Case Name: WASHOE COUNTY BANK (a Corporation), Appellant, v. W. C. CAMPBELL, N. L. WATTON, and T. A. BECHTOL, Respondents
Court: Supreme Court of Nevada
Jurisdiction: Nevada
Decision Date: 1917-10
Citations: 41 Nev. 153
Docket Number: No. 2020
Parties: WASHOE COUNTY BANK (a Corporation), Appellant, v. W. C. CAMPBELL, N. L. WATTON, and T. A. BECHTOL, Respondents.
Judges: 
Reporter: Nevada Reports
Volume: 41
Pages: 153–174

Head Matter:
[No. 2020]
WASHOE COUNTY BANK (a Corporation), Appellant, v. W. C. CAMPBELL, N. L. WATTON, and T. A. BECHTOL, Respondents.
[168 Pac. 643]
1. LANDLOED AND TENANT - N0TIOE - ASSIGNMENT; OF RENTS - INTEREST IN REALTY-EFFECT-"ESTATE OR INTEREST IN LAND."
The lessor's assignment of "all rents due and to become due under" a certain lease was not an assignment in itself of the lease, and did not create an estate or interest in the lands within Rev. Laws, 1038, 1030, 1069, stating the requisites of an instrument affecting the estates or interests in lands and of recordation in order to constitute notice.
2. LANDLORD AND TRNANT-INTEEEST IN LANDS-ASSIGNMRNT o~' RENTS-NOTICE.
Such an assignment does not, when recorded, constitute notice to the lessees ot the assignment.
3. ASSIGN~1ENTS-NECESSITY O~ NoTIc~.
Until the debtor receives notice of an assignment, or until he has knowledge of such facts concerning the same as~ are sufficient to put him on inquiry, he may deal with the assignor as though no assignment had been made.
4. LANDLO1~D AND TENANT - ASSIGNMENT OT RENTS - RIGI-ITs OF LESSEE.
In the absence of actual or constructive notice to the lessees of an assignment of the rent due or to become due, they could interpose against the assignee any defenses maintainable against the lessor.
5. LANDLORD AND TENANT-LiABILITY TOE RENT-EVIDENCE-SUFFICIENCY.
Where the landlord and his assignee of rents after lessees failed to pay the rents negotiated with other parties who subsequently went on the premises and paid the rent after the assignee was told by the lessees that a third person would assume the lease and made no objection, the landlord and the assignee were estopped to sue the lessees for the rent.
6. LANDLOI~D AND TENANT-SURRENDER OF LEASE-OPERATION OF LAW.
Where a landlord grants a new le~tse to a stranger with the assent o~ the tenant during the existence of an~ outstanding lease, and the tenant gives up his own possession to the stranger, who thereafter pays rent, or where in any other way a new tenant is by agreement of the tenant and the landlord substituted and accepted in place of the old, there is a surrender by operation of law.
7. LANDLORD AND TENANT-ACTIONS FOR RENT-DVIDENCE-ADMIS-SIDILITY.
In action of the landlord's assignee for rent, it is proper for the trial court to consider the occupancy of the premises and payment of tlie rentals by other parties than the original lessee when such facts were known and acknowledged by the lessor.
S. LANDLORD AND TENANT-ACTIONS FOR RENT-EVIDENCE-ADMISSIBILITY.
Where the lessees in an action by the landlord’s assignee for rent claimed a release by operation of law, it was proper for the trial court to consider occupation of premises and payment of rentals by third persons with the knowledge of the landlord.
9. Landlord and Tenant — Surrender oe Premises — Acquiescence —Evidence—Sufficiency.
Evidence held to sustain finding that the lessees delivered up possession of the premises to a third person, notifying the person to whom they had been accustomed to pay rentals, and that the third person continued in possession and made at least one rent payment to such agent.
10. Appeal and Error — Scope of Review — Conflicting Evidence.
Where the evidence was conflicting, but the judgment of the trial court was supported by substantial evidence, its conclusion should not be disturbed.
Appeal from Second Judicial District Court, Washoe County; John S. Orr, Judge.
Action by the Washoe County Bank, a corporation, against W. C. Campbell and others. From the judgment rendered, plaintiff appeals.
Affirmed,
Coleman, J., dissenting.
