Court Opinion

ID: 9544502
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:56:20.059527+00
Date Added: 2024-06-11T15:13:06.628032
License: Public Domain

CARTER, J.
I concur in the judgment of affirmance, however, I believe that our decision should properly be based upon the doctrine of surrender or surrender by operation of law as that term is used in the law of landlord and tenant. A surrender is the yielding up of an estate for years to the landlord. (Triest & Co. v. Goldstone, 173 Cal. 240 [159 P. 715]; Welcome v. Hess, 90 Cal. 507 [27 P. 369, 25 Am.St.Rep. 145].) It may arise by express agreement between the landlord and tenant or by operation of law. (Steel v. Thompson, 59 Cal.App. 191 [210 P. 430] ; Bauer’s Law etc. Co. v. Third St. I. Co., 21 Cal.App. 183 [131 P. 77].) The latter is not, strictly speaking, a surrender wholly by operation of law, *675inasmuch as it is based upon the conduct of the parties indicating a surrender, and from which the court draws the legal conclusion that the surrender has taken place. Even in a so-called surrender by operation of law the issue is largely one of fact for the trier of fact. (Triest & Co. v. Goldstone, supra; Steel v. Thompson, supra; Strei v. Brooks, 95 Cal.App. 589 [273 P. 145]; Bognier v. Harnett, 45 Cal.App.2d 570 [114 P.2d 654].) In the ordinary case two things must occur to establish a completed surrender: (1) The abandonment of the leased premises by the tenant; and (2) an acceptance of the abandonment by the landlord. (See Welcome v. Hess, supra; Voss v. Levi, 33 Cal.App. 671 [166 P. 359]; Bonetti v. Treat, 91 Cal. 223 [27 P. 612, 14 L.R.A. 151]; In re Bell, 85 Cal. 119 [24 P. 633] ; Anheuser-Busch Brewing Assn. v. American P. Co., 59 Cal.App. 718 [211 P. 817]; 260 Seaman Ave. Corp. v. Armstrong, 130 Cal.App. 612 [20 P.2d 715]; Salvation Army v. Daily Telegram, 125 Cal.App. 743 [14 P.2d 123] ; Neuhaus v. Norgard, 140 Cal.App. 735 [35 P.2d 1039].) The effect of a completed surrender is to terminate the tenancy, to release the tenant from the payment of future rent and to accomplish a mutual rescission of the lease, but he is liable for rent accruing before the surrender is complete. (See Gaskill v. Trainer, 3 Cal. 334; McDermott v. Burke, 16 Cal. 580; Baker v. Eilers Music Co., 26 Cal.App. 371 [146 P. 1056]; Donnellan v. Wood, Curtis & Co., 4 Cal.App. 192 [87 P. 235]; Costello v. Martin Brothers, 74 Cal.App. 782 [241 P. 588] ; Guiras v. Harry H. Culver & Co., 109 Cal.App. 743 [293 P. 705]; Moskovitz v. LeFrancois, 121 Cal.App. 310 [8 P.2d 1049].)
In the instant case the court found upon sufficient evidence that the tenant abandoned the premises. It is immaterial whether the abandonment occurred in January when he sold his business at auction, vacated the property and ceased to pay rent, or in April when he heard that the landlord was leasing property in the same building to one Smith to engage in a similar business. Both occurred before May 1, 1941, when the landlord gave possession of the adjoining premises to Smith. Hence, the first requirement of a surrender, abandonment by the tenant, unquestionably occurred. Up to May 1st the landlord had assumed the position of following the first course leading to the various remedies stated to be available to him in Phillips-Hollman, Inc. v. Peerless Stages, Inc., 210 Cal. 253, 258 [291 P. 178]:
*676“The rule is well settled that where a lease has been repudiated by a tenant, and the premises abandoned, and there are no covenants in the lease to the contrary, the landlord has a choice of but two remedies:
“1. He may rest upon his contract and sue for each installment of rent as it falls due. If this alternative be selected, obviously the action must be limited to accrued installments, and no recovery can be had for future installments, because, the lease being still in existence, no obligation to pay the rent arises until each installment falls due.
“2. He may take possession of the premises, relet the same and recover from the tenant any damages suffered thereby. Such damages will be the difference between the amount secured on the reletting and the amount provided for in the original lease.” (Italics added.)
