Hancock Oil Co. v. Hopkins

CARTER, J.

I dissent.

I agree with respondents that the case falls within the common law rule, now embodied in Code of Civil Procedure, section 1962(4) and I do not agree that the provisions of section 386 of the Code of Civil Procedure as amended in 1881 have any such abrogative effect upon section 1962(4) as has just been held by the majority of this court.

I also disagree with the intimation contained in the majority opinion that it can be at all “questionable whether a tenant, by interpleading his landlord and another, directly and absolutely disputes the former’s title.” As will hereinafter be shown this statement is contrary and stands in opposition to all common law and modern authority. The tenant’s very action in filing suit in such a situation, in the absence of any factors showing a derivative title from the lessor to the claimant, subsequent to commencement of the landlord-tenant relationship, is tantamount to an admission that such dispute dated back at least to the commencement of the landlord-tenant relationship.

The principle that a tenant is not permitted to deny the title of his landlord at the time of the commencement of the landlord-tenant relationship stems far back into the common law, and is undisputed therein. The basis for the rule is found in the inequity of allowing a tenant to secure possession of premises through a lease from the person then in possession, and afterwards, and while retaining and enjoying such possession, disputing the right of the lessor to make the lease, and depriving the latter of the benefits of his rent or other obligations incurred when due or owing. As stated in the annotation in L.R.A. 1916E at page 699:

. . . possession of land under a lease imposes upon the lessee and those claiming under him the duty of recognizing *512the title of the lessor, in. virtue of which he secured such possession; hence, so long as he continues in possession under his lease, he is estopped in any proceeding commenced by him against his lessor, to deny the latter’s title as to defects therein or adverse claims outstanding at the time of the execution of the lease. In order to be entitled to question his landlord’s title in these regards, he must first surrender possession of the premises. . . .”

A correlative provision of the law in this respect is found in Civil Code, section 1948 providing that “The attornment of a tenant to a stranger is void, unless it is made with the consent of the landlord, or in consequence of a judgment of a court of competent jurisdiction.”

The initial question to be considered then, is whether or not a suit in which a tenant interpleads his landlord and one who claims the rent agreed to be paid in accordance with the terms of the lease by which he holds possession of the real property contravenes the foregoing conclusive presumption, that “A tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation.”

While the matter is one of first impression in California* it has been uniformly held in other jurisdictions where the question has-been raised, that a tenant by interpleading his landlord with a third person asserting an adverse title to the leased premises antecedent to the inception of the landlord-tenant relationship, thereby disputes his landlord’s title and the action is not maintainable. (Whitaker v. Whitaker, 62 S.W. 664 (Ct. of Chancery Appeals of Tenn.; affirmed by Supreme Ct. of Tenn. without opinion, see 62 S.W. 673); Standley v. Roberts, 59 F. 836 [8 C.C.A. 305]; Oil Run Petro Co. v. Gale, 6 W.Va. 525; 97 A.L.R. 993; L.R.A. 1916E 699 30 Am.Jur. 216; 32 Am.Jur. 126; Pomeroy’s Equity Jurisprudence (5th ed. 1941) vol. 4, §§ 1326, 1327.) If, however, the claims of the third person originate from some act of the lessor done or suffered after the commencement of the landlord-tenant relationship the action is maintainable, not solely *513because of the presence of privity, as required at common law, but because then the tenant is not disputing his landlord’s title as it existed at the commencement of the relation. (Maulsby v. Scarborough, 179 Md. 67. [16 A.2 897]; Lawrence v. Eller, 169 N.C. 211 [85 S.E. 291, Ann.Cas. 1917D 546, L.R.A. 1916E 696]; Coutan v. Williams, 9 Ves.Jr. (Eng.) 107; Clark v. Byne, 13 Ves.Jr. (Eng.) 386; 4 Pomeroy Equity Jurisprudence, § 1327.) Such is not this case.

Although the matter has not been directly adjudicated in California, yet the fact has been adverted to on occasions that a tenant or subtenant, cannot compel the landlord to litigate the right of some other to that possession for which the tenant has no claim. (Commissioners of Yosemite v. Barnard, 98 Cal. 199 [32 P. 982]; Vatuone v. Cannobio, 4 Cal.App. 422 [88 P. 374].)

