December 7, 2019

Kendall v. Ernest Pestana, Inc. | Case Brief - 40 Cal. 3d 488, 709 P.2d 837, 220 Cal.Rptr. 818 (1985) - Supreme Court of California

FACTS: Plaintiffs are trying to lease a business site from Bixler. Bixler leased the property from the defendants who got it under assignment from the original owners the Perlitches. The defendant refused to sign the lease unless rent was increased among other things.

HISTORY: On appeal from an order sustaining a demurrer w/o leave to amend.

ISSUE: Is the refusal an unlawful restraint on the freedom of alienation?

HOLDING: Yes

RATIONALE: In the past most leases contained a clause giving the lessor the right to refuse arbitrarily. This was the majority rule. Now, more jurisdictions are saying that "consent may be withheld only where the lessor has a commercial reasonable objection to the assignments. change has come from 1) leases and their nature as conveyances 2) nature of lease as a contract.

Majority rule:

1) conveyance is real property w/ lessor having exercised a personal choice 

2) approval clause is an unambiguous reservation of absolute discretion of the lessor over assignments of the lease 

3) doctrine of stare decisis

4) lessor has right to increased value of property

DISPOSITION: Order sustaining the demurrer is reversed.