The question thus arises as to whether the second requisite of a surrender, that is, acceptance of the abandonment by the landlord, has been established. In that connection the principle that that question is one of fact should not be ignored. Here the trial court found that there was such an acceptance. The chief act by the landlord which has been considered as an acceptance by him is a reentry and assumption of complete possession by him. Other conduct has been given a like effect. It is said in 15 California Jurisprudence 793:
“Under the rule just stated, a surrender by operation of law arises where a new lease is accepted by a tenant, where a lease is given to a third person, where a landlord resumes possession with the acquiescence of the tenant, or where the landlord does any act amounting to an eviction. Where a lessee is unable to gain possession because of the refusal of third persons, also claiming as lessees, to deliver it, and the landlord then authorizes the lessee to prosecute ejectment in the landlord’s name to secure possession, an abandonment of the lease by mutual consent will be inferred, and it cannot be availed of by the third person as a defense. . . . While a tenant of premises for a term cannot divest himself of his right to possession or terminate his liability for the. stipulated rent therefor by a mere abandonment of the premises without the consent of the lessor, a resumption of possession of the premises by a landlord with the acquiescence of a tenant' amounts to a surrender of a leasehold by operation of law. A mere statement by the lessor to the lessee that he may move out if he desires, does not become of binding efféet in terminat*677ing the leasehold until a surrender and acceptance of possession have actually been made. Nor are the mere delivery of the keys of the premises to the lessor and their retention sufficient to effect a surrender by operation of law, unless that appears to be the intention of both parties. An acquiescence in the surrender or abandonment of the premises is perhaps best evidenced by the lessor’s taking possession of the property and assuming over it again all the authority of an owner in possession.” (Italics added.) But those are not the only acts which may constitute an acceptance. The general test is as stated in 32 American Jurisprudence, Landlord & Tenant, section 901:
“A surrender of demised premises occurs only through the consent or agreement of the parties evidenced either by an express agreement or by an unequivocal act inconsistent with the terms of the lease and with the relation of landlord and tenant, or by acts so inconsistent with the terms of the lease as to imply in law an agreement to surrender, and hence, an acceptance by the landlord is requisite.” (Italics added.) And, as expressed in the quotation from California Jurisprudence, any act amounting to an eviction is sufficient. The landlord’s covenant in the instant case, not to permit any space in the same building to be used for a furniture store, if it has been violated by the lessor, if that covenant goes to the heart of the lease, if its violation is inconsistent with the terms of the lease and the relation of landlord and tenant, or if it amounts to an eviction, then the breach of it would show an acceptance of the abandonment and a completed surrender. That is true because, if the landlord chooses, as he does here, to rely upon the lease and recover the rent, he must not do anything to interfere with the tenant’s rights thereunder. It would not be doubted that if the landlord demolished the building on the premises there would be an acceptance of the abandonment. The remodeling of a building and making extensive repairs thereon has been considered an acceptance by the landlord of the tenant’s abandonment. (32 Am.Jur., Landlord & Tenant, § 907.) The violation of the . covenant here in question is an act which constitutes an acceptance; at least it is sufficient from which the trial court could have implied an acceptance and surrender. That is true because this court has held that such a covenant goes to the essence of the lease, that the covenant to pay rent is dependent upon the continued *678observance of it. In Medico-Dental Bldg. Co. v. Horton & Converse, 21 Cal.2d 411, 418 [132 P.2d 457], this court in dealing with such a covenant stated:
“It is plaintiff’s position that a lease is a conveyance as distinguished from a contract, so that any covenant on the part of the lessor is independent of the lessee’s obligation to pay rent and each party has his remedy for breach of covenant in an action for damages. While it is true that a lease is primarily a conveyance in that it transfers an estate to the lessee, it also presents the aspect of a contract. (Pollock on Contracts, Third Am. Ed., p. 531.) . . . Thus, the parties recognized in plain terms the essential interdependence of their obligations.
