LOVETT v. BELL (1946)

The question for decision is whether the owner of a motor hotel consisting of 12 units is entitled to a judgment evicting a lessee who has for a valuable consideration agreed that he will not have any interest in the leased premises after the expiration date of the lease, despite the ‘Maximum Rent Regulation’ for housing promulgated by the federal Office of Price Administration (OPA) as authorized by the federal Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 901 et seq.

Judgment evicting defendants and awarding damages for withholding having been entered, the matter comes here on appeal.

In September, 1940, by a writing respondents leased their motor hotel in Glendale for the term of five years ending September 30, 1945, for a total rental of $12,000, the first month and the last 15 months payable in cash, the balance payable in equal monthly installments. The lessee promptly assigned the lease to appellant R. H. Bell who apparently then and at all times thereafter acted on behalf of both himself and his codefendant. By paragraph Sixth of the lease ‘lessee shall have an option for the rental of said premises, upon the expiration of the lease, for an additional period of five years, upon the same basis, terms and conditions provided for herein.’ By paragraph Seventh, ‘Lessor shall have the right, and shall be permitted to sell the said premises at any time during the term of this lease, but upon such sale the said lessees shall be entitled to receive from the said lessor all unearned rental, and upon such sale the said lessor shall pay to the lessees any and all rentals then unearned.’

On May 3, 1944, by a written instrument the parties so modified the lease that appellants relinquished the ‘right to the exercising of an option beyond the 30th day of September, 1945, and by these presents give up all right to said option and will not have any interest in said leased premises above described after the 30th day of September, 1945,’ and respondents ‘relinquish their right to sell said premises free and clear of said lease prior to the expiration of said lease. * * *’

Anticipating that they would be requested to vacate the premises on the expiration date of the lease on September 25, 1945, appellants forwarded to respondents $200 as rent ‘for calendar month October, 1945,’ and in a letter suggested that ‘a tenant has some rights.’ The prompt reply to such communication was a return of appellants' check with a declaration that the latter's continued occupancy after September 30 would result in an action of ejectment. Without observing the formalities prescribed by the ‘Maximum Rent Regulations' and the federal ‘Price Control Act,’ hereinafter referred to as the Act, respondents filed their complaint herein on October 11, 1945, and following a trial, findings and decision and judgment were filed on November 20, 1945. Inasmuch as all legal questions raised at the trial and by the appeal are involved in the trial court's decision on the merits, a consideration of the sufficiency of the evidence to support the findings and of the findings to support the judgment will dispose of all assignments.

The Findings.

The findings of the court material to this discussion are that the lease was so modified by the writing of May 3, 1945, that appellants relinquished to respondents all rights to remain upon the leased premises and they have no interest therein; that prior to September 30, 1945, demand was made upon appellants for possession at the expiration of the lease; that the withholding was deliberate, intentional and wilful despite appellants' knowledge that their right to possession had terminated; that the reasonable value of the use of the premises by appellants after September 30, 1945, is $904 which is the amount of respondents' damage; that while the premises are situate within a defense rental area, no relationship of landlord and tenant existed after September 30, 1945, and the Rent Director of the OPA has no jurisdiction over the subject matter of the action.

The Evidence Supports the Findings.

The consideration passing to appellants by the modification agreement was the right of unmolested occupancy to the expiration of the lease. For that they paid respondents $1250 and yielded a complete surrender of the premises to become effective when their right of possession should terminate. Appellants promptly sued respondents to recover the money paid with penalties as having been received in violation of the ‘Maximum Rent Regulation.’ Judgment against them on that claim was recently affirmed. Bell v. Lovett, 75 Cal.App.2d 883, 171 P.2d 758.

