Roadside Rest, Inc. v. Lankershim Estate
Roadside Rest, Inc. v. Lankershim Estate
Opinion of the Court
The present action seeks declaratory relief concerning certain provisions of a sublease under which Roadside Rest, Inc. operated a restaurant. The controversy involved an alleged modification of such sublease, changing the computation of rent from a monthly to a yearly basis as determined by gross income. The primary defendant is the Lankershim Estate, owner and lessor of the property, all rights of the other defendants being derivative therefrom. On
The original sublease covering the Roadside Rest property, was prepared in the office of Walker, Adams & Duque, attorneys for the Lankershim Estate, and following the signatures of the contracting parties, is found the written approval of the estate, signed by Irving Walker, the estate’s director and vice president. Paragraph 2 of this sublease, as originally drawn, provided that the sublessees should pay to the sub-lessors the sum of $3,000 annually on the first day of July; further, that monthly thereafter, “Sublessees shall compute their gross receipts for the preceding calendar month. In the event that nine per cent (9%) of said gross receipts exceeds
Attached by staples to the sublease and just preceding the original page 2 crossed out as hereinbefore mentioned, is an additional or substituted page 2 which appears to have been written on a typewriter different from that used in preparing the original page 2 and the rest of the sublease. This substituted page 2 is not initialed by anyone, nor does any date appear thereon. A material change in rental terms is provided for in the substituted page 2, which stipulates that the minimum annual rent shall be $3,000, and that “ (b) The overage of 9% of the gross receipts of the Sublessees’ business shall be payable at the expiration of each year unless as hereinafter provided”; thereafter providing that the sublessees shall monthly 11 compute their gross receipts for the preceding calendar month; In the event that the 9% of the gross receipts at any time exceeds the minimum rental of $3000.00, then on or before the 10th day of the following month, the Sublessees shall pay to the said Sublessors 9% of such gross receipts until the end of the year. ’' The practical effect of this change, according to the appellant Drew's opening brief, “is to transform a monthly excess, as provided in the original clause 2, to an excess calculated on the annual basis.”
The actual controversy giving rise to the action for declaratory relief is, in the language of respondent’s brief, “over the question as to whether clause 2 of the sublease as originally proposed or the substituted clause 2 is in effect and governs the measure of rent under the sub-lease.” The trial court found that the substituted clause 2 was the “true sublease,” which “was and is the agreement between the parties thereto as executed on or about the 16th day of June, 1941, and as
It is the appellants’ contention that the findings of the trial court “are contrary to the pleadings and the evidence and do not support the judgment” holding that the substituted page 2 of the document in question constituted the “true sublease,” and that the defendants knew or should have known of the substitution and acquiesced therein. It is particularly urged that the finding to the effect that the Lankershim Estate is bound by a constructive consent to the so-called “true sublease” or substituted page 2, is not supported by the evidence. Briefly, therefore, this appeal is concerned with two basic questions: (1) What was the real sublease entered into on or about June 16, 1946?; and (2), Did the Lankershim Estate, owner and lessor, by reason of its knowledge or otherwise, give constructive approval of the modified sublease ? The correct
At the outset it is well to note the fundamental proposition, reiterated in section 1981 of the Code of Civil Procedure, that “The party holding the affirmative of the issue must produce the evidence to prove it; therefore, the burden of proof lies on the party who would be defeated if no evidence were given on either side.” In the present case, obviously, the burden rested on the plaintiff, Roadside Rest, to establish the allegations of its complaint. Moreover, in paragraph IX of that complaint, it is directly alleged that on or about June 17, 1941, “with the knowledge, consent, acquiescence and approval of the Lankershim Estate and its duly authorized agents and representatives, the section known as clause 2 . . . was stricken out and in lieu thereof was substituted” the modified clause 2 changing the overage rental terms from a monthly to a yearly basis, as hereinbefore mentioned. This allegation concerning an alleged alteration of the original document makes applicable section 1982 of the Code of Civil Procedure which provides that “The party producing a writing as genuine which has been altered, or appears to have been altered, after its execution, in a part material to the question in dispute, must account for the appearance or alteration.” That the provision known as clause 2, changing the rental basis, is material, there can be no doubt. The burden, therefore, of establishing that the substituted clause 2 represented the true agreement, and that the Lankershim Estate in some manner approved this important alteration, clearly rested upon Roadside Rest, Inc.
