Bard v. Kent

TRAYNOR, J. —

The defendant in this action, L. E. Kent, administered the "business affairs of Mrs. Ruth Roland Bard, hereinafter referred to as Miss Roland, under a general power of attorney for many years before her death. In 1933, Kent, acting as agent for Miss Roland, leased for five years a parcel of real property owned by her to Cliff Odums and Albert M. Berkson, who constructed a building on the property and installed equipment for the operation of a restaurant named the Cat and the Piddle. The restaurant failed, and Odums and Berkson abandoned the venture. Thereupon Kent, acting in his personal capacity, together with Howard Hastings and Don Carpenter, organized a corporation, known as the Cat and the Piddle Company, which assumed the obligations of Odums and Berkson and took over the operation of the restaurant. When this venture likewise proved unprofitable, Kent bought the stock of Hastings and Carpenter in the Cat and the Piddle Company and continued to pay off the obligations that the company had assumed. Various sublessees who thereafter tried to operate a restaurant on the premises were unsuccessful.

On August 21, 1935, Miss Roland executed a lease of the premises to the Cat and the Piddle Company for a term of five years. The lessee subsequently obtained an extension of the lease and written authority to sublease the premises to M. A. McDonnell. On August 30, 1935, the premises were subleased to McDonnell for a term of five years ending August 31, 1940, with an option to renew the lease for one year. This lease from the Cat and the Piddle Company to McDonnell included the right to use the equipment and fixtures on the premises and provided for rental payments of 10% of the gross receipts up to $6,000 and 8% of the gross receipts over that amount, with a minimum payment of $450 per month. The restaurant operated by McDonnell proved highly successful, and he made improvements costing approximately $30,000. Meanwhile Kent dissolved the corporation,

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distributed its assets to himself, and continued his business as an individual under the fictitious name of the Cat and the Fiddle Company. As owner of the improvements upon the property he received half of the rent, but upon termination of the lease the improvements were to revert to Miss Roland.

During 1936 McDonnell told Miss Roland and Kent that he would undertake additional improvements at a cost of about $10,000 if his lease were extended for another four years. Miss Roland in subsequent conversations with Kent expressed a willingness to grant the extension if the proposed improvements would cost approximately $10,000. She suggested that Kent check the figures and have an architect draw sketches for the purpose of making an estimate. On August 17, 1937, Miss Roland executed to the Cat and the Fiddle Company an option to extend its lease for an additional four years in order that it in turn could give McDonnell an extension of his lease. The option was signed for Miss Roland by Kent as her attorney in fact. It recited that “For consideration of Ten Dollars ($10.00) and other valuable consideration" the Cat and the Fiddle Company was granted an option to extend its lease for an additional period of four years. After the option was signed, Kent instructed Kenneth McDonald, an architect, to draw sketches of the proposed improvements. These sketches were billed to Kent and paid for by him subsequent to the deaths of the architect and Miss Roland.