Cheney, Downer, Price & Hawkins, for Appellant:
An oral lease of lands for more than one year is void; likewise an oral surrender of a lease, covering a period of more than one year, is equally void. (Cutting’s Compiled Laws, sec. 2694.) The acceptance of rent from another tenant, even with knowledge that a substitution was claimed, will not amount to a surrender by operation of law. A leasehold interest in land for more than one year can no more be surrendered than it can be created by parol. {Rees v. Lowy, 59 N. W. 310; Chicago Attachment Co. v. Davis Sewing Machine Co., 15 L. R. A. 754; Johnson v. Reading, 36 Mo. App. 306; Welch v. Schuyler, 6 Daly, 412.)
The assignment was recorded. It is contended that the assignment was not such an instrument as could properly be recorded, because it did not affect real estate. Our statute provides that among the documents that may be recorded is any instrument of writing "whereby any real estate may be affected.’' (Cutting’s Compiled Laws, sec. 2663.)
Unless a contract of lease is distinctly to be held to be a unilateral contract, the obligations assumed by the tenant are just as binding as those assumed by the landlord, and each should receive the protection of the law.
Boyd & Salisbury, for Respondents:
The law is well settled that unless an instrument which comes fairly within the scope of the recording acts, the recordation of the same is a futile and unnecessary act, and has no effect whatsoever upon the rights of the parties. (Cutting’s Compiled Laws, secs. 2663, 2664.) Constructive notice is entirely a creature of statute. Its effect is to be gathered from the construction of the statute. (Grellet v. Heilshorn, 4 Nev. 526.) Where the statute does not authorize the registry of assignments of choses in action, the filing and recording of them imparts no notice to any one. (4 Cyc. 60; Am. & Eng. Ency. Law, 77, 78.)
Until the debtor receives notice of an assignment, or until he has knowledge of such facts concerning the same as are sufficient to put him on inquiry, he may deal with the assignor as though no assignment has been made, and the assignment makes the chose subject to arrangements made between the debtor and the assignor prior to the time when the debtor receives notice of the assignment. (4 Cyc. 88; 2 Am. & Eng. Ency. Law, 1077, 1099.) A leasehold interest is merely a chattel real, and the rules which govern conveyances of real property do not apply to assignments of estates for years, but they are governed generally by the rules applicable to sales of personal property. (Jeffries v. Easton, Eldridge & Co., 113 Cal. 345.) A leasehold interest is not real estate. (People v. Bennett, 14 Hun, 63.)
"A surrender is created by operation of law when the parties to a lease do some act so inconsistent with the subsisting relation of landlord and tenant as to imply that they have both agreed to consider the surrender as made.” (24 Cyc. 1367.)
The grounds of accident and surprise, as a motion for a new trial, will not avail the moving party unless the party has, during the trial of the action and when taken by surprise, moved for a continuance for a sufficient length of time to enable such party to meet the evidence by which he claims to have been surprised. (Heath v. Scott, 65 Cal. 548; Schellhouse v. Bell, 29 Cal. 605; Delmas v. Martin, 39 Cal. 555; Perrer v. Mutual Ins. Co., 47 Cal. 416.) A motion for a new trial will not be granted upon the ground of newly discovered evidence unless it be shown that a different result' would probably be obtained upon a new trial. (Oberlander v. Fixen, 129 Cal. 690.) It must be further shown that diligence has been exercised in attempting to procure the testimony at the time of the trial.. (Tibbet v. Sue, 125 Cal. 544.)

Opinion:
By the Court,
McCarran, C. J.:
The respondents were the lessees of Mrs. L. E. Alexander Shannon. The premises leased were known as the Alexander Ranch, situated in Washoe County. Some time after the making of the lease, the lessor made an assignment to the Washoe County Bank, appellant here, which assignment is as follows:
"Know all men by these presents, that I, L. E. A. Shannon, the party of the first part in that certain lease hereinafter described, for and in consideration of the sum of ten dollars to me in hand paid by Washoe County Bank, the receipt whereof is hereby acknowledged, and for other valuable considerations moving to me from said Washoe County Bank, do by these presents assign, set over and transfer to said Washoe County Bank all rents due and to become due under that lease made on the 3d day of March, 1908, between me, the party of the first part therein, and W. C. Campbell, N. L. Watton, and T. A. Bechtol, the parties of the second part therein, wherein I leased to the parties of the second part the Alexander Ranch for the term of five years next ensuing the date thereof at a monthly rental of $66.75, payable in advance on the first day of each and every month. And I hereby authorize and direct said Washoe County Bank to collect said rentals and to take such action, legal or otherwise, as may be necessary for the collection thereof; and I further direct that upon the collection of said rents, or any portion thereof, the same shall be applied by said Washoe County Bank upon the indebtedness due from me to said bank."