“It is an established rule that those covenants which run to the entire consideration of a contract are mutual and dependent. . . . Undoubtedly the restrictive covenant in defendant’s lease was of such a nature. . . . The correlation of these facts with the express provisions of the lease above noted compels the conclusion that the restrictive covenant was not incidental or subordinate to the main object of the lease, but went to the whole of the consideration, and that as such it must be deemed a dependent covenant. . . . But where, as here, the covenant of the lessor is of such character that its breach will defeat the entire object of the lessee in entering into the lease, such as rendering his further occupancy of the premises a source of continuing financial loss incapable of satisfactory measurement in damages, it must be held that the covenant goes to the root of the consideration for the lease upon the lessee’s part.” (Italics added.) There can, therefore, be no escape from the proposition that the entire purpose of the lease has failed because of the landlord’s breach of the covenant and it is as much an acceptance of the tenant’s abandonment, and hence a surrender, as a demolition of a portion of the premises. Moreover, since any act which would constitute an eviction of the tenant by the landlord will constitute an acceptance of the tenant’s abandonment. (Triest & Co. v. Goldstone, supra; Welcome v. Hess, supra), if the breach of the covenant in question is an eviction, we have an acceptance. That it is an eviction follows from the rule that: “If, for example, the landlord, after vacating premises to the plaintiff, rents adjoining premises or a part of the same premises to other tenants for the conduct of a business or for other purposes naturally destructive of the plaintiff’s business or his *679beneficial enjoyment of his premises, the latter may claim a constructive eviction.” (32 Am.Jur., Landlord & Tenant, § 263.) Inasmuch as the tenant’s rights are as above outlined there is no question about his being entitled to a declaration that the lease is cancelled. Assuming that is an equitable remedy he cannot be deprived thereof because he was in default since the act of the landlord completed a surrender upon which he could lawfully rely.
The clause in the lease that upon default in the payment of rent “the lessor may, at his option and without notice to lessee, relet the same for such rent and upon such terms as he may see fit,” and lessee agrees to pay any deficiency, does not affect the foregoing conclusions for many reasons. It is not a situation where the lessor having the power to relet has any superior power embraced therein including the power to rent premises , in the same building to be used for a furniture business. To so reason would give to that clause a right on the part of the lessor to breach the covenant against renting to a competing business. Obviously, that is not the purpose of that clause. It is merely a method of mitigating the damages which may be followed by the lessor if he chooses. Here he has not chosen to follow it. He has not and does not purport to exercise that right. On the contrary he maintains that his conduct did not constitute a breach of the competitive business covenant. How can it be said that he is pursuing that right when the facts are all to the contrary? The lessor by availing himself of the right under that clause is not the only one to benefit. The lessee also may well benefit because the recovery against him would be reduced from the full agreed rental to the difference between the agreed rental and that obtained on a reletting.
Suppose the lessor instead of breaching the competing business covenant had gone into possession himself or demolished, remodeled, or sold the premises. Certainly the lessee could successfully assert an acceptance of his abandonment. The lessor could not escape the effect of such conduct on the pretext that he was reletting the premises, because obviously he was not. His acts speak louder than his assertions. Likewise, in the instant case the lessor’s breach of the covenant against competition is wholly irreconcilable with a reletting on behalf of the tenant. If there is a reletting it should be under the same conditions, that is, with no competing business in the same building, as under the lease. Another way of stating the *680matter might be to say that the lessor by breaching the covenant against a competing business or assuming possession of the premises or remodeling them, exceeded Ms authority under the reletting clause of the lease resulting in a surrender. In Siller v. Dunn, 103 Cal.App. 154 [284 P. 232], the lease contained a reletting clause. The lessee abandoned the premises. The court states at page 155:
