Sleep EZ v. Mateo ( 2017 )

Filed 4/4/17
CERTIFIED FOR PUBLICATION
APPELLATE DIVISION OF THE SUPERIOR COURT
STATE OF CALIFORNIA, COUNTY OF LOS ANGELES
SLEEP EZ, ) No. BV 031618
)
Plaintiff and Appellant, ) Central Trial Court
)
v. ) No. 15U11111
)
MARTINIANO MATEO et al., )
)
Defendants and Respondents. ) OPINION
)
APPEAL from a judgment of the Superior Court of Los Angeles County, Elaine Mandel,
Judge. Affirmed.
Law Office of Allen R. King and Allen R. King for Plaintiff and Appellant Sleep EZ.
Neighborhood Legal Services, Alexander Prieto and Jeffrey Uno for Defendants and
Respondents Martiniano Mateo and Maximina Mateo.
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INTRODUCTION
We hold here that, when a tenant mails rent at a landlord‟s direction and, through no
fault of the tenant, the landlord does not receive it, the tenant is not in default in the payment of
rent in an unlawful detainer action.
Plaintiff and appellant Sleep EZ appeals the judgment in favor of defendants and
respondents Martiniano Mateo and Maximina Mateo. Plaintiff contends the judgment should
be reversed because it proved all the elements of its cause of action, including that defendants
defaulted in paying their rent. As discussed below, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff alleged in its complaint that the parties had a written agreement wherein
defendants were to pay rent in the amount of $523.98 per month, and defendants failed to pay
rent as indicated in an attached three-day notice to pay or quit. On September 8, 2015, the
statutory notice period expired with defendants neither paying rent nor vacating their
apartment. Plaintiff requested it be awarded possession of the property, along with damages,
attorney fees, and costs. The three-day notice indicated defendants were informed on
September 5, 2015, that the rent of $523.98, which was due on September 1, 2015, had not
been paid, and directed defendants to pay the rent or vacate the property. Defendants answered,
generally denying the allegations in the complaint, including that they had defaulted in paying
their rent, and the case proceeded to trial.
At the court trial on October 15, 2015, plaintiff‟s manager, Victor Ricks, testified
defendants rented one of plaintiff‟s apartments pursuant to a written rental agreement, a copy of
which was admitted as an exhibit. The agreement required defendants to pay $523.98 in rent
on the first of every month. Ricks instructed tenants to pay their rent by mail to a post office
box address, and to always pay by money order. Ricks did not receive the September rent by
September 5, 2015, so he prepared a three-day notice. The notice period expired, Ricks did not
receive the rent, and defendants remained in possession of the apartment.
Defendant Maximina Mateo testified Ricks instructed her family to pay the monthly rent
by sending money orders to a post office box. On August 31, 2015, she purchased a
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United States Post Office money order in the amount of $523.98. On this same date, she
mailed the money order to Ricks at the designated post office box address, as she had done for
the past 30 years she had been living in the apartment with her family. A copy of the
customer‟s receipt for the $523.98 paid to the post office for the money order was admitted into
evidence. Ms. Mateo testified that, on the day of trial, she received the envelope she had sent to
Ricks back from the post office with a yellow sticker stating it was undeliverable. The sealed
envelope addressed to Ricks was admitted into evidence.
Ms. Mateo‟s 17-year-old son, Henry Mateo, testified that, after the three-day notice was
posted on their apartment door, he made five to six attempts to speak with Ricks by telephone
to determine if the money order had been received. He reached Ricks only once, and Ricks told
him he had not yet had a chance to check the post office box.
On rebuttal, Ricks testified “he had never agreed that the mailing of the rent would
constitute payment, whether the check was received or not.” Ricks further testified he never
received or successfully negotiated defendants‟ money order for the September 2015 rent.
The court rendered judgment in favor of defendants. In its statement of decision, the
court indicated it found as follows: “1. Defendants purchased a money order for the full amount
of the rent due for September [¶] 2. Defendants mailed the money order to Mr. Ricks, with
postmark August 31, 2015 [¶] 3. The Lease states that rent is to be paid „to landlord by U.S.
Mail.‟ [¶] 4. Mr. Ricks did not receive the money order [¶] 5. Defendants remain in possession
of the unit [¶] 6. Defendants have not paid September rent.”
The court further stated it found defendants mailed their rental payment as directed by
plaintiff and “[t]heir payment was not received by plaintiff through no fault of their own.” The
court indicated defendants were entitled to judgment because they had timely sought to pay
their rent by mailing their money order as directed by plaintiff.
