Crowell v. Harvey Investment Co.

WORKS, P. J.

Plaintiffs, as lessors, and defendant, as lessee, entered into an agreement whereby certain real property was let for the term of ninety-nine years. The in-strument provided, in part, that the lessee should “bear and discharge all . . . taxes . . . which may be taxed, charged, assessed, levied or imposed upon said leased premises . . . at any time during the continuance of this lease ... to the end that the rents . . . shall be received by said lessors without any abatement or deduction whatever and shall constitute . . . the net income of said lessors from said property during said term . . . And it is further covenanted that the lessee shall obtain and deliver to the said lessors . . . original tax receipts for all such taxes . . . ten (10) days before the delinquency thereof”. In another part of the lease it was also provided that the lessee could “assign its leasehold interest hereunder and thereby be released from all obligations thereafter accruing hereunder; provided, and upon condition that all of the agreements, covenants and conditions imposed upon the lessee hereunder and due at the time of such assignment shall have been fully performed;

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and provided ... in the event of any assignment of the leasehold interest hereby created being made which does not comply with all the conditions and provisions hereof, the assignor shall be and remain liable under this indenture and be bound thereby as though no assignment had been made.”

An assignment of the agreement was made on January 31, 1928, but lessee had not then paid and never did pay, nor did its assignee ever pay, the second installment of taxes on the demised property for the fiscal year 1927-1928. This installment became “payable on and after” a day early in January, 1928, under the law (Pol. Code, sec. 3746, subd. 1). Because of the nonpayment of the installment and the consequent delinquency arising, the property was in due time sold to the state. Thereafter the lessors redeemed from the sale by the payment of the tax, with the penalties and costs added pursuant to law.

This action was commenced for the purpose of recovering installments of rent which became due after the assignment of the lease, upon the theory that the assignment did not relieve defendant of the obligation to pay such rents for the reason that the installment of taxes above mentioned had • not been paid at the time the assignment was made. Judgment went for defendant and plaintiffs appeal.