Opinion
Hearing Granted April 22, 1948.
Appeal from Superior Court, San Joaquin County; C. W. Miller, Judge.
Action by Antonio G. Silveira and wife against Henry T. Ohm and wife for specific performance of option to purchase realty, wherein defendants filed a cross-complaint for rent. From a judgment in favor of defendants on their cross-complaint, plaintiffs appeal.
Judgment reversed.
COUNSEL
George Wadsworth, of Tracy, and Hohn H. Machado, of San Jose, for appellants.
Rutherford, Jacobs, Cavalero & Dietrich, of Stockton, for respondents.
OPINION
ADAMS, Presiding Justice.
On January 30, 1939, the parties to this action entered into an agreement entitled ‘Agreement of Sale of Real Property Together with Lease and Option to Purchase Appitional Property.’ Said document recited that defendants, the sellers, were the owners of 314.376 acres of land, that buyers desired to purchase 224 acres thereof designated as Parcels I and II, and to lease and have an option to purchase an additional 86.376 acres thereof described as Parcel III, and that sellers desired to retain four acres, refered to as Parcel IV. The whole of said property was said to be subject to a Federal Farm Loan mortgage upon which was due the sum of $23,288.09, and one of the conditions of the transaction was that buyers should assume and pay this mortgage. Regarding Parcel III it was provided that it should be leased to buyers for a term of five years from and after October 24, 1938, that buyers should each year during the term plant same to beans and no other crop; and that as rental for the use of said parcel, ‘when said crops are matured and ready for harvesting, Buyers will, at their own sole cost and expense harvest the same and deliver one-third (1/3) of the total crop of beans grown upon said premises to the Sellers. * * *’ Buyers were obligated to pay costs of irrigation, but sellers were to pay taxes until such time as buyers might exercise an option to purchase. The option provisions were:
‘If the Buyers are not then in default, they shall have the right at any time on or before the expiration of the 5-year lease period to said Parcel III herein provided for, to-wit: on or before the expiration of five years from and after October 24th, 1938, to purchase said 86.376 acres of land contained in said Parcel III for a total purchase price of $24,434.60, said purchase price being based upon the figure of $225.00 per acre for said 86.376 acres, plus an additional $5000.00 for the buildings and improvements situated upon said Parcel III. Should said Buyers elect to exercise this option to purchase said land * * *, they shall notify the Sellers in writing of said election and shall within fifteen days thereafter deposit said purchase price, in full, with a Title Company in Stockton, San Joaquin County, California, with instructions that said purchase price be delivered to the Sellers upon the delivery by the Sellers to the Buyers of a deed conveying a good and merchantable title to said Parcel III containing 86.376 acres of land, as aforesaid, subject, however, to any and all existing roadways, easements, rights of way and patent reservations and subject also to the bonded indebtedness of the Banta-Carbona Irrigation District.
‘It is further agreed and understood that as a specific condition precedent to the exercise of this option to purchase the aforesaid Parcel III * * *, Buyers shall first have paid off in full and completely discharged the aforementioned Federal Farm Loan Mortgage, dated April 1, 1926, executed by Sellers to The Federal Land Bank of Berkeley, a corporation, and recorded April 23, 1926, in ‘B’ 166/235, San Joaquin County Records, which said mortgage does, upon the date of the execution of this agreement constitute a lien upon the entire tract of land of 314.376 acres owned by Sellers and herein segregated for the purposes of this agreement into Parcel I, Parcel II, Parcel III, and Parcel IV.’
The agreement also recited that ‘it is the desire of the parties hereto to reduce all understandings, agreements and negotiations had between them prior to the date of this agreement to one fixed and permanent understanding between them which will hereafter be deemed to be their entire agreement relative to the matters herein set forth.’ The agreement is elsewhere referred to as the ‘entire agreement.’
Regarding the provisions of the agreement pertaining to Parcels I and II, the conditions were fully met, and said parcels were duly conveyed to plaintiffs. Also, plaintiffs paid off the Federal Land Bank mortgage, and the present action involves only that portion of the agreement pertaining to Parcel III.
On July 27, 1943, plaintiffs notified defendants in writing of their election to purchase said parcel in accordance with the option agreement, and on July 28th they deposited with a title insurance company the purchase price of $24,334.60, with instructions to deliver same to defendants upon their delivery of a deed.
On August 5, 1943, defendants served upon the plaintiffs a document entitled ‘Notice of Reservation of Rights’ in which they made reference to the agreement and the option provisions regarding Parcel III, declared that they intended to and would execute and deliver a deed to said parcel, but that plaintiffs’ liabilities were not to be deemed changed or affected by such deed; and that plaintiffs were obligated, under the terms of the agreement, to pay rental in full for the year October 24, 1942 to October 23, 1943, and to pay $1,200 to one Lewis for brokerage services; and asserting that on payment of the purchase price and said $1,200 they would execute and deliver a deed to said Parcel III.
