Opinion
Rehearing Denied April 15, 1931
Hearing Granted by Supreme Court May 15, 1931.
Appeal from Superior Court, Los Angeles County; J. Walter Hanby, Judge.
Action by J.P. Treff against J. Gulko. Judgment for plaintiff, and defendant appeals.
Reversed.
COUNSEL
Burke, Camarillo & Herron, of Los Angeles, for appellant.
Eastham & Smith, of San Pedro, for respondent.
OPINION
LAMBERSON, Justice pro tem.
On August 25, 1924, respondent, Treff, leased to two persons certain storeroom premises at San Pedro for the term of five years, beginning September 1, 1924, and for a total rental of $9,000, payable in monthly installments graduated from $125 per month for the first year to $175 per month during the fifth year. The lease was assigned to appellant, the lessor consenting thereto, on February 2, 1925, but appellant signed no acceptance or agreement to take over the lease. He occupied and paid rent for the premises from February 2, 1925, up to and including the month of February, 1926. The court found that appellant entered into possession of the premises and paid such rentals. No objection has been made to such finding, and the evidence is sufficient to support it. Appellant paid rent at a reduced amount during a portion of the time the premises were occupied by him, by agreement with respondent. In December, 1925, and January, 1926, the two parties had some conversations about the rent, and the lessor told the appellant that the rent, beginning with January, would be $150, and the appellant said, in effect, that he could not pay that amount because of business conditions, and that he was going to move out. He did quit the premises during the early part of February, 1926, and paid no further rents.
The premises, apparently, remained vacant until January 1, 1927, when respondent leased them for $75 per month for the first eighteen months of a term, and at the rate of $100 per month for the following eighteen months, the total length of such term being in excess of the unexpired portion of the term specified in the original lease.
On March 2, 1926, respondent lessor gave written notice to appellant that he refused to accept appellant’s "attempt to surrender the possession of the premises," and demanded payment of the rent up to and including the month of March. Other demands for rent were made at later dates, both in writing and orally. The complaint in this action was filed on March 12, 1928. The court found that plaintiff notified defendant lessee that he would hold defendant liable for the payment of all of the rent reserved in the lease, and that plaintiff would release the premises to the best advantage for the account and benefit of defendant, and that said premises were relet for the benefit and account of defendant and for the best price obtainable therefor. The court gave judgment in favor of the respondent lessor in the sum of $2,625 after deducting the amount received by reason of reletting the premises.
The appellant lessee appeals from the judgment and contends that plaintiff and respondent accepted the surrender of the premises from appellant on January 1, 1927, by reletting the premises without notice to the appellant that he intended to relet for the benefit and account of the appellant. He further contends that the evidence is insufficient to support finding IV in which the court found that the reletting was after notice, and for the benefit and account of defendant.
The only testimony in regard to the matter is found in the testimony of respondent, Treff, and is as follows:
"Q. Now at the time you rented this store at $75.00, when did that begin?
A. January 1, 1927.
"Q. And at what time, did you have any conversation with Jacob Gulko in reference to renting the store to someone else?
A. I went to Mr. Gulko before that.
"Mr. Camarillo: What Gulko?
"A. To J. Gulko, and asked him to try to rent that store if he could and I would do the— somebody that I liked to rent it, and I would do the best I could to rent it. But he tried to tell me that he didn’t have anything to do with it; so I done the best I could to rent the store.
"Q. (By Mr. Mason.) What did he tell you at that time?
A. He says that he didn’t have anything to do with it.
"Q. What did you tell him?
A. Well I didn’t tell him anything, I just went my way, there was no use to argue with him."
Under date of December 9, 1927, almost a year after the reletting of the storeroom, respondent’s attorney addressed a "memorandum of rent due" from appellant, to respondent, and concluded the memorandum with the following statement: "The premises involved are now under lease at the best price obtainable, to-wit, $75.00 per month for the first 18 months of the term, and $100.00 per month for the next 18 months of the term, said term commencing January 1, 1927. In computing the rents due from Mr. Gulko, credit has been given for the rents payable under the present lease as shown above." Aside from the testimony already quoted the record is silent as to what the respective parties did in regard to exercising any control over the premises after their abandonment by appellant.
The lease contained no provisions in regard to reletting. It provided, in substance, that, should default be made in the payment of any portion of the rent, when due, and for thirty days thereafter, or in any of the covenants contained in the lease, the lessor, his agent, or attorney might re-enter and take possession of the premises, remove all persons therefrom, and at his option terminate the lease.
