Lyon v. Goss

123 P.2d 11, 19 Cal. 2d 659, 1942 Cal. LEXIS 401
CourtCalifornia Supreme Court
DecidedMarch 3, 1942
DocketL. A. No. 17182
StatusPublished
Cited by130 cases

This text of 123 P.2d 11 (Lyon v. Goss) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lyon v. Goss, 123 P.2d 11, 19 Cal. 2d 659, 1942 Cal. LEXIS 401 (Cal. 1942).

Opinion

CARTER, J. —

This action was brought to secure a declaration of the rights of the parties under a contract and lease, and for other equitable relief. Plaintiff has appealed from an interlocutory decree (L. A. No. 17182), and defendant Goss from a final judgment entered five months later (L. A. No. 17594).

The premises affected by the contract and lease cover the ground floor of the Homer Laughlin Building, located at 315 South Broadway, Los Angeles. For many years prior to this litigation these premises had been occupied by the largest public market in Los Angeles. In it there were approximately seventy stalls occupied by sub-tenants operating meat and vegetable markets, grocery stores, and other concessions, and some seven hundred employees were engaged to serve the twenty to forty thousand customers who shopped there daily.

For years prior to March, 1929, the master lease upon the entire premises had been held by a corporation, the Grand Central Public Market, Inc., and the term of its then lease ran to October 31, 1939. For over twenty years defendant C. A. Goss had been interested in this corporation as organizer, president, or general manager. The corporation ordinarily followed the plan of sub-leasing the various stalls to sub-tenants, who operated individually but were subject to certain rules and to the supervision of the corporation.

On March 11, 1929, Mr. Goss and Homer Laughlin, the owner of the Homer Laughlin Building, entered into an agreement for a lease of the market property for a term of twenty years commencing November 1,1939, and ending October 31, 1959. It will be noted that at the time of the execution of this contract the outstanding master lease had approximately ten years and eight months to run, and that immediately upon its termination, the new lease was to take effect.

The agreement of March 11, 1929, recited that Mr. Goss was desirous of securing a lease of the premises for the 1939-1959 term, and for it offered to pay Mr. Laughlin, as a bonus and in sole consideration of the execution of the lease and not as any part of the rental, the sum of $1, together with certain portions of the income which Mr. Goss would receive as lessee. The agreement further recited that Mr. Laughlin had accepted the offer, and had that day executed a lease to Mr. Goss for the twenty year term at a fixed rental of $2,280,000, payable at the rate of $9,500 a month on the first day of each month commencing November 1, 1939.

[663]*663It was provided that the premises would continue to he used for a market without substantial change in the method of operation, and that Mr. Goss would proceed with diligence to procure sub-leases and contracts for sub-leases from responsible persons who wished to conduct merchandising establishments in the stalls and would agree to make bonus and rental payments to at least the minimum amount specified in a schedule attached to the agreement. According to the schedule, the total of all bonuses for subleasing the entire market would be $485,000. Of this sum Mr. Laughlin was to receive the first $205,000, and the balance was to be divided equally with Mr. Goss. The schedule also called for a total minimum rent from subleases of $17,410 a month, of which $9,500 was to be paid to Mr. Laughlin outright and the balance was to be divided equally with Mr. Goss.

The agreement declared that Mr. Laughlin entered into it because of special confidence and trust in Mr. Goss and his long experience in subleasing and managing the premises. Mr. Goss covenanted to endeavor immediately to secure subleases and sublease contracts and to continue the endeavor with diligence until all available space was subleased. He also agreed that he would procure contracts calling for the payment of bonuses in the sum of $75,000 by March 11, 1932, and additional contracts providing for the payment of further bonuses in the sum of $130,000 by March 11, 1935, or a total of $205,000, and that by the latter date he would also have subleases providing for a rental income over the term of not less than $9,500 a month, time being expressly made the essence of the agreement. In the event of his failure to so perform by March 11, 1935, it was provided that the agreement and all of his interest in the master lease and in all subleases and contracts should immediately cease and determine, and that all sums paid in should be held by Mr. Laughlin as liquidated damage for the breach. Provision was made for the deposit of all income with a trustee bank, to be disbursed in accordance with the terms of the agreement, and also for conditional assignment of the master lease to the trustee, to be held for the benefit of the one party or the other, conditioned upon performance or nonperformance of the agreement by Mr. Goss.

On April 23, 1929, the parties addressed a letter to the trustee which among other things provided that all subleases and contracts for subleases should be submitted to Mr. [664]*664Laughlin for approval, and that without his approval none would he entered into by Mr. Goss or accepted by the trustee.

• On May 28, 1930, the parties addressed another letter to the trustee wherein it was agreed that in case any of the contracts or subleases delivered to Mr. Laughlin as part of the $205,000 first to be delivered to him, should be cancelled by reason of the default of the maker, then such contracts would be replaced or made good to Mr. Laughlin from later contracts. It was also provided that the first available funds, if necessary, even those due Mr. Goss, could be used by the trustee to meet semi-annual installments on a mortgage outstanding against the Homer Laughlin Building, Mr. Goss to be later reimbursed for such advances.

Subsequent to execution of the agreement Mr. Goss proceeded with diligence to perform. Prior to April 20, 1931, he obtained and delivered to the trustee, and secured the approval of Mr. Laughlin on thirty-four contracts to enter into leases and thirty-four subleases with persons desiring to conduct merchandising stalls on the premises. The total amount of the bonuses to be paid under these contracts was $282,000, and the total monthly income provided by the subleases was $7,400.

On April 20, 1931, the parties addressed another letter to the trustee. It called attention to the provision of the agreement that in event of failure by Mr. Goss to obtain the specified contracts and subleases by March 11, 1935, his interest should cease and determine. It then stated: “The second party (C. A. Goss) has at this time secured sufficient subleases and contracts to enter into subleases to assure the performance of the covenants and conditions of said trust agreement on his part to be kept and performed and it has now been agreed that first party (Homer Laughlin) now waives said provision of the trust agreement and from this date said trust agreement shall be held to be a binding contract and it is agreed that no default thereof can be declared by first party (Homer Laughlin) because of any present or future violation or failure to perform the provisions of said trust agreement hereinbefore and in this letter set out.” The letter further provided that in consideration of the premises, it was agreed that all bonus and sublease income received by the trustee, over necessary expenses, should be paid to Mr. Laughlin until he should have received $205,000 net, and that in case the Grand Central Public Market, Inc., should [665]*665pay $13,500 advance rent, it should be turned over to Mr. Laughlin. This advance rental was subsequently paid.

On December 27, 1932, Mr. Laughlin died, and Beach D.

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Cite This Page — Counsel Stack

Bluebook (online)
123 P.2d 11, 19 Cal. 2d 659, 1942 Cal. LEXIS 401, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lyon-v-goss-cal-1942.