MITCHELL ET AL v. CEAZAN TIRES LIMITED

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District Court of Appeal, Second District, Division 3, California.

MITCHELL ET AL. v. CEAZAN TIRES, LIMITED.

Civ. 14119.

Decided: February 25, 1944

L. D. Uhlman, of Long Beach, for appellants. Charles J. Katz, Alfred Gitelson, and Mose Katzev, all of Los Angeles, for respondent.

Because of the tire rationing program which followed closely upon December 7, 1941, the defendant, a wholesaler of new tires, took the position that it was relieved from all obligations under a lease it had with the plaintiffs for a building in which to carry on a branch of its business in the city of Long Beach. We have reached the conclusion that the defendant was not released from its lease by the restrictions placed upon its business.

The lease between the parties was entered into in March, 1940, and was to run to July 24, 1943. Its fourth paragraph read:

“The Lessee shall have the full control and occupancy of the buildings upon said premises and may sublet or sublease any part or portion thereof to any acceptable and responsible person, but the Lessee is to be and remain liable for the rentals herein reserved and for the performance of all the conditions of this lease imposed upon the Lessee.

“The premises hereby leased are to be used for the conduct of an automobile tire business and other related business such as automobile supplies, and in no event used for a business that would increase the fire hazard or insurance rates.”

This 1940 lease was a renewal of one entered into in 1937, with like terms except that the rental under the renewal lease was $125, instead of $150, per month. The use the defendant had been making of the premises covered by the two leases had been entirely that of selling tires and tubes; no “related” business had been engaged in. With the successive restrictions imposed by the O.P.A. upon the sale of tires, beginning with the freezing order of December 11, 1941, the defendant found its business materially affected and on February 23 served a notice of rescission upon the plaintiffs, giving warning that on February 25 it would quit plaintiffs' premises and pay no more rent after that date. On February 25 the defendant did vacate the leased property. Plaintiffs promptly brought this suit, seeking a judgment that the lease was still a binding obligation upon the defendant. From a judgment declaring that the defendant was under no further obligation for rent on the leased premises, the plaintiffs appealed.

Plaintiffs' position is that the provisions of the lease respecting the use to which the defendant might put the premises, were permissive, not restrictive; that the defendant could make any use of the property, so far as the lease was concerned, except as limited by the provision, general in its application to all businesses, that the use should not increase the fire hazard or the insurance rates. The defendant advanced two theories, which found favor with the trial court: First, it contended, the lease by its terms restricted the use of the premises to the automobile tire business and to other related businesses, such as the business of automobile supplies, and that the restrictions placed by the government upon the tire business so destroyed the usefulness of the premises to it (the lessee) that it was released from the payment of further rent. Second, it argued, its right to be relieved of the burdens of the lease, because of the severe restrictions on the sale of new tires, is to be measured by its known purpose in leasing plaintiffs' property, for the sale of new tires only, whatever interpretation be placed on the lease. In this connection it points to the fact that it made no use of the leased buildings other than for the wholesaling of tires as proof that that was its primary purpose in securing the lease, and that any other “related” business that it was authorized to engage in was to be in conjunction with the primary business, and was frustrated with it.

With respect to the interpretation to be placed upon the lease itself, it does not matter, in the end, whether it is held to be permissive or restrictive. If permissive, the defendant beyond doubt would remain liable for the rent, as will be seen from the cases soon to be cited. But if the lease is regarded as restrictive, even so the defendant remained under obligation to fulfill its provisions. Looking to the uses which the lease authorized the defendant to make of the demised premises, we find them to be: “for the conduct of an automobile tire business and other related business such as automobile supplies.” One might engage in many phases of the automobile tire business itself without violating any of the regulations which caused the defendant to rescind. The first orders prohibited entirely the sale of new tires and tubes, but left unaffected the sale of second hand tires and tubes. Later, sales of new tires and tubes were permitted, although in a greatly restricted market, and the sale of used and reconditioned tires was placed under a rationing program. From early in January, 1942, there were restrictions, not prohibitions, upon the sale of tires. At all times the business of repairing and changing tires and tubes continued to be lawful. The defendant may not have cared to engage in the branches of the tire business which remained open to it, but it could lawfully have done so in the premises it had leased.

So, too, could it without restrictions have conducted numerous “related” businesses, of which “automobile supplies” was named in the lease, plainly as an illustration, not a definition. There are those who find a livelihood in selling, renting, repairing and charging batteries. We suggest this as a possible “related” business which, so far as we are aware, remained lawful. The furnishing of automobile supplies has been the business of a well known chain of stores, and many stores carry large stocks. The defendant had the undoubted right to use its leased premises for this business.

