Aggeller & Musser Seed Co. v. Blood

• Decision Date: 14 June 1928
• Docket Number: 4581
• Citation: 73 Utah 120,272 P. 933
• Parties: AGGELLER & MUSSER SEED CO. v. BLOOD
• Court: Utah Supreme Court

272 P. 933

73 Utah 120

AGGELLER & MUSSER SEED CO. v. BLOOD

No. 4581

Supreme Court of Utah

June 14, 1928

Rehearing Denied December 19, 1928.

Appeal from District Court, Third District, Salt Lake County; M. L Ritchie, Judge.

Action by the Aggeller & Musser Seed Company against the Guaranteed Securities Company, for which George H. Blood, receiver, was substituted as defendant. Judgment for plaintiff, and defendant appeals. Reversed and remanded, with directions.

Judgment reversed, and the cause remanded with directions to the trial court to grant a new trial at respondent's cost.

Frazer & Wallis, of Salt Lake City, for appellant.

Badger Rich & Rich, of Salt Lake City, for respondent.

THURMAN, C. J. HANSEN and GIDEON, JJ., concur. CHERRY and STRAUP, JJ., dissent.

OPINION

THURMAN, C. J.

This action was commenced by the plaintiff, a California corporation, located in the city of Los Angeles, against the Guaranteed Securities Company, a Utah corporation, located in Salt Lake City. By stipulation of the parties George H. Blood, receiver for the Utah corporation, was substituted as defendant. The California corporation will hereinafter be referred to as plaintiff, and for brevity the Utah company will be referred to as defendant.

It is alleged in the complaint that on or about the 21st day of March, 1923, plaintiff and defendant entered into a lease agreement by the terms of which plaintiff devised to the defendant certain premises in the city of Los Angeles described as the entire third floor loft in the building numbered 752 on South Spring Street, and extending through the block and numbered 755 South Main street over the stores occupied by the lessors; that the term of said lease was a period of five years, beginning the 1st day of April, 1923, and ending the 31st day of March, 1928; that defendant agreed to pay plaintiff therefor the total sum of $ 24,000 in monthly installments of $ 400 per month, but, in the event either lessor or lessee should determine that it was desirable to have the elevator changed from an automatic to a manual control, and the lessor should employ such operator, the rental should then be the sum of $ 450 per month. The written lease was referred to and made part of the complaint.

It is then alleged that manual control was afterwards substituted for automatic control, and that under the terms of the lease there became due from defendant to plaintiff the sum of $ 450 per month from May 1, 1924, to November 30, 1925, together with interest thereon, which interest amounted to the sum of $ 439.89; that defendant has not paid said sum nor any part thereof, except that defendant has a credit thereon of $ 60 per month, received by plaintiff from another tenant to whom plaintiff rented a portion of said premises for the purpose of minimizing the damages; that said rental to said other tenant commenced November 1, 1924, and had continued ever since; that defendant was entitled to credit for the full amount of said rental received from said tenant, except the sum of $ 132.30 commission paid by plaintiff on or about November 1, 1924, for obtaining said tenant; that the total credit due defendant is the sum of $ 647.70, leaving a balance due plaintiff from defendant in the sum of $ 8,333.19, together with interest thereon at the rate of 7 per cent. from November 1, 1924, for which sum plaintiff prays judgment and costs.

The written lease agreement purports to be signed by the president and secretary of the plaintiff corporation and sealed with its corporate seal. On the part of the defendant company the lease agreement purports to be signed by J. J. Morey, as president of said company, and by C. E. Robinson, as secretary, and sealed with the corporate seal of defendant.

