153 P.

2d 47 Page 1
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95 Contracts
95V Performance or Breach
Supreme Court of California. 95k309 Discharge by Impossibility of Per-
LLOYD et al. formance
v. 95k309(1) k. In General. Most Cited
MURPHY. Cases
L. A. 18738. Under the doctrine of “commercial frustration”,
performance remains possible but the expected
Oct. 31, 1944.
value of performance to the party seeking to be ex-
Rehearing Denied Nov. 28, 1944.
cused has been discharged by a fortuitous event,
In Bank. which supervenes to cause an actual but not literal
failure of consideration.
West Headnotes
[4] Contracts 95 309(1)
[1] Landlord and Tenant 233 93
95 Contracts
233 Landlord and Tenant 95V Performance or Breach
233IV Terms for Years 95k309 Discharge by Impossibility of Per-
233IV(F) Termination formance
233k93 k. Expiration of Term. Most Cited 95k309(1) k. In General. Most Cited
Cases Cases
The applicability of the doctrine of commercial The question in cases involving commercial frustra-
frustration with respect to leases depends on the tion is whether the equities of the case, considered
total or nearly total destruction of the purpose for in the light of sound public policy, require placing
which, in the contemplation of both parties, the the risk of the disruption or complete destruction of
transaction was entered into. the contract's equilibrium on defendant or plaintiff,
and the answer depends on whether an unanticip-
[2] Contracts 95 309(1) ated circumstance, the risk of which should not be
fairly thrown on promisor, has made performance
95 Contracts
vitally different from what was reasonably to be ex-
95V Performance or Breach
pected.
95k309 Discharge by Impossibility of Per-
formance [5] Contracts 95 309(1)
95k309(1) k. In General. Most Cited
Cases 95 Contracts
The doctrine of “commercial frustration” is akin to 95V Performance or Breach
the doctrine of “impossibility of performance”, but 95k309 Discharge by Impossibility of Per-
frustration is not a form of impossibility even under formance
the modern definition of that term, which includes 95k309(1) k. In General. Most Cited
not only cases of physical impossibility but also Cases
cases of extreme impracticability of performance. The relation of the parties, terms of the contract,
Civ.Code, § 1511. and circumstances surrounding its formation must
be examined to determine whether it can be fairly
[3] Contracts 95 309(1) inferred that the risk of the event that has super-

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vened to cause the alleged frustration was not reas- 95 Contracts

onably foreseeable. 95V Performance or Breach
95k309 Discharge by Impossibility of Per-
[6] Contracts 95 309(1) formance
95k309(1) k. In General. Most Cited
95 Contracts
Cases
95V Performance or Breach
Laws or other governmental acts that make per-
95k309 Discharge by Impossibility of Per-
formance impossible, or more difficult or expensive
formance
do not excuse the duty to perform contractual oblig-
95k309(1) k. In General. Most Cited
ations.
Cases
Where the risk of the event that has supervened to [10] War and National Emergency 402 10(1)
cause the alleged frustration was foreseeable, there
should have been provision for it in the contract, 402 War and National Emergency
and the absence of such provision gives rise to the 402I In General
inference that the risk was assumed. 402k10 Effect of War on Pre-Existing Civil
Rights, Liabilities, and Remedies
[7] Contracts 95 309(1) 402k10(1) k. Contracts. Most Cited Cases

95 Contracts Contracts 95 309(1)

95V Performance or Breach
95k309 Discharge by Impossibility of Per- 95 Contracts
formance 95V Performance or Breach
95k309(1) k. In General. Most Cited 95k309 Discharge by Impossibility of Per-
Cases formance
The doctrine of frustration has been limited to cases 95k309(1) k. In General. Most Cited
of extreme hardship so that businessmen, who must Cases
make their arrangements in advance, can rely with Where parties have contracted with reference to a
certainty on their contracts. state of war, or have contemplated the risks arising
from it, they may not invoke the doctrine of frustra-
[8] Contracts 95 309(1) tion to escape their obligations.

