248 F. 25 | 9th Cir. | 1918
This is an appeal from an order of the District Court, affirming an order of the referee in bankruptcy in disallowing the claim of the Powell Street Investment Company against the Turpin Hotel Company, bankrupt, for any sum in excess of $5,500. The claim out of which the controversy arises is for rent of certain premises in San Francisco leased by the bankrupt, Turpin Hotel Company, from the Powell Street Investment Company. The findings of the referee are substantially as follows:
The Powell Street Investment Company leased the Hotel Turpin for a period of 10 years, expiring January 31, 1920, at a stipulated monthly rental of $2,500. On July 31, 1915, the Hotel Company was $14,000 in' arrears on the rent. An adjustment of the indebtedness was then made by the Hotel Company, which paid to the Investment Company $5,000 in cash and gave six notes, of $1,500 each, payable at intervals of 30 days, indorsed by William Wilsie. Wilsie paid the first note, but, having failed to pay subsequent notes as they fell due, on January 16, 1917, the landlord, Investment Company, accepted a chattel mortgage on certain property belonging to Wilsie and surrendered to Wilsie all the unpaid notes. The Hotel Company paid to the landlord, Investment Company, $1,600 a month from August 1, 1916, to January 31, 1917. The receipts, which were given by the Investment Company, landlord, for such rentals,' to the Hotel Company, read: “Received from Turpin Plotel Company $-, payment for rent on account.” On April 4, 1917, the Hotel Company filed its petition in bankruptcy. No part of the rent for February and March, and up' to April 4, 1917, was paid. The referee allowed $5,500 for rental of February and March, and up to April 6, 1917, inclusive, at the rate óf $2,500. In December, 1916, the Powell Street Investment Company made a new inventory of the furniture and personal property in the hotel, and papers embodying a new agreement were to be drawn in December, 1916, providing the Hotel Company had paid in full the reduced rental of $1,600 per month up to that time.
The referee found that the rent receipts heretofore referred to, which were given by the landlord for rentals from August 1, 1916, to January 31, 1917, were not receipts “upon account,” but were in full for rental for said months, and that the lease in question between the parties was modified as to monthly rentals, in that the monthly rental was reduced from $2,500 to $1,600 for the months from August, 1916, to January, 1917, inclusive, by an executed oral agreement.
These findings are made clearer by reference to the evidence, which
The testimony of Savage of the .Investment Company was that he told Turpin the Investment Company would give receipts on account for rent until the end of May, and that he said to Turpin, “We will then execute a chattel mortgage; we will then execute a modification to the lease, which will have a new chattel mortgage attached to it,” the mortgage to be paid some time in January; that the receipts on account for rent would be given until the end of May, when Turpin was to get a receipt in full for rents from August 1st to May 31st; that the lease would then call for S2.000 a month; that the understanding was that the reduction of $900 a mouth was merely a contingent one upon Turpin completing his payments until May 31, 1917, and that on the 31st of May, 1917, he (Savage) was to give Turpin a written modification of the lease carrying a reduced rent to the end of the term at the rate of $2,000 a month, and that there was to bo attached to the writing a chattel mortgage dated of that date, May 31, 1917, to secure the reñíais for the balance of the lease; that this modified lease and mortgage were not to be executed “unless he (Turpin kept good faitli in our oral agreement”; that the mortgage contemplated was being prepared in November or December, 1916, but that as soon as Turpin “fell down in his agreement” the mortgage was “held up.”
The contention of the appellant is that the actual oral agreement between the landlord and the tenant had not been executed. This contention is, of course, predicated upon the assumption that the parties agreed that a chattel mortgage would be executed and delivered, and that because of failure by the Hotel Company to execute and deliver a chattel mortgage as security for the payment of future rent, as called for under the modified lease, there never was an execution and full performance of the agreement made. The appellee, on the other hand, argues that the lessor accepted for a consideration $1,600 for- each of tire months from August, 1916, to January, 1917, in full payment, and that the rental reduction was not conditioned upon the payment of the reduced monthly rent úp to May 31, 1917, but that the lower rent was granted in consideration of the agreed new adjustment and settlement of arrears of rentals, and that the agreements to make in the future a new chattel mortgage and lease rider were not essential to the allowance of any past concession of monthly rental.
To this finding, supported by substantial evidence, and to the whole case upon its facts, there should be applied the principle recognized by section 1698, California Civil Code, that a contract in writing may be altered, either by a contract in writing or, as we have in the present instance, by an executed oral agreement. When the payments were accepted as rent in full for the mouth specified in the receipts, there was an execution of the essence of the oral adjustment of rental between the landlord and tenant. The agreement of the tenant to give at some subsequent time a new mortgage security was not a condition precedent to the reductions conceded and recognized, nor was it such an essential thing in the adjustment agreement that the omission on the part of the tenant to make such a mortgage and to deliver it to the lessor should be construed as failure in the execution of the oral agreement. The evidence of the circumstances connected with the dtday in making the proposed new mortgage and lease rider, when considered with the acceptance of the payments of rentals in the reduced sums, strengthen the opinion that the matter of the giving of the mortgage was neither of the essence of the adjustment nor the consideration for the promise of the lessor to reduce the rental. The real consideration for the oral agreement was the settlement by obligation of Wilsic to pay $9,000 of back rent, which he agreed to do, with the understanding that rentals had been reduced. This was at least presumably a valuable consideration for the oral modification. The obligation by way of indorsement of notes was made for the benefit of the tenant, the maker of the notes, in favor of the landord, payee. It would seem that under the rule of the California decisions the Hotel Company could maintain action for the breach of the engagement of Wilsie. Hendrick v. Lindsay, 93 U. S. 143, 23 L. Ed. 855; Austin v. Seligman (C. C.) 18 Fed. 519; Washer v. Independent M. & D. Co., 142 Cal. 702, 76 Pac. 654.
In conclusion, our opinion is that the referee and District Court were right in their understanding of the evidence and of the legal effect thereof.
Affirmed.