Inasmuch as the ‘Maximum Rent Regulation’ was in effect when appellants agreed that the would ‘not have any interest in said leased premises * * * after the 30th day of September, 1945,’ the inference was fairly deducible that appellants agreed to yield possession and to surrender all rights thereto on the 30th of September and not to attempt to continue their occupancy with the aid of the Rent Administrator. Such inference is reasonable and is supported by the testimony of Mr. Bell that he effected the modification agreement in order that he might have security in his occupancy of the hotel for the full term of the lease. Demand for possession was proved by the letter of respondents to appellants and the reply thereto. The withholding was not denied but the continued occupancy despite the agreement and notice to quit on September 30 was proof that the withholding was deliberate and wilful. The amount of damages awarded, $904, was established by Mr. Lovett's testimony that the daily net income from the property was $29. While the findings (1) that no relationship of landlord and tenant existed after September 30, 1945, and (2) that the Rent Director has no jurisdiction over the controversy are primarily legal conclusions, yet the factual features of such declarations are established by the clear, simple, unequivocal language of the modification agreement and by the aforementioned testimony of Mr. Bell. Appellants' stipulation that they ‘will not have any interest’ in the hotel after September 30, 1945, was their own supreme prior adjudication of any possible claim to retain possession they might thereafter assert. If a total renunciation of interest in the property be not the fact established by the language of the agreement then the art and custom of reducing to writing the understandings of men might as well be cast into the discard.

The Findings Support the Judgment.

Notwithstanding the agreement of May 3, 1944, appellants contend that, by virtue of the Maximum Rent Regulations promulgated by the office of Price Administration pursuant to the Price Control Act of 1942, they cannot be evicted unless the complaint allege, and proof be made of, a full compliance with such Rent Regulations, and not at all if it be shown that the facts bring the case within the purview of section 6(a) which reads as follows:

‘Restrictions on Removal of Tenant. So long as the tenant continues to pay the rent to which the landlord is entitled, no tenant shall be removed from any housing accommodations, by action to evict or to recover possession, by exclusion from possession or otherwise, nor shall any person attempt such removal or exclusion from possession, notwithstanding that such tenant has no lease or that his lease or other rental has expired or otherwise terminated, and regardless of any contract, lease, agreement or obligation heretofore or hereafter entered into which provides for entry of judgment upon tenant's confession for breach of covenants thereof or which otherwise provides contrary thereto, unless: * * *’

(Then follow exceptions, none of which was pleaded or otherwise presented or considered in the court below.)

The nearest approach to the facts of this case found among the cited authorities or any others that are available is Bowles v. Strano, 62 F.Supp. 9, decided by the United States District Court of Pennsylvania. The owners having sold their property February 24, 1945, exacted the concession that they might remain in the house for one month by paying a rental of $110. Because of unavoidable delays title was not delivered until July 3, when vendees paid the purchase price and agreed that vendors might remain until August 1, 1945. They refuse to vacate on the latter date whereupon the purchasers filed their action in ejectment in the Court of Common Pleas. Price Administrator Bowles then sought an injunction to compel the latter court to strike from its records ‘the alleged unlawful judgment.’ The deferal court found that no interest of the United States was adversely affected by the eviction order and held (1) that while the agreement of the parties was described in part as a lease its actual character was an agreement not under the jurisdiction of the OPA or of the Area Rent Director; (2) that having formally agreed to deliver possession on August 1, vendors were estopped from invoking the powers of the OPA or of the Area Rent Director to enable them to violate their contract and maintain possession. Also, that court refused ‘to exercise its equitable jurisdiction to the ultimate benefit of vendors who are trying to ignore their agreement,’ and held that ‘the effect of an injunction would be to aid a violator of an agreement and to further injure the other party to it.’

The purposes of the Act were to secure the effective prosecution of the recent war, to stabilize prices, eliminate profiteering, hoarding, speculation and other deceptive practices. 50 U.S.C.A.Appendix, § 901. Its purpose was not to interfere with contracts made in good faith with respect to a business property but on the contrary the Act itself specifically provides that any rental agreement ‘shall remain in force pursuant to the terms thereof except so far as those provisions are inconsistent with this Maximum Rent Regulation.’ Defense Rental Area Maximum Rent Regulation No. 54a, sec. 1388.331(c). In view of the purposes of the Act it is inconceivable that a person who confesses that he has no interest in a property within a defense rental area could justifiably assert in a judicial proceeding that he is entitled to resist eviction under the provisions of section 6(a). Neither did the Administrator purpose to exted protection to a claim such as that of appellants nor did Congress intend that such a regulation would be promulgated. Neither the Administrator nor the Congress could have conceived that two persons capable of contracting should be deprived of the right freely to make engagements concerning any property so long as the Maximum Rent Regulations should not thereby be violated. Especially it could not have been intended that a person under the guise of retaining a place of habitation might withhold a profitable business enterprise from its owner after the expiration of the right of possession.

