PEOPLE v. KLOPSTOCK ET AL (1944)

This is an appeal by defendant Elerding from that portion of a judgment in an eminent domain proceeding by which the entire compensation was awarded to defendants Northwestern Pacific Railroad Company and City Bank Farmers Trust Company and by which it was decreed that defendant Elerding was not entitled to participate in the award.

Defendant Elerding claims as the assignee, through several purported assignments, of a lease executed in 1924 by the defendant Northwestern Pacific Railroad Company, as lessor, and Pacific States Construction Company as lessee. That lease covered a portion of the premises here involved and was for a period of one year at a monthly rental of $10. It provided that in case the lessee should hold over, such holding should be deemed a tenancy from month to month. It also provided that the lease could not be assigned without the written consent of the lessor. The lessee went into possession and remained in possession under the lease until March 20, 1940, at which time Consumers Rock Cement Company went into possession under a purported assignment from the lessee. The lessor did not give its consent to said assignment and it refused to accept tenders by said assignee of the monthly rental provided in the lease. The lessor wrote three letters to said assignee dated March 27, 1940, April 8, 1940 and May 13, 1940, stating that it refused to recognize the validity of said assignment but it served no notice terminating or declaring a forfeiture of the lease. Thereafter the lessor brought an action in unlawful detainer against Consumers Rock & Cement Company. In that action, the trial court denied judgment for restitution of the premises upon finding that no notice had been served terminating or forfeiting the lease but it entered its judgment in favor of the lessor for the claimed rental value of the premises which was in excess of the rental provided in the lease. Upon the appeal in that action, the portion of the judgment awarding rental in excess of that provided in the lease was reversed. Northwestern Pac. R. Co. v. Consumers Rock & Cement Co., 50 Cal.App.2d 721, 123 P.2d 872.

The present proceeding in eminent domain was commenced on February 23, 1940, being about one month prior to the time of the purported assignment of the lease by Pacific States Construction Company to Consumers Rock & Cement Company. Defendant Elerding claims through mesne assignments, purporting to vest in said defendant all of the rights of the lessee under said lease. It does not appear however that the lessor consented to any of said assignments. It is because of the provisions of the lease permitting the lessee, under certain conditions, to remove the improvements erected upon the premises that the rights of the assignee of the lessee were claimed to have had a substantial value. The trial court found that the various assignments under which defendant Elerding claimed “were ineffective to vest any right, title or interest in the defendant Bert Elerding, and that said defendant Bert Elerding has no interest in the parcels sought to be condemned and is not entitled to participate in the award or receive any compensation for his alleged interest therein”.

On this appeal, defendant Elerding cites and relies upon the decision in Northwestern Pac. R. Co. v. Consumers Rock & Cement Co., 50 Cal.App.2d 721, 123 P.2d 872, 873. He claims that the effect of that decision was to uphold the validity of the assignment of the lease to the Consumers Rock & Cement Company and further to sustain the validity of all subsequent assignments of the lease. We are of the view, however, that defendant Elerding's claims with respect to the effect of that decision may not be sustained. In that case, all parties conceded that the lessor was entitled to recover some rental from the defendant in that action. The sole issue presented on the appeal was whether lessor's recovery should have been limited to the amount of rental provided by the lease. The reversal of the portion of the judgment appealed from was based upon the fact that the lessor had served no notice terminating or declaring a forfeiture of the lease and upon the conclusion that the lessor was therefore not entitled to recover rental in excess of that provided by the lease. Under the limited issue presented on that appeal, it cannot be said that the decision had the effect of upholding the validity of the assignment to Consumer's Rock & Cement Company or of sustaining the validity of any possible subsequent assignments. The holding in that case went no further than to declare that the lessor did not have “the option of merely giving notice of the invalidity of the assignment without declaring a forfeiture of the lease, and then suing for rental in excess of that provided in said lease”. The peculiar situation in that case developed from the giving by the lessor to the purported assignee of notice of the invalidity of the assignment followed by the making by the lessor of an unsuccessful attempt to obtain restitution of the premises from the purported assignee.

In the present case, defendant Elerding's rights, if any, are based upon the claim that all the assignments were valid and that all the rights of the original lessee vested in said defendant. The lease provided, however, that the lessee should not “assign this lease or any interest therein without the written consent of the Railroad Company and satisfactory obligation by proposed * * * assignee to be bound by all the terms and provisions of this lease first had and obtained”. There is no evidence of any consent by the lessor to any assignment or of any conduct constituting a waiver of said provision of the lease. On the contrary, it appears that the lessor promptly gave notice of the invalidity of the first purported assignment to Consumer's Rock & Cement Company and that said lessor has at all times taken the position that all purported assignments of the lease were invalid. We are of the view that the lessor had the right to take the position that all assignments made contrary to the terms of the lease were invalid and that the lessor was entitled to assert that right either with or without declaring a forfeiture of the lease. If this be true, then the mere fact that the lessor may have made an unsuccessful attempt to obtain restitution of the premises in the above–mentioned action against Consumers' Rock & Cement Company upon the theory that the lease had been terminated by forfeiture should not effect the lessor's right in this action to maintain its position that all assignments were invalid. We find no evidence which would support a finding or conclusion that any of the assignments were valid and it follows that the trial court correctly determined that defendant Elerding was not entitled to participate in the award.

The judgment is affirmed.

SPENCE, Justice.

NOURSE, P. J., and STURTEVANT, J., concur.