95 Contracts [11] War and National Emergency 402 68

95V Performance or Breach
95k309 Discharge by Impossibility of Per- 402 War and National Emergency
formance 402II Measures and Acts in Exercise of War and
95k309(1) k. In General. Most Cited Emergency Powers
Cases 402II(A) In General
A promisor, to excuse himself from performance, 402k66 Effect of Precautionary Acts on
must prove that the risk of the frustrating event was Rights and Liabilities
not reasonably foreseeable and that the value of 402k68 k. Leases. Most Cited Cases
counter-performance is totally or nearly totally des- (Formerly 402k4)
troyed, for frustration is no defense if it was fore-
seeable or controllable by the promisor, or if Landlord and Tenant 233 105
counter-performance remains valuable.
233 Landlord and Tenant
[9] Contracts 95 309(1) 233IV Terms for Years

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233IV(F) Termination Emergency Powers

233k102 Breach of Covenant or Condition 402II(A) In General
233k105 k. Use of Premises. Most 402k66 Effect of Precautionary Acts on
Cited Cases Rights and Liabilities
Where a lease of premises for the sale and repair of 402k68 k. Leases. Most Cited Cases
new automobiles was executed after passage of Na- (Formerly 402k4)
tional Defense Act providing for mobilization of in-
dustry, and with knowledge that production of auto- Landlord and Tenant 233 105
mobiles would soon be restricted, tenant failed to
233 Landlord and Tenant
prove that the possibility of war and its con-
233IV Terms for Years
sequences on the production and sale of new auto-
233IV(F) Termination
mobiles was wholly outside the contemplation of
233k102 Breach of Covenant or Condition
parties so as to justify tenant in terminating lease on
233k105 k. Use of Premises. Most
theory of “commercial frustration”. 50
Cited Cases
U.S.C.A.Appendix, § 1152(a).
Tenant claiming right to terminate lease restricting
[12] War and National Emergency 402 68 use of the premises to the sale of new automobiles
and petroleum products, on theory of frustration be-
402 War and National Emergency cause of federal restrictions on production of new
402II Measures and Acts in Exercise of War and automobiles, did not sustain burden of proving that
Emergency Powers value of the lease had been totally or nearly totally
402II(A) In General destroyed.
402k66 Effect of Precautionary Acts on
Rights and Liabilities [14] Landlord and Tenant 233 93
402k68 k. Leases. Most Cited Cases
233 Landlord and Tenant
(Formerly 402k4)
233IV Terms for Years
Landlord and Tenant 233 105 233IV(F) Termination
233k93 k. Expiration of Term. Most Cited
233 Landlord and Tenant Cases
233IV Terms for Years Provisions that prohibit subleasing, or other uses
233IV(F) Termination than those specified, affect the value of a lease and
233k102 Breach of Covenant or Condition are to be considered in determining whether its pur-
233k105 k. Use of Premises. Most pose has been frustrated or its value destroyed.
Cited Cases
Where a governmental regulation does not entirely [15] War and National Emergency 402 68
prohibit the business to be carried on in the leased
402 War and National Emergency
premises but only limits or restricts it, thereby mak-
402II Measures and Acts in Exercise of War and
ing it less profitable and more difficult to continue,
Emergency Powers
the lease is not terminated or the lessee excused
402II(A) In General
from further performance.
402k66 Effect of Precautionary Acts on
[13] War and National Emergency 402 68 Rights and Liabilities
402k68 k. Leases. Most Cited Cases
402 War and National Emergency (Formerly 402k4)
402II Measures and Acts in Exercise of War and
Landlord and Tenant 233 105