It is alleged in appellant's complaint that the defendants here, the lessees of Mrs. Shannon, were notified of the assignment of the rentals, and in this respect it is averred that pursuant to said notice the respondents paid the rental to plaintiff to and including the month' of August, 1909. This action was commenced by the appellant bank to recover from the respondents the rental of the premises from the 1st day of September, 1909, to the 1st day of September, 1910, and in their complaint they allege:
"That on or . about the 24th day of June, 1909, said L. E. Alexander Shannon, for a valuable consideration, and by an instrument in writing, assigned and set over to Washoe County Bank, the plaintiff herein, all the rents due and to thereafter become due under and by virtue of said lease, and by the terms of said instrument in writing authorized and directed the said Washoe County Bank to collect said rentals and to take such action, legal or otherwise, as might be necessary for the collection thereof. That said instrument in writing was filed for record in the office of the county recorder in Washoe County, Nevada, on the 25th day of June, 1909, where the same is of record in Book C of Leases at page 409."
By their answer the respondents deny ever having received notice, either actual or constructive, of the execution of this assignment. It appears from the record that the assignment, being acknowledged before a notary public, was recorded in the office of the county recorder of Washoe County. In the court below appellant sought to establish notice to respondents, both actual and constructive. They sought to support their claim of actual notice by the testimony of the witness, Fred Stadt-muller, assistant cashier of the appellant corporation; and they contend here, as in the court below, that the recorded assignment constituted constructive notice to respondents. It will suffice to say here with reference to the testimony of the witness Fred Stadtmuller that the same was most unsatisfactory. The most that could be maintained for the testimony of this witness is that he believed that notice had been mailed to respondents, basing his belief upon the custom of the bank in such matters. He was unable to produce a copy of the notice, and refused to positively state that he had sent the same through the mails, or that the same had been in any wise delivered to respondents or either of. them.,
The trial court found, and in our judgment properly so, that the respondents had never received notice, either actual or constructive, of the execution of the assignment. In support of their contention that respondents were chargeable with constructive notice as to the assignment, appellants' refer us to the sections of our code, as follows:
"No estate, or interest in lands, other than for leases for a term not exceeding one year, nor any trust or power over or concerning lands, or in any manner relating thereto, shall hereafter be created, granted, assigned, surrendered, or declared, unless by act or operation of law, or by deed or conveyance, in writing, subscribed by the party creating, granting, assigning, surrendering, or declaring the same, or by his lawful agent thereunto authorized in writing." (Section 1069, Revised Laws, 1912.)
Section 1038, Revised Laws, provides:
"Every conveyance of real estate, and every instrument of writing setting forth an agreement to convey any real estate, or whereby any real estate may be affected, proved, acknowledged, and certified in the manner prescribed in this act, to operate as notice to third persons, shall be recorded in the office of the recorder of the county in which such real estate is situated, but shall be valid and binding between the parties thereto without such record."
Section 1039, Revised Laws, provides:
"Every such conveyance or instrument of writing, acknowledged or proved and certified, and recorded in the manner prescribed in this act, shall, from the time of filing the same with the recorder for record, impart notice to all persons of the contents thereof; and subsequent purchasers and mortgagees shall be deemed to purchase and take with notice."
It is contended that by this statute is prescribed a rule governing the creation and surrendering of all interests in lands; that by this statute is prescribed a character of evidence which is exclusive when proof is required that a lease of lands for more than one year has been created or extinguished. The facts presented in the case bearing upon the acts and conduct of the parties, and the significant language of the assignment, removes the matter from the operation of this statute.
