Payne v. Crossley

GRIFFIN, J. Appellants William R. Payne and wife brought an action against respondents Lawrence Crossley and wife to set aside a cancellation agreement upon the ground that it was obtained by fraud. Subsequently, respondents Crossley brought an action against appellants Payne for unlawful detainer, ejectment and damages for alleged breach of the lease agreement. The two actions were consolidated for trial and upon appeal from separate judgments entered in favor of respondents.

The evidence shows that the Crossleys, in 1947, were lessors of Indian land near Palm Springs. They desired to develop a trailer park. Subsequently, they contacted appellants, who were without funds. They entered into a lease agreement in October, 1947, by the terms of which respondents were to furnish the land and money for development, and to supply certain income from the trailer park for this purpose. Appellants were to help develop the land. The net earnings from the rentals were to be divided equally between them.

Appellants entered upon the property and commenced physical improvements, such as putting in streets, poles for electricity, gas lines, and marking out lot lines. A gross income of a considerable amount was earned but was insufficient to prevent financial difficulties for the appellants. In the spring of 1950, appellants’ creditors were numerous and the Department of Internal Revenue was threatening proceedings for failure to pay taxes due. On July 21, 1950, appellant Payne was served with notice to quit the premises for violation of the covenants of the lease. Voluntary bank[74]ruptcy proceedings for appellants were discussed with Crossley and his attorney. A conference resulted in which the parties, on July 22, 1950, signed some form of agreement denominatetd “Cancellation of Lease” for the admitted default by lessee of the terms of the lease. It provided that the lease should be surrendered and that each party should be. released from any liability thereunder. Thereafter, by some agreement, Mrs. Payne remained as acting manager until a new manager could be procured. Prior to September 1st, Mrs. Payne was notified that a new manager would take over on that date. At that time appellants asserted they still had an interest in the premises and refused to vacate or deliver the keys to the new manager. Thereafter, notice was served upon them to vacate. These actions, as above, indicated, were then instituted.

The trial court found specifically that the lessees failed to comply with the terms and conditions of the lease in many particulars such as failure to pay rent and to furnish correct ..accounts and statements of income and expenses; that they possessed and used intoxicating liquor on the premises owned, by the Indians; that they failed to correct unsanitary conditions and make certain improvements; that the lease was mutually canceled; and that after September 1st, Mrs. Payne remained on the property only as an employee of respondents and that said employment was terminated; that •the cancellation of the lease agreement was, for a consideration, executed by appellants freely and voluntarily and without fraud or misrepresentation on the part of respondents; .and that accordingly respondents were entitled to possession of the premises.