Monday, March 31, 2014

Rescind, Surrender, And Cancel. Courts' Handling Of Leases.

I recently had to ask a clerk of the San Francisco Superior Court to enter a default judgment "for possession only" in an eviction case. The procedure does not require many steps to comply with, but this time I talked the details over with the clerk, and left very glad that I did, because I accidentally discovered that the SF Court follows an ancient tradition of physically canceling an original instrument, the lease agreement.

If you don't have an original, you can still get your judgment with a help of a declaration, but if you do possess the originally signed document, you are up for a treat. You can submit it together with your default application, and you'll receive it back, stamped like this:


This smells like some deep-rooted old tradition to me, treating signed original contracts like a real thing in itself, a financial contract requiring physical cancellation.

The tradition is acknowledged in CEB's California Landlord-Tenant Practice (2013).   Section 13.4(2) (page 1312), under the "Practice Tip" advises that "[s]ome courts have instructed their clerks not to issue clerk's judgments under CCP §1169 unless the landlord submits not only the materials necessary to enter default ..., but also the materials most important to show that a judgment for all relief requested by the complaint may also be obtained (written contract, if any...)."  The Practice Tip concludes that "[a]though there is no authority for this practice, it is far easier to accede to these special requirements than to fight them." (italics mine)

I thought it sounds strange that there is no authority confirming the practice, especially for a procedural step like this, looking like an old tradition. The courts do have the power to cancel a contract. It is well within the court's discretion "to rescind, cancel, or direct a surrender of contracts, securities or deeds." Trigg v. Read, 24 Tenn. 529, 5 Hum. 529 (Tenn. 1845).

The concept was applied in a landlord-tenant setting before: "[i]n order to do complete equity between the parties, the trial court ordered the option unconditionally canceled; ... and ordered [parties] to surrender for cancellation the lease and option." Stewart v. Crowley, 213 Cal. 694, 698-699 (Cal. 1931).  And here is the case where the landlord applied for a cancellation of the lease, first in the Federal court, and then before the California state court: Progressive Collection Bureau v. Whealton, 62 Cal.App.2d 873, 874 (1944).

Courts' approach in nullifying contracts was summarized in this eloquent quote, addressing the public policy, or a violation of it, as the measure for exercising the court's discretion in canceling a contract:

"[C]ourts have been cautious in blithely applying public policy reasons to nullify otherwise enforceable contracts. This concern has been graphically articulated by the California Supreme Court as follows: 'It has been well said that public policy is an unruly horse, astride of which you are carried into unknown and uncertain paths, . . . While contracts opposed to morality or law should not be allowed to show themselves in courts of justice, yet public policy requires and encourages the making of contracts by competent parties upon all valid and lawful considerations, and courts so recognizing have allowed parties the widest latitude in this regard; and, unless it is entirely plain that a contract is violative of sound public policy, a court will never so declare. "The power of the courts to declare a contract void for being in contravention of sound public policy is a very delicate and undefined power, and, like the power to declare a statute unconstitutional, should be exercised only in cases free from doubt." [Citation.] . . . "No court ought to refuse its aid to enforce a contract on doubtful and uncertain grounds. The burden is on the defendant to show that its enforcement would be in violation of the settled public policy of this state, or injurious to the morals of its people." '"  Bovard v. Am. Horse Enters., 201 Cal.App.3d 832, 838-839 (1988), citing Moran v. Harris, 131 Cal.App.3d 913, 919-920 (1982), quoting in turn Stephens v. Southern Pacific Co. 109 Cal. 86, 89-90 (1895).

So the power to cancel a contract, however delicate, was long recognized to be shared with the courts, to let them help you ride that unruly horse of the public policy. You may want now to include in your next eviction notice a demand to surrender the lease. And don't forget to bring the original lease to the court!


Your options and available strategies will depend on your case's particular facts. If you are currently in a similar situation and need to learn more about your rights and obligations, make your first step toward taking control over the circumstances, and give us a call at (415) 987-7000. We'll guide you through the jungle. The only thing you can't afford is to stay put and uninformed. Our office provides a confidential assessment of your particular scenario, free of charge, and we will be glad to share with you the results of our analysis along with our thoughts on available solutions.
______________________
More real property posts

No comments:

Post a Comment