DISCUSSION
To prove its cause of action, plaintiff was required to establish defendants defaulted in
the payment of rent and failed to comply with the three-day notice stating the amount due. (See
Code Civ. Proc., § 1161, subd. (2).) Plaintiff argues there was no substantial evidence to
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support the court‟s determination that defendants‟ mailing of the money order on August 31,
2015, was sufficient to avoid a default under the rental agreement. Plaintiff also argues it
established the remaining elements of its cause of action. As we conclude the mailing of rent
constituted payment for purposes of avoiding a default, we do not address whether the
remaining elements of the cause of action were proved.
Allocation of Risk When Payment is Mailed at a Landlord’s Direction
Ordinarily, “„[p]ayment is not effectuated by sending the amount due to the creditor by
mail or other public carrier until the remittance gets into the hands of the creditor, . . .‟
[Citations.]” (Cornwell v. Bank of America (1990) 224 Cal. App. 3d 995, 999 (Cornwell).)
When the issuer of a check “does not deliver the check to the payee . . . , the issuer remains
liable to the payee on the underlying obligation. [Citations.]” (Barrett Business Services,
Inc. v. Workers’ Comp. Appeal Bd. (2012) 204 Cal. App. 4th 597, 603 (Barrett).)
But, Civil Code section 1476 provides, “If a creditor, or any one of two or more joint
creditors, at any time directs the debtor to perform his obligation in a particular manner, the
obligation is extinguished by performance in that manner, even though the creditor does not
receive the benefit of such performance.”
Civil Code section 1476 applies when the party owed money directs the debtor to pay by
mail and payment is not actually received. “„When a creditor directs a debtor to mail payment,
it is deemed that the payment is made when it is deposited in the mail. Otherwise, the payment
is not effective until received by the creditor.‟ [Citations.]” (Nguyen v. Calhoun (2003) 105
Cal. App. 4th 428, 439-440 (Nguyen), italics omitted; accord, Cornwell, supra, 224 Cal.App.3d
at pp. 998-999 [“„if the creditor directs the debtor to send him the money by mail, the loss of
the money in the mail is at the risk of the creditor[; b]ut in the absence of such a direction, the
payment sent by mail or through a public carrier does not become operative until it gets into the
hands of the creditor, and a mere general direction to remit money is not a consent to a
remittance by mail at the creditor‟s risk‟”]; Barrett, supra, 204 Cal.App.4th at p. 603 [same].)
Plaintiff argues Civil Code section 1476 does not apply when a United States Postal
Service money order is used to pay a debt, because the money order is an uncertified check, and
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its effect on the underlying rent obligation is controlled by California Uniform Commercial
Code section 3310. Plaintiff points out that, pursuant to California Uniform Commercial Code
section 3310, a money order remains unnegotiated until it is honored.
California Uniform Commercial Code section 3310 provides in relevant part, “(a) Unless
otherwise agreed, if a certified check, cashier‟s check, or teller‟s check is taken for an
obligation, the obligation is discharged to the same extent discharge would result if an amount
of money equal to the amount of the instrument were taken in payment of the obligation. . . . [¶]
(b) Unless otherwise agreed and except as provided in subdivision (a), if a note or an
uncertified check is taken for an obligation, the obligation is suspended to the same extent the
obligation would be discharged if an amount of money equal to the amount of the instrument
were taken, and the following rules apply: [¶] (1) In the case of an uncertified check,
suspension of the obligation continues until dishonor of the check or until it is paid or certified.
Payment or certification of the check results in discharge of the obligation to the extent of the
amount of the check.”
California Uniform Commercial Code section 3310 is inapplicable because, by its own
terms, it is triggered only when an instrument “is taken for an obligation.” This “refers to a
situation in which the debtor has delivered an instrument with the intention that it constitute
conditional payment for the underlying obligation and the creditor has accepted it as
conditional payment for the underlying obligation.” (Canal-Randolph Anaheim, Inc. v.
Wilkoski (1978) 78 Cal. App. 3d 477, 490.) In a situation where the payment remains
undelivered, it is clearly not accepted for payment. California Uniform Commercial Code
section 3310 does not apply when Civil Code section 1476 is satisfied. Civil Code
section 1476 specifies that, when a debtor performs as directed by the creditor, “the obligation
is extinguished by performance in that manner,” and this occurs “even though the creditor does
not receive the benefit of such performance.”
The California Uniform Commercial Code is intended to preempt statutes that contradict
or are inconsistent with its terms. (See Cal. U. Com. Code, § 1103, subd. (b).) California
Uniform Commercial Code section 3310 does not address the legal effect of an instrument
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which is lost prior to it being “taken” by the creditor. The only portion of the section dealing
with lost instruments specifically requires the creditor to once have been in possession. (Cal.
