Capital Associates, Inc. v. Sally Southland, Inc.

• Decision Date: 20 July 1988
• Docket Number: No. 57595,57595
• Citation: 529 So.2d 640
• Parties: CAPITAL ASSOCIATES, INC. v. SALLY SOUTHLAND, INC., d/b/a Sunflower of Brookhaven and Frank Malta.
• Court: Mississippi Supreme Court

Page 640

529 So.2d 640

CAPITAL ASSOCIATES, INC. v. SALLY SOUTHLAND, INC., d/b/a Sunflower of Brookhaven and Frank Malta.

No. 57595.

Supreme Court of Mississippi.

July 20, 1988.

Rehearing Denied Aug. 31, 1988.

Pat Henley, Henley, Lotterhos & Henley, Jackson, for appellant.

Daniel H. Fairly, Stratton & Fairly, Brookhaven, for appellees.

En Banc.

HAWKINS, Presiding Justice, for the Court:

Sally Southland, Inc. (Southland), and Frank Malta (Malta), Southland's major if not sole shareholder, were sued by Capital Associates (Capital) in the circuit court of Lincoln County upon a lease agreement executed by Southland unto Capital, and upon which Malta executed a personal guaranty. Capital appeals from a judgment in favor of these defendants.

Because Capital was entitled to a judgment as a matter of law, we reverse and render judgment in favor of Capital on the lease contract, and remand for assessment of the amount due under the Lease Agreement.

FACTS

In 1981 Malta purchased a Sunflower Super Market (Sunflower) in Brookhaven. Around June of 1982 Malta was approached by Wilford Welch (Welch), an employee of Stanco Communications (Stanco), to purchase or lease surveillance equipment. Because Malta was moving the Sunflower Store to another location across town, he decided the surveillance equipment was necessary for a "dead spot" in the store. On June 23, 1982 Malta executed a lease agreement with Capital for sixty months at $250 per month. Welch, who carried blank copies of Capital's lease forms, filled out and witnessed the Capital/Southland lease agreement. At the same time, Malta also executed a guaranty for Southland. The lease was approved by Capital in Atlanta, Georgia, and a copy later returned to Malta.

Also on June 23, 1982, Malta acknowledged delivery and acceptance of 20 "dummy" cameras, one live camera, one VCC box, one 19" monitor, and one 9" monitor. The "dummy" cameras usually have a red light to give the appearance to the public that they are live cameras; they, however, contain no inner workings. Malta testified that he did not want "dummy" cameras, but accepted them because of Welch's assurance that the "dummy" cameras would do the job and further because he was given a 100% trade-in on inactive cameras for live cameras. The equipment was installed in the Sunflower in approximately one and one-half days.

Malta testified that he was never satisfied with the "dummy" cameras but did continue making payments through February of 1984. Malta made requests to both Capital and Stanco to upgrade the cameras. At one time, someone did come to the store to look, but no new cameras were put into the building. Malta continued making payments, but did request with several of the payments that the equipment be upgraded. Finally, Malta decided that he would get a response if he quit paying. He, therefore, made his last payment in February of 1984. Capital then notified Malta that the lease payments were still due and that the lease was non-cancellable. Malta was also notified that his agreement to upgrade the equipment was with Stanco and not with Capital.

In March Malta began to negotiate a sale of the Sunflower store. The sale finally became effective April 14, 1984. The buyers of the store decided to create a new decor inside the store and chose to take down the cameras. At trial Malta testified he believed the cameras were then packed and stored somewhere in the store.

Capital filed suit on September 29, 1984, to recover $9,500 unpaid balance and seeking $862 (residual), $587.15 (state sales tax), $105.64 (late charges), $344.80 (personal property tax) for a total of $11,399.59 plus $3,799.86 as attorney's fees for a grand total of $15,199.45, plus interest. On the day of trial, without notice to Capital, Southland and Malta moved to dismiss Capital's claim. The motion stated that Capital is a foreign corporation, incorporated in the state of Florida. Capital had obtained a certificate of authority to do business in Mississippi on January 4, 1982, but the certificate was suspended on November 4, 1985. Southland and Malta believed that pursuant to Miss.Code Ann. This matter coming on to be heard on motion to dismiss, and appears to the court that the plaintiff, Capital Associates, Inc., is a Florida corporation, foreign to the State of Mississippi, and on January 4, 1982, obtained a Certificate of Authority to do business in the State of Mississippi, that the contract entered upon in this case was executed on September 23, 1982, and the suit was filed on September 29, 1984. It further appears that on November 4, 1985, the plaintiff was suspended by order of Commission of Franchise Tax and that as of January 17, 1986, the records of the Office of the Secretary of State of the State of Mississippi did not reveal that said suspension has been set aside. The court has considered Section 27-13-27 and Section 79-3-247. However, this case was pending and the contract suit was executed at a time when the plaintiff had apparent authority to do business in the State of Mississippi. The Court holds tha [sic] the suspension of the authority to do business in the State of Mississippi by a foreign corporation by order of Commission of Franchise Tax of the Office of the Secretary of State of the State of Mississippi does not cause the pending cases to abate or to be terminated. Therefore, the motion to dismiss is overruled.

