City of Beverly Hills v. Albright

An action in eminent domain was brought by the city of Beverly Hills to condemn and acquire for municipal off-street parking certain improved commercial property referred to herein as Parcel 1, owned by defendant Kathryn Stevens Albright and leased to defendants and appellants herein, Betty B. Jensen and Walter C. Jensen. Other defendants were named in the cause in connection with parcels not here material. Prior to trial, the action against defendant

On November 24, 1954, appellants leased Parcel 1 from defendant Albright for a retail toy store for a five-year term commencing January 1, 1955, ending December 31, 1959.

Section (17) of the lease provides in pertinent part:

“Any and all alterations, additions, improvements or fixtures (except trade fixtures) made or placed in or upon said premises shall at the termination of said term by lapse of time or otherwise, belong to the Lessor without compensation to Lessee. ’ ’

Section (18) thereof continues:

“Should the leased premises be taken under condemnation proceedings or be acquired by any public authority in any other manner, the estate of Lessee shall cease and determine upon but not prior to the date when the Lessee shall be actually required to yield possession, and all liabilities of the Lessee hereunder accruing subsequent to such date shall cease . . . Lessee hereby assigns to Lessor his rights to any and all damages for property taken in any such proceeding and all such damages shall be payable to lessor. ’ ’ No mention of trade fixtures was made in this provision.

Thereafter, appellants in the operation of the store premises installed what they alleged to be certain “trade fixtures” valued at approximately $6,000, and “which cannot be economically, or without substantial loss of their entire value, removed from the said premises.” Appellants were still occupying the premises, and the fixtures remained in place and continued in use by them, as of the date of trial (August 21, 1959), although the fixtures were “in fact” subsequently removed from the premises by appellants pursuant to the provisions of the judgment permitting their removal on or before September 14, 1959. We are unable to determine from the record before us if all of the fixtures were removed.

The issue is twofold—whether the “trade fixtures” became part of the leased premises owned by defendant Albright and condemned and actually taken by plaintiff under the within condemnation proceeding, for which the former was compensated and in which appellants had no property right;

The trial court found that the lease under which appellants were in possession contained sections (17) and (18) (hereinabove set forth), cited by way of reference to a finding immediately preceding in connection with other defendants, Dorothy and Harry Finer, who held a similar parcel under a lease with defendant Albright containing identical provisions, (Finding VI (B)); further found that “certain commercial trade fixtures” had been affixed to the premises during the term of the lease and were still in place on the date of trial (Finding VI (C)); and concluded that appellants have no compensable interest in Parcel 1 and are not entitled to compensation for the taking thereof by plaintiff, except that they may on or before September 14, 1959, remove from the premises occupied by them “any trade fixture affixed thereto by them which has not, by the manner in which it is affixed, become an integral part of the premises and which can be removed without injury to the premises.” The judgment likewise so provided and, in addition, recited- that “(a)ny such fixture not so removed from said premises by said date shall be deemed a part of the real property,” and the remaining right, title and interest, if any, of the appellants in the fixtures shall be vested in plaintiff upon payment to them of the sums “hereinabove stated.” The sum to which the trial court found appellants entitled was declared in the judgment to be $15.50 for costs of suit, and included nothing for fixtures, as in the case of other defendants Drucker and Slotnick, also mentioned therein.

Although the lower court’s findings do not expressly declare that it was by reason of sections (17) and (18) of the lease appellants had no compensable interest in Parcel 1, it is obvious from the language employed by the court and its explicit reference to these sections that it relied upon their operation and effect in denying an award. Likewise the trial’ court made no finding relative to the nature of the fixtures. We are somewhat hampered in our consideration of this point inasmuch as this appeal comes to us only on the judgment roll and the oral proceedings being unavailable, we are unable to ascertain what, if any, proof of their removability was offered at the trial; we suspect none, because of the limited

But appellants, predicating their entire argument on the premise that the fixtures were removable, advance the position that they remained their personal property as between them and the lessor (§ (17)) and when the entire estate was condemned, constituted “property taken” by the condemnor for which they are entitled to damages, their right to which is not included in the assignment (§( 18)). However, even under the theory that the fixtures were removable, we deem the trial court’s findings and judgment to be correct. Assuming, but not declaring that the fixtures did not become part of the realty and remained the personal property of appellants (§ (17)), they still would be entitled to no compensation for the reason that they, having retained possession of the premises, and the fixtures having remained in place and in their continued use to the date of trial, the same could not constitute “property taken” by the condemnation or otherwise. Section (18) provides that, if during the term, the premises are condemned the leasehold estate shall terminate upon lessees actually being required to yield possession. Appellants in fact remained in possession of the premises and continued the use of the fixtures in place at least up to the date of trial—hence their term did not end and they were

This brings us to what we believe to be the true basis of the trial court’s findings and judgment. Subject to certain factors relating to permanency such as physical annexation, adaptation to use with the real property, and intention to annex the same to realty, fixtures installed by a tenant are considered real property and become the property of the landlord upon termination of the tenancy (Civ Code, § 660; City of Los Angeles v. Klinker, 219 Cal. 198 [ 25 P.2d 826 , 9 A.L.R. 148 ]; People v. Church, 57 Cal.App.2d Supp. 1032 [ 136 P.2d 139 ]), except where there is an agreement permitting their removal (Civ. Code, § 1013) or where they are affixed for the purpose of trade, if in addition “the removal can be effected without injury to the premises, unless the thing has, by the manner in which it is affixed, become an integral part of the premises.” (Civ. Code, § 1019.)