On August 11th defendants filed with the title company a deed dated August 10, 1943, together with instructions to deliver the same to plaintiffs on being satisfied that the Federal Land Bank loan had been paid, the sum of $1,200 had been paid to Lewis, and plaintiffs had authorized the turning over of the purchase price of the land, $24,434.60. No mention was therein made of any payment for rent. On August 17th plaintiffs filed their action for specific performance, alleging performance on their part, and demanding a deed for Parcel III. On that same day defendants modified their escrow instructions, eliminating therefrom all reference to brokerage fees.
In reply to defendants’ ‘Notice of Reservation of Rights,’ plaintiffs, on August 21st, executed and served upon defendants a notice in which they denied that any rent was due, asserted that the agreement had made no provision therefor in the event plaintiffs exercised their option to purchase, and denied any obligation on their part to pay a brokerage fee. They asserted further that title to all crops growing upon the land passed to the buyers upon delivery of a deed, and that the suit would not be dismissed until defendants renounced their claim to a share of the crops then growing upon the land and their withdrawal of notice that plaintiffs were responsible for a brokerage fee. On August 27, 1943, the title insurance company recorded the deed from defendants to plaintiffs.
Thereafter defendants apparently took no further action in the matter, and they did not file an answer to plaintiffs’ complaint until February 20, 1946, at which time they also filed their cross-complaint. In their answer they admitted substantially all of the allegations of plaintiffs’ complaint, but denied that plaintiffs had fully performed on their part in that they had not rendered, and refused to tender, the rent due and owing under the agreement for the crop year 1942-1943. In their cross-complaint they sought judgment for $3,680 alleged to be the reasonable value of their share of the bean crop harvested in 1943, or $3,599 as the reasonable rental value of the premises, the cross-complaint being in two counts, the one based on the value of one-third of the bean crop, and the other on the reasonable rental value of the land. In both answer and cross-complaint they alleged that they had already conveyed ‘all their interest in and to said real property to cross-defendants by good and sufficient grant deed.’
Upon trial of the action on November 26, 1946, it was conceded that since defendants had conveyed the land to plaintiffs, the question of specific performance had become moot; and that the only question remaining for determination was that raised by defendants’ cross-complaint as to their right to rental. The tria court rendered judgment against plaintiffs for $2,422.04 which it found was the reasonable rental for the property for the portion of the year beginning October 24, 1942, and up to the date of plaintiffs’ election to exercise the option, to wit: July 27, 1943. This was computed as three-fourths of one-third of the selling price of the crop of beans (which had been harvested in September or October of 1943 after the delivery of the deed), after deducting certain expenses of recleaning the beans.
From that judgment this appeal has been taken by plaintiffs, it being their contention that there was no reservation in the agreement of any interest in a crop that might be growing upon the land at the time the option was exercised, nor any provisions for the apportionment of rents in the event that the buyers exercised the option; that there was no provision for ascertainment of the value of a crop before its maturity and harvest; that the agreement itself specified that it expressed the entire agreement between the parties and did not contain any provision that before they should become entitled to a deed the buyers should tender to seller any interest in a growing crop. They assert that the general rule is that growing crops are a part of the realty until severed, and that, in the absence of an agreement to the contrary, such growing crops pass to the buyer with the title to the land itself; and where a contract of sale makes no reservation of the growing crops, the vendor is bound to convey the land with the crops.
Respondents, on the other hand, contend that this is strictly a landlord-tenant case, and that, though there was a merger of the leasehold with the reversion, the tenants should pay the reasonable value for the use they made of the land up to the time of the merger. They rely upon section 1935 of the Civil Code, and upon the case of Mott v. Cline, 200 Cal. 434, 437, 253 P. 718, in which that section was applied.
Said section 1935 provides that when the hiring of a thing is terminated before the time originally agreed upon, the hirer must pay the due proportion of the hire for such use as he has actually made of the thing, unless such use is merely nominal, and of no benefit to him.