The rule is well settled that upon the surrender of leased premises by a lessee before the expiration of the term provided for by the lease, the owner of the premises has three remedies: First, he may do nothing and sue 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. Siller v. Dunn, 103 Cal.App. 154, 284 P. 232.
In the case of Phillips-Hollman, Inc., v. Peerless Stages, Inc. (Cal.Sup.) 291 P. 178, the court said at page 180:
"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. If this alternative be selected, in the absence of a covenant in the lease to the contrary, and perhaps where the landlord has relet for the balance of the entire term (which latter point we do not here decide), the law is well settled that the landlord cannot recover in installments, but must bring his action at the expiration of the original term, at which time the damages for the first time can be ascertained. Oliver v. Loydon, 163 Cal. 124, 124 P. 731; Bradbury v. Higginson, 162 Cal. 602, 123 P. 797; Hermitage Co. v. Levine, 248 N.Y. 333, 162 N.E. 97, 98, 59 A.L.R. 1015. See, also Respini v. Porta, 89 Cal. 464, 26 P. 967, 23 Am.St.Rep. 488."
In the present case, the respondent having elected to take possession of the premises and relet the same and to rest upon his action for damages, we must conclude, upon the authority of the last-quoted case, that his action was prematurely begun, and that the judgment awarding damages to him must be reversed.
There is a further and more serious reason why the judgment of the trial court cannot be sustained. The only allegations appearing in the complaint in regard to the assignment of the lease and the assumption of its obligations by appellant are found in paragraph II and are as follows: "That thereafter and during said term, to-wit, on the 2nd day of February, 1925, the said Peretz and Addleson in writing assigned and transferred unto the said defendant all their right and interest in and to said lease and premises, and thereupon their rights therein and thereto became, and ever since have been, vested in the defendant, and the defendant thereupon entered into possession and remained in possession of said premises under said lease so assigned to him."
The court found, in substance, that it was true that, after the making and delivery of said lease by the respondent to the original lessees on February 2, 1925, said lessees in writing assigned and transferred to appellant all their right and interest in and to said lease and leased premises and the said lease thereon, and that thereupon their rights therein became, and ever since have been, vested in the appellant, and that the appellant thereupon entered into possession and remained in possession of said premises under said lease so assigned to him and occupied said premises and "promised to pay said rent." The finding that appellant promised to pay the rent is not sustained by the evidence, the only basis for such a finding being appellant’s occupancy of the premises and his payment of the rent during the period between February 2, 1925, and the month of February, 1926. The appellant did not sign the original lease or any acceptance of such lease and entered into no new agreement to assume the obligations of the lease or to pay the rent.
In the absence of fresh contractual stipulations, there is no privity of contract between the assignee of the lessee and the landlord (Farber v. Greenberg, 98 Cal.App. 675, 277 P. 534), and when a tenant holds under a mere naked assignment of a lease, his liability is, as to the landlord, limited to his occupancy of the premises and terminates with his abandonment of possession. Chase v. Oehlke, 43 Cal.App. 435, 185 P. 425. The subject is carefully discussed in 15 California Jurisprudence at page 753, where it is said: "Privity of contract between landlord and lessee, however, is not affected by the latter’s assignment, but continues until the end of the term notwithstanding he is no longer in possession of the premises. In the absence of fresh contractual stipulation, there is no privity of contract between the assignee and the landlord. But the assignee may, by express stipulation to be bound by the covenants of the lease, create a privity of contract between himself and the landlord, which will also enure till the term expires. By virtue of such an agreement the assignee becomes liable upon and entitled to the benefit of all the covenants of the lease as such. It seems, however, that to establish privity of contract between landlord and assignee, the necessary agreement must be made between them themselves." See, also, Bush v. Bastian et al., 297 P. 976, decided March 17, 1931, in this court, wherein it was held that, under the allegations of a complaint in which it was alleged in substance that a lessee assigned a certain lease to the appellant with the express stipulation that the lessee would continue to be bound by all of the terms of the lease, and that pursuant to such assignment the appellant went into possession and occupation of certain premises, the liability of the appellant assignee to the lessor was limited to the rentals accruing prior to the assignee’s abandonment of the possession of the leased premises.
In view of the conclusions which we have announced, we consider it unnecessary to discuss the various questions treated in the briefs of appellant and of the respondent.
For the foregoing reasons the judgment is reversed.
We concur: MARKS, Acting P.J.; JENNINGS, J.