Gourmet Lane, Inc. v. Keller

35 Cal. Rptr. 398 (1963)

Facts

P has seven shareholder-members, all of whom are directors. The members operate food concessions under separate leases with Kassis Building Corporation in the concourse known as Gourmet Lane. Each lease contains the following provisions: 'Lessee promises and agrees, together with such other tenants as there may be of the other concourse shops, to maintain and operate in a sanitary businesslike manner the said dining area at no cost or expense of any nature to lessor. Lessee shall enter into an association and cooperate with such other tenants in the operation of said dining area. This obligation is to be joint and several among all of said tenants. A decision of the majority of said tenants with regard to the details of the operation and maintenance of said area and allocating the costs thereof shall be binding upon lessee and all of the other tenants.' The tenants decided to incorporate, and P corporation was organized. The majority agreed to allocate costs by charging a fixed minimum based on taxable sales. That amount was $100 per week. By February 1959 all members but D had shown and were paying charges based upon, sales tax returns in excess of the minimum. Defendant objected to the $100 minimum and, upon his request, the directors voted to reduce the weekly minimum to $75. D again requested that the minimum be dropped; this time to $50 per week. The directors refused this request. Commencing June 1, 1960, D refused to make further payments. When D pays the weekly minimum, his share is but 6.54 percent of the total expenses; The others running from 11.99 percent to 23.75 percent. D's total gross receipts are in line with the others and even exceed those of one other member. P sued D and P got the verdict. D appealed.