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153 P.2d 47 Page 4
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233 Landlord and Tenant petroleum products of a major oil company) and for
233IV Terms for Years no other purpose whatsoever without the written
233IV(F) Termination consent of the lessor’ except ‘to make **49 an oc-
233k102 Breach of Covenant or Condition casional sale of a used automobile.’Defendant
233k105 k. Use of Premises. Most agreed not to sublease or assign without plaintiffs'
Cited Cases written consent. On January 1, 1942 the federal
Where lease provisions, prohibiting subleasing and government ordered that the sale of new automo-
the use of leased premises for any purpose other biles be discontinued. It modified this order on
than the sale of new automobiles and gasoline, were January 8, 1942 to permit sales to those engaged in
waived and lessor offered to lower the rent if tenant military activities, and on January 20, 1942, it es-
could not operate profitably, tenant could not ter- tablished a system of priorities restricting sales to
minate lease on theory of frustration by reason of persons having preferential ratings of A-1-j or high-
governmental restrictions on sale of new automo- er. On March 10, 1942, defendant explained the ef-
biles. fect of these restrictions on his business to one of
the plaintiffs authorized to act for the others, who
**48 *50 Appeal from Superior Court, Los Angeles orally waived the restrictions in the lease as to use
County; John Beardsley, judge. and subleasing and offered to reduce the rent if de-
Action by Caroline A. Lloyd and others against fendant should be unable to operate profitably.
William J. Murphy for a declaration of rights under Nevertheless defendant vacated the premises on
a lease and for rent. From an adverse judgment, de- March 15, 1942, giving oral notice of repudiation
fendant appeals. of the lease to plaintiffs, which was followed by a
written notice on March 24, 1942. Plaintiffs af-
Affirmed.
firmed in writing on March 26th their oral waiver
Prior opinion, 142 P.2d 939. and, failing to persuade defendant to perform his
Chas. W. Rollinson and Wm. Roy Ives, both of Los obligations, they rented the property to other ten-
Angeles, for appellants. ants pursuant to their powers under the lease in or-
der to mitigate damages. On May 11, 1942,
Albert W. Leeds, Schultheis & Laybourne, and plaintiffs brought this action praying for declaratory
Everett B. Laybourne, all of Los Angeles, for re- relief to determine their rights under the lease, and
spondents. for judgment for unpaid rent. Following a trial on
the merits, the court found that the leased premises
Schultheis & Laybourne and Clifford E. Royston, were located on one of the main traffic arteries of
all of Los Angeles, amici curiae on behalf of re- Los Angeles County; that they were equipped with
spondents. gasoline pumps and in general adapted for the
maintenance of an automobile service station; that
TRAYNOR, Justice. they contained a one-story storeroom adapted to
many commercial purposes; that plaintiffs had
On August 4, 1941 plaintiffs leased to defendant for waived the restrictions in the lease and granted de-
a five-year term beginning September 15, 1941, fendant the right to use the premises for any legit-
*51 certain premises located at the corner of Al- imate purpose and to sublease to any responsible
mont Drive and Wilshire Boulevard in the city of party; that defendant continues to carry on the busi-
Beverly Hills, Los Angeles County, ‘for the sole ness of selling and servicing automobiles at two
purpose of conducting thereon the business of dis- other places. Defendant testified that at one of these
playing and selling new automobiles (including the locations he sold new automobiles exclusively and
servicing and repairing thereof and of selling the when asked if he were aware that many new auto-

