239 P. 341 | Cal. Ct. App. | 1925
An appeal by defendants Denny, Miller and Taylor from a judgment awarded to plaintiffs for unpaid rental of real property. The appellants were sued and held liable as guarantors of a lease under which said rental accrued. Their sole contention is that they were released from the obligation of guaranty when one of the original lessors assigned his interest in said lease and guaranty to one of the plaintiffs herein.
The facts are not disputed and are substantially as follows: On March 11, 1920, Morris G. Jonas and John Murphy *70 leased certain premises in San Francisco to Joseph P. Schiller for a term of five years at a stipulated total rental of $19,920, payable in monthly installments of $332, four installments thereof being paid in advance, on the execution of the lease. With permission of the lessors said lease was thereafter assigned by Schiller to defendant Luthy Battery Company, a corporation. The lease provided, among other things, that it should bind the heirs, executors, administrators, successors and assigns of any and all of the parties thereto, and provision was also made therein for the payment of a reasonable attorney's fee in the event action was brought to enforce its terms. Contemporaneously with the execution of said lease, as part of the same transaction, and on the same document, appellants guaranteed the performance of the covenants of said lease on the part of the lessees in a guaranty reading as follows: "In consideration of the foregoing lease or agreement, and One Dollar ($1.00) to us paid, we do hereby covenant, promise and agree to and with the said Morris G. Jonas and John Murphy that the said Joseph P. Schiller or his assigns shall well and truly pay all rents and perform and execute all the covenants therein contained on his part, or on the part of his assigns, and that on his failure, or the failure of his assigns, to do so in any particular, we will forthwith pay in United States Gold Coin unto the said Morris G. Jonas and John Murphy all rents or damages that may happen by reason of such failure, not exceeding the sum of Eighteen Thousand Five Hundred and Ninety-two Dollars ($18,592).
"Dated and signed this 11th day of March, 1920.
"JOSEPH P. SCHILLER. "OMER DENNY. "CARLTON EARLE MILLER. "WM. M. TAYLOR."
On May 21, 1923, Jonas assigned to Emile E. Kahn, one of the plaintiffs and respondents herein, all of his right, title, and interest in said lease and guaranty. After the execution of said assignment the corporate defendant, Luthy Battery Company, failed to pay the rent, and this action was brought by John Murphy, one of the original lessors, and Emile E. Kahn, assignee of Jonas, against said Luthy Battery Company and the guarantors, to recover the rental due on May 23, 1923, part of which accrued prior and *71 part subsequent to said assignment from Jonas to Kahn. Defendants Schiller and Luthy Battery Company defaulted, but these appellants appeared and defended the action upon the ground that said guaranty did not extend to the benefit of the assigns of the original promisees, and that the assignment of said lease and guaranty from Jonas to Kahn, on May 21, 1923, operated as a release and exoneration of them from any liability accruing subsequent to the date of said assignment; they also denied liability for the arrearages accruing prior to said assignment. The trial court held that plaintiffs were not entitled to recover the rental accruing prior to the assignment from Jonas to Kahn, but held appellants liable for the amount falling due subsequent to said assignment. Judgment for plaintiffs and against appellant was entered accordingly for the sum of $332, which amount represented the installment of rental falling due after the assignment, and for the further sum of $75, attorneys' fees and costs. The basis for the trial court's ruling against appellants was that the guaranty in question, not being limited by its terms to Jonas and Murphy, the original lessors, was not a special guaranty, but was an assignable chose in action, and that, therefore, appellants were not exonerated from liability by virtue of said assignment from Jonas to Kahn.
[1] We are of the opinion that the conclusions reached by the trial court are sustained by the case of Reios v. Mardis,
These contentions were held to be without merit, the court saying: "This contention is based upon the common-law rule which prohibited an assignee from suing in his own name upon a chose in action, or any promise or other liability other than negotiable paper, originally to his assignors. (2 Blackstone, 467, 468; 2 Chitty on Contracts, p. 1357; Daniel on Negotiable Instruments, sec. 1.)
"The common-law rule that a chose in action was not negotiable in the sense that it was transferable so as to enable the assignee to maintain an action thereon has been materially modified, if not entirely superseded, by statute in this state. Save, therefore, as a matter of history, the numerous cases cited by respondents from other jurisdictions, where, in the absence of statutory regulation, the rule of the common-law prevails, have little if any bearing upon the question presented here; and in so far as they are in conflict with the statutory rule in force in this state, must be disregarded.
