Schweiso v. Williams

Opinion

FEINBERG, J.

On this appeal

1

from dismissals in these consolidated actions following summary judgments in favor of the same defendants (Williams, Palo Alto Town & Country Village et al.) the only issue is whether a lessor may arbitrarily refuse consent when a commercial lease provides

[885]

that a lessee shall not assign or sublease the premises without the written consent of the lessor.

The pleadings, affidavits and counteraffidavits alleged the following: Appellants Stevenson, Schweiso, and Jazbutis each had leased commercial premises from the respondents. Paragraph 13 of each lease provided that the lessee was precluded from assigning the premises without the written consent of the lessor. Appellants Stevenson and Schweiso, commercial tenants of the respondents, entered into contracts with third parties to sell their businesses. Respondents for no valid commercial reason refused to consent to Stevenson’s proposed assignee unless Stevenson paid 10 percent of the purchase price ($15,500) which Stevenson paid under protest.

Respondents also interfered with Schweiso’s contract with the prospective purchaser (Grofs), by telling Grofs that they were paying too much for Schweiso’s business. After respondents refused their consent in writing, the Grofs cancelled their contract with the Schweisos. Respondents told Bob Schweiso that: 1) paragraph 13 of the lease was the lessor’s “license to steal;” 2) the 10 percent transfer fee ($6,000) requested by the lessor was “blood money;” and 3) the lessor had a right to be unreasonable.

In 1977, appellants Jazbutis contracted to sell their business to Gammell. Respondents refused to consent to the assignment unless Jazbutis’ brokers, appellants VanDervort and Faye, agreed to pay one-half of the commission ($5,500) to respondents. Gammell cancelled the contract. Before September 1978 Jazbutis and respondents orally agreed to permit Jazbutis to sell the business and assign the lease on certain conditions. Jazbutis agreed to the conditions and in reliance thereon, executed a contract to sell the business to Gomes. After respondents refused to honor the agreed upon conditions, Gomes cancelled the contract. Stevenson, Schweiso, Van Dervort, Faye and Jazbutis filed verified complaints.