One principle that we find to be applicable to the situation thus presented is thoroughly established. It was expressed in these words in an annotation published in 1920 (7 A.L.R. 836): “The decided weight of authority is to the effect that where the contract does not restrict the use of the leased premises to a single purpose, it is not invalidated by a subsequent enactment prohibiting the use for less than all of the several purposes specified.” Since the publication of the annotation from which we have just quoted, these cases recognizing the principle have been decided: Jacobs v. Mingle, 1923, 278 Pa. 250, 122 A. 285, 286; Girard Trust Co. v. Tremblay Motor Co., 1928, 291 Pa. 507, 140 A. 506, 511; Grace v. Croninger, 1936, 12 Cal.App.2d 603, 55 P.2d 940; 61–69 Pierrepont St. v. Feist, 1940, 124 N.J.L. 412, 11 A.2d 727; Byrnes v. Balcom, 1942, 265 App.Div. 268, 38 N.Y.S.2d 801, affirmed, 1943, 290 N.Y. 730, 49 N.E.2d 1004; Davidson v. Goldstein, 1943, 58 Cal.App.2d Supp. 909, 911, 136 P.2d 665. Another principle, also applicable to the situation in which the defendant found itself, was stated in Byrnes v. Balcom, one of the cases just cited, as follows (page 803, of 265 App.Div., page 803 of 38 N.Y.S.2d): “A change in the law during the term of the lease, however, which merely restricts but does not wholly prohibit the conduct of the business carried on, does not release the tenant from his obligation to pay rent.” Other cases to the same point are: Grace v. Croninger, supra; Davidson v. Goldstein, supra; Colonial Operating Corporation v. Hannan Sales & Service, Inc., 1943, 265 App.Div. 411, 39 N.Y.S.2d 217; Robitzek Investing Co. v. Colonial Beacon Oil Co., 1943, 265 App.Div. 749, 40 N.Y.S.2d 819, 822; Deibler v. Bernard Bros., 1943, 319 Ill.App. 504, 48 N.E.2d 422.

Of these several cases cited we shall make further reference only to one, the case of Grace v. Croninger. That action was by the lessor upon a guaranty for the payment of the rent under a lease which gave the lessee the right to use the premises as a saloon and also for bootblack and cigar store purposes. It is quite obvious that the primary purpose of such a lease would be the running of the saloon; the other two purposes would be incidental to the major operation. After the lease was entered into the War–Time Prohibition Act, 27 U.S.C.A. § 1 et seq., outlawed the sale of intoxicating liquor. “The main question presented by these appeals,” the court stated (page 605, of 12 Cal.App.2d, page 941 of 55 P.2d), “is whether the liability of the guarantor for the subsequently accruing rents ceased upon the enactment of the War–Time Prohibition Act.” It was determined that the liability did not cease, for three reasons: First, because there were two uses authorized by the lease which were unaffected by the statute, viz. the use of the premises for bootblacking and for a cigar store. Second, the conduct of the saloon business was not prohibited but only restricted, for soft drinks could still be sold. Third, the lessee continued in possession of the premises. In our case the third reason does not exist, but each of the others does, and as they would singly, so they do jointly, support the conclusion that the defendant had not been released from its obligation to pay rent under the terms of its lease.

We have seen that a lessee is not released from the obligations of a lease which permits or authorizes him to use the property for two purposes by a police regulation which stifles one use only. A lessee cannot escape the effect of this rule by proving that it never was his intention to use the property in the way that remains lawful, that his only purpose in obtaining the lease was to use the property in the business he is no longer permitted to carry on. The lessee's obligations, under the lease, are to be measured by his rights, not his desires. Davidson v. Goldstein, supra, 58 Cal.App.2d Supp. 909, 910, 136 P.2d 665; Robbins v. McCabe, 1921, 239 Mass. 275, 131 N.E. 799; Colonial Operating Corp. v. Hannan Sales & Service, Inc., 1943, 265 App.Div. 411, 39 N.Y.S.2d 217. Especially is this true where his right under the lease is not limited to his own use of the premises but includes the right to take such reward as may be obtained from a subletting. A lessee with the right to sublet, and that describes the defendant in the present case, is in no position to claim that he has been deprived of the fruit of his lease just because the use he wished to make of it is no longer possible.

Upon the return of this case to the trial court the cause of action that will remain will no longer be one in equity for declaratory relief, but one at law for rent which has become past due. This may necessitate some amended or supplemental pleading which the plaintiff should be permitted to make.

The judgment is reversed.

BISHOP, Justice pro tem.

SHINN, Acting P. J., and PARKER WOOD, J., concur.