Opinion
Hearing Granted by Supreme Court Dec. 19, 1927.
Appeal from Superior Court, San Diego County; S. M. Marsh, Judge.
Action by James R. McNeece against George W. Wood and another. Judgment for plaintiff, and defendant named appeals. Affirmed. COUNSEL
Luce & Swing, of San Diego, for appellant.
A. Haines and John H. McCorkle, both of San Diego, for respondent.
OPINION
COLLIER, Justice pro tem.
Facts: McNeece, in writing, leased to Wood certain real property in the city of San Diego. The lease contained only two clauses which are material here. They are as follows:
Clause 1. "It is further agreed and understood that said lessee shall not use or permit to be used said premises for any improper or unlawful purpose, and any such improper or unlawful use shall work a forfeiture of this lease. " (Italics ours.) Clause 2. "It is further hereby agreed that if the lessee shall at any time refuse or fail to pay the rent as herein provided to be paid by him, or shall refuse or fail to keep any of the covenants and agreements herein contained and such conditions shall continue for a period of 30 days, then, and in that event, the lessor may, at his option, declare this lease forfeited and may retake possession of said premises without process of law."
Wood sublet the upper floors of said premises to Jennie H. Hipwell, one of the defendants (not appearing in this appeal), who operated the same through her agent, Mrs. Geohegan. On or about November 20, 1925, Mrs. Geohegan leased room 438 in said premises to Bradley and O’Brien, alias O’Hara, who immediately commenced to operate therein a "bookmaking" joint. Mrs. Geohegan testified at the trial that said room was rented for the purpose of bookmaking. This was noticed by a Mr. Logan, who occupied the dual position of elevator man and janitor for Mrs. Hipwell and Mrs. Geohegan, and watchman for Wood. Logan notified Mrs. Geohegan of his suspicions and tried twice to notify Wood, but without avail. Logan then notified the police department. Room 438 was raided by the police on December 1, 1925. It was stipulated by all parties during the trial that the room was being used by Bradley and O’Brien for "registering bets on horse races and they had with them the paraphernalia for that purpose." This was clearly a violation of section 337a of the Penal Code, and an "unlawful" use within the terms of the lease. Thereupon McNeece served notices declaring said lease forfeited, whereupon this action was commenced.
On June 19, 1926, one England was operating a lunch counter on the ground floor of the building under a sublease from Wood. On that date one Shepherd, England’s employee, who was in charge of the lunch counter during the night shift, was arrested for violation of the Wright Act (St. 1921, p. 79). The evidence disclosed that the arresting officers found two pints of moonshine whisky behind the counter, one pint in Shepherd’s coat and one pint in each of a pair of the latter’s shoes. The coat and shoes were in a locker in the rear of the restaurant, the door of the locker being open. McNeece again served notices upon Wood, charging the above as an additional violation of the lease. Plaintiff’s complaint was amended to cover the same. Thereafter a trial was had, and the court found that both of said matters were violations of the "unlawful purpose" clause, forfeited the lease, and awarded damages to plaintiff.
There was no evidence showing that Wood had any actual knowledge of either of said matters until after they had happened. But in addition to the testimony of Logan, epitomized above, Mrs. Geohegan, the agent of the sublessee, Mrs. Hipwell, testified, in substance, that she alone managed the upper floors of said premises, and that on November 20, 1925, she rented room 438 to Bradley and O’Brien for the purpose of "bookmaking." Appellant sought to impeach this evidence, but, in view of the familiar rule that the decision of the trial court is final on questions of fact where there is conflicting testimony, we must presume that the court followed her testimony, which was favorable to the respondent.
The case largely turns upon the interpretation to be placed upon the words in the lease, "said lessee shall not use or permit to be used said premises for any improper or unlawful purpose"-in view of the fact that the evidence shows that Wood did not at any time have actual notice or knowledge of either or any of said unlawful acts, except as he may have received the same, as a matter of law, by reason of the notice or knowledge of his watchman, Logan.
Appellant contends that Wood did not "permit" said violations, therefore the lease could not be forfeited. He also contends that clause 2 modifies clause 1, so that granting, for the sake of argument only, that clause 1 was violated, still such violations must continue for 30 days before the lease could be forfeited, and that there was no showing of any violation continuing for that period of time. The other contentions of appellant which we deem material will be noticed in due course. If, within the decisions, Wood did not "permit" the said violations, then the judgment of the trial court must be reversed. Hence we shall first consider that point.