Commissioners of Yosemite v. Barnard, supra, was an action in unlawful detainer. Plaintiff prevailed. However, the trial court made a finding that there was an outstanding lease in a third person. The defendant upon appeal urged that the plaintiff not being entitled to possession, the judgment should be reversed. This court held that the finding was immaterial and said: “The tenant, having received the possession by the permission of his landlord, cannot compel the landlord to litigate the right of some other to that possession for which the tenant has no claim. As between him and his landlord, his contract as lessee obligates him to surrender the possession at the expiration of his term, and he cannot set up an outstanding title, or show any title in himself which has not been mediately or immediately derived from his landlord.”

From what has been said it follows that we may justly disregard the mandate pertaining to the law of landlord and tenant found in section 1962(4) of the Code of Civil Procedure, only if the amendment to section 386 of the Code of Civil Procedure enacted in 1881 be taken to repeal section 1962(4) as far as interpleader actions are concerned.

Section 386 of the Code of Civil Procedure as here relevant provides as follows:

“And whenever conflicting claims are or may. be made upon a person for or relating to personal property, or the *514performance of an obligation, or any portion thereof, such persons may bring an action against the conflicting claimants to compel them to interplead and litigate their several claims among themselves. The order of substitution may be made and the action of interpleader may be maintained, and the applicant or plaintiff be discharged from liability to all or any of the conflicting claimants, although their titles or claims have not a common origin, or are not identical, but are adverse to and independent of one another.”

The reasons for the provisions in the concluding sentence of the foregoing code section that the claims of the inter-pleaders need not be of a common origin, nor identical, is easily seen when one refers to the rigid common law elements of a bill of interpleader, to wit: (1) The same thing, debt, or duty must be claimed by both or all the parties against whom the relief is demanded; (2) All of the adverse titles or claims must be dependent, or be derived from a common source; (3) The one seeking the relief must not have nor claim any interest in the subject matter; (4) He must have incurred no independent liability to either of the claimants. (4 Pomeroy’s Equity Jurisprudence (5th ed. 1941) § 1322.)

As a result of the code provision (Code Civ. Proc., § 386), the first two requirements have been expressly abrogated in this state. (14 Cal.Jur. 702.) Such being the primary purpose, an intention on the part of the Legislature to go further, without expressly saying so, and thereby repeal such an ancient and universally recognized principle pertaining to the law of landlord and tenant as that expressed in section 1962(4) of the Code of Civil Procedure as a conclusive presumption is not to be readily implied. It is to be noted that the phraseology of section 386 permits interpleader when “conflicting claims are or may be made upon a person for or relating to personal property, or the performance of an obligation. ...” If the Legislature intended the effect for which appellant contends, they would have included real property in that phraseology. Such wording is contained in the statutes of Indiana* and it has been held in that state, solely because of this wording that a tenant holding a lease *515may when an action is brought against him require inter-pleader of the other claimant. (Hall v. Craig, 125 Ind. 523, 525 [25 N.E. 538].)

As for the conclusion suggested in the majority opinion that “as, notwithstanding the rule codified in section 1962(4), the common law permitted a tenant to interplead his landlord and a stranger in privity, when the Legislature abolished the requirement of privity in interpleader cases, it did away with the basis for the common law rule,” the presence of privity was not the basis of the common law rule, but merely one circumstance where a tenant would not be violating the rule. This rule cannot be done away with except by express or implied repeal of the code section itself.

The conclusion herein reached that section 1962(4) of the. Code of Civil Procedure was not intended to be and has not been impliedly modified by section 386 of the Code of Civil Procedure as amended in 1881 is further borne out by a consideration of the practical results that would' ensue upon the allowance of such litigation at the instance of the tenant.

