Amco Trust, Inc. v. Naylor

• Decision Date: 19 February 1958
• Docket Number: No. 13283,13283
• Citation: 311 S.W.2d 257
• Parties: AMCO TRUST, Inc., Appellant, v. P. C. NAYLOR, Appellee.
• Court: Texas Court of Appeals

Page 257

311 S.W.2d 257

AMCO TRUST, Inc., Appellant, v. P. C. NAYLOR, Appellee.

No. 13283.

Court of Civil Appeals of Texas, San Antonio.

Feb. 19, 1958.

Rehearing Denied March 19, 1958.

Matthews, Nowlin, Macfarlane & Barrett, Louis T. Tarver, Jr., San Antonio, for appellant.

James C. Brady, San Antonio, for appellee.

BARROW, Justice.

P. C. Naylor brought this suit against South Texas Kitchens, Inc., a Texas corporation, C. P. Ernster, and Amco Trust, Inc., also a Texas corporation, to recover unpaid rent due and to become due under a lease agreement entered into between P. C. Naylor as lessor, and south Texas Kitchens, Inc., and C. P. Ernster as lessees, and for damages to the leased building. P. C. Naylor alleged that Amco Trust, Inc., although not a party to the lease, was jointly liable along with the other defendants, because of a contract entered into between South Texas Kitchens, Inc., Joined by its stockholders individually, and Amco Trust, Inc. P. C. Naylor alleged this contract to be an assignment of the lease from South Texas Kitchens, Inc., to Amco Trust, Inc.

Upon the trial of the case the court, sitting without a jury, entered judgment that plaintiff, P. C. Naylor, recover from defendants, Amco Trust, Inc., South Texas Kitchens, Inc., and C. P. Ernster, jointly and severally, $2,825 as rent and $1,374.97 as damages. From this judgment Amco Trust, Inc., alone has appealed.

P. C. Naylor, appellee, and South Texas Kitchens, Inc., and C. P. Ernster, its president, entered into a lease contract on September 23, 1953. The contract provided that appellee would lease his building at 234 Olmos Drive, West, in San Antonio, Texas, to South Texas Kitchens, Inc., and C. P. Ernster, for a term beginning December 15, 1953, and ending December 15, 1958, for a monthly rental of $225, payable in advance on the 15th day of each month. South Texas Kitchens, Inc., went into possession of the premises and there engaged in the business of selling and installing kitchen units on a contract basis.

In the spring of 1956, South Texas Kitchens, Inc., being indebted to Amco Trust, Inc., appellant herein, for a substantial sum of money, entered into a contract with appellant to obtain additional financing and give additional security. The contract was dated and became effective on March 1, 1956. By the terms thereof South Texas Kitchens, Inc., and its stockholders, completely turned over the business of that corporation to Amco Trust, Inc., and gave it authority to disburse moneys of South Texas Kitchens, Inc., to discharge its obligations, as far as possible, and to conduct the business of South Texas Kitchens, Inc., without any interference by it. The contract further provided that Amco Trust, Inc., was to hold an assignment of all the assets, properties, contracts and equipment of South Texas Kitchens, Inc., as well as the stock of its officers, as additional security for the discharge of its indebtedness to Amco Trust, Inc. The contract further provided that the agreement shall terminate upon final discharge and payment of the indebtedness of South Texas Kitchens, Inc., to Amco Trust, Inc.

The first question to be determined in this case is whether or not the appeellant, Amco Trust, Inc., is liable to appellee, P. C. Naylor, for the rent for the unexpired term of the rental contract between Naylor and South Texas Kitchens, Inc. In order to hold appellant liable, it must be shown either that appellant assumed the performance of said contract or that there was an assignment of the rent contract to appellant.

In the written instrument by which South Texas Kitchens, Inc., and its officers, turned over the management of the business to Amco Trust, Inc., it is expressly provided that Amco Trust, Inc., does not assume any of the debts or obligations of South Texas Kitchens, Inc., or its said officers. The remaining question is: Did Amco Trust, Inc., by virtue of this contract become an assignee of the lease? We think it did.

The evidence shows that South Texas Kitchens, Inc., being indebted to Amco Trust, Inc., in a substantial amount, made an assignment of all its assets and properties, including its lease from Naylor, with full right on the part of Amco Trust, Inc., to take charge of and operate the business of South Texas Kitchens, Inc. Amco Trust, Inc., did in fact take over the business. It installed its own management, occupied the premises and conducted the business without interference from South Texas Kitchens, Inc., or its officers, as it had the right to do under the contract. However, the contract expressly provided that it should terminate just as soon as all debts due Amco Trust, Inc., by South Texas Kitchens, Inc., were paid.

The case of Cockrell v. Houston Packing Co., 105 Tex. 283, 147 S.W. 1145, 1151, is squarely in point. Undoubtedly the contract gave Amco Trust, Inc., a mortgage on the property of South Texas Kitchens, Inc., including the lease in question. In the Cockrell case, the Supreme Court, speaking through Justice Dibrell, said:

'The mortgagee of a lease, who takes possession of the leased premises, is in the attitude of an assignee of such lease, and is therefore liable to the landlord for the rent. It seems to be a well-settled rule, applicable to our law, that the mortgagee of a lease, not in possession of the leased...