Respondent seeks to forfeit appellant’s lease. At the outset we are confronted with the rule of strict construction where such a forfeiture is the issue. This rule is clearly epitomized by Justice Works in Stratford v. Continental, etc., Co., 74 Cal.App. 551, 555, 241 P. 429, 430, as follows:
"The courts tenaciously cling ‘to the rule that forfeiture of estates and restraints upon alienation should not be enforced except when the terms of the conditions are so plain as to be beyond the province of construction’ [citing cases]."
Attention is first called to clause 1, and particularly to the words italicized, as follows:
"*** said lessee shall not use or permit to be used said premises for any improper or unlawful purpose, and any such improper or unlawful use shall work a forfeiture of this lease." (Italics ours.)
It seems to us that the "terms and conditions are so plain as to be beyond the province of construction." The Standard Dictionary defines "any" as "a, an, one ; said of a single person, thing or part of whatever kind, degree or quantity from among a number, class or total." Webster defines "any" as "one, " indefinitely out of a number; one indiscriminately of whatever kind or quantity." "Words and phrases are construed according to the context and the approved usage of the language. ***" Section 16, Code Civ. Proc. "The words of a contract are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning; unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed." Section 1644, Civ. Code. "Courts take judicial notice of the following facts: 1. The true signification of all English words and phrases, and of all legal expressions." Section 1875, Code Civ. Proc.
In the light of the foregoing, clause 1 may be paraphrased as follows:
"*** The lessee shall not use or permit to be used said premises for a single improper or unlawful purpose, and one such improper or unlawful use shall work a forfeiture of the lease."
Therefore, leaving out of the discussion for the time being the knowledge or lack of knowledge of the appellant, "any," or a "single," violation of clause 1 would be sufficient to work a forfeiture of the lease. This position is sustained by Burke v. Bryant, 283 Pa. 117, 128 A. 822, where it is said:
"The owners of a building and land in Wilkes-Barre leased the premises to Bryant and Bell ‘for the purpose of garage and storage’ for a term of 10 years. The lease provides, the ‘premises shall not be used for any purposes contrary to this agreement, and in case of violating this agreement the lessors may, at their option, declare the term of this lease at an end.’ The lessees sublet the premises, as they were privileged to do, to Harry Bloom. The clauses governing subletting give to the lessors or their assignees the same rights and powers against subtenants as against original lessees. The lessor owners assigned the lease, with all its terms and conditions, to Berry and Cohen, who subsequently assigned to the present use plaintiffs. "As the result of a police raid on May 28, 1923, a large still, with the necessary equipment for distillation of medicated alcohol, was discovered thereon in full operation, and was confiscated. The plaintiffs, on learning of this use of the property, proceeded to regain possession by confession of judgment in ejectment against the original lessees by virtue of a warrant of attorney contained in the lease, declaring a forfeiture, in their affidavit of default, because of a violation of the terms of the laese, and because of the provisions of the Volstead Act. U.S. Comp. St. Ann. Supp. 1923, § 10138 ¼ et seq. (27 USCA). Bloom denied any connection with the still, charging another who had the privilege of occupying for a short time a small boarded off portion of the building as responsible. The court below, on petition, opened the judgment thus entered, and, at the trial subsequently held, the jury found the premises were used for purposes contrary to the lease and the law, with Bloom’s knowledge and connivance. Judgment was entered on the verdict. "This appeal raises some very interesting and important questions which we must consider: First, whether the doing of things which constitute a violation of the Volstead Act may, under section 23 of title 2 of that act (section 10138 ½ l [27 USCA § § 35-37]) work, at the lessor’s option, a forfeiture of the lease, and if so, whether the impairment of the obligation of a contract or the taking of property without due process of law would result. *** "The last clause of section 23 of title 2 of the Volstead Act reads: ‘Any violation of this title upon any leased premises by the lessee or occupant thereof shall, at the option of the lessor, work a forfeiture of the lease.’ Act October 28, 1919, c. 85, 41 Stat. 305, 314. "*** The forfeiture of leases, where the premises have been used in violation of the liquor laws, is a valid exercise of the police power as being an aid to prohibition. It has a direct effect on the enforcement of the law.
