Petroleum Collections Inc. v. Swords - 48 Cal. App. 3d 841, 122 Cal. Rptr. 114 (1975)

Rule:

The covenant of quiet enjoyment is not broken until there has been an actual or constructive eviction. An actual eviction takes place when the tenant is physically dispossessed of the property; a constructive eviction occurs when the act of molestation merely affects the beneficial use of the property, causing the tenant to vacate the premises. If the tenant is evicted or if he surrenders possession of the premises within a reasonable time after the act of molestation has occurred, he is relieved of his obligation to pay rent. If, in the case of an interference with the tenant's beneficial enjoyment of the premises, the tenant does not surrender the premises within a reasonable time after the date of the interference, he is deemed to waive his right to abandon; what constitutes a reasonable period of time is a question of fact to be determined by the trier of fact.

Facts:

Plaintiff’s assignor, Texaco, Inc., leased a parcel of land to defendant, Edward Swords. The written lease, which was for a period of ten years, embraced a large “modular” type sign which was located on top of the service station building and which could be seen approximately one-half mile down the freeway. Subsequently, the Fresno County Building Inspector discovered that the modular type sign had been installed without a county building permit and that it constituted a fire hazard. The inspector ordered the hazardous condition rectified or the sign removed; the sign was taken down by the original builder at Texaco's request. After taking down the sign, Texaco furnished defendant with a dilapidated billboard which could not be seen from the freeway. Defendant then insisted that Texaco furnish him with a sign similar to the one which was on the service station when he leased the property; when Texaco failed to do so, defendant refused to pay any rent. Plaintiff collection agency then brought the present action to recover unpaid back rent due and owing to Texaco. The trial court held that Texaco breached the lease's implied covenant of quiet enjoyment, that this implied covenant and defendant's covenant to pay rent were mutually dependent and that as a consequence defendant was not obligated to pay any rent to Texaco for the eleven month period he and his sublessee occupied the premises. Plaintiff appealed.

Issue:

Under the circumstances, did the defendant have the obligation to pay rent for all the months he occupied the landlord’s premises?

Answer:

Yes.

Conclusion:

On appeal, the Court reversed the judgment. According to the Court, when the act of molestation merely affected the defendant’s beneficial use of the premises, the defendant was not physically evicted and he had a choice in the matter. The Court held that the defendant could remain in possession and could seek appropriate relief or could surrender possession of the premises within a reasonable time. The Court stated that if the defendant elected to remain in possession, his obligation to pay rent continued unless the landlord breached some other covenant which the covenant to pay rent was dependent upon. If the defendant elected to surrender possession of the premises, a constructive eviction occurred at that time and the defendant was relieved of his obligation to pay any rent. The Court found that defendant was not relieved of his obligation to pay rent because he remained in possession of the premises for some eleven months when he subleased the premises.