The landlord upon letting the tenant into possession is entitled to his rent according to the leasehold agreement. In the event of the failure of the tenant to make payment, the landlord can sue for same and the tenant cannot defend on the basis of title in a third person, or that the landlord had no right to make the lease. He must make payment to the lessor. (Reynolds v. Lewis, 59 Cal. 20.) If interpleader is allowed, the rent is paid into court and the landlord is deprived thereof until the termination of the litigation, and of the possible income therefrom entirely. Many of the property owners in this state, as was shown in the late depression are largely dependent upon the rent derived from their property to meet monthly trust deed and mortgage payments. Especially is this true today as to large scale war housing projects recently constructed throughout the state. Also taxes, insurance premiums and expenses for care and maintenance continue to fall due regardless of the legal entanglements that may envelop the income. With the owner’s title so effectively clouded little help can be expected from financing institutions, and it is readily conceivable that this deprivation of income may easily in a short time result in loss of the owner’s equity through foreclosure of encumbrances or execution sale upon a judgment suffered.

*516As stated by Judge Sanborn in the case of Standley v. Roberts, 59 F. 836, 842 [8 C.C.A. 305]:

. It would be a monstrous proposition . . . that a tenant of an owner could take a second lease of the same premises from one claiming title to them, and then compel the real owner and the pretended owner to litigate, not only the title to the premises, but the validity of the leases the tenant himself had taken, before either lessor could recover his rent. If such a proposition could be sustained, any tenant might treat his landlord to as many lawsuits as he could obtain leases of his premises. . .

(See, also, Dungey v. Angove, 30 Eng.Rep. (Eng.) 644, 645.)

Furthermore, such an action started by an unscrupulous tenant could quite conceivably interfere with and delay the owner in obtaining redress by use of the remedy of -unlawful detainer,* when the tenant holds over after the expiration of his term, or has failed to perform conditions and covenants in regard to upkeep of the property. (Code Civ. Proc., §1161(1) (3).)

In my opinion it would be more consonant with considerations of justice and principles of equity jurisprudence to require a third person who asserts an adverse interest in real property antecedent to the inception of the landlord-tenant relationship, to obtain a preliminary injunction restraining the tenant from paying the rent to the landlord and requiring that it be impounded pending the litigation, or requiring the appointment of a receiver, in which events the person asserting the adverse interest would be required to put up a bond to protect the landlord in the event he ultimately prevailed in the action. In other words, the burden should be on the person who asserts an interest adverse to the landlord to convince the trial court on an application for a preliminary injunction that he has at least a prima facie case, and give the trial court an opportunity to protect the landlord against damage by requiring the person asserting such adverse claim to furnish an undertaking which will protect the landlord against loss or damage in the event he should ultimately *517prevail. In such event all parties are protected and the landlord is not subjected to the perpetual threat that whenever a tenant becomes suspicious that his landlord’s title may be questioned, he may bring an action in interpleader and require his landlord to resort to expensive and prolonged litigation before he may receive the rent which the tenant has by solemn written agreement promised to pay at stated periods. It is not difficult to visualize a situation where a tenant might resort to an action in interpleader without just or any cause in order to prevent the landlord from receiving the rent when due and thus cause the landlord financial embarrassment when no real or actual controversy exists as to the genuineness of the landlord’s title. Such a situation should not be permitted to exist in view of the traditional policy of the common law which finds expression in our code section that “A tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation.” (Code Civ. Proc., § 1962(4).)

Although, according to the majority opinion, the complaint is uncertain as to just when the copartnership and copartners claimed to have derived title from the lessors, no contention has been made upon this appeal, that it is at all possible for plaintiffs to amend, so as to take the case out of the rule, and it being indicative to the contrary according to the briefs on file, the sustaining of the general demurrer to plaintiff’s complaint should therefore be affirmed.

McDevitt v. Sullivan, 8 Cal. 592 (decided before enactment of Code Civ. Proc.) dicta; Schluter v. Harvey, 65 Cal. 158 [3 P. 659] and Spangler v. Spangler, 11 Cal.App. 321 [104 P. 995], claimants asserted interest stemmed from the lessor subsequent to the lease. Warnock v. Harlow, 96 Cal. 298 [31 P. 166, 31 Am.St.Rep. 209] the issue was not raised.

“ A defendant against whom an action is pending upon a contract, or for specific real or personal property, may, at any time before answer . . (Acts 1881 (Spec. Sess.) eh. 38, §25, p. 240. Burns Indiana Statutes 2-223 (1943).

Which action takes precedence on the court’s calendar. Nor can a tenant who holds over after expiration of his term deny his landlord’s title without first surrendering the premises. (McKissick v. Ashby, 98 Cal. 422 [33 P. 729].)