It will be observed from the language of the assignment that it was not one which could be construed as assigning the lease itself. The language of the assignment is plain and unambiguous. It assigns "all rents due and to become due under that lease made on the 3d day of March, 1908." The assignment of rents due and to become due does not constitute an assignment of the instrument itself. (Ramsey v. Johnson, 8 Wyo. 476, 58 Pac. 755, 80 Am. St. Rep. 948.) The authorities are quite uniform in holding that a mere assignment of moneys due or to become due under a contract is not an assignment of the contract itself. (National Surety Co. v. Maag, 43 Ind. App. 16, 86 N. E. 862; In Re Wright, 157 Fed. 544, 85 C. C. A. 206, 18 L. R. A. n. s. 193; Dickson v. City of St. Paul, 97 Minn. 258, 106 N. W. 1053; Fortunato v. Patten, 147 N. Y. 277, 41 N. E. 572; Butler v. San Francisco Gas & Electric Co., 168 Cal. 32, 141 Pac. 818.)
An assignment of the rents due and to become due, affecting only the rentals to be collected and not the lease under which such rentals are collected, does not create an estate or interest in lands such as is contemplated by the section of our statute above quoted. Its recordation, therefore, not being contemplated by the statute, constituted no notice to respondents of the assignment made by Mrs. Shannon to the appellant bank. In our judgment the trial court properly concluded that the assignment in question was merely an assignment of a right to collect moneys, and as such did not affect or concern the real estate. Appellants in their brief refer us to the case of Rees v. Lowy, 57 Minn. 381, 59 N. W. 310, wherein the Supreme Court of Minnesota held, among other things, that a leasehold interest in land for more than one year cannot be surrendered any more than it can be created by parol. If this question were before us, the doctrine asserted by that court might be of valuable assistance, but the question is not presented here; nor was the question presented to the Minnesota court under the same conditions as those set forth in the record of this case.
As a general proposition of law it may be stated that until the debtor receives notice of an assignment or until he has knowledge of such facts concerning the same as are sufficient to put him on inquiry, he may deal with the assignor as though no assignment had been made. (Hogan v. Black, 66 Cal. 41, 4 Pac. 943; Leahi v. Dugdale, 34 Mo. 99; Deach v. Perry, 53 Hun, 638, 6 N. Y. Supp. 940; Com. v. Sides, 176 Pa. 616, 35 Atl. 136; Merrick v. Hulbert, 15 Ill. App. 606; Laughlin v. District of Columbia, 116 U. S. 485, 6 Sup. Ct. 472, 29 L. Ed. 701; De Baun v. Davis, 1 Ky. Op. 281.)
Concluding, therefore, that the record fails to establish notice, either actual or constructive, to respondents, it follows that respondents here were entitled to interpose and establish such defense or defenses as would have been maintainable had the action been brought by the lessor, Mrs. Shannon.
In our judgment, the record discloses acts and conduct on the part of Mrs. Shannon, the lessor and assignor, as to amply support the finding of the trial court to the effect that she had consented to.a release of respondents from their obligations under the lease. The record here discloses many things which go to refute the idea that either the lessor, Mrs. Shannon, or her assignee, the Washoe County Bank, continued to regard respondents as her lessees after the date of the last payment of rent by respondents. Sasselli, who testifies to having taken over the lease and premises from respondents, relates in his testimony of his having gone to the private residence of G. H. Taylor, the cashier of the bank, and there making payment on the rent. He says he complained to Taylor of the amount of the rent and told him he could not pay it. He says he asked for a reduction of the rent and' that the cashier replied to the effect that he would take the matter up with Mrs. Shannon. There was no mention made at that time by Taylor as to respondents, the original lessors, nor do they appear to have been referred to or looked to by the cashier on the question of reduction or change of terms.
In a letter addressed to one of the respondents, the lessor declared him as her agent to negotiate with other parties to lease the premises. In another com-münication to the same party, she spoke of letting the premises to others on terms different from those contained in the original lease to respondents. The testimony, of the witness Yori, which is uncontradicted, establishes communication between himself and the lessor relative to his becoming a lessee of' the ranch independent of respondents. The testimony of Sasselli and Yori establishes that the former left the premises in question and the latter, after communicating by letter with Mrs. Shannon, went on the premises in May, 1910. During the interim between the departure of Sasselli and the occupancy of Yori, the ranch appears to have been unoccupied. Yori testifies to his having written to the lessor, Mrs. Shannon, asking if she would rent the nremises to him. He further testifies that in answer to this communication "she wrote herself that I could go on there for so much money, and I was just going on from month to month." The testimony of Sasselli and Yori establishes the payment of rentals to the Washoe County Bank as the assignee of the lessor and to the lessor herself. From the testimony of all of the parties it is established that Yori occupied the premises and paid the rental for a number of months, all of which was with the knowledge and assent of the lessor and pursuant to her authority as related in the testimony of Yori.