Because of such intention, because appellants had no interest in the premises upon the expiration of the lease and because the interests of the United States were not to be affected by the eviction of appellants, a successful prosecution of the action did not require service upon the Area Rent Director of the written notices of the proposed eviction as provided by Section 6(d)(1) of the Regulations or compliance with any other procedural form. Certain authorities cited by appellants in support of such contention (Johnson v. Swanson, Super.Ct.Wash.1943, Vol. 1, Pike and Fisher OPA Service, p. 1799; Brown v. Wright, 4 Cir., 137 F.2d 484; Wilber v. Falske, Super.Ct.App.Dept.Cal., 1 Pike & Fisher OPA Service, p. 2,007; Hamrick v. Dufford, 71 Ohio App. 552, 50 N.E.2d 566; Kirschbaum v. Mobley, 12 Ohio Supp. 6; Tyczynski v. Soens, Cir.Ct.Ind., 1 Pike & Fisher OPA Service, p. 1961; Brown v. Lee, D.C., 51 F.Supp. 85) are not applicable here. Each of them refers to a definite relationship of landlord and tenant and each holds that a failure to follow the procedure prescribed in the Maximum Rent Regulations was nothing short of attempted nullification of a valid federal statute, enacted as an aid to the prosecution of the war.

Appellants were not ‘tenants without a lease,’ referred to in the ‘Restrictions on removal of tenant,’ because they were not entitled to possession. Sec. 6(a). Neither were respondents landlords as defined in section 13(a)(8) because they were not ‘entitled to receive rent for the occupancy’ of the hotel from appellants after the expiration of the lease. The authorities cited by appellants (Tracy v. Hailey, Super.Ct.App.Dept.Cal., 1 Pike and Fisher, p. 1781; Long Branch Banking Co. v. Howland, 133 N.J.E.q. 315, 32 A.2d 860; Home Savings Bank of City of Albany v. Hunter, 180 Misc. 1, 42 N.Y.S.2d 557) in support of their contention that they were tenants and entitled to the protection of section 6(a) are readily distinguishable. The Tracy case was an unlawful detainer action and ‘judgment * * * should have been for the plaintiff unless the restrictions of section 1388.286 of Maximum Rent Regulation 53 * * * apply.’ The other two cases resulted from the attempts of purchasers of rental properties at lien foreclosure sales to oust the tenants in possession. The intervention of the Administrator was upheld because the tenant of the debtor became the tenant of the purchaser who acquired the property subject to existing liens. In each instance the tenant occupied a single family residence and had not waived the benefits of the Regulation. Also, in both instances they were tenancies at will which had not been terminated. Finally, in the last mentioned cases the enforcement of the Act did not result in assisting the occupant to breach a contract.

In the present action a reversal of the judgment would be to supplant order with disorder, honor with dishonor and a solemn obligation with audacious repudiation. Having definitely contracted to free the leased premises of all claims of right to possession on a day certain and having received the specified consideration for such agreement, appellants will not be permitted to deny their own commitment on which confident reliance had been placed by respondents. It is a principle of common honesty that a person may not violate his solemn obligations. It is likewise the law that one with full knowledge of the facts shall not be permitted to act in a manner inconsistent with his former position to the injury of another. Harlan v. Harlan, 70 Cal.App.2d 657, 662; 161 P.2d 490; In re Bruce's Estate, 27 Cal.App.2d 44, 80 P.2d 82. Having accepted the benefits of an agreement a party thereto must bear the burdens thereby imposed upon him. Civil Code, sec. 3521; Estate of Bruce, 27 Cal.App.2d 44, 50, 80 P.2d 82, supra; Schramm v. Burkhart, 137 Or. 208, 2 P.2d 14, 16.

Furthermore, appellants are forestalled by their own fraud impliedly found by the court below. Promptly following their execution of the modification agreement they instituted their action to recover the money paid for their ‘security’ in the occupancy of the hotel for the full term of the lease. By virtue of such action and of their contentions in the present proceeding the trial court was warranted in concluding that at the time of entering into the modification agreement appellants had no intention of performing its terms. Such conduct was a fraud (Civil Code, sec. 172), and it nullified all rights of appellants asserted to have arisen thereunder.

The judgment is affirmed.

MOORE, Presiding Justice.

McCOMB and WILSON, JJ., concur.