Crawford v. Hub Ranch of Paradise Valley

285 P.2d 724, 134 Cal. App. 2d 256, 1955 Cal. App. LEXIS 1751
CourtCalifornia Court of Appeal
DecidedJuly 5, 1955
DocketCiv. No. 4936
StatusPublished

This text of 285 P.2d 724 (Crawford v. Hub Ranch of Paradise Valley) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Crawford v. Hub Ranch of Paradise Valley, 285 P.2d 724, 134 Cal. App. 2d 256, 1955 Cal. App. LEXIS 1751 (Cal. Ct. App. 1955).

Opinion

MUSSELL, J.

This is an action for damages for breach of a lease agreement entered into on August 12, .1949, by and between plaintiff, William E. Crawford, and James DeLucas, as lessees, and Hub Ranch of Paradise Valley, a partnership, composed of Shigeru Uchiyama, C. E. Halliburton and R. R. Bray, the general partners, as lessor. A cross-complaint was filed against Crawford to recover a loan in the sum of $2,500 made to him by Halliburton and Uchiyama. Halliburton died before the trial of the action and Eva M. Halliburton, as executrix of his estate, was substituted, and said executrix filed an amended answer. A jury trial was had, resulting in a verdict for plaintiff and against defendants for the sum of $134,640, and in favor of the cross-complainants on their cross-complaint for the sum of $2,500. Defendants appeal from the judgment against them and defendant Eva Halliburton, as executrix, also appeals from the order denying the motion for judgment notwithstanding the verdict.

The defendant Hub Ranch, a limited partnership, early in 1949 purchased approximately 41,400 acres of land in Humboldt County, Nevada, and 12 sections thereof are involved in this action. The said 12 sections were undeveloped and required clearing, leveling and developing of a water supply from underground sources before they could be farmed. R. R. Bray was the general manager of the Hub Ranch and was authorized to enter into partnership transactions and contracts not exceeding the sum of $1,000.

In May, 1949, plaintiff and James DeLucas visited the property, contacted Mr. Bray, and discussed with him the leasing of 12 sections of the ranch property. Bray informed them that he was general manager and that their primary negotiations would be with him, subject to the approval of the other partners. Crawford stated that they did not have the money to “go ahead and” complete a development the “size potentially had there” and asked Bray whether or not it would be possible “to do some outside financing.” Bray then stated [258]*258that there was a financing setup already established through an insurance company whereby it agreed to advance so much money on land as it was developed. Bray further stated that Mr. Herman, who represented the insurance company, had visited the land and would advance $10,000 a section at such time as the land was leveled and water was brought to the surface. Several weeks prior to the date of the lease here involved Bray and Crawford, at Bray’s suggestion, went to Los Angeles to discuss the insurance loan with Mr. Herman. Crawford testified in this connection that one purpose of this discussion with Mr. Herman was to verify the insurance loan and “also to have the loan made out to me, with the land being put up as security”; that Herman asked him if he had enough money to carry out the development, to level the first section, and Crawford stated that he had with the exception of the well; that he, Crawford, stated he would level the section and put a well on it if the insurance company would grant $10,000 upon completion; that Herman said “Yes,” he says, “The minute the land is level and the water is on top of the ground.” He says, “You ’phone me long distance down here, and I’ll come up there.” He says, “You’ll have a check in less than 30 days”; that Herman stated that he had already approved the loan of $10,000 per section and that “It was only necessary to change the application over into my name, and then send it back to the home office. And he said the home office rarely, if ever, turned down a loan once he had okayed it out here on the west coast.”

Early in August, 1949, Crawford went to Fresno for the purpose of negotiating a lease with the Hub Ranch for 12 sections of land. Bray and Crawford went to the office of Mr. Hollins, an attorney, and the lease was prepared by him. This draft was signed by Bray, Crawford and DeLucas. It was then submitted to the remaining general partners of the Hub Ranch and a conference was held at the office of Mr. Snell, one of the attorneys for the defendants. The Hollins draft of the lease was not acceptable to the remaining partners of the Hub Ranch particularly by reason of the fact that it contained no reference to existing encumbrances on the property or the payment of the indebtedness then secured by a mortgage on the premises.

The lease here involved was then drawn up and executed by the Hub Ranch, Crawford and DeLucas. It provided generally as follows: Twelve sections of land were leased to [259]*259plaintiff and James DeLucas for a period of five years, with an option to renew for an additional five years. The 12 sections were to be adjoining and were to be selected by the lessees within 60 days. The lessees were to clear and level said land, install wells, equipment and ditches for irrigation or drainage, one section the first year, two sections each and every year thereafter until all of said land had been developed as therein provided. The lessees agreed to devote all of the leased premises to the raising of grains or other suitable crops and as return for the said leased premises the lessor was to receive one-fifth of the entire crop of grain and other crops raised on the premises, except as to vegetables, of which it was to receive one-sixth. The lease also contained an option to purchase one or more sections of said land at $50 an acre, provided that one-half of the rent lessor received was to apply on the purchase price of the land upon which lessees exercised the option to purchase. The lease also contained a covenant against assignments without the written consent of the lessor, and contained the following two paragraphs: “8. It is understood that the Lessees contemplate borrowing money for the purpose of clearing, leveling, irrigating, draining and water development, including wells, pumps and pipelines, and Lessor agrees to execute the necessary loan documents to consummate the borrowing of moneys to complete the foregoing development.

‘ ‘ 21. Lessor agrees that two-thirds of all payments received under this contract will be applied to the discharge of any indebtedness now secured by mortgage on any portion of the demised premises. Lessor shall not, except with consent of Lessees, borrow money upon the security of the demised premises unless the money so borrowed is expended in improvement of the demised premises.”

It is the contention of the plaintiff that said paragraph 8 required the leased premises to be free and clear of all encumbrances to enable lessees to borrow money to develop the land and it is the contention of the defendants that the language of paragraph 8 was clear and unambiguous and merely required the lessor to subordinate its interest in the leased premises to any loan which the lessees might secure for the development of the property. Defendants further contend that said paragraph 21 clearly disclosed the existence of the then existing encumbrance on the property, to which encumbrance they agreed to apply two-thirds of the lease rentals in repayment.

[260]*260It is undisputed that at the time of the execution of the lease there was a then existing deed of trust on the property, which is referred to throughout the trial as the Cordoza deed of trust, in the amount of $26,666.67. This deed of trust covered one of the sections plaintiff chose to develop first, namely, section 21.

The lessees moved their equipment upon the property in August and September, 1949, and commenced the development of section 21 and a portion of section 20. This development consisted chiefly of clearing off the sage brush, discing and land planing.

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Bluebook (online)
285 P.2d 724, 134 Cal. App. 2d 256, 1955 Cal. App. LEXIS 1751, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crawford-v-hub-ranch-of-paradise-valley-calctapp-1955.