If violators of the law were permitted to remain in possession, enforcement would be rendered increasingly difficult, whereas if the premises are returned the maintenance of public morality is secured. It is very important that a lawless occupant should be completely ejected by a law-abiding lessor. Forfeitures under this section of the Volstead Act have been upheld. Grossman v. U.S. (C. C. A.) 280 F. 683; U.S. v. Boynton (D. C.) 297 F. 261; Farrelly v. Wells, 115 Misc. 632, 189 N.Y.S. 34. There is no denial of due process because the forfeiture was to be effected as in other cases. *** The language of the act is:
"‘Any violation of this title upon any leased premises by the lessee or occupant thereof shall at the option of the lessor work a forfeiture.’ "The cause of forfeiture arises when the unlawful relation is shown to exist. *** The consequences of the act, so far as the public is concerned, may result in fine and imprisonment, but, as it relates to the owner of the premises, his protection lies in forfeiture. It is a separate, distinct, and independent redress, different from the government’s right to convict or resort to padlock proceedings. See Commonwealth v. Allen, 70 Pa. 465, 471. A decree abating a nuisance and canceling a lease for violation of section 23 of the Volstead Act was sustained in Grossman v. U.S. (C. C. A.) 280 F. 683. *** "It is urged that a single violation of the Volstead Act would not be sufficient to declare a forfeiture. The acts do not so state. *** The tenant was responsible for any violation of the covenants of the lease by the subtenant, and it is not material whether he knew of such violation or not. Goenner v. Glumicich, 81 Pa.Super. 521. Where a subtenant offends against a provision prohibiting the occupation of the premises for dwelling houses or any unlawful purpose, the restriction on the manner of use runs with the land, and is binding on the estate in the hands of subtenants. Wheeler v. Earle, 5 Cush. (Mass.) 31, 51 Am. Dec. 41." (Italics ours.)
See, also, Poulos v. Toledo, etc., Co., 22 Ohio App. 426, 154 N.E. 57, where a sale of cocaine brought about the forfeiture.
Appellant claims that the lease was not forfeited because he had no knowledge of the violations until afterwards, and hence did not "permit" them. With this contention we cannot agree. We hold that a violation of clause 1 by a subtenant was a violation by the lessee whether the lessee knew it or not. The following language of the court in People ex rel. Jay v. Bennett, 14 Hun (N.Y.) 63, 65, is illuminating on this question. Here the court was considering this clause in a lease:
"It being clearly and distinctly understood, however, that at no time shall it be allowed to sell intoxicating liquor on the premises."
The court said:
"The covenant between the relator and the lessees was broken when liquor was sold. It extended to all successors of her lessees. It related to the premises and subjected all occupants to its control, no matter from what source they derived their right of possession under it. [Italics ours.] The covenant indeed, construed in the light of the existing laws, was that if liquor was sold upon the premises without license, and therefore in violation of the statute of 1857 (Laws of 1857, c. 628), regulating the sale of intoxicating drinks, the lease should become ipso facto void at the option of the relator, and she could employ the same process to enforce that result which she could resort to if the tenants or lessees had held over after the expiration of their lease. *** [Italics ours.] "It then seems to be beyond all dispute that if the premises or any part of them was used or occupied for any illegal trade, the relator was eo instante invested with the right to declare that the lease was void, and to insist upon her right to possession. The sale of intoxicating liquors without a license, whether as an entire business or as an incident to one, is an illegal trade under the statute of 1857, supra. The sale is a criminal offense and punishable as such. It is a misdemeanor, and prohibited as a crime. *** The relator proved the use of a part of the demised premises for the sale of liquors without a license, as an incident of the business carried on by the seller. Having done this, she established the facts required by law to authorize the remedy she sought."
Perhaps the leading case on this branch of the question is Wheeler v. Earle, 5 Cush. (Mass.) 31, 51 Am. Dec. 41. In this case evidence was introduced tending to show that a subtenant of a part of the premises, under the tenant, had occupied the same for the unlawful purpose of selling liquor without a license. The court ruled that the evidence established such a use as constituted a breach of the lessee’s covenant, that a breach thereof gave a right of re-entry, and that the tenant must be presumed to have known of the unlawful use by his subtenant. The court in its opinion said:
"Does the clause in this lease, authorizing a re-entry by the lessor, to repossess himself of the premises, apply to the breach of the covenant, ‘that the lessee will not occupy, or in any manner suffer the buildings now on the premises, or which may hereafter be erected thereon, to be occupied, for dwelling houses, or for any unlawful purposes whatever’? "This, of course, depends upon the construction to be given to the indenture. The language is very broad; the lessee stipulates, ‘if he shall neglect or fail to perform and observe any or either of the covenants herein contained, which on his part are to be performed,’ then the lessor may lawfully enter, etc. Although the conditions upon which the lessee took his lease may be such as materially to affect the value of his leasehold interest, and subject it to the contingency of an early termination, yet if such are its plain and obvious terms, the lessee must abide by the stipulations of the lease. *** "This restriction upon the manner of using the premises runs with the land, and is binding upon the estate in the hands of subtenants. They take only the title of the lessee, and with the like limitations and restrictions. Such use by a subtenant holding under the original lessee, for an unlawful purpose, would equally forfeit the estate. This principle seems very clear, and hence, in the treatises upon the relation of landlord and tenant, it is said that when an estate is held subject to forfeiture, for breaches of numerous covenants or stipulations, some of which may be likely to be violated, it is expedient always to take from the sublessee good security against all such violations of the various stipulations in the original lease, as may subject the original lessee to lose his whole estate. By creating subtenants, the original lessee puts them in possession of the premises, and being thus in under him, their acts, if in violation of the conditions of the lease, will cause a forfeiture. "In the view we have taken of this case, it is unnecessary to consider particularly, whether the ruling that the defendant was presumed in law to know that the buildings were used for unlawful purposes, if the fact was so, was entirely correct in the form stated. The legal consequence will be much the same under the different forms in which I have stated the consequences of a violation of the lease by a subtenant of the lessee. " (Italics ours.)