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mobile dealers were continuing in business replied: available in a proper case, even in a lease. As the
‘Sure. It *52 is just the location that I couldn't make author declares in 6 Williston, Contracts
a go, though, of automobiles.’Although there was (Rev.Ed.1938), s 1955, pp. 5485-5487, ‘The fact
no finding to that effect, defendant estimated in re- that lease is a conveyance and not simply a continu-
sponse to inquiry by his counsel, that 90 per cent of ing contract and the numerous authorities enforcing
his gross volume of business was new car sales and liability to pay rent in spite of destruction of leased
10 per cent gasoline sales. The trial court held that premises however, have made it difficult to give re-
war conditions had not terminated defendant's ob- lief. That the tenant has been relieved,
ligations under the lease and gave judgment for nevertheless,*53 in several cases indicates the grav-
plaintiffs, declaring the lease as modified by itation of the law toward a recognition of the prin-
plaintiffs' waiver to be in full force and effect, and ciple that fortuitous**50 destruction of the value of
ordered defendant to pay the unpaid rent with in- performance wholly outside the contemplation of
terest, less amounts received by plaintiffs from re- the parties may excuse a promisor even in a lease. *
renting. Defendant brought this appeal, contending **
that the purpose for which the premises were leased
was frustrated by the restrictions placed on the sale ‘Even more clearly with respect to leases than in re-
of new automobiles by the federal government, gard to ordinary contracts the applicability of the
thereby terminating his duties under the lease. doctrine of frustration depends on the total or
nearly total destruction of the purpose for which, in
[1] Although commercial frustration was first re- the contemplation of both parties, the transaction
cognized as an excuse for nonperformance of a con- was entered into.’
tractual duty by the courts of England (Krell v.
Henry, C.A., 1903, 2 K.B. 740; Blakely v. Muller, The principles of frustration have been repeatedly
K.B., 19 T.L.R. 186; see McElroy and Williams, applied to leases by the courts of this state ( Brown
The Coronation Cases, 4 Mod.L.Rev. 241) its v. Oshiro, 58 Cal.App.2d 190, 136 P.2d 29; David-
soundness has been questioned by those courts (see son v. Goldstein, 58 Cal.App.2d Supp. 909, 136
Maritime National Fish, Ltd., v. Ocean Trawlers, P.2d 665; Grace v. Croninger, 12 Cal.App.2d 603,
Ltd., (1935) A. C. 524, 528-29; 56 L.Q.Rev. 324, 55 P.2d 940; Knoblaugh v. McKinney, 5
arguing that Krell v. Henry, supra, was a misapplic- Cal.App.2d 339, 42 P.2d 332; Industrial Develop-
ation of Taylor v. Caldwell, 1863, 3 B.&S. 826, the ment & Land Co. v. Goldschmidt, 56 Cal.App. 507,
leading case on impossibility as an excuse for non- 206 P. 134; Burke v. San Francisco Breweries, Ltd.,
performance), and they have refused to apply the 21 Cal.App. 198, 131 P. 83) and the question is
doctrine to leases on the ground that an estate is whether the excuse for nonperformance is applic-
conveyed to the lessee, which carries with it all able under the facts of the present case.
risks. Swift v. McBean, 1942, 1 K.B. 275; White-
[2][3] Although the doctrine of frustration is akin to
hall Court v. Ettlinger, (1919) L.J. (K.B.) N.S. 126;
the doctrine of impossibility of performance (see
137 A.L.R. 1199, 1224; see collection and discus-
Civ.Code, s 1511; 6 Cal.Jur. 435-450; 4 Cal.Jur.
sion on English cases in Wood v. Bartolino, 48
Ten-year Supp. 187-192; Taylor v. Caldwell, supra)
N.M. 175, 146 P.2d 883, 886, 887. Many courts,
since both have developed from the commercial ne-
therefore, in the United States have held that the
cessity of excusing performance in cases of extreme
tenant bears all risks as owner of the estate ( Cus-
hardship, frustration is not a form of impossibility
ack Co. v. Pratt, 78 Colo. 28, 239 P. 22, 44 A.L.R.
even under the modern definition of that term,
55; Yellow Cab Co. v. Stafford-Smith Co., 320 Ill.
which includes not only cases of physical impossib-
294, 150 N.E. 670, 43 A.L.R. 1173), but the mod-
ility but also cases of extreme impracticability of
ern cases have recognized that the defense may be
performance (see Mineral Park Land Co. v.