It is conceded by respondents that they executed their deed to appellants and that such deed merged the leasehold estate in the reversion; that while at the time the deed was executed there was a bean crop growing upon the land, same had not been harvested. The record shows that it was not harvested until late in September. The agreement entered into by the parties expressly stated that it was their entire agreement. It specified that if plaintiffs (buyers) were not in default they had the right ‘at any time’ on or before the expiration of the lease to purchase said parcel for the specified price. No provision was made in said agreement for the payment of the reasonable value of the use of the land as rental should the option be exercised before a bean crop had been planted or, if planted, before the harvesting of same. And it must be conceded that unless and until there was a crop grown thereon and severed therefrom by harvesting, respondents would not, under the agreement, acquire any interest in such crop or be entitled to receive any portion thereof as rental for that particular year. They concede the general rule stated in cases cited by appellants (such as Huerstal v. Muir, 64 Cal. 450, 453, 2 P. 33; Dascey v. Harris, 65 Cal. 357, 4 P. 204; Wilson v. White, 161 Cal. 453, 460, 461, 119 P. 895; Downs v. National Bank of Bakersfield, 101 Cal.App. 712, 714, 282 P. 420; List v. Sandell, 42 Cal.App.2d 505, 507, 109 P.2d 376, and cases there cited; Sweet v. Watson’s Nursery, 33 Cal.App.2d 699, 704, 92 P.2d 812) that the title to crops growing upon land and unsevered therefrom passes to the vendee upon execution of a conveyance of the land, in the absence of any written reservation or agreement to the contrary.
No case directly on all fours with the present one has been cited by either party; but Buell v. Simon Newman Co., D. C., 61 F.Supp. 157, affirmed in 9 Cir., 154 F.2d 35, presents a comparable one. There a tenant had an option to purchase property rented to him on a crop sharing basis, and the option was exercised while a crop was growing, but before it was harvested. It was held that the crop passed to the optionee with the title to the premises, and that the landlord seller was not entitled to any rental, the leasehold estate having merged with the reversion prior to the date the crop rental became due, that is, prior to the maturity and severance of the crop from the land. In Cumming et al. v. United States, 57 Ct.Cl. 551, the United States rented certain hotel property, the rental being payable at the end of each month. On December 28th the option to purchase was exercised by the government and a deed executed to it, and plaintiffs’ contention that they were entitled to an apportionment of the rental for the 28 days of the month prior to the conveyance was answered by the court which stated, page 566 of 57 Ct.Cl.: ‘Because the transaction was not closed until the latter part of December, the plaintiffs contend that they should be allowed rent up to the date in December when the defendant made its payment. Another principle intervenes, however, which prevents this. The December installment of rent could not accrue under the terms of the lease before the end of the month, and prior to that time the tenant holding under the lease had succeeded to the fee, by conveyances of title by the landlords. Rent follows the reversion, and before the rent became due the reversion had passed to the United States. In these circumstances, as was said by Chief Justice Richardson in York v. Jones 2 N.H. 454, 456, ‘there is no doubt that the rent passed as incident to the reversion and became extinguished,’ or, as said in another case, ‘the term for years was drowned or merged in the fee-simple estate and became exitinct.’ Liebschutz v. Moore, 70 Ind. 142, 147, [36 Am.Rep. 182]. There could not be a right of action until the installment of rent accrued according to the lease, and when that time arrived the plaintiffs had ceased to be owners.’
In Clark v. Strohbeen, 190 Iowa 989, 181 N.W. 430, 13 A.L.R. 1419, the question was the effect of a sheriff’s deed on sale of certain land on execution against the owner, upon the title to a crop of wheat unharvested and unsevered, which crop had been grown by a lessee of the owner, the lease providing for payment to the lessor of one-fifth of the crop after being harvested and hauled to town. The court applied the rule that matured and uncut grain upon the premises belonged to the tenant and not to the landlored, and therefore did not pass to the substituted landlored on execution of the sheriff’s deed. It said, page 433 of 181 N.W.: ‘It is to be observed that in the application of the foregoing principle to landlord and tenant cases the maturity of the crops on the leased premises is a controlling consideration. If the crop is fully matured at the time of the voluntary conveyance, or of the execution of the sheriff’s deed to the purchaser, it does not pass by the conveyance but belongs to the tenant. Everingham v. Braden, 58 Iowa 133, 12 N.W. 142.’ Also see Frum v. Kueny, 201 Iowa 327, 207 N.W. 372, 374.
As for the case of Mott v. Cline, the action there was in equity, for specific performance of an option to buy, which option was contained in a lease by Cline to one Ah Chue, and which option, and not the whole lease, had been assigned by Ah Chue to Mott. Mott filed an action to compel specific performance of the option after tendering $4,100, the amount of the sale price provided in the lease. The rental fixed by the lease was, as the time the option was exercised on May 28, 1923, $250 per year, payable on the 20th day of December of each year. Cline, answering Mott’s complaint in his action for specific performance, set up that he was entitled to rent for the four months of the rent year prior to the exercise of the option, and objected to the sufficiency of Mott’s tender as not including such portion of the rent. Other objections were interposed which are not pertinent here. Cline refused to execute a conveyance, and the court held that the failure of plaintiff to tender a proportionate amount of rent for the use of the premises by the lessee for the period of about four months prior to the offer to purchase furnished a bar and answer to him (Mott’s) demand ‘for specific performance of the option provision,’ citing section 1935 of the Civil Code. Respondent there contended that Cline, by a failure to object to the insufficient amount of the tender had waived any objection he might have made on that ground, but the court said that there was no evidence of any such waiver, the record being silent as to what actually took place when the insufficient tender was made; that respondent had not sustained the burden imposed upon him to show such waiver.