It is to be observed that the record furnishes no satisfactory answers to the important questions as to who actually prepared the substituted page 2 and as to the exact time when this substitution was made. The respondent dismisses this inquiry with the observation that since it is evident that the change was made, the time and place of making such modification is immaterial. It is impossible to accede to this proposition; the time of alteration and the circumstances connected therewith, are of the utmost importance in determining the validity of the alleged modification and the owner’s approval thereof. John Drew, one of the original sublessees testified: “When I signed that lease, there were no changes or marks”; that there was some conversation concerning a change, but that no document was ever presented embodying any change;
One H. F. Metcalf testified to receiving a monthly salary from the Lankershim Estate “as a general expert in real estate matters,” although not being an officer or director of the estate. The broker Charlesworth, who negotiated the sublease in question, used Metcalf’s office. Sometime after signing the sublease, according to this witness, Charlesworth told Met-calf “they had made an error, he thought in negotiating their
Finally, there is the testimony of Irving Walker, vice president and director of the Lankershim Estate, that at the time the estate’s written approval was appended to the sublease and signed by Walker, no portion was crossed out, nor did any initials appear on the margin. “I have a very definite recollection,” said Mr. Walker, “that the provision in the sublease at the time I gave my consent to it was ... to the effect that the percentage of the rent should be calculated on a monthly basis,” and that no person ever asked Walker, as an official of the Lankershim Estate, to amend the sublease. Mr. Walker’s office prepared the sublease, and the witness testified: “It has been my uniform requirement that the signatures to documents which were to be signed by the Lankershim Estate and other parties be signed by the other parties before I signed for the Lankershim Estate.” Mr.
The trial court’s conclusion that the substituted page 2 of the document constituted the “true sublease,” and that the original page 2 was merely a “mistaken sublease,” is not supported by the record. All that the evidence shows in respect to this matter, is that after the original sublease was executed, and after written approval in that form by the Lankershim Estate, there was some discussion to which the estate was not a party, in regard to making the rental terms more favorable to the sublessee, by changing the computation from a monthly to a yearly basis. But the fact remains that no modified sublease embodying any such proposed change was ever presented to or approved by the Lankershim Estate, and the trial court found that the estate “has not given its written consent to said true sublease” (The modified sublease) . The most that is indicated by the evidence is that at some unlmown time and place, some unidentified person prepared and attached to the document a new page, crossing out the original provisions as to rental terms. Any sublease negotiated was without value except as its terms were approved by the estate, and the only conclusion justified under the evidence, is that the original, and not the substituted rental provision represents the only agreement actually made, executed and approved. The law quite definitely provides how a lease or other contract may be changed, section 1698 of the Civil Code specifying that “A contract in writing may be altered by a contract in writing, or by an executed oral agreement, and not otherwise.”
The further question whether the Lankershim Estate, although not giving written consent, nevertheless in effect approved the alteration by reason of some knowledge “of the existence of the true sublease,” in the language of the trial court’s finding, or because the estate had “been put on inquiry
Respondent’s brief suggests that the Lankershim Estate knew of the alteration because of the fact that John Drew, originally sublessee and later a lessee of the estate, “was for a period of years the agent of the Lankershim Estate for the collection of the rent.” It is true that, as a matter of convenience Drew was authorized to collect rent from the sublease, and in the final leasing arrangement Drew was required to pay to the Lankershim Estate 25 per cent of the rent collected from Roadside Rest, Inc. The arrangement, however, was nothing more than this, and Drew was no more the representative of the owner than is any other lessee; the fact can in no manner affect the present controversy. The respondent, further, would impute knowledge and approval to the Lanker-shim Estate by reason of the acceptance of rent which respondent says was “computed on the basis of the modified draft.” But, as said in the brief of the estate, whatever rent came to it was merely accepted under the justifiable belief that the original sublease, which was the only agreement ever approved, represented the only existing sublease. Obviously, had the estate been advised that the rental terms had been modified, some appropriate action would have been taken. Ratification requires knowledge and the record discloses nothing of this nature. To say that the estate owed some kind of a duty to obtain this knowledge is to again indulge an unwarranted assumption amounting to a reversal of the burden of proof. Constructive consent or approval in respect to the alleged
The respondent further suggests that “the great probabilities are” that the Lankershim Estate’s copy of the sublease, not produced in court, ‘1 contains the identical alterations” contended for by respondent. Here again is an attempt to justify the judgment on the ground of probabilities. Moreover, as pointed out in the Lankershim reply brief, the photostatic copy of the sublease reveals that the sublease was “made and entered into in duplicate, ’ ’ and both of the executed and approved copies of the sublease were before the court as Exhibits 1 and 7. So far as probabilities are concerned, inferences unfavorable to respondent’s contentions might likewise be suggested from the fact that two of the original five parties to the controversial sublease were not called as witnesses, namely Mr. Carlyle Nibley and Mr. Henry Anderson. However, as hereinbefore mentioned, a judgment should not rest upon probabilities, conjecture or vague inferences concerning what a given situation might or should have been.
For the reasons hereinbefore expressed, the judgment is reversed with directions to enter a judgment declaring that the original sublease without modifications, as approved by the Lankershim Estate in writing, is the only valid and subsisting sublease, and that such original sublease governs the rights of the parties thereto and those claiming under them.
York, P. J., and White, J., concurred.
A petition for a rehearing was denied November 4, 1946, and respondent’s petition for a hearing by the Supreme Court was denied December 12, 1946. Shenk, J., Carter, J., and Schauer, J., voted for a hearing.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.