U. Com. Code, § 3310, subd. (b)(4).) This provision indicates a creditor may enforce an
instrument it once had in its possession which was lost or destroyed by bringing an action on
the instrument. (Cal. U. Com. Code, § 3310, subd. (b), com. 4.) A creditor cannot bring an
action on the instrument unless it once possessed the item and then lost it. (See Crystaplex
Plastics, Ltd. v. Redevelopment Agency (2000) 77 Cal. App. 4th 990, 996 [agreeing with a
treatise that found when “„the drawer had entrusted a messenger with delivery of the check to
the payee, and the messenger instead chose to flee to Jamaica with the check, the payee would
not be able to enforce the instrument because the payee would not have had possession at the
time of the loss‟”].)
Also, as explained by the comments to the Uniform Commercial Code, the preemptive
effect of the code must yield when “other interpretative principles addressing the
interrelationship between statutes may lead the court to conclude that the other statute is
controlling, even though it conflicts with the Uniform Commercial Code. This, for example,
would be the result in a situation where the other statute was specifically intended to provide
additional protection to a class of individuals engaging in transactions covered by the Uniform
Commercial Code.” (Official Comments on U. Com. Code, com. 3, reprinted at 23A West‟s
Ann. Cal. U. Com. Code, § 1103 (2017 pocket supp.) p. 14; Zengen, Inc. v. Comerica Bank
(2007) 41 Cal. 4th 239, 248 [Official Comments on U. Com. Code are persuasive when
Legislature adopted section in question exactly as written].)
If California Uniform Commercial Code section 3310 were always required to apply to
extinguish debts paid by negotiable instruments, Civil Code section 1476 would never apply
when negotiable instruments were mailed at a creditor‟s direction. “Repeals by implication are
disfavored. [Citations.]” (Center for Biological Diversity v. Department of Fish & Wildlife
(2016) 1 Cal.App.5th 452, 466.) Civil Code section 1476 provides additional protections
beyond those delineated in the California Uniform Commercial Code to a class of individuals,
namely, persons ordered to make payments only by mail. In the landlord-tenant context,
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beneficiaries of this rule are exemplified by persons such as defendants, who dutifully pay their
monthly rent and whose payment is lost through no fault of their own. Even if the negotiable
instruments law conflicted with Civil Code section 1476, we are persuaded the latter controls.
The Court of Appeal‟s opinion in Cornwell does not compel a contrary result. In
Cornwell, the debtor sued a creditor bank, claiming his mailing of a monthly mortgage check at
the bank‟s direction extinguished his debt to pay for that month, even though the bank had not
received the check. The Court of Appeal held that because the bank did not order the debtor to
pay exclusively by mail, Civil Code section 1476 was inapplicable. (Cornwell, supra, 224
Cal.App.3d at p. 1000.) The Court of Appeal further indicated that, even if the bank had
directed a particular manner of payment, as required by Civil Code section 1476, the parties
would have also needed to agree to alter the conditional payment rule contained in the
predecessor to California Uniform Commercial Code section 3310 in order to extinguish the
debt before the instrument was honored. (Id. at pp. 1000-1001.) This discussion was dicta,
because in Cornwell, as in our case, the instrument was not received. Cornwell therefore does
not stand for the proposition that, when a negotiable instrument is mailed at a creditor‟s
direction, the negotiable instruments statute controls its effect. (See Areso v. CarMax, Inc.
(2011) 195 Cal. App. 4th 996, 1006 [“Mere observations by an appellate court are dicta and not
precedent”].)
Application of Law to the Present Case
As a preliminary matter, we reject plaintiff‟s argument that the trial court‟s finding in its
statement of decision that “Defendants have not paid September rent” is dispositive of whether
they defaulted in payment of rent. The court‟s finding must be read in context with its further
determination in the statement that it ruled in defendants‟ favor because defendants timely
sought to pay their rent by mailing their money order as directed by plaintiff, and the money
order was “not received by plaintiff through no fault of their own.” To the extent the statement
is ambiguous on this point, we interpret it to favor affirming the judgment. (Chapala
Management Corp. v. Stanton (2010) 186 Cal. App. 4th 1532, 1535.)
