Lovett v. Bell

SCHAUER, J.

I dissent.

The controlling issues in this case are res judicata. (Bell v. Lovett (1946), 75 Cal.App.2d 883 [171 P.2d 758].) The decision in the earlier litigation at least impliedly (and, on the facts, conclusively) determines that the premises involved are not “housing accommodations” within the meaning of the Emergency Price Control Act of 1942, as amended (56 Stats. 23, 50 U.S.C.A.) and the Rent Regulation for Housing (8 F.B. 7322) promulgated thereunder, and adjudges valid the agreement of May 3, 1944, whereby the defendants herein relinquished all right to occupy and operate the premises subsequent to September 30, 1945. The majority opinion errs in disregarding the previously and finally adjudicated facts. It. cannot reach its results without disregarding those facts and the law of res judicata.

The Rent Regulation (§13(9) (6)) defines “housing accommodations” to mean “any building, structure, or part thereof . . . rented or offered for rent for living or dwelling purposes.” It is obvious here that as between plaintiffs and defendants the premises in question were not “rented or offered for rent for living or dwelling purposes.” The premises were an entire “motor hotel” of twelve units owned by plaintiffs. The lease to defendants (or their predecessors) was not for “housing accommodations” for them but as a business enterprise to be operated for profit. In the prior litigation the court expressly found that “all of the . . . rooms involved in said lease with the exception of one (1) were sublet to the general public by plaintiff [R. H. Bell, defendant here]. That plaintiff [R. H. Bell, defendant here] was not the ultimate consumer of said premises other than one (1) room.” (Bell v. Lovett (1946), supra, 75 Cal.App.2d 883, 885 [171 P.2d 758].) The controversy, therefore, does not concern the right of a tenant or occupant of a family dwelling to remain in possession of his living quarters after the expiration of the rental term but involves a wilful holding over in the operation of a business for profit after the relinquishment, for a valuable consideration, of all right therein.

In 1940, the property to be operated as a business enterprise, was leased by plaintiffs to defendants’ predecessors for a term expiring September 30, 1945, and with an option to the lessees to renew the term for an additional five years. The lease, however, reserved to plaintiffs “the right ... to sell the said premises at any time during the term of this lease” and upon such sale to terminate the lessees’ rights and occupancy. In 1944, for valuable considerations, the lease was modified. The lessors (plaintiffs) did “relinquish their right to sell said premises free and clear of said lease prior to the expiration of said lease” and the defendant R. H. Bell (who had acquired the lessees’ rights) agreed that he did “relinquish his right to the exercising of an option beyond the 30th day of September, 1945, and . . . give up all rights to said option and will not have any interest in said leased premises . . . after the 30th day of September, 1945.” (Italics added.) The plaintiffs fully performed their part of the contract but the defendants, notwithstanding their own covenant, and notwithstanding that they had received such full performance from plaintiffs, refused on and after September 30, 1945, to surrender possession of the premises or any part thereof. The complexion of the whole matter might have appeared different to the trial judge if the defendants had surrendered to plaintiffs possession of the entire business property reserving only a claim of right to continue in personal occupancy of a single unit as a “housing accommodation.” Their refusal to surrender possession, it appears however, was not related to a single unit or to any housing shortage or “housing accommodation” but was found by the court to be “deliberate, intentional, wilful and with knowledge that all of defendants ’ rights therein and their right to possession had terminated, and with knowledge that they were holding over against the will of the plaintiffs.” The court further found “that from and after the 30th day of September, 1945, no relationship of landlord and tenant has existed between the plaintiffs and defendants, and that the Rent Director of the Office of Price Administration has no jurisdiction over the subject matter herein.”