"The right to recover money by a judicial proceeding is defined to be a thing in action, which, if it arises out of an obligation, may be transferred by the owner without prejudice to any setoffs or other defense existing at the time of or before notice of assignment; and a written contract for the payment of money, even though it be non-negotiable in form, may be transferred with all the rights of the assignor in like manner with negotiable instruments, subject, however, to all the equities and defenses existing in favor of the maker of the contract at the time of the transfer. (Civ. Code, secs. 953, 954, 1458, 1459; Code Civ. Proc., sec. 368.)
"In this state `Every action must be prosecuted in the name of the real party in interest' (Code Civ. Proc., sec. 367); and whatever the common-law rule, or the reason for its origin, may have been, it is certain that the immediate *73
effect of the several code sections just cited is to permit the assignee of a contract of guaranty — which is but a chose in action — to sue thereon in his own name. (La Rue v.Groezinger,
"If the contract of guaranty in the case at bar had been specifically limited to the lessor named in the lease, there would have been much force in the contention that the obligation of the guarantor was purely personal, and that its assignment, before default of the lessee, operated as a discharge of the obligation. Here, however, there was no limitation of the guaranty, either expressly or impliedly, to the lessor personally, and like any other promise made to him, it could be assigned and sued on by the assignee. (20 Cyc. 1431, 1483;Stillman v. Northrup,
The same general doctrine as to assignability of choses in action is set forth as being the law of this state in California Jurisprudence (vol. 3, p. 236); and in Union Collection Co. v.Oliver,
"San Francisco, Cal., July 3, 1902.
"Mr. H.J. Miller, City.
"Dear Sir: I hereby guarantee to refund all moneys paid by you for the purchase of Zubiate stock in twelve months from date, in the event that you are not satisfied with your investment.
"(Signed) DEW. R. OLIVER, President."
The court said upon this particular subject, "Nor is there any merit in the argument of defendant that the contract was personal, and therefore unassignable. The contract does not provide that it shall not be assigned. Neither is it in its nature strictly personal, and therefore unassignable (2 Am.
Eng. Ency., pp. 1010, 1018; 4 Cyc. 22; Taylor v. BlackDiamond,
In Stillman v. Northrup,
[2] It will be observed that in the case before us the guarantors guaranteed the payment of the entire rental for the full five-year period of the lease, to wit, the sum of $18,592, from which fact it may be fairly inferred, as the trial court held, that it was intended that the guaranty should inure to the benefit of the assignees of the original lessors, in the event that lease was assigned at any time during the life thereof.
[3] Whether or not a given contract is assignable may be a question of the intention of the parties to be determined by construction of the terms of the contract (Montgomery v. DePicot,
Appellants endeavor to differentiate the case of Reios v.Mardis, supra, from the case at bar upon two particular grounds, first, that it appears from the decision therein that the guarantors consented to the assignment of the lease and guaranty; and, secondly, that by the terms of the guaranty there, the agreement was to indemnify the "lessor" against loss; while here the agreement was "to pay to said Morris G. Jonas and JohnMurphy all rents and damages that may happen" by reason of the failure of the lessee and his assigns to pay the rent and perform and execute the covenants of said lease. We believe that neither of those distinctions renders that case ineffectual as a controlling *76 authority. While it is true the guarantor there did consent to the assignment, its liability as such was not declared by the court upon the theory of either consent or ratification, but was placed upon the broader ground of the right of the promisee to make the assignment. In reference to the second proposition, the case of Levy v. Cohen, supra, seems directly applicable, wherein it holds that where the contract is assignable, and there is no trust or confidence reposed in the original promise, the guaranty must be regarded as a general one and passes with the original obligation, for it is entirely immaterial to whom the money is paid, so long as the contract is performed.
The case of Garfield v. Ford,
Appellants also cite and emphasize the case of Smith v.Ottmann,
[5] The guarantors being liable for the rental due under the lease, they were also chargeable with attorneys' fees for the enforcement of its terms (Grace v. Croninger,
The judgment is affirmed.
Tyler, P.J., and Cashin, J., concurred.