Penasquitos, Inc. v. Holladay

Opinion

BROWN (Gerald), P. J.

In July 1962, Jim Holladay and Robert Holladay, were tenants in common of some property in San Diego. They granted Irvin Kahn, later president and majority shareholder of plaintiff Penasquitos, Inc., a 99-year lease and option to buy the property. The minimum rent was $1,800 yearly per acre for the 5.86 net usable acres, plus 8 percent of the lessee’s gross yearly revenue from improvements and activities over $131,850. Some expenses were excluded. The option was to buy the property at $60,000 per usable acre, and it could be exercised in increments of one acre or more at a time. Penasquitos acquired Kahn’s interest by assignment.

[358]

In October 1968, Robert Holladay sold his 40 percent interest in, the entire property to Penasquitos for $65,000. Jim Holladay offered to sell Penasquitos his interest at the option price. Instead, Penasquitos offered Jim the reasonable market value of his interest, subject, of course, to the 99-year lease and option owned by Penasquitos. Holladay declined. Penasquitos sued for partition by sale for the “common benefit of the parties” to preserve the property’s commercial value.

In its oral decision June 14, 1971, the court ordered physical partition of the property. It also ordered Penasquitos to exercise its option to buy the property. But the Interlocutory Judgment of Partition and Declaratory Judgment entered September 1, 1971, omitted the order to exercise the option, ordered physical partition, and affirmed the validity of Penasquitos’ lease and option agreement.

An action for partition is an equitable proceeding

(Elbert Ltd. v. Federated etc. Properties,

120 Cal.App.2d 194, 200 [261 P.2d 743]). Although partition is a matter of right when a cotenant desires it

(De Roulet

v.

Mitchel,

70 Cal.App.2d 120 [160 P.2d 574]), it is subject to the requirement of fairness and the right may be waived by contract, either expressly or by implication. (See

Pine