The defendant answering the complaint admits that the lease was signed in the name of defendant by J. J. Morey, president, and C. E. Robinson, secretary, and that defendant's corporate seal was affixed to said lease. Defendant further admits that said J. J. Morey was president of defendant company at the time the lease was executed, but denies that C. E. Robinson was secretary of defendant company. Defendant alleges that the said lease was at no time authorized, ratified, or approved by the board of directors of defendant, all of which was known to plaintiff; that for said reason said lease has no binding effect upon the defendant. Defendant further alleges that at the time said lease was executed, and in accordance with its provisions, it was understood and agreed that the lease was merely temporary with respect to defendant, and that another corporation was to be subsequently formed to take over said lease, and that thereupon defendant should be wholly absolved and relieved from any liability, responsibility, or obligation in connection with said lease. Defendant further alleges that a new corporation was subsequently formed, to wit, Guaranteed Mortgage Securities Company of America, Incorporated, and that it took possession of the said lease and said leased premises on or about July 1, 1923, with the knowledge and consent of the plaintiff, and continued in possession until the 1st day of May, 1924; that during all of said last period of time the said Guaranteed Mortgage Securities Company of America, Incorporated, paid the rent on said premises to the plaintiff, and plaintiff recognized said last-named company as its tenant and as the holder of said lease during all of said period of time, and at no time made any objection on account of the occupancy of said premises by said company.

Defendant admits it has not paid rental to plaintiff as alleged in its complaint, and denies generally every allegation of the complaint tending to show any liability of defendant on account of said lease.

Further answering, defendant alleges on information and belief that on or about May 1, 1924, the Guaranteed Mortgage Securities Company of America, Incorporated, vacated the said premises, and that shortly thereafter and before November 1, 1924, the plaintiff occupied, for its own use and benefit, the whole of said premises, excepting that occupied by one Hutchinson, the other tenant hereinbefore referred to and continued to so occupy the same from shortly after the 1st day of May, 1924, up to and including the month of November, 1925. Defendant, as a further defense, alleges, in effect, the same matter covered by its answer as above stated.

Plaintiff's reply to the answer is in effect a denial of each and every allegation thereof which in any manner controverts the allegations of plaintiff's complaint.

The cause was tried to the court, and findings made in favor of the plaintiff. From the judgment entered thereon, defendant appeals.

The principal questions raised by defendant's assignment of errors are: (1) Was the lease in controversy authorized, ratified, or approved by the defendant company? (2) Did the vacating or abandonment of the leased premises by the occupant thereof in May, 1924, operate as a surrender thereof, and, if so, was such surrender accepted by the plaintiff?

It is admitted that J. J. Morey was the president of the defendant company, and that the executed the lease as such, and that the corporate seal of defendant company was affixed thereto. It also appears from the undisputed evidence in the case that C. E. Robinson was the assistant secretary of the defendant company, and that he also signed the lease. The contention of defendant is that it was understood and agreed that the lease was only temporary as far as the defendant was concerned, and that a new company was to be formed which would take over the lease and the assets of the defendant company at Los Angeles, and that the defendant would then be absolved from all further liability under the lease. The contention of plaintiff is that it was understood that the defendant intended only to change the name of the Los Angeles branch of the company merely for purposes of identification, and that otherwise there was no change in the company. In support of this contention it relies on the following paragraph in the lease: "Lessee contemplates changing its corporate name, and if such change is made, will immediately notify lessor."

It is undisputed that in July, 1922, J. J. Morey as president of defendant company, was authorized by its board of directors to open a branch office in the city of Los Angeles and in other states mentioned, with full power to employ such officers to manage said office and on such terms and conditions as he should judge wise and prudent. It also appears from the records of the defendant company that Roland G. Paul was elected general sales manager, and C. E. Robinson, second assistant secretary and treasurer and office manager, of the Los Angeles office. Several trips were made by the president, Mr. Morey, to Los Angeles between July, 1922, and March, 1923, when the lease in question was executed by plaintiff and defendant. During that period of time an office was opened and business carried on by defendant in Los Angeles, but on different premises than those described in the lease. In February, 1923, Mr. Morey, who had just returned from a trip to Los Angeles, reported to the board of directors of defendant that the plan upon which the business had been carried on in Los Angeles "is not suitable to our purposes and advises a change be made through action of our attorneys." Whereupon a resolution was adopted by the board fully authorizing "the president to negotiate a plan for the incorporation or financing of the Los Angeles branch of this business on such terms and conditions as the president, in connection with the executive committee should deem advisable." Mr. Morey returned to Los Angeles, and on March 21, 1923, executed the...