Wood v. Hipwell

California Court of Appeal Aug 15, 1930 No. Docket No. 107.Published

Before: Marks

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Holding. The court held that a $1,000 payment made as consideration for the execution of a lease constitutes a bonus or absolute payment to the lessor, rather than a security deposit, and therefore the lessee is not entitled to its return upon termination of the lease.

Issues

Does the evidence support the judgment on the cross-complaint awarding the return of the $1,000 payment to the lessee?
Should a payment designated as consideration for the making of a lease be construed as a security deposit or an absolute transfer of title to the lessor?

Disposition. reversed

Quotations verified verbatim against the opinion

“The lease provided in clear terms that the $1,000 was paid to appellant as a consideration for making the sublease.”

“Defendants parted with the money, not as a penalty or as security, but as a payment the consideration for which was the execution of the lease on the part of plaintiff.”

“The title thereto passed absolutely to the lessor, unaffected by the fact that he agreed, upon the performance of certain conditions by defendants, to give them credit therefor.”

MARKS, J.

Appellant was the lessee of a building in the city of San Diego which belonged to James R. McNeece. A portion of the building was subleased by appellant to Jennie PI. Hipwell, one of the respondents, for the term of seven years and eight months commencing on March 1, 1923, and ending on October 31, 1930, at a stipulated rental, payable in monthly installments. At the time of the execution of the sublease the respondent Hipwell paid to appellant the sum of $1,000, concerning which payment the sublease contained the following:

“As a consideration for the making of this lease, the party of the second part pays to the party of the first part, the sum of One Thousand ($1000.00) Dollars, receipt of which is hereby acknowledged; and in the event that all of the conditions and agreements of this lease have been met by said second party, up to the first day of September, 1930, then and in that event the rent for the months September and October, 1930, shall be One ($1.00) Dollars for each month. ...”

“It is hereby agreed that in case the lease is terminated on account of fire, pestilence or other act of God, said lessor agrees to pay to said lessee upon said termination the sum of One Thousand ($1000.00) Dollars, provided all agreements of this lease have been complied with up to the time of said termination.”

The parties to the sublease made several written agreements reducing certain monthly installments of the rental, but none of them affect the issues before us.

In December, 1925, two of the tenants of Mrs. Hipwell were arrested for conducting bookmaking operations in the premises and later a tenant of appellant was arrested for a violation of the Wright Act. McNeece commenced an ac

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tion in the superior court against Wood and Hipwell to recover possession of the premises. On July 19, 1926, judgment was rendered in favor of McNeece in this action. On the same day appellant surrendered the keys of the building to either McNeece or Mrs. Hipwell or both. Thereafter Mrs. Hipwell remained in possession of the premises subleased by her from appellant. The nature of her tenancy after July 19, 1926, does not appear from the record before us, although it can be inferred that she became the tenant of McNeece. The judgment of the superior court in the case of

Wood v. Hipwell

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MARKS, J.

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