Appellants’ lease excepted “trade fixtures” from those which, at the termination of the lease, would become part of the premises of the lessor without compensation (§ (17)); thus, as between lessor (defendant Albright) and lessees (appellants) any “trade fixtures” could be removed upon termination of the leasehold. However, inasmuch as the lease fails to define “trade fixtures,” it is necessary to resort to the definition found in section 1019. Thereunder, trade fixtures which remain the personal property of the lessee are those which can be removed from the demised premises without injury to the latter unless by the manner in which they have been affixed they have become an integral part thereof. If, then, the fixtures in the instant case have become so permanently attached and such an integral part of the premises as to take them out of the definition of “trade fixtures” contained in section 1019, they are not removable and at the termination of the lease they become the property of the lessor without compensation, as part of the leased premises in which appellants have no interest. If it is argued that appellants, even then, had any right to damages for the taking of the fixtures as part of the leased premises, such right would automatically become the property of the lessor (§ (18)). Although it is true that under ordinary circumstances, as between the condemnor and the lessee, trade fixtures are regarded as part of the realty for the purpose of fixing compensation for their taking, damages therefor may be recovered by the tenant and the award made for such fixtures

As previously herein briefly noted, appellants predicate their appeal on the premise that the fixtures, “trade fixtures,” were removable; and argue at length in their closing brief that the case was tried in the lower court on this assumption and thus we must assume that the evidence would establish the same. Respondent, on the other hand, defends the judgment on the ground that the fixtures were so permanently affixed to the demised premises and would be so valueless when removed as to take them out of the definition of removable trade fixtures found in section 1019.

Although oral proceedings of the trial are not before us, it is certain from what record is available that no issue relating to the removability of the fixtures existed in the lower court, and contrary to appellants’ contention, the case actually was tried on the premise originally advanced by appellants themselves in their answer and in the pretrial statement, that the fixtures were “permanently affixed to the premises” and were not removable. Appellants in their answer alleged that they “erected, installed and affixed upon said leased premises trade fixtures necessary for the operation of said business, which fixtures had a market value at the time of the commencement of this action in excess of $6,000, and which cannot be economically or without substantial loss of their entire value removed from the premises.” (Paragraph I, Answer.) That appellants prior to this appeal in fact believed the fixtures to be so permanently affixed as to constitute an integral part of the premises and thus not removable, is borne out, not only by their pleading, but in a stipulated pretrial statement wherein the parties agreed that the first of the two issues to be tried in the cause is “the right of said defendants to claim compensation for the value of their leasehold interest, including the value of certain trade fixtures alleged by them to be permanently attached to the premises. ’ ’ (Emphasis added.) We assume appellants read and knew the effect of such a stipulation, particularly since reference to any issue, concerning whether the fixtures were removable was omitted. Thus, it is apparent that the case was tried by both parties and heard by the lower court on the theory that the

As permanent fixtures, neither under the law nor under the lease have appellants a right to remove them, and as part of the leased premises owned by defendant Albright they were taken by plaintiff; although, appellants were permitted to use the same until judgment. Under appellants’ assignment to the lessor (§ (18)), whatever damages thereto, or to those fixtures left on the premises after September 14, 1959, the court may find due from plaintiff to appellants, would automatically become the property of defendant Al-bright. Appellants claim compensation for property rights they do not possess.

Appellants’ extensive argument that they never intended the assignment in the lease to include any right to damages they might harm for the taking of the fixtures in question and that the lease must be so construed, is AAothout merit, for on its face the lease is clear and explicit in its terms, the provisions of which lend themsehres to the within reasonable and fair result. (Civ. Code, § 1638) ; and taking the document as a Avhole, giving effect to every provision thereof (Civ. Code, §1641) Ave find no need for a judicial interpretation of the terms of the lease including proof of the intention of the parlies. Certainly no doubt exists concerning the meaning of the plain language employed in I he lease, AAdiich governs the construction of the document. That one. of the parties does not like the result of the operation of its proAdsions is no justification for placing a forced construction on a lease contrary to that supported by the clear and explicit language of tbe document.

Any argument that the condemnor under the lower court’s judgment could eAmde payment of just compensation for fixtures is specious. Obviously if payment, because of prior assignment by them cannot be aivarded to the lessees, under the rule of People v. Klopstock, supra, 24 Cal.2d 897 , damages for the taking nevertheless remain in the arvard to lessor as compensation for the entire leased premises.