The last mentioned finding undoubtedly has reference to the fact that the property involved is not a mere residential or “housing accommodation” holding of the defendants but is a business holding. That is to say, the property, as herein-above indicated, is a “motor hotel” which is occupied by the defendants not primarily for residence purposes but mainly for purposes of business operation in the subletting of hotel units to the general public. As expressly found by the court, “Said premises were at all times . . . improved by a motor hotel, the units of which were rented to the public on a daily and weekly basis by the defendants herein.” It was also found “That the defendant ... as alleged in plaintiffs’ complaint did relinquish and surrender and abandon to the plaintiffs any and all right ... to enjoy and remain in possession of the said premises . . . from and after the 30th day of September, 1945” and that “the defendants ... do not have any interest therein nor the right to the possession thereof nor the right to possession of any part thereof.” As aptly declared by Mr. Presiding Justice Moore in the opinion of the District Court of Appeal in this case, “If a total renunciation of interest in the property be not the fact established by the language of the agreement then the art and custom of reducing to writing the understandings of men might as well be cast into the discard.” (Lovett v. Bell (1946), (Cal. App.) 173 P.2d 560, 562-563.)

The court did not expressly find that the defendants entered into the 1944 modification agreement with the specific intent not to perform their obligations thereunder but the evidence and the findings which were made amply support such a deduction. It is to be noted that defendants, having induced plaintiffs to relinquish their right to sell the premises free and clear of the lease (and which sale, even under the Emergency Price Control Act of 1942 and the Rent Regulations for Housing could have resulted in the dispossession of defendants) at once showed their bad faith in the matter by suing the plaintiffs for triple damages, asserting that the cash paid by defendants to plaintiffs as a part of the consideration for the latter’s relinquishment of their right to sell free and clear, was additional rent. Their contention was disposed of adversely to the defendants herein. (Bell v. Lovett (1946), supra, 75 Cal.App.2d 883.) Apparently, it is in furtherance of the same general plan that the defendants have, as found by the court, continued to operate the motor hotel business and to withhold possession of the premises, such withholding being “deliberate, intentional, wilful and with knowledge that all of the defendants’ rights therein and their right to possession had terminated.”

As previously indicated the legality of the consideration and of the object of the controlling contract was established in the earlier litigation (Bell v. Lovett (1946), supra, 75 Cal. App.2d 883) and is now res judicata. Whatever might be our views on the several contentions of the parties if the matter were before us initially, certainly we cannot now say that that part of the modification agreement by which the lessees relinquished their interest in the leased premises effective September 30, 1945, is void despite the fact that it has been finally adjudicated between the parties that the agreement is valid. The contract was executed as an entirety and it is obvious that the lessors would not have entered into it without the agreement by the lessees that their interest in the property and right to occupancy terminated on September 30, 1945. As stated in Krier v. Krier (1946), 28 Cal.2d 841, 843 [172 P.2d 681], “a judgment in a prior action between the same parties on the identical cause of action is res judicata, and a bar to a second suit thereon, not only as to issues actually determined, therein but also as to issues necessarily involved. [Citations.] And even though the causes of action be different, the prior determination of an issue is conclusive in a subsequent suit between the same parties as to that issue and every matter which might have been urged to sustain or defeat its determination. [Citations.] ”

Courts should abhor and refuse to unnecessarily perpetrate injustice. Here the defendants have received from the plaintiffs full measure of performance. The plaintiffs surrendered their right to sell their property and thereupon and thereby cause defendants to be dispossessed. The defendants having had the full benefit of plaintiffs’ forbearance now assert that the contract by which they procured such forbearance was void. And even though such contract has been finally adjudicated valid this court now disregards the law of res judicata and supports defendants in their “wilful and deliberate” refusal to perform. Such applications of the Emergency Price Control Act tend to bring odium to its administration.

Under the circumstances shown in this record the rights of the defendants to possession of and to operate and enjoy the profits of their business venture ceased on September 30, 1945. Their possession and operation of the business premises since that date have been unlawful. The judgment of the trial court is amply supported and should be affirmed.

Shenk, J., and Carter, J., concurred.

Respondents’ petition for a rehearing was denied May 26, 1947. Shenk, J., Carter, J., and Schauer, J., voted for a rehearing.