“Notwithstanding this provision in the lease [the right of the lessor to relet], it is the contention on the part of the defendants [lessees] that the testimony of the plaintiff [lessor] established beyond question that by his own acts he had accepted a surrender of the lease, had repossessed himself of the premises in his own right and for his own uses and purposes, and had by operation of law released the defendants from further liability for the payment of rent. The lease in question provided a certain stipulated rental and also specified the purposes for which the premises were to be used, to wit, as a furniture and furnishing goods store, and that no other or different use of the said premises be made by the lessee without the written consent of the lessor first had and obtained. ... On or about the eighth day of August, 1927, the Dunn-Brett Furniture Company delivered to the plaintiff the key to the premises described in the lease, and at the time of the delivery of the key the plaintiff handed to the president of the corporation a notice to the effect that he would still hold the corporation liable for rent until the premises were released. It is further shown by the testimony that prior to the surrender of the premises by the Furniture Company and the delivery of the key to the premises to the plaintiff, the plaintiff had for about three months made some effort to find another tenant for the premises, the plaintiff having been informed by the officers of the Furniture Company that the business of the company was in failing circumstances and that the company would not be able long to continue in business. There does not appear to be any testimony in the transcript to the effect that the plaintiff made any effort to obtain a tenant for the premises after the surrender thereof by the Furniture Company on the eighth day of August, 1927, or during any of the time for which judgment is asked in this case on account of rentals alleged to be due, nor does the testimony show that the efforts were by the plaintiff to relet the premises, or upon what terms they were offered, but from *681matters hereinafter referred to we do not deem this material. The testimony shows that at or about the time the Furniture Company gave up the key to the premises, the plaintiff put into execution an idea or thought that he had entertained in relation to converting the premises into an hotel. His language was, ‘to throw it into an hotel so we could rent it.’ It further appears from the transcript that on or about the seventeenth day of August, 1927, the plaintiff began the remodeling of the six-story building herein referred to so as to make it available for hotel purposes, and that this remodeling was finished on or about the fifteenth day of February, 1928. The period of time for which the plaintiff claims rent being from the date when the defendant surrendered the premises up to the fifteenth day of February, 1928, when the same were ready for occupancy for hotel purposes. It further appears from the transcript that the cost of remodeling the premises was somewhere between fifty and sixty thousand dollars; that the work of remodeling required approximately six months. The plaintiff’s testimony is to the effect that during the time of remodeling the premises it would have been impossible for any tenant to have taken possession thereof. ... It does not appear to be questioned that the remodeling of the building does not come within the terms of repairs mentioned in the lease, nor does it appear to be questioned that the character of the remodeling of the building precluded the possibility of its being used as a furniture and furnishing store. Upon the testimony of the plaintiff showing that the remodeling of the building was not in the nature of repairs, was such as to preclude the further use of the premises for the purposes mentioned in the lease, and that the plaintiff intended to and did take possession of the premises for the purposes of converting them to a different use from that mentioned in the lease, and was doing so not for the benefit of the lessee, but for and on his own account, a nonsuit was granted. ... We think the testimony is conclusive that the plaintiff took possession of the premises solely as owner in his own right and not in the furtherance of any of the covenants of the lease, and that it was in execution of a plan to convert the premises into an hotel and change its uses entirely from that limited in the lease.
“The law seems to be pretty well settled that upon the surrender of leased premises by a lessee before the expiration of *682the term provided for in the lease, the owner of the premises has three remedies; first, he may do nothing and site the' lessee as each installment of rent becomes due, or for the whole thereof when it becomes due; second, he may treat the lease as terminated and retake possession of the premises and use the same for his own purposes as the exclusive owner thereof; or, third, he may retake possession of the premises for the tenant’s account and hold the tenant in damages for the difference between the rentals provided for in the lease and what, in good faith, he was able to procure from a reletting. Only one question is involved upon this appeal, and that is, notwithstanding the clause in the lease which we have quoted, the plaintiff abandoned the lease and by his actions is now estopped to maintain this action.