The acts and conduct of the lessor, Mrs. Shannon, running through all of these transactions, as related in the record, were sufficient, in our judgment, to constitute an estoppel sufficient to defeat an action by the lessor against her lessees, respondents here, for the collection of the rentals claimed. That which would constitute an estoppel as to a lessor in an action against his lessees for the collection of rent is of equal effect as to the assignee of a lessor where the lessees are not chargeable with notice of the assignment.
The record as it is before us is, in our judgment, sufficient to warrant the trial court in finding that the lessor, Mrs. Shannon, did not look to respondents for the rental, and did not hold them responsible for the same after the 1st day of September, 1909. The acts of Shannon as related in the record were to our minds so inconsistent with the subsisting relation of landlord and tenant as to convey the idea that she recognized the surrender of the leasehold by respondents. Indeed, there is much in the record that goes to establish acquiescence by the assignee in the acts of the lessor in recognition of the surrender of the leasehold to third parties.
It is asserted as a proposition of law that where a landlord grants a new lease to a stranger with the assent of the tenant during the existence of an outstanding lease, and the tenant gives up his own possession to the stranger who thereafter pays rent, or where in any other ivay a new tenant is by agreement of the tenant and the landlord substituted and accepted in place of the old, there is a surrender by operation of law. (Commercial Hotel Co. v. Brill, 123 Wis. 638, 101 N. W. 1101; Hawthorne v. Coursen, 18 Misc. Rep. 447, 41 N. Y. Supp. 995; Bowen v. Haskell, 53 Minn. 480, 55 N. W. 629; Weiner v. Baldwin, 9 Kan. App. 772, 59 Pac. 40; In Re Clothing Co., 230 Fed. 681; Triest v. Goldstone, 173 Cal. 240, 159 Pac. 715; Realty Co. v. Cooke, 138 N. Y. Supp. 99.)
The record establishes beyond all doubt that the demised premises here known as the Alexander Ranch was occupied and the rentals paid by parties other than respondents. The occupancy of these third parties and the payment of the rental by them was known and acknowledged by Mrs. Shannon, the lessor. It was proper for the trial court to consider these facts, if for no other purpose than as circumstances tending to establish the acquiescence of the lessor in the surrender of the premises by respondents. (Bedford v. Terhune, 30 N. Y. 453, 86 Am. Dec. 394; Mulvey v. Charter, 174 Ill. App. 417.) The release claimed being one by operation of law rather than by express surrender, it was proper for the trial court to consider such facts as would establish the intention of the parties. (Welcome v. Hess, 90 Cal. 507, 27 Pac. 369, 25 Am. St. Rep. 145; Triest v. Goldstone, supra.)
Finding No. 5 of the trial court is as follows:
"Fifth- — -That some time during the month of June, 1909, the defendants Campbell and Watton delivered up the possession of the premises described in said lease to one Sasselli and at said time notified one A. C. Frohlieh, an employee of the plaintiff, and the person to whom the said defendants had been accustomed to pay said rentals, that the said defendants had turned over said premises to said Sasselli, and that the said Sasselli would thereafter pay the rental to become due on the said lease; that said Sasselli continued for some time in the possession of said premises and thereafter made at least one payment of rent to the plaintiff as the agent for the said L. E. Alexander Shannon."
Error is assigned to the action' of the trial court in making the foregoing finding. It is contended that this finding is erroneous, for the reason that the same is unwarranted by the evidence in the case; and for the reason that it is not shown that the defendant delivered up the possession of the premises described in the complaint to one Sasselli; and for the reason that the evidence does not show that the plaintiff or Mrs. Alexander Shannon was ever notified or that either of them was ever notified of such delivery, or that A. C. Frohlich, mentioned in this finding, was ever notified thereof. Error is further contended for as to this finding for the reason that it is not shown that the said A. C. Frohlich had any authority to accept said notification or ever did accept the same or was at any time the person to whom defendant had been accustomed to pay the rentals; and for the further reason that it is not shown in the evidence . that the plaintiff or the said Mrs. Alexander Shannon, or either of them, were ever notified that said defendants had turned over the premises to Sasselli, and that he would pay the rental to become "due on said lease.
