Opinion
Page __
__ Cal.App.2d __ 236 P.2d 600 LAWRENCE BARKER, Inc. v. BRIGGS. Civ. 18530. California Court of Appeals, Second District, Second Division Oct. 29, 1951.Hearing Granted Dec. 20, 1951.
Subsequent opinion 248 P.2d 897.
Rehearing Denied Nov. 14, 1951.
Benjamin J. Goodman, Krystal & Paradise and Sidney D. Krystal, all of Los Angeles, for appellants.
Kenyon F. Lee, Los Angeles, and Thomas D. Mercola, Beverly Hills, for respondents.
McCOMB, Justice.
From a judgment in favor of plaintiff in an action to recover possession of a parcel of real property leased by plaintiff to defendant for a term of years, defendant appeals.
Facts: January 1, 1945, plaintiff entered into a parking lot lease with defendant for [236 P.2d 601] a term of 10 years from January 1, 1945, covering the premises located at 536 South Spring Street, Los Angeles. The lease provided among other things for (a) a minimum guaranteed rental of $1,250 per month plus 60 percent of all gross income or receipts in excess of $25,000 derived by the lessee for the use or occupancy of the demised premises in any calendar year; (b) for the furnishing by lessee to lessor within 60 days after the end of each calendar year of an annual report or statement prepared and certified by a reputable certified public accountant, showing the gross income or receipts of lessee from the demised premises for the preceding year; and (c) for a security deposit by lessee, which at the time of trial was in excess of $15,000. The lease did not contain any provisions concerning the manner, time or method of operation of the demised premises by lessee.
Pursuant to the terms of the lease defendant entered into possession of the demised premises on or about January 1, 1945, and thereafter operated it as a parking lot. Also pursuant to the lease defendant furnished to plaintiff from the years 1945 to 1949, inclusive, annual statements or reports prepared by a reputable certified public accountant. The reports for the years 1945, 1946, 1947, and 1948 were not furnished until 60 days after the close of each respective year. However, prior to July 22, 1949, plaintiff did not object in writing to the fact that any of the reports was late.
Subsequent to the execution of the lease defendant entered into a parking lot lease with another lessor covering premises located at 537 South Main Street, Los Angeles, which property although separated by an alley is contiguous with the demised premises on the easterly side thereof.
On or about January 1, 1948, when the demised premises at 536 South Spring Street were filled to capacity with parked cars, defendant parked overflow cars on the parking lot located at 537 South Main Street. Defendant kept and maintained records to show the number of cars that entered 536 South Spring Street but were actually parked on 537 South Main Street. In accounting to plaintiff for additional percentage rentals, defendant made an allowance to plaintiff of 25 percent of the gross receipts on overflow cars parked on 537 South Main Street.
From 1945 to 1947, defendant operated the demised premises at night with a full time parking attendant in charge. This procedure proved unprofitable and during the period from January 1, 1948, through July 26, 1949, defendant operated the premises at night in conjunction with its nighttime operation of the property located at 537 South Main Street. He maintained a full time parking attendant at 537 South Main Street who would service cars entering 536 South Spring Street.
During this period defendant accounted to plaintiff for gross receipts accountable to night parking at 536 South Spring Street by allocating a portion of the Main Street night gross receipts to 536 South Spring Street.
July 22, 1949, plaintiff by written notice informed defendant that he was in default under the terms of the lease by failing to furnish lessor a timely report or statement for the year 1948 of gross receipts and failing to pay the full amount of percentage rental called for by the terms of the lease for the calendar year 1948. By this notice plaintiff claimed possession of the demised premises without cancelling the lease. At the same time he demanded the right to hold defendant's security deposit under the lease.
Defendant claimed that he was not in default under the terms of the lease and refused to deliver possession of the premises. Plaintiff then instituted the present action in ejectment.
Defendant in his answer set up a counterclaim for damages for breach by plaintiff of a covenant in the lease pertaining to a party wall. Defendant also filed a cross-complaint seeking declaratory relief, alleging that the terms and provisions of the lease were uncertain and seeking adjudication of the respective parties' rights thereunder.
The trial court:
(a) Sustained an objection to the introduction of evidence under the counterclaim;
[236 P.2d 602] (b) Denied defendant's prayer under the cross-complaint for declaratory relief; and
(c) Gave judgment that plaintiff be restored to possession of the leased premises.
Questions: First: Did the trial court err in sustaining plaintiff's objection to the introduction of any evidence on defendant's counterclaim for the reason that the statute of limitations barred such claim?
No. Defendant offered to prove that he had suffered damages caused during the period from August 15, 1946, through October 15, 1946, because plaintiff had not maintained a party wall in safe condition with the result that defendant had suffered damages in the sum of $3,731.20. Defendant asserted this claim first in his answer filed October 3, 1949. Therefore since more than 3 years had elapsed from the time of the occurrence which gave rise to the claim it is barred by the provisions of section 339, subdivision 1 of the Code of Civil Procedure. The trial court's ruling was correct.
Second: Did the trial court commit prejudicial error in not making findings and construing the disputed terms of the lease pursuant to the issues created by the cross-complaint for declaratory relief and the answer thereto?
Yes. The cross-complaint showed clearly that there was a dispute between the parties as to the proper method of computing the percentage of rental due the lessor under the terms of the lease. Therefore the trial court should have received evidence pertaining to the disputed provisions in the lease and thereafter have made findings of fact, drawn conclusions of law and given a judgment construing the ambiguities in the lease for the future guidance of the parties.
Third: Did the trial court commit prejudicial error in giving plaintiff possession of the leased property?
Yes. The trial court found that the lease had been breached by defendant in three respects: (1) That defendant had not furnished to plaintiff for the years 1947, 1948 and 1949 reports for the calendar year preceding within 60 days after the close of each year, in accordance with the provisions of the lease, and that such reports as were furnished did not accurately reflect the gross income attributable to the use and occupancy by defendant of the leased premises; (2) That the reports as furnished were not certified by the public accountants in accordance with the provisions of the lease; and (3) That the report furnished for the year 1949 did not accurately reflect the gross revenue for such year.
Predicated upon these breaches the trial court found that defendant forfeited his right to possession of the leased property and gave plaintiff immediate possession of the property. Clearly plaintiff was not entitled to possession of the premises and to maintain the lease at the same time. (Maurice Mercentile Co. v. American Employers' Ins. Co., 140 Cal.App. 354, 358, 35 P.2d 1047; Costello v. Martin Brothers, 74 Cal.App. 782, 786 et seq. , 241 P. 588.)
The rule is settled also that whenever a penalty or a forfeiture is used merely to secure the payment of a debt, the performance of a duty, or the enjoyment of a right, equity, in considering the performance of the obligation, the real thing intended, will relieve against such penalty or forfeiture wherever compensation will adequately reimburse the aggrieved party for a breach of the contractual obligation. (Gonzales v. Hirose, 33 Cal.2d 213, 216, 200 P.2d 793; El Rio Oils Ltd. v. Chase, 95 Cal.App.2d 402, 410 et seq. , 212 P.2d 927.)
In the present case it is evident that a money judgment will fully and adequately compensate plaintiff for any injury which he has suffered by reason of defendant's breach of the provisions of the lease. Therefore the foregoing rule is applicable and the trial court sitting as a court of equity should have relieved defendant from his default upon making adequate award for damages.
In view of our decision it is unnecessary to consider other questions raised by counsel.
The judgment is reversed and the cause remanded for further proceedings consistent with this opinion.
MOORE, P. J., concurs.