694 P.2d 1129 (Wash. App. 1985)
Frederick and Mary Goehler operated the Feed Store Restaurant in McCleary under a 10-year lease from Richard Olin.1
As part and parcel of the sale of their restaurant business, the Goehlers assigned their leasehold interest to Ronald and Virginia Carter.2 By conditional sales contract and the required Uniform Commercial Code documentation and filings, the Goehlers retained a security interest in the restaurant personalty to protect them should the Carters default under either the lease or contract.3 Olin's consent to the assignment of the lease was contained in a separate document, which specifically referred to the Carter contract and Goehlers' "collateral rights" reserved therein.4
On September 27, 1981, the Carters abandoned the restaurant.5 The next day the Goehlers contacted Olin and requested access to the restaurant and their collateral to continue the business or negotiate another sale.6 Olin told them that the restaurant could not reopen until September's rent and utilities were paid, and that he would retain the personalty until the true owner was determined.7 The building's locks were changed and on October 1, 1981, Olin sent the Goehlers a letter demanding payment of both the September and October rent.8 On November 6 a second notice threatening termination of the lease was mailed, and on November 23 a notice of termination was sent.9 Later, Olin removed most of the collateral and placed it in commercial storage in his own name.1011 In January of 1982, Olin relet the building and permitted the new lessee to use the balance of Goehlers' property in the operation of the business.12
The trial court awarded the landlords 4 months' back rent, unpaid utility expenses, storage costs and attorney's fees.13 The Goehlers' counterclaims for conversion and unlawful eviction were dismissed.14 The Goehlers appealed to the Court of Appeals of Washington, Division Two.15
Whether the Goehlers retained a right of reentry to the leased premises after the Carters abandoned the restaurant?16
In Washington law an absolute assignment of a leasehold acts to divest the assignor of his estate and gives him no right of reentry on his assignee's abandonment.17 On the other hand if the assignment is conditional the assignor is not divested of his entire interest in the leasehold and his reservation of a right of reentry on breach of condition is valid and enforceable.18 Such a right has been implied where the lessee's leasehold is assigned in conjunction with the sale of his business, the sale documents reserve a security interest in personalty located on the leased premises, and a contemporaneous assignment refers to the contract.19
The assignment here was conditional because the Goehlers retained a security interest in the restaurant personalty through the conditional sales contract and the required Uniform Commercial Code documentation and filings.22 Olin's consent to the assignment of the lease was contained in a separate document, which specifically referred to the Carter contract and Goehlers' "collateral rights" reserved therein.
After the Carters abandoned the restaurant on September 27, 1981, the Goehlers contacted Olin the next day and requested access to the restaurant and their collateral to continue the business or negotiate another sale.23 These facts demonstrate that the assignment was conditional, thereby preserving the Goehlers' right of reentry under the standards set forth in Washington precedent.24
The Goehlers retained a right of reentry to the leased premises after the Carters abandoned the restaurant.25
Whether Olin's lockout of the Goehlers constituted an unlawful eviction?26
A lessor's unlawful lockout of one with a right to possession is a breach of the implied covenant of quiet enjoyment.27 An abandonment requires clear, unequivocal and decisive evidence of an intent to abandon.28 Olin's action was unlawful because he excluded the Goehlers, without following the notice requirements.29
Yes.
The Goehlers had a right to possession as established by the conditional nature of the assignment and their immediate request for access following the Carters' abandonment.30 The Goehlers continually and unambiguously expressed their desire to resume possession to reopen or perhaps resell the restaurant.31
Olin changed the building's locks and on October 1, 1981, sent the Goehlers a letter demanding payment of both the September and October rent.32 On November 6 a second notice threatening termination of the lease was mailed, and on November 23 a notice of termination was sent. Olin excluded the Goehlers without following the notice requirements of RCW 59.04.040. RCW 59.04.040 provides that when a tenant fails to pay rent the landlord must notify him to pay said rent or quit the premises within ten days.33 These actions rendered the lockout unlawful.34
Olin's lockout of the Goehlers constituted an unlawful eviction.35
Whether Olin converted the Goehlers' personal property by removing it to storage?36
A conversion is a willful interference with a chattel without lawful justification, whereby a person entitled thereto is deprived of the possession of it.37 The Goehlers' security interest in the personalty gave them the right to possession upon the Carters' default.38 RCW 62A.9-503.39 Assuming there had been a valid dispute or conflicting claims to the personal property, possession could have been denied the Goehlers only for so long as reasonably necessary to determine the identity of the rightful claimant.40 Olin's exclusion of the Goehlers from their collateral for an unreasonable period of time was a "willful interference" without "lawful justification," and therefore his actions constituted a conversion.41
Yes.
The Goehlers' security interest in the personalty gave them the right to possession upon the Carters' default. Olin removed most of the collateral and placed it in commercial storage in his own name. In January of 1982, Olin relet the building and permitted the new lessee to use the balance of Goehlers' property in the operation of the business.
There was no attempt to ascertain the rightful claimant's identity during the 4 months preceding the suit.42 Olin's alleged good faith is no defense to a claim of conversion.43 His actions therefore constituted conversion of the Goehlers' personal property.44
Olin converted the Goehlers' personal property by removing it to storage.45
Whether the trial court properly dismissed the Goehlers' counterclaims for conversion and unlawful eviction?46
No.49
The trial court awarded the landlords 4 months' back rent, unpaid utility expenses, storage costs and attorney's fees while dismissing the Goehlers' counterclaims for conversion and unlawful eviction.50 Because the eviction was unlawful and Olin's actions constituted conversion, the counterclaims should not have been dismissed.51
The proper disposition is to reverse the judgment.52 The case is remanded for a determination of the damages due the Goehlers as a result of the wrongful eviction and conversion, less the rent and utilities that were due before they were unlawfully excluded.53
The trial court did not properly dismiss the Goehlers' counterclaims for conversion and unlawful eviction.54