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Howard, 172 Cal. 289, 293, 156 P. 458, to cases of extreme hardship so that businessmen,
L.R.A.1916F, 1; Christin v. Superior Court, 9 who must make their arrangements in advance, can
Cal.2d 526, 533, 71 P.2d 205, 112 A.L.R. 1153; 6 rely with certainty on their contracts. Anglo-
Williston, op. cit. supra, s 1935, p. 5419; Restate- Northern Trading Co. v. Emlyn Jones and Willi-
ment, s 454, comment a., and Cal.Ann. p. 254). Per- ams, 2 K.B. 78; 137 A.L.R. 1199, 1216-1221. The
formance remains possible but the expected value courts have required a promisor seeking to excuse
of performance to the party seeking to be excused himself from performance of his obligations to
has been destroyed by a fortuitous event, which su- prove that the risk of the frustrating event was not
pervenes to cause an actual but not literal failure of reasonably foreseeable and that the value of coun-
consideration. Krell v. Henry supra; Blakely v. terperformance is totally or nearly totally des-
Muller, supra; Marks Realty Co. v. Hotel Hermit- troyed, for frustration is no defense if it was fore-
age Co., 170 App.Div. 484, 156 N.Y.S. 179; 6 Wil- seeable or controllable by the promisor, or if coun-
liston, op. cit. supra, ss 1935, 1954, pp. 5477, 5480; terperformance remains valuable. La Cumbre Golf
Restatement, Contracts, s 288. & Country Club v. Santa Barbara Hotel Co. 205
Cal. 422, 425, 271 P. 476; Johnson v. Atkins, 53
[4][5][6] The question in cases involving frustration Cal.App.2d 430, 434, 127 P.2d 1027; Grace v.
is whether *54 the equities of the case, considered Croninger, 12 Cal.App.2d 603, 606, 607, 55 P.2d
in the light of sound public policy, require placing 940; Industrial Development & Land Co. v. Gold-
the risk of a disruption or complete destruction of schmidt, 56 Cal.App. 507, 511, 206 P. 134; Burke
the contract equilibrium on defendant or plaintiff v. San Francisco Breweries, Ltd., 21 Cal.App. 198,
under the circumstances of a given case (Fibrosa 201, 131 P. 83; **51Megan v. Updike Grain Corp.,
Spolka Akcyjina v. Fairbairn Lawson Combe Bar- 8 Cir., 94 F.2d 551, 553; Herne Bay Steamboat Co.
bour, Ltd., H.L. 1942, 167 L.T.R. 101, 112, 113; *55 v. Hutton, 1903, 2 K.B. 683; Leiston Gas Co.
see Smith, Some Practical Aspects of the Doctrine v. Leiston Cum Sizewell Urban District Council,
of Impossibility, 32 Ill.L.Rev. 672, 675; Patterson, 1916, 2 K.B. 428; Raner v. Goldberg, 244 N.Y.
Constructive Conditions in Contracts, 42 438, 155 N.E. 733; 6 Williston, op. cit. supra, ss
Columb.L.Rev. 903, 949; 27 Cal.L.Rev. 461), and 1939, 1955, 1963; Restatement, Contracts, s 288.
the answer depends on whether an unanticipated
circumstance, the risk of which should not be fairly [9][10] Thus laws or other governmental acts that
thrown on the promisor, has made performance vi- make performance unprofitable or more difficult or
tally different from what was reasonably to be ex- expensive do not excuse the duty to perform a con-
pected (6 Williston, op. cit. supra, s 1963, p. 5511; tractual obligation. Sample v. Fresno Flume, etc.,
Restatement, Constracts, s 454). The purpose of a Co., 129 Cal. 222, 228, 61 P. 1085; Klauber v. San
contract is to place the risks of performance upon Diego Street-Car Co., 95 Cal. 353, Light Co. v.
the promisor, and the relation of the parties, terms Columbus, 249 U.S. 399, 414, Co., 256 U.S. 619,
of the contract, and circumstances surrounding its 630, 41 S.Ct. 612, 65 L.Ed. 1123; Columbus Ry.,
formation must be examined to determine whether Power & Light Co. v. Columbus, 249 U.S. 3998
it can be fairly inferred that the risk of the event 414, 39 S.Ct. 349, 63 L.Ed. 669, 6 A.L.R. 1648;
that has supervened to cause the alleged frustration Thomson v. Thomson, 315 Ill. 521, 527, 146 N.E.
was not reasonably foreseeable. If it was foresee- 451; Commonwealth v. Bader, 271 Pa. 308, 312,
able there should have been provision for it in the 114 A. 266; Commonwealth v. Neff, 271 Pa. 312,
contract, and the absence of such a provision gives 314, 114 A. 267; London & Lancashire, Ind. Co. v.
rise to the inference that the risk was assumed. Columbiana County, 107 Ohio St. 51, 64, 140 N.E.
672; see 6 Williston, op. cit. supra, ss 1955, 1963,
[7][8] The doctrine of frustration has been limited pp. 5507-09. It is settled that if parties have con-

