403, 106 P.2d 913.

Equally without merit is respondent's contention that, because the lease was not physically attached to the contract of guaranty, or was not signed until after the guaranty contract, the guarantors were released from liability. The contract of guaranty itself recites that it was “Annexed to and forming part of agreement dated April 8, 1929, between 11 West 42nd Street, Inc., as Landlord, and Albert De Windt, as Tenant, which agreement refers to lease dated February 1, 1929 between 11 West 42nd Street, Inc., as Landlord and Albert De Windt, as Tenant * * * that if default shall at any time be made by Albert De Windt, the said tenant, in the payment of the rent or the performance of the covenants contained in the said lease dated February 1, 1929 and/or the said agreement dated April 8, 1929, hereto annexed * * * under any of the terms of the said lease dated February 1, 1929, and the said agreement dated April 8, 1929 hereto annexed * * *. This guarantee agreement is intended to apply to and to affect both the said lease dated February 1, 1929 and the said agreement dated April 8, 1929, hereto annexed.”

Furthermore, the fact that the lease was not actually annexed to and did not accompany the contract of guaranty at the time the latter was presented to the respondent for his signature, did not operate to destroy the legal unity of the two agreements. Where there is a merger by reference of separately executed written instruments, actual annexation is not essential. Beedy v. San Mateo Hotel Co., 27 Cal.App. 653, 660, 661, 150 P. 810.

Respondent was not entitled to notice of acceptance of the guaranty herein because the same was absolute in form, and being unconditional and absolute, it was binding on the guarantors without notice of acceptance. Thorpe v. Story, 10 Cal.2d 104, 117, 118, 73 P.2d 1194; Union Bank v. Coster's Ex'rs, 3 N.Y. 203, 213, 53 Am.Dec. 280. Neither was the lessor required to give notice to the guarantors of default by the tenant, because the contract of guaranty unequivocally bound its makers to answer for the default of the tenant “without requiring notice of any such default from the said landlord.” It would be difficult, indeed, to phrase a waiver of notice in language more lucid, explicit or plain.

It is next urged by respondent that he was discharged from liability under the contract of guaranty by reason of claimed alterations in the contract guaranteed. In this respect, respondent sets forth that for the month of May, 1929, the rent was reduced from $500 to $426.02, and that an extension of time was granted for the payment of the first month's rent; that in June default occurred in the payment of that month's rent, and the landlord extended the time for payment thereof until June 11th, while payment of the July rent was extended to the 16th of that month; that an extension to September 6, 1929, was given for the payment of that month's rent. We are not unmindful of the application by courts of the rule of strictissimi juris with regard to contracts of guaranty, under which rule the obligations of the guarantor are strictly construed in his favor, but it is only when an alteration in the subject of an agreement amounts to a different contract that the guarantor is discharged. In the case at bar the lease remained unchanged insofar as the rent due each month was concerned. The acceptance of a lower rental for one month amounted only to a mere gift from the lessor to the tenant and does not constitute a material alteration of the written contract such as will release the guarantor. Kennedy v. Moyer, 5 Cal.App.2d 29, 31, 42 P.2d 352. The extension of such a favor by oral agreement between the lessor and the lessee never had any executory force as a contract modifying the terms of the lease. Dodge v. Chapman, 42 Cal.App. 612, 615, 183 P. 966. The temporary reduction amounted only to a sacrifice or waiver by the landlord; did not materially alter the terms of the lease so as to effect the discharge of the guarantor. Becker v. Faber, 280 N.Y. 146, 19 N.E.2d 997, 121 A.L.R. 1010; Cluver v. Sachs, 138 Misc. 352, 354, 245 N.Y.S. 699; Stroud v. Thomas, 139 Cal. 274, 72 P. 1008, 96 Am.St.Rep. 111; Callaghan v. Olsen, 58 Cal.App. 96, 207 P. 1014. For the same reasons, the guarantor has no valid basis for claiming discharge because of any extension in time for payment of the rent. Leniency extended by the lessor to the lessee in the payment of the rent, without changing the time when under the lease contract the payment of the rent due might be demanded, does not constitute an extension of the time for payment that will relieve the guarantor. Giving such leniency and such consideration under the facts here present to the tenant does not discharge the surety, for mere indulgence of this kind under the law of this state or the State of New York will not discharge a surety. Clark v. Sickler, 64 N.Y. 231, 234, 21 Am.Rep. 606; National Citizens Bank v. Toplitz, 178 N.Y. 464, 467, 71 N.E. 1.

Respondent's claim that the reletting by the lessor after dispossession of the tenant amounted “to the same thing as an assignment,” cannot be upheld. When by legal proceedings the tenant was ejected and dispossessed the lease was at an end. There was nothing to assign. All that remained and survived was a liability, not for rent, but for damages. Hermitage Co. v. Levine, 248 N.Y. 333, 162 N.E. 97, 59 A.L.R. 1015. Furthermore, the reletting was authorized by clause “Twenty–first” of the lease which has relation to the ascertainment of damages.

It is further urged by respondent that he was discharged from liability under his contract of guaranty for the reason that after the lessor had on September 17, 1929, obtained a writ of dispossession, he delayed service and execution of the same until November 4, 1929. We are not impressed with this argument, because there is no showing in the record of any agreement on the part of the lessor to stay or countermand the warrant of dispossession. Therefore, whatever delay occurred in the service of such warrant, in the state of the instant record, cannot be reasonably charged against the lessor and certainly does not amount to conduct on the part of lessor which will release the respondent guarantor.

Finally, respondent urges all but twelve months of the installments upon the lease were barred by the statute of limitations. § 337, Code Civ.Proc. While it is true that when a tenant repudiates a lease and abandons the premises the landlord may rest upon his contract and sue for each installment of rent as it falls due, nevertheless, when there are no covenants to the contrary, the landlord is not restricted to the course of action just stated. He has another remedy, and that is the course taken by the lessor herein to wit: take possession of the premises, relet the same and recover from the tenant any damages suffered thereby. In the case at bar, clause “Twenty–first” of the lease clearly empowered the landlord upon resumption by him of possession of the premises through the default of the tenant, to relet such premises. The law is clear that when the last–named method is lawfully resorted to by the landlord, he cannot recover in installments, but must bring his action at the expiration of the original term, because that is the first time at which the damages can be ascertained. In fact, ordinarily, the reletting of the premises is tantamount to an election to terminate the lease and to hold the tenant for damages, in which case, as heretofore pointed out, an action cannot be maintained successfully until the original term has ended. True, a lease may be so drawn that it contains provisions through which the rule just announced may be evaded, but in the present case, the lease specifically authorized the landlord to invoke, as he did, the last–mentioned rule. What we have just said is in harmony with the doctrine enunciated in Phillips–Hollman v. Pearless Stages, 210 Cal. 253, 259, 291 P. 178.

From the foregoing, it follows that the verdict and the judgment predicated thereon are wholly unsupported by the law and the evidence, and that plaintiff is entitled to recover the full amount of unpaid rent in the sum of $11,833.17.

The attempted appeal from the order denying the motion for judgment notwithstanding the verdict is dismissed, and for the reasons herein stated, the judgment is reversed and the cause remanded with directions to the court below to enter judgment in favor of plaintiff for the sum of $11,833.17 with interest thereon at the rate of 7% per annum from April 30, 1934, the same being the date of termination of the rental term.

WHITE, Justice.

YORK, P. J., and DORAN, J., concurred.

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