Smith v. Thomsen

PULLEN, P. J. Respondents herein were the owners of an unimproved parcel of land in Santa Monica upon which they desired to erect a hotel with stores on the ground floor. In furtherance of this project respondents obtained a build[604]ing loan from the Beneficial Life Insurance Company. They also entered into a long-term lease for the hotel with Max Thomsen and Eleanor Thomsen at a total rental of $335,700. In accordance with the agreement the Thomsens furnished the hotel, entering into a contract therefor with A. E. Pratt, appellant herein, who installed the furniture and fittings to an amount in excess of $40,000. As security for the faithful performance of the lease it was agreed that the lessees would give to the lessors a chattel mortgage on the furniture. To do this it was necessary for appellant to release his lien on the furniture and vest title in the lessees, which he did, accepting in lieu thereof as security for the unpaid balance on the furniture an assignment from the lessees of their lease. The lessors in turn assigned the chattel mortgage on the furniture to the insurance company as additional security for its loan.

After the execution of these various instruments the original loan from the insurance company was increased some $15,000 and the same evidenced by a supplementary agreement dated July 2'0, 1928, increasing the total rentals on the hotel for the entire term to $350,685. It is the fact of this increase in rental contained in this agreement of which appellant claims he had no notice. This supplementary agreement was executed by lessors and lessees and acknowledged by Bernard J. Walsh, a notary public. The lessees failing to pay the required monthly rentals, defaulted and two actions were brought, one to foreclose the chattel mortgage and for the appointment of a receiver, and another action in unlawful detainer. With this latter action we have nothing to do, this appeal being from a judgment for a specified sum found due from the lessees to the lessors for rent and directing the foreclosure of the chattel mortgage to satisfy the amount due. The appellant is A. E. Pratt who originally sold to lessees the furniture covered by the chattel mortgage.

Appellant raises two questions in his opening brief: First, that Pratt was a surety and the change in the amount due under the lease was an alteration without his knowledge and consent in the terms of the contract between the principal and the insured and therefore acted as a discharge of the suretyship, and, second, as to the right of a landlord to collect rentals during the period of time a receiver was in charge of the premises.