McNulty v. Lloyd

California Court of Appeal Mar 8, 1957 No. Civ. 8846Published

Before: Warne

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Holding. The court held that the defendants breached their conditional sales contract by entering into unauthorized sale agreements disguised as leases, and that the defendants failed to properly plead or prove affirmative defenses such as forfeiture relief, waiver, or laches.

Issues

Whether the defendants' lease agreements constituted a breach of the conditional sales contract prohibiting unauthorized alienation of interest.
Whether the defendants were entitled to relief from forfeiture under Civil Code section 3275 despite failing to plead it in the trial court.
Whether the plaintiffs waived the breach or were barred by laches from seeking restitution of the property.

Disposition. affirmed

Quotations verified verbatim against the opinion

“These facts were sufficient to sustain the trial court’s implied finding that the so-called leases were in reality contracts of sale and were in violation of appellants’ agreement with the respondents.”

WARNE, J. pro tem.

This is an appeal by defendants from a judgment in favor of the plaintiffs below, respondents herein, restoring respondents to the possession of certain real property in Del Norte County.

In 1948 respondents entered into a conditional sales contract for the sale of certain land to the Lloyds for a total price of $12,000. No down payment was required. Payments of not less than $20 per month, plus annual interest at the rate of 5 per cent, were called for. When the total “rental” payments reached $1,200 the Lloyds could, on payment of one-half of the balance due, receive a grant deed to the property, subject to a deed of trust securing payment of the balance. The instrument contained the following provision: “It is also agreed that, during the life of this agreement . . . all the terms and conditions thereof shall bind and inure to the benefit of the parties hereto and their heirs and assigns, except that this . . . Agreement or any rights or interests therein pertaining to the said parties of the second part [the Lloyds] can not be assigned in any wise by said parties of the second part or any sale ... of their interests except by agreement with the parties of the first part, ...” In 1949 a supplemental agreement was executed to correct an error in the description of the lands in the first agreement.' This second agreement contained the same clause forbidding alienation of the Lloyds’ interest without the permission of the respondents.

The Lloyds went into possession in 1948 and then began “leasing” portions of the property. These leases were for specific portions of the property and were for periods of 10 years. The leases contained an “option of release” and also of purchase.

[9]

On March 7,1951, plaintiffs served written notice on defendants, terminating said conditional sale agreement, claiming that defendants had breached the agreement by selling certain portions of the property in violation of the express terms thereof. Said notice also demanded that defendants remove all property they owned from the premises within 30 days. Defendants thereafter continued to hold said property, and in August, 1951, plaintiffs filed suit for restitution of the premises. The case was tried without a jury. Judgment was in favor of plaintiffs, restoring them to possession of said lands. Findings were waived. Defendants appeal from the judgment.

McNulty v. Lloyd

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