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tracted with reference to a state of war or have con- proving that the value of the lease has been des-
templated the risks arising from it, they may not in- troyed. The sale of automobiles was not made im-
voke the doctrine of frustration to escape their ob- possible or illegal but merely restricted and if gov-
ligations. Northern Pac. Ry. Co. v. American Trad- ernmental regulation does not entirely prohibit the
ing Co., 195 U.S. 439, 467, 468, 25 S.Ct. 84, 49 business to be carried on in the leased premises but
L.Ed. 269; Primpos Chemical Co. v. Fulton Steel only limits or restricts it, thereby making it less
Corp., D.C.N.Y., 266 F. 945, 948; Krulewitch v. profitable and more difficult to continue, the lease
National Importing & Trading Co., 195 App.Div. is not terminated or the lessee excused from further
544, 186 N.Y.S. 838, 840; Smith v. Morse, 20 performance. Brown v. Oshiro, supra, 58
La.Ann. 220, 222; Lithflux Mineral & Chem. Cal.App.2d at page 914, 136 P.2d 29; Davidson v.
Works v. Jordan, 217 Ill.App. 64, 66; Mederios v. Goldstein, supra, 58 Cal.App.2d Supp. at page 918,
Hill, 8 Bing. 231, 131 Eng.Reprint 390, 392; Bolck- 136 P.2d 665; Grace v. Croninger, supra, 12
ow V. & Co. v. Compania Minera de Sierra Minera, Cal.App.2d at page 607, 55 P.2d 940;Industrial De-
K.B., 115 %. l.t.r./ 745, 747. velopment & Land Co. v. Goldschmidt, supra;
Burke v. San Francisco Brewing Co., supra, 21
[11] At the time the lease in the present case was Cal.App. at page 202, 131 P. 83; First National
executed the National Defense Act, Public. Act No. Bank of New Rochelle v. Fairchester Oil Co., 267
671 of the 76th Congress, 54 Stats. 676, s 2(a), 50 App.Div. 281, 45 N.Y.S.2d 532, 533; Robitzek Inv.
U.S.C.A.Appendix s 1152(a), approved June 28, Co., Inc., v. Colonial Beacon Oil Co., 265 App.Div.
1940, authorizing the President to allocate materials 749, 40 N.Y.S.2d 819, 824; Colonial Operating
and mobilize industry for national defense, had Corp. v. Hannan Sales & Service, Inc., 265
been law for more than a year. The automotive in- App.Div. 411, 39 N.Y.S.2d 217, 220; Byrnes v.
dustry was in the process of conversion to supply Balcolm, 265 App.Div. 268, 38 N.Y.S.2d 801, 803;
the needs of our growing mechanized army and to Deibler v. Bernhard Bros., 385 Ill. 610, 53 N.E.2d
meet lend-lease commitments. Iceland and Green- 450, 453; Wood v. Bartolino, 48 N.M. 175, 146
land had been occupied by the army. Automobile P.2d 883, 886, 888, 890.Defendant may use the
sales were soaring because the public anticipated premises for the purpose for which they were
that production would soon be restricted. These leased. New automobiles and gasoline continue to
facts were commonly known and it cannot be said be sold. Indeed, defendant testified that he contin-
that the risk of war and its consequences necessitat- ued to sell new automobiles exclusively at another
ing restriction of the production and sale of auto- location in the same county.
mobiles *56 was so remote a contingency that its
risk could not be foreseen by defendant, an experi- **52 [14][15] Defendant contends that the lease is
enced automobile dealer. Indeed, the conditions restrictive and that the government orders therefore
prevailing at the time the lease was executed, and destroyed its value and frustrated its purpose. Pro-
the absence of any provision in the lease contract- visions that prohibit subleasing or other uses than
ing against the effect of war, gives rise to the infer- those specified affect the value of a lease and are to
ence that the risk was assumed. Defendant has be considered in determining whether its purpose
therefore failed to prove that the possibility of war has been frustrated or its value destroyed. See
and its consequences on the production and sale of Owens, The Effect of the War Upon the Rights and
new automobiles was an unanticipated circum- Liabilities of Parties to a Contract, 19 California
stance wholly outside the contemplation of the State Bar Journal 132, 143. It must not be forgotten,
parties. however, that ‘The landlord has not covenanted that
the tenant shall have the right to carry on the *57
[12][13] Nor has defendant sustained the burden of contemplated business or that the business to which

