Pasadena Hudson, Inc. v. Maggiora
Pasadena Hudson, Inc. v. Maggiora
Opinion of the Court
In 1952 plaintiff leased certain property in Pasadena from defendants for a term of 10 years at an annual rental of approximately $14,500. Plaintiff agreed in addition to reimburse defendants for the city and county real property taxes on the premises paid during the term of the lease. A deposit of $11,000 was paid by plaintiff to defendants as security for its performance of its obligations under the lease; defendants agreed to credit plaintiff with interest on this deposit at the rate of 5 per cent per annum. One year and three months after signing the lease plaintiff vacated the premises and ceased paying rent. Defendants gave plaintiff written notice, as required by the lease, of the breach thereof arising from the failure to pay rent due. Plaintiff then advised defendants in writing that it was unable to comply with the lease and expressly requested that defendants attempt to relet for its benefit. Defendants responded with a written notice to plaintiff that they elected t.o keep the lease in full force and to relet for plaintiff’s benefit; they stated further that they would hold plaintiff for any resulting loss or damages, as provided in the lease.
One month thereafter defendants relet the premises to Meadow Gold Dairies for a term of 10 years. The proposed lease was approved by plaintiff prior to its execution. The annual rent under this lease is $16,800; however, defendants are required to pay the annual taxes on the land up to a maximum of $2,881.87. Based upon 1954 and 1955, the net result is that the total yearly rental received under the new lease is less than that designated in the lease with plaintiff; the deficiency has been about $500 per year.
At the end of 1954 defendants submitted an accounting to plaintiff in which the latter was credited with interest on
Thereafter plaintiff instituted this action for declaratory 'relief, praying that the rights of the parties under the lease be determined. The trial court held: that the lease executed by plaintiff and defendants was in full force; that defendants are entitled to retain the money deposited with them by plaintiff as security until the expiration of the lease; that plaintiff wrongfully breached the lease; that defendants are entitled, as provided in the lease, to deduct from the security deposit damages and expenses incurred as a result of plaintiff’s breach; that plaintiff is not entitled to collect the rent from Meadow Gold Dairies; and that at the expiration of the lease plaintiff is entitled to an accounting from defendants as to the security deposit, and is entitled to any money remaining after deduction of damages and expenses incurred by defendants. Moreover, although the court found that defendants incurred and paid legal expenses and attorneys’ fees in the sum of $785 as a result of plaintiff’s breach, the court refused to find whether or not the fees were reasonable.
Plaintiff has appealed from the judgment on these grounds: (1) that the court erred in refusing to adjudicate the propriety of the deductions made by defendants from the security deposit; (2) that the court erred in holding that plaintiff is not entitled to any portion of the rents collected under the Meadow Gold lease; and (3) that the court erred in failing to adjudicate defendants’ obligation to pay interest.
It should be noted at the outset that neither side questions defendants’ right under the lease to take possession of the premises after plaintiff’s default and relet them for plaintiff’s benefit, thereby keeping the lease in effect. (See Phillips-Hollman, Inc. v. Peerless Stages, Inc., 210 Cal. 253 [291 P. 178] ; Dickinson v. Electric Corp., 10 Cal.App.2d 207 [51 P.2d 205].) The only questions involved on this appeal concern the present obligations of the parties under the lease between them.
Our position on the question of attorneys’ fees does not mean that plaintiff is entitled to an immediate judicial determination every time defendants make a deduction from the security deposit. Plaintiff may question the propriety of future deductions at the time of the final accounting. Here the questions of attorneys’ fees and the reasonableness thereof were before the court in this suit for declaratory relief; their determination at the time of trial was not only a simple matter but also a part of the relief prayed for.
Plaintiff’s second contention is that it should be permitted each month to collect the rent under the Meadow Gold lease to the extent it exceeds the amount which plaintiff is required to pay under its lease with defendants. Plaintiff argues that defendants are receiving more each month under the Meadow Gold lease than they received under plaintiff’s
Plaintiff’s final complaint is that the trial court failed to make a proper determination as to defendants’ obligation to pay interest on the security deposit. For purposes of clarification the trial court should have stated the formula for computing interest on the security deposit, but the formula is not what plaintiff suggests. Plaintiff argues that it is entitled to a credit each year of 5 per cent of $11,000, the total amount of the security deposit. This argument is without merit. The sole purpose of the deposit was to give defendants some security for plaintiff’s performance of the covenants in the lease. The lease specifically provides that in the event of default by plaintiff, defendants may apply any or all of the security deposit toward the payment of any damages occasioned by the default and any deficiency in the reletting of the premises. Once part of the deposit has been used for such purposes, plaintiff is no longer entitled to receive that portion of the deposit upon termination of the lease since it has been used for plaintiff’s benefit. It follows that plaintiff is likewise not entitled to be credited with interest upon that portion of
The judgment herein is correct so far as it goes. It is, however, deficient in two respects: (1) The court should have determined the reasonable value of the legal services occasiond by plaintiff’s default; and (2) the court should have stated the formula to be used in computing interest on the security deposit.
The cause is remanded with directions to the trial court to make a finding as to the reasonable value of the legal services rendered to defendants as a result of plaintiff’s default, and to enter a new judgment not inconsistent with the views herein expressed. The total costs on appeal shall be divided equally between the plaintiff and the defendants.
Ashburn, J., and Kincaid, J. pro tem.,
On March 6, 1958, the opinion and judgment were modified to read as printed above.
A petition for a rehearing was denied March 12, 1958, and appellant’s petition for a hearing by the Supreme Court was denied April 30, 1958.
Assigned by Chairman of Judicial Council.
Reference
- Full Case Name
- PASADENA HUDSON, INC. (a Corporation) v. ANGELO MAGGIORA
- Cited By
- 1 case
- Status
- Published