It is obvious that that case is different in many respects from the case before us. It was a suit in equity, and not an action for rent. It did not involve a crop rental, but a cash rental which was possible of computation and apportionment at the time the option was exercised, as the amount payable to the lessor was definite and not dependent, as here, upon whether a crop of beans was eventually harvested, which crop of beans— not the value thereof— was to be divided between the lessor and lessee when harvested. Nor, in that case, was a conveyance of the land to the optionee executed as in the case here. And it is obvious that at the time the option was exercised and plaintiffs here became entitled to their deed, there were no beans to tender and might never be a crop to harvest should it fail to mature or be destroyed; and there was likewise no way of determining at the time the option was exercised what the year’s rental, in cash would be even if it could be said (which the agreement did not provide) that the seller was entitled to cash in lieu of the portion of the crop provided as rental in the agreement. Also, the action before us, as it stands, is not one for specific performance but one by the lessor to recover one-third of the cash value of the crop. Respondents did not, in their conveyance to plaintiffs, reserve any right to the crop which might thereafter be harvested, but by their conveyance vested the title to the land in plaintiffs, thus, as they concede, merging the leasehold estate in the reversion; and thus vesting in plaintiffs the title to the lands and the crop growing thereon. And they state in their brief that they do not contend that their ‘Notice of Reservation of Rights’ was intended to reserve any rents.
As hereinbefore stated, defendants did not file their answer or cross-complaint in this action until February 20, 1946; and there is no evidence that they laid claim to any portion of the beans when they were harvested in September or October, 1943; and they apparently permitted plaintiffs to dispose of them, which indicates that they were not without doubt as to their right to same, and that their subsequent cross-complaint was something of an afterthought. The agreement as executed stated specifically that it was the entire agreement between the parties; it provided that the option to purchase might be exercised by the buyers at any time if they were not in default. It made no provision for payment for use of the land during a rental year in the event that there should be a crop failure, or if the option should be exercised before the harvesting of a crop, or for the ascertainment of and apportionment of the value of any growing crop. By the acceptance of the purchase price fixed in the agreement and their execution of their deed they apparently conceded that plaintiffs, the buyers, were not in default under the terms of the contract; and even if it could be said that section 1935, supra, is applicable to this case, and that under the decision in Mott v. Cline defendants would have been justified in refusing to convey because rental for a portion of the year 1942-1943 was not tendered, the conclusion seems inevitable that when they executed the conveyance, and, as they alleged in their pleadings, conveyed ‘all their interest in and to said real property to cross-defendants,’ they effectually waived any possible right they had to any interest in the crop then growing thereon.
Our conclusion in this connection is fortfied by a consideration of what would have been the situation had plaintiffs exercised their option and defendants had executed such conveyance to plaintiffs during the rental year beginning in October, 1942, but before any bean crop had been planted thereon; and that plaintiffs had, after the title vested in them, concluded to plant a crop other than a bean crop, as they would have had a right to do on their own land. In such an event it is plain that defendants could not have claimed any rental for the portion of such rental year as had elapsed prior to their conveyance, as there would have been no bean crop to divide, and nothing upon which to compute an apportionment of rental. Recognition of such a situation renders unsound the judgment of the trial court in giving defendants a judgment for three-fourths of one-third of the selling price of the beans based upon the occupancy of the land by plaintiffs for three-fourths of the crop year before the execution of the conveyance, and, we think, necessitates a reversal of the judgment.
As for section 1935 of the Civil Code, respondents cite no case in which apportionment was applied to a crop rental, or where the hiring was terminated by a conveyance of the title to the thing hired before the end of the hiring period in accordance with a written agreement of the parties that it might be so terminated. On the contrary, they cite Donnellan v. Wood, Curtis & Co., 4 Cal.App. 192, 87 P. 235, regarding which case they say that it was there held that section 1935 was not applicable because of the language used in the lease agreement.
Without attempting in this opinion to limit the application of section 1935 beyond the facts of this case, we are of the opinion that it is inapplicable here in view of the terms of the agreement between the parties, and the fact that respondents executed their conveyance of the land without reservation of any rental or any interest in the growing crops upon which their only right to rental was dependent.
The judgment is reversed.
THOMPSON and PEEK, JJ., concur.