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There was substantial evidence defendants mailed their September rent and, through no
fault of their own, plaintiff never received the money order. (See Perez v. VAS S.p.A. (2010)
188 Cal. App. 4th 658, 683 [appellate court reviewing judgment for sufficiency of evidence
determines if “„“„there is substantial evidence, contradicted or uncontradicted, which will
support the determination‟”‟”].) Ms. Mateo testified she mailed the money order to the post
office box designated by Ricks, and the sealed envelope addressed to Ricks which was returned
as undeliverable by the post office was admitted into evidence. The envelope was addressed to
“Victor Ricks [¶] P.O Box 451133 [¶] L.A, Ca 90045.” Although, aside from Ms. Matteo‟s
testimony, the record on appeal does not indicate whether this was the address provided by
Ricks for rental payments, we presume this was the case. (See Hearn v. Howard (2009) 177
Cal. App. 4th 1193, 1201 [when the record is silent, “[w]e must . . . presume that what occurred
at . . . [trial] supports the judgment”].)
There was also substantial evidence the mailing of the money order was done at
plaintiff‟s command. A copy of the parties‟ rental agreement was admitted as an exhibit, and it
stated rent was to be paid “to landlord by U.S. Mail.” Ricks and Ms. Mateo testified Ricks
instructed defendants to pay rent by mail to a post office box using a money order. Ms. Mateo
testified she had paid rent in this manner for 30 years.
Pursuant to Civil Code section 1476, defendants‟ obligation to pay the September rent
was extinguished by the mailing of the money order. Ricks‟s direction to pay exclusively by
mail shifted the risk of loss onto plaintiff, and therefore defendants were not in default in the
payment of rent on September 1, 2015. Accordingly, there was substantial evidence plaintiff
did not satisfy its action under Code of Civil Procedure section 1161, subdivision (2).
Plaintiff relies on Ricks‟s testimony—that “he had never agreed that the mailing of the
rent would constitute payment, whether the check was received or not”—in arguing that
mailing the money order did not constitute payment. However, Henry Mateo testified he spoke
with Ricks after the three-day notice was served, and Ricks told him he had not checked the
post office box to determine if the money order had been received. This undermined Ricks‟s
credibility, because, if he had failed to check the post office box, he would not have been able
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to say defendants defaulted in paying the rent by September 5, 2015 and later refused to comply
with the three-day notice. (See Beck Development Co. v. Southern Pacific Transportation Co.
(1996) 44 Cal. App. 4th 1160, 1204 [even if a witness‟s testimony is uncontradicted, “so long as
the trier of fact does not act arbitrarily and has a rational ground for doing so, it may reject the
testimony of [the] witness”].)
More importantly, Ricks also testified he directed defendants to pay rent exclusively by
mail. His testimony regarding the effect of paying rent by mail if it was not received, even if
believed by the court, was inconsistent with Civil Code section 1476. This section provided
defendants‟ obligation to pay rent was extinguished by performance in the manner plaintiff
specified, even though plaintiff did “not receive the benefit of such performance.” Ricks could
not unilaterally alter the effect of the statute.
Plaintiff appears to argue Ricks‟s testimony was evidence the parties agreed to terms
different than those contained in Civil Code section 1476. We assume, without deciding, the
parties could lawfully waive the effect of Civil Code section 1476. (But see Tower Acton
Holdings v. Los Angeles County Waterworks Dist. No. 37 (2002) 105 Cal. App. 4th 590, 601 [“a
law established for a public reason cannot be waived or circumvented by a private act or
agreement”].) Yet, the record is silent on the existence of any such waiver or agreement. It is
well established it is the appellant‟s burden to provide an adequate record on appeal that
affirmatively demonstrates error (Hearn v. Howard, supra, 177 Cal.App.4th at p. 1200), and we
presume any testimony on this issue supported the judgment (id. at p. 1201).
Moreover, under these circumstances, it would be unreasonable to construe the record as
reflecting that defendants agreed to waive the effect of Civil Code section 1476. Defendants
resided in their apartment for 30 years, and plaintiff specifically directed them to pay by money
order and only through the mail. They did so, month after month through the years and, by no
fault of their own, plaintiff did not receive their latest money order. Defendants were
prohibited by plaintiff from paying in person, which would have eliminated the risk plaintiff
would not receive their rent. We presume from the silent record plaintiff had not placed
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defendants in the untenable position of being subject to eviction from their home when they
faithfully complied with the landlord‟s instructions in the mailing of their rent.
DISPOSITION
The judgment is affirmed. Defendants to recover costs on appeal.
_________________________
RICCIARDULLI, Acting P. J.
We concur:
_________________________ _________________________
B. JOHNSON, J. C. LEE, J.*
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*Retired judge of the Los Angeles Superior Court sitting under assignment by the Chairperson of the
Judicial Council.
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