“In the case of Welcome v. Hess, 90 Cal. 507 [25 Am.St.Rep. 145, 27 P. 369], it was held (quoting from the syllabus) that ‘where tenants leased a building for a term of years as a store, and abandoned the premises after one year’s occupation thereof, sending the keys to the landlord, the acts of the landlord in taking possession of the premises, and reletting them for a period longer than the remainder of the term, without notifying the original lessees that he should so do on their account, and without notifying them that he should continue to hold them liable for the rent, show an acceptance by the landlord of the surrender, and he is estopped from denying it.’ The opinion in that case shows what the landlord may do, as we have hereinbefore stated. It also shows that during the unexpired portion of the term of the lease the lessee has a right to resume possession of the premises unless the landlord has done something which is equivalent to the acceptance of a surrender of the lease. ... In Bernard v. Renard, 175 Cal. 230 [3 A.L.R. 1076, 165 P. 6941], it is held (quoting from the syllabus in 3 A.L.R.): ‘An acceptance of a surrender of a lease will be effective if, after the lessee’s refusal to take possession or be bound by the lease, the lessor resumes absolute control of the- property and attempts to let it without any notice to the lessee that he is not acting in his own right. ’ In Voss v. Levi, 33 Cal.App. 671 [166 P. 359], the court, in its opinion, used the following language: ‘Such acceptance of surrender was evidenced only at the time the plaintiff, on the 19th day of January, 1915, took possession of the premises ■ and proceeded to have them remodeled. That an acceptance of *683surrender was then completely had, we have no doubt. ’ In Behkopf v. Wirz, 31 Cal.App. 695 [161 P. 285, 286], in considering the question of the acceptance of a surrender of a lease, it is said, referring to the right of the lessor to relet the premises and hold the tenant liable: ‘But a lessor who chooses to follow that course must in some manner give the lessee information that he is accepting such possession for the benefit of the tenant, and not in his own right and for his own benefit. If the lessor takes possession of property delivered to him by his tenant and does so unqualifiedly, he thereby releases the tenant.’ (Citing a number of authorities.) And further; ‘An unqualified taking of possession by the lessor and reletting of the" premises by him as owner to new tenants is inconsistent with the continuing forces of the original lease. ... If done pursuant to the tenant’s attempted abandonment, it is an acceptance of the surrender and likewise releases the tenant. ’ There can be no difference in principle .between the acts referred to in this case, which amounts to a release of the tenant, and the circumstances shown by the evidence upon the record in this ease. The remodeling of the premises by the owner cannot be held to be anything other than a taking of possession of the premises exclusively by the landlord or owner for his own uses and purposes as such owner. As we have stated, the testimony in this case shows that the premises were rendered wholly untenantable during the period for which rent is claimed, and also that the premises have been rendered wholly unusable for the purposes mentioned in the lease to the Furniture Company.
“In the case of Meeker v. Spalsbury et al., 66 N.J.L. 60 [48 A. 1026], the court, in considering a lease having in it a provision relative to repairs similar to the one under consideration, and where it was claimed that a surrender had been accepted by operation of law, used the following language: ‘He (referring to the landlord) was to have the right to enter and make such repairs as should be necessary for the preservation of the premises. When the plaintiff did more than that, he conclusively evidenced his intention to hold possession on his own account, thereby accepting the tenants’ abandonment• as a surrender. ’ The case of Meeker v. Spalsbury, supra, is referred to and approved in the casé of Fink v. Browe Co:, (N.J.Ch.) 99 A. 926. To the same effect in principle is the case of In re Schomaker Piano Forte Mfg. Co., 163 F. 413. In 15 *684California Jurisprudence, 797, section 214, the rule is stated that making material alterations in the leased premises amounts to an acceptance of the abandonment of the premises by the lessee. We do not deem it necessary to cite or quote from other authorities, as the foregoing show the rule well settled that when the landlord remodels premises so as to make them unavailable for the purposes for which they were leased, and also renders them untenantable during the period of remodeling, that rent for such period cannot be collected, for the reason that acceptance of the surrender of the lease will be inferred as a matter of law, and the landlord estopped from asserting the contrary. The respondents do not question the contention of the appellant that a clause in a lease, such as we have set forth herein, will be upheld where the parties have acted consistently therewith, but only contend that the plaintiff’s evidence conclusively establishes that his acts were not consistent therewith, and that by his taking unqualifiedly possession of the premises, and as he says, practically dismantling five of the floors thereof and remodeling the building so as to fit it for an entirely different use and purpose, establishes beyond controversy in law an acceptance of the abandonment of the lease.” (Italics added.) Likewise, in the instant case the lessor has done more than relet the premises (he has not done that at all) he has committed an act which is unequivocally opposed to the continuance of the lease. (See, also, State Guaranty Corp. v. Richardson, 9 Cal.App.2d 287 [49 P.2d 606] ; In re Goldburg’s Estate, 148 Misc. 607 [266 N.Y.S. 106]; Bonsignore v. Koondel, 134 Misc. 344 [235 N.Y.S. 453] ; First Stamford Nat. Bank & Trust Co. v. Pierce, 161 Misc. 756 [293 N.Y.S. 75].)
For the foregoing reasons the judgment should be affirmed.