Eltinge & Graziadio Development Co. v. Childs

Opinion

ROTH, P. J.

Appellants, Eltinge and Graziadio Development Co., a partnership, George Eltinge and George L. Graziadio, the partners, appeal from a judgment interpreting the rental provisions of a ground lease entered against them in their action for declaratory relief against respondents, Kenneth and Margaret Childs.

On May 1, 1964, appellants (lessees) executed a ground lease on real property for a fixed period of 60 years, commencing May 1, 1964, in Palm Desert, with respondents (lessors) and terminating on October 31, 2025, with an option to lessees to extend the term for an additional 30 years.

Rental on a “net, net, net” basis was fixed for the first five years and was defined as “basic ground rent.” Thereafter at the expiration of each five-year period “additional ground rent shall be authorized by which 6%

[297]

of.. .

appraisal

value

1

exceeds the annual basic ground rent. ...” (Italics added.)

The lease in Article II thereof contains warranties by lessees which in pertinent part recite that “their

purpose . .

.” (italics added) is for the development of a shopping center; class A buildings will be constructed to accommodate the purpose and that no space will be subleased by lessees which shall at any time be used for sale of alcoholic beverages, pool or dance hall, distressed business; new or used vehicles or gambling or lottery activities or any unlawful activities.

Lessees contend that appraised value means value of the land based upon its use as a shopping center. Lessors assert it means fair market value.

The parties stipulated that: the only issue to be tried was the interpretation of the provisions of the lease contained in sections 3 and 4 of lease; such interpretation was to be made “only upon an examination of the ‘four corners’ of. . . lease, and such indisputable facts . . . supplied to the Court upon mutual agreement of the parties, in the event of a specific request from the Court for any such facts.” The court made no request and no additional facts were supplied.