In our judgment, the record supports the finding. The testimony of Watton and Sasselli is to the effect that in the bank some time about June 15, 1909, the former, in the presence of the receiving teller, A.' C. Frohlich, and in the presence of Sasselli, made the statement:
"Mr. Frohlich, Mr. Sasselli has taken the lease off of our hands and will hereafter pay the rent on that property."
At that time Watton, the respondent, according to his statement, turned the lease over to Sasselli. This is also testified to by the witness Sasselli. The record further supports this finding to the effect that Frohlich, as receiving teller, had been accustomed to receive the rent from Watton. The record also establishes that from and after this transaction in the bank Sasselli occupied the leased premises and paid rent to both Mrs. Shannon, the lessor, and to Mr. Taylor, the cashier of the appellant bank.
We do not assume to say that the transaction in the bank, wherein Watton made the declaration to the receiving teller that Sasselli was to take the lease off their (respondents') hands, and would pay the rent, was sufficient to constitute notice to the appellant bank or to the lessor. Nor do we assume to determine that the receiving teller of the bank could in any wise bind the bank, even though he acquiesced in the transfer and surrender. But if subsequent acts following in uninterrupted sequence indicated complete acquiescence by the appellant in the surrender attempted to be made in the bank; if from the date of the colloquy in the bank between Watton, Sasselli, and Frohlich, the lessor, as well as the appellant as her agent, no longer looked upon the respondents as tenants under the lease; if from that date the acts of the lessor and her assignee, the appellant, were so inconsistent with the subsisting relation of landlord and tenant as to convey the idea that they and each of them recognized the surrender of the leasehold on the occasion of the Watton-Frohlich-Sasselli transaction — then the finding of the court in this respect is not error.
It might be said with propriety, we think, that this record presents a series of acts on the part of the lessor, Mrs. Shannon, as well as on the part of her assignee, the appellant here, continuing from the date of the transaction in the bank, as testified to by the respondent Watton, no one of which, taken alone, would constitute acquiescence on the part of appellant or on the part of its assignor, Mrs. Shannon, in the surrender of the leasehold, but the whole of which, taken together, was sufficient to estop the lessor, Mrs. Shannon, from denying her acquiescence in the surrender of the leasehold and her recognition of third parties as tenants under a separate lease. If the respondents here had received actual notice of the assignment of the rentals made by the lessor to the appellant bank, or if they had been chargeable with notice- under the law, then a different view might be taken of the acts and conduct of the lessor. As we view it, she, by reason of her acts and conduct, would have been estopped from prosecuting a suit against the respondents for the unpaid rentals. But where the lessees, respondents here, were not chargeable with notice as to the assignment, then, as we have already stated, they had a right to prove and rely upon the acts and conduct of their lessor; and that which constituted an estoppel as to her was of equal effect as to appellant, her assignee.
The evidence produced before the trial court, as we find it in the record, was to no slight extent conflicting. Every fact presented in the case was, as disclosed by the record, met by some conflicting fact or circumstance ; but out of this condition the trial court, having heard the evidence' and viewed the witnesses upon the stand, and having had opportunity to observe their conduct arid demeanor and all other things that properly go with the active trial of a case, determined the matter, after careful consideration, by judgment in favor of respondents. The determination and judgment of the trial court is supported by substantial evidence; and, in view of the unvarying rule of this court, such determination and conclusion should not be disturbed. The view that we have taken of the case under the law as we deem it applicable disposes of the errors assigned as to the admission by the trial court of certain testimony. No error was committed in this respect.
In view of the findings of the trial court and in view of the conclusion reached, the newly discovered evidence asserted by appellant in furtherance of its motion for a new trial would not have produced a different result. (Oberlander v. Fixen, 129 Cal. 690, 62 Pac. 254.)
The judgment and order appealed from are sustained.
It is so ordered.