Comfortable, Venerable Cafe Serves Its Last Slice of Life : Tradition: After 47 years, regulars bid farewell to the Pali, an institution in Silverado Canyon.

Rustic Silverado Canyon has two country stores, a post office and a library. But by Sunday night, it no longer had the Pali Cafe.

Proprietors of the 47-year-old restaurant--the canyon’s only eatery and longtime village cracker barrel--said they were serving up their last stack of pancakes and closing for good after failing to settle a dispute with their landlord.

News of the closure shook up the cozy community of 900 people, who talk with pride about how little there is to do there, normally. Yet on Sunday, canyon regulars joined longtime patrons from “down the hill” to bid farewell to an institution as familiar and friendly as worn work boots. After a renovation this year, the simple wood-framed restaurant sports new padded booths and is decorated with framed photographs of scenes from the canyon.

“We’re going to be sunk up here,” said Toni Doscher, a postal worker in Anaheim who has lived in the canyon for four years.

“It’s the only place we have to meet with each other if you want to get out of the kitchen. If you have a little business meeting. If it’s a beautiful night and you want to take a walk,” Doscher said between sips of navy bean soup. “It’s the epitome of canyon living--the relaxed lifestyle.”

Customers streamed in all day--making for Pali’s busiest day ever--and some sat for hours until the final closing at 3 p.m. Sunday.

Mary Myers sat tearfully at the counter, clutching a wadded tissue and counting the hours until the doors shut. Since losing her secretary’s job a month ago, Myers said the restaurant has been a daily refuge from sitting at home across the street.

“You come in here and talk to people without being afraid for your life. Everybody in here knows everybody else,” she said. “If it weren’t for this place, I wouldn’t know hardly anybody.”

The restaurant has hosted benefit dinners and sponsored booths at the annual Silverado Country Fair. Children wait for rides there and neighbors call to track down friends. It’s been a stand-in family kitchen for David and Melinda White, who take their two sons twice a month for breakfast with her parents.

“This is going to change our lifestyle more than if Denny’s switched hands,” said David White.

Fred and Laura Schmidbauer said they were closing the establishment after running it the past nine years because the building owners declined to make improvements to the property--including a new paint job outside and work to the parking lot--that the couple says are needed to expand the business and make it profitable enough to keep. Fred Schmidbauer said that means adding an outdoor patio and drawing more customers from outside the canyon.

The couple spent about $10,000 in renovation indoors this year, he said. With one year left on a 10-year lease, they stopped paying rent about a month ago, and then were told to leave.

“If he pays the rent, he can stay,” said landlord John Toepher. “I’m sorry it’s all come to this. But life goes on. If you don’t pay your rent, you can’t stay. It’s pretty basic.”

Even as Schmidbauer hugged customers goodby and arranged to sell off the equipment, he was trying at the last minute to find someone who would buy the contents of the business and reopen the restaurant.

The dispute has been a hot topic on the community grapevine and put residents in the uncomfortable position of watching friends feud. The landlords live near the restaurant and are well regarded in town. The Schmidbauers live in Mission Viejo but are treated as locals in a community that makes keen distinctions between “canyon people” and “flatlanders” below.

“It’s affected everyone in the canyon,” Doscher said. She and others held out hope their beloved restaurant might be bought--and saved.

Chathi Anderson, a Pali waitress and sometime-manager for 2 1/2 years, planned to make the drive down the hill Tuesday to take the test for a teacher’s aide job. She wasn’t thrilled at the prospect.

“I’m ticked off. I don’t want to look for another job,” Anderson said shortly after serving up the restaurant’s final order: a turkey sandwich and navy bean soup. “I’d be happy to run the place for anyone who wants to buy it. I definitely don’t want to leave.”