Collis v. Baker

591 P.2d 363, 285 Or. 417, 1979 Ore. LEXIS 915
Oregon Supreme Court·Decided February 27, 1979·No. TC A 7601 01240, SC 25358·Published·Cited by 2 cases

Opinion

*419 LINDE, J.

Defendant lessors appeal from a judgment awarding plaintiff damages resulting from defendants’ failure to consent to the assignment of plaintiffs lease to a third party.

Plaintiff leased the Freeway Hotel in Portland, Oregon, from defendants Mr. and Mrs. Baker in 1972. In November, 1975, plaintiff assigned his interest in the lease to Albert Chenoweth for $30,000, subject to the Bakers’ consent. This was required by the following provision of the lease:

6. The lessee will not assign, transfer, pledge, hypothecate, surrender or dispose of this lease, or any interest herein, or permit any other person or persons whomsoever to occupy the demised premises without the written consent of Lessor being first obtained in writing, it being agreed however, that such consent will not be unreasonably withheld; . . .

Plaintiff sought defendants’ consent to the assignment during November and December, 1975, but the negotiations did not result in an agreement on conditions demanded by Mr. Baker. 1 Meanwhile, plaintiff had put Chenoweth in possession of the hotel as of December 1, 1975, and thereafter plaintiff and Chenoweth treated the transfer as completed despite Mr. Baker’s refusal to consent. Defendant made it clear that he did not recognize Chenoweth as transferee of the lease. In February, 1976, plaintiff sued for a declaration that defendants’ refusal to consent was unreasonable; in answer, defendants asked that plaintiff’s rights under the lease be terminated for breaching the assignment clause without defendant’s consent.

While this action was pending, in August, 1976, the hotel’s elevator became inoperable, requiring repairs *420 that were estimated to cost $4,500. Under the lease, the lessor was not obligated to undertake repairs but to pay the cost of repairs to the elevator above $100. 2 Despite various communications between the several parties, none of them ordered the elevator repairs. On September 1, 1976, Chenoweth wrote plaintiff that he had decided to terminate the agreement between them because Baker had not consented to the assignment and because he had not paid for the repairs. At the time of the termination, $25,397.36 remained payable on Chenoweth’s contract with plaintiff.

On September 3, plaintiff notified Mr. Baker of plaintiff’s decision to terminate the lease on the grounds of Baker’s failure to recognize the assignment to Chenoweth or to repair the elevator. He thereafter filed a "Supplemental Complaint” in the pending action in two counts: one for $25,397.36 in damages for loss of the benefits of plaintiff’s bargain with Chenoweth, the second for damages for breach of the lease in failing to repair the elevator. The case was tried to the court without a jury. At the conclusion of plaintiffs case, the court granted defendant’s motion for involuntary nonsuit on the second count on the grounds that plaintiff could have ordered the repairs at defendant’s expense and that the damages were speculative. At the end of the trial, the court found that defendant’s refusal to consent to the assignment of the lease to Chenoweth was unreasonable, and that this refusal lost plaintiff the benefits of that assignment in the amount of the unpaid portion of the price.

Defendant appeals only from the judgment for damages. The only claim on appeal is that the evidence does not support a finding that the refusal to consent to the assignment caused plaintiff’s loss. Defendant maintains that Chenoweth terminated his agreement *421 with plaintiff not because of the unresolved disagreement over the assignment of the lease but because the elevator was not repaired — a failure for which defendant was not responsible, as the trial court had found in granting the nonsuit on the first count.

We think the trial court had enough evidence to find that defendant’s refusal to recognize Chenoweth as a tenant by assignment, which the court held to be unreasonable, was one reason for Chenoweth’s decision to end his effort to buy plaintiff’s hotel business. Mr. Chenoweth testified on direct examination that he had talked to Mr. Baker about the breakdown of the elevator, and that Baker has said that "[t]here was just nothing he could do about it.” Chenoweth’s impression of the conversation was that "it had something to do with not recognizing me.” On cross-examination defense counsel described Chenoweth’s letter of termination as "more or less of a two-fold letter” or one including "two prongs . .. one Mr. Baker had not consented to the assignment of the lease to you; two, and was — well, not paying the repairs?” He then asked Chenoweth:

Q ... Well, your major concern in September of 1976 was because the elevator shut down; wasn’t it?
A Yes, sir.
Q Up to the time the elevator had problems, had developed in August, you had been operating the hotel; right?
A Yes, sir.
Q And you had got some rugs and did some painting and you were anticipating operating the hotel; weren’t you?
A Yes.
Q Okay. So had the problem with the elevator not developed you would have continued operating the hotel until a judicial determination was made about the assignment, wouldn’t you?
A Yes, I would have.
Q In fact the letter I was referring to there where it uses two prongs, in fact your main concern was the *422 elevator problem and that is what caused you to terminate the lease; isn’t that true?
A Yes, sir.

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Collis v. Baker, 591 P.2d 363, 285 Or. 417, 1979 Ore. LEXIS 915 (Or. 1979).

591 P.2d 363 (Collis v. Baker) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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