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the premises are by their nature or by the terms of used other than as a saloon. When national prohibi-
the lease restricted shall be profitable enough to en- tion made the sale of alcoholic beverages illegal,
able the tenant to pay the rent but has imposed a the court excused the tenant from further perform-
condition for his own benefit; and, certainly, unless ance on the theory of illegality or impossibility by a
and until he chooses to take advantage of it, the ten- change in domestic law. The doctrine of frustration
ant is not deprived of the use of the premises.’ 6 might have been applied, since the purpose for
Williston, Contracts, op. cit. supra, s 1955, p. 5485; which the property was leased *58 was totally des-
see, also, People v. Klopstock, 24 Cal.2d , 151 P.2d troyed and there was nothing to show that the value
641. In the present lease plaintiffs reserved the of the lease was not thereby totally destroyed. In
rights that defendant should not use the premises the present case the purpose was not destroyed but
for other purposes than those specified in the lease only restricted, and plaintiffs proved that the lease
or sublease without plaintiffs' written consent. Far was valuable to defendant. In Grace v. Croninger,
from preventing other uses or subleasing they supra (12 Cal.App.2d 603, 55 P.2d 941), the lease
waived these rights, enabling defendant to use the was for the purpose of conducting a ‘saloon and ci-
premises for any legitimate purpose and to sublease gar store, and for no other purpose’ with provision
them to any responsible tenant. This waiver is sig- for subleasing a portion of the premises for boot-
nificant in view of the location of the premises on a black purposes. The monthly rental was $650. It
main traffic artery in Los Angeles County and their was clear that prohibition destroyed the main pur-
adaptability for many commercial purposes. The pose of the lease, but since the premises could be
value of these rights is attested by the fact that the used for bootblack and cigar store purposes, the
premises were rented soon after defendants vacated lessee was not excused from his duty to pay the
them. It is therefore clear that the governmental re- rent. In the present case new automobiles and gas-
strictions on the sale of new cars has not destroyed oline may be sold under the lease as executed and
the value of the lease. Furthermore, plaintiffs any legitimate business may be conducted or the
offered to lower the rent if defendant should be un- premises may be subleased under the lease as modi-
able to operate profitably, and their conduct was at fied by plaintiff's waiver. Colonial Operating Corp.
all times fair and cooperative. v. Hannon Sales & Service, Inc., 178 Misc. 879, 34
N.Y.S.2d 116, was reversed in 265 App.Div. 411,
The consequences of applying the doctrine of frus- 39 N.Y.S.2d 217, and Signal Land Corp. v. Loech-
tration to a leasehold involving less than a total or er, City Ct., 35 N.Y.S.2d 25; Schantz v. American
nearly total destruction of the value of the leased Auto Supply Co., Inc., 178 Misc. 909, 36 N.Y.S.2d
premises would be undesirable. Confusion would 747; Canrock Realty Corp. v. Vim Electric Co.,
result from different decisions purporting to define Inc., 179 Misc. 391, 37 N.Y.S.2d 139, involved
‘substantial’ frustration. Litigation would be en- government orders that totally**53 destroyed the
couraged by the repudiation of leases when lessees possibility of selling the products for which the
found their businesses less profitable because of the premises were leased. No case has been cited by
emergency. Many leases have been affected emer- defendant or disclosed by research in which an ap-
gency. Many lesses have been affected in varying pellate court has excused a lessee from performance
degrees by the widespread governmental regula- of his duty to pay rent when the purpose of the
tions necessitated by war conditions. lease has not been totally destroyed or its accom-
plishment rendered extremely impracticable or
The cases that defendant relies upon are consistent
where it has been shown that the lease remains
with the conclusion reached herein. In Industrial
valuable to the lessee.
Development & Land Co. v. Goldschmidt, supra,
the lease provided that the premises should not be The judgment is affirmed.

© 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works.

153 P.2d 47 Page 9
25 Cal.2d 48, 153 P.2d 47
(Cite as: 25 Cal.2d 48, 153 P.2d 47)

GIBSON, C. J., and SHENK, CURTIS, ED-

MONDS, CARTER, and SCHAUER, JJ., con-
curred.
CAL. 1944.
Lloyd v. Murphy
25 Cal.2d 48, 153 P.2d 47

END OF DOCUMENT

© 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works.