In Miller v. Prescott, 163 Mass. 12, 39 N.E. 409, 47 Am. St. Rep. 434, the court said:
"The plaintiff’s testator, who was the lessee of the real estate described in the writ, entered into a covenant not to ‘make or suffer any waste, or any unlawful, improper, or offensive use of said premises.’ By the terms of the report the verdict is to stand, unless there was error in one of the two following rulings: First, ‘that unlawful use of the premises by a subtenant was a breach of the covenants and conditions of the lease, whether known by the plaintiff, or her testator or not. ’ *** The covenant referred to is a covenant concerning land, and affecting the mode of enjoyment of it. *** It is intended for the protection of the lessor, and he may enforce it directly against the original lessee, or against an assignee of the lease. If there is no assignment of the lease, but a subletting of the whole or a part of the premises for a time less than the remainder of the term, so that no privity of estate is created between the lessor and the subtenant, the covenant would be ineffectual for the lessor’s protection, if he could not proceed on the ground that it applies as well to an unlawful use by a subtenant as by the original lessee. We are of opinion that the agreement not ‘to make or suffer’ an unlawful use of the premises must be interpreted as a stipulation that there shall be no unlawful use by the original lessee, or by any person who is occupying under him. It is easy for the lessee to control the use of the property, and to protect the interests of the lessor and of himself in this particular. With this interpretation, effect is given to the word ‘suffer.’ It may not be reasonable to hold that the covenant makes the lessee liable for an unlawful use of the property by trespassers, but he may well be held to ‘suffer’ unlawful use of the property if he does not take effectual measures to prevent such a use by those who occupy by his authority. " (Italics ours.)
To the same effect are Haymarket Realty Co. v. Sullivan, 249 Mass. 262, 143 N.E. 907; Sullivan v. Vorenberg, 241 Mass. 319, 135 N.E. 165; Arado v. Maharis, 232 Ill.App. 282; United States v. Gaffney (C. C. A.) 10 F.2d 694; Crowe v. Riley, 63 Ohio St. 1, 57 N.E. 956; Shepard v. Dye, 137 Wash. 180, 242 P. 381, 49 A. L. R. 824; and Burke v. Bryant, supra.
Appellant claims that section 10138 ½ l of the National Prohibition Act, "Any violation of this title upon any leased premises by the lessee or accupant thereof shall, at the option of the lessor, work a forfeiture of the lease," does not apply in this case. We think this position untenable. The instant lease was executed after the National Prohibition Act and the Wright Act went into effect, and the National Prohibition Law was written into the lease. See United States v. Gaffney, supra, where the United States Circuit Court of Appeals for the Second Circuit says:
"Entirely apart from the specific covenants of both Mantell’s and Gaffney’s leases, each of them impliedly contained a covenant to obey the National Prohibition Law. When that covenant was broken by the tenant, all right to maintain the lease as against the landlord was gone; and it was assuredly within the power of the nation to aid the landlord to recover his premises, by a method well known to the law, and not created by the amendment."
To the same effect see Burke v. Bryant, supra. Furthermore, the National Prohibition Act and similar enactments give the landlord a cumulative remedy. Haymarket Realty Co. v. Sullivan, supra; Burke v. Bryant, supra.
We now come to the question, Does clause 2 control clause 1? Appellant contends that:
"Considering the two clauses of the lease which provide for a forfeiture and applying the proper rules of construction to those two clauses, a breach of the condition not to use or permit the use of the premises for unlawful purposes must continue 30 days before a forfeiture may be exacted."
This we cannot accept. As we have seen, clause 1 provides that:
"Any [one, a single] improper or unlawful use shall work a forfeiture of this lease."
Furthermore, it seems clear to us that the two clauses are not dependent the one on the other. Clause 1 refers solely to the use of said premises. Clause 2 refers only to the covenants given as consideration for the use. Clause 1 refers to the positive mandate of the law; clause 2 refers to the contract of the parties. A violation of clause 1 ipso facto and eo instante works a forfeiture of the lease, whereas a violation of clause 2 merely gives the landlord an option to terminate the lease. Finally, it seems to us that to say that clause 2 modifies clause 1, to the effect that a violation of clause 1 must continue 30 days, would be to hold that there was a contractual obligation on the part of the lessee to permit any illegal use of the premises for 30 days, which would be clearly against public policy and void. Therefore we hold that clause 2 does not modify clause 1-that the two clauses are independent of each other.
Appellant as his next contention quotes the following from 36 C. J. 92, § 726:
"A covenant restricting particular acts upon the premises may be such as to hold the tenant responsible for the acts of third persons. Upon a positive covenant by the lessee not to use or permit the use of the premises in a particular manner, the lessee may be liable for acts of a sublessee. Where there is a covenant not to do or permit to be done a particular thing, a lessee who grants an underlease and authorizes that particular thing to be done commits a breach of the covenant. But where the sublease contains the same restriction as the original lease, which is violated by the sublessee, it is held that the lessee is not liable on his covenant not to do or suffer the acts in question, and it is held that a covenant on the part of the tenant for himself and his assigns does not render him liable for acts of a sublessee." (Italics ours.)
That portion of the text commencing with the italicized words is claimed to be supported by two English cases, and no others; but these cases support the text only in part and they are contrary to the great weight of American authority, as shown by the cases already cited. The American cases, almost without exception, treat such a covenant as one running with the land and binding upon all assignees and subtenants of the original lessee. See Wheeler v. Earle, Burke v. Bryant, and other cases, supra.
Appellant next urges that a breach of the lease must be substantial before a forfeiture is justified, and claims that the violations in question are insubstantial, if not trivial. We cannot sustain him. The penalties to which the lessor may be liable under both the National Prohibition Act and section 337a of our Penal Code are neither of them to be desired or lightly suffered. The Supreme Court of Minnesota has well said, in Zotalis v. Cannelos, 138 Minn. 179, 164 N.W. 807, L. R. A. 1918A, 1066, where shaking dice for cigars was a violation of a covenant against gambling which was under consideration:
"The violation of a condition in the lease cannot be said to be trivial when the violation is of such a character that the lessor may be subjected to a criminal prosecution on account thereof."
Furthermore, the action of the lessor, when a violation of the National Prohibition Act occurs, may well have a distinct bearing on the attitude toward him of those in charge of enforcing that legislation, including the courts. In Grossman v. United States, 280 F. 683, 685, Justice Evans, speaking for the Circuit Court of Appeals, very aptly said:
"The court might not conclude to dispossess the landlord, if it appeared that he was innocent of the uses to which his property was being put by the tenant and manifested a desire to co-operate in abating the nuisance. Of course, the landlord cannot close his eyes to the obvious and still plead innocence. He may be chargeable with knowledge concerning the character of, and the uses to which, the premises are put, if the facts reasonably warrant such a conclusion, notwithstanding he professes his ignorance of such uses. His attitude toward the tenant, after being informed of the latter’s misconduct, might, and probably would, be determinative of the state of his mind and his knowledge of thetenant’s wrongdoing; for it is hardly conceivable that a law-respecting landlord would not avail himself of the above-quoted provision of the National Prohibition Act and seek to oust the tenant, upon discovering that his premises were being maintained as a nuisance by such tenant. On the other hand, the landlord who repudiates the tenant’s action immediately upon learning of the facts, and who at the first opportunity avails himself of a remedy open to him to oust the tenant from the premises, necessarily places himself in a position of vantage when it comes to the terms of the decree finally entered. " (Italics ours.)
Enough has already been quoted to show that the courts have readily forfeited leases of the character we are considering, where violations have occurred. Only decisions dealing with violations similar to the case at bar have been cited, and they have been numerous. Therefore, construing the forfeiture clause most strictly against the landlord, for whose benefit it was created, we find the intention of the parties to be clearly set forth in the very terms of the instrument; that the breach was a substantial one, which equity will not relieve against; that the covenant in question runs with the land and was and is binding on all lessees and subtenants; that the original lessee is responsible for the acts of his sublessees, whether known to him or not; that clause 2 does not impair or modify clause 1 each of them being independent covenants; and that the lease has been breached by appellant through those for whom he was responsible, and has therefore been forfeited.
The judgment of the trial court is affirmed.
We concur: CRAIG, Presiding Justice pro tem.; THOMPSON, J.