Secs. 27-13-27 and 79-3-247 (1972) Capital was barred from prosecuting this action. The circuit judge overruled the motion, stating:

Trial proceeded with the pertinent portions of the lease introduced into evidence as follows:

IMPORTANT: Vendor and its representatives are not the agents of Lessor. Neither Vendor nor its representatives can waive, vary or alter any of the Terms and Conditions hereof. Lessor does not warrant merchantability or fitness for any particular use of equipment and disclaims any other warranty, express, implied or statutory. Lease payments will be due despite dissatisfaction with equipment for any reason.

* * *

2.... THE LESSEE REPRESENTS THAT THE LESSEE HAS SELECTED THE EQUIPMENT LEASED HEREUNDER PRIOR TO HAVING REQUESTED THE LESSOR TO PURCHASE THE SAME FOR LEASING TO THE LESSEE, AND LESSEE AGREES THAT THE LESSOR HAS MADE AND MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, DIRECTLY OR INDIRECTLY, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING THE SUITABILITY OF SUCH EQUIPMENT, ITS DURABILITY, ITS FITNESS FOR ANY PARTICULAR PURPOSE, ITS MERCHANTABILITY, ITS CONDITION, AND /OR ITS QUALITY, AND AS BETWEEN LESSEE AND LESSOR'S ASSIGNEE, LESSEE LEASES THE EQUIPMENT "AS IS" ... NO REPRESENTATION OR WARRANTY AS TO THE EQUIPMENT OR ANY OTHER MATTER BY THE VENDOR SHALL BE BINDING ON THE LESSOR NOR SHALL THE BREACH OF SUCH RELIEVE LESSEE OF, OR IN ANY WAY AFFECT, ANY OF LESSEE'S OBLIGATIONS TO THE LESSOR AS SET FORTH HEREIN.... If the equipment is not properly installed, does not operate as represented or warranted by the vendor or is unsatisfactory for any reason, Lessee shall make any claim on account thereof solely against the Vendor and shall nevertheless pay Lessor all rent payable under this lease. Lessor agrees to assign to Lessee, solely for the purpose of making and prosecuting any such claim, any rights it may have aginst [sic] the Vendor for breach of warranty or representations respecting the Equipment. Notwithstanding any fees that may be paid to Vendor or any agent of Vendor, Lessee understands and agrees that neither the Vendor nor any agent of the Vendor is an agent of Lessor and that neither the Vendor nor his agent is authorized to waive or alter any term or condition of this lease. [Emphasis theirs]

[Lease Agreement]

Malta, on behalf of Southland, also signed a "Delivery and AcceptanceReceipt,"

which in capital letters stated in part:

LESSE [sic] AGREES THAT THE LESSOR HAS MADE AND MAKES NO REPRESENTATIONS OR WARRANTES [sic] OF ANY KIND OR NATURE, DIRECTLY OR INDIRECTLY, EXPRESS OR IMPLIED, A [sic] TO ANY MATTER WHATSOEVER, INCLUDING THE SUITABILITY OF SUCH EQUIPMENT, ITS DURABILITY, ITS FITNESS FOR ANY PARTICULAR PURPOSE, ITS MERCHANTABILITY, ITS CONDITION, AND/OR ITS QUALITY; AND AS BETWEEN LESSEE AND LESSOROR [sic] LESSOR'S ASSIGNEE, LESSEE LEASES THE EQUIPMENT "AS IS" AND LESSEEAFFIRMS [sic] THAT IT HAS NO DEFENSE OR COUNTER-CLAIMS AGAINST LESSOR IN ONNECTION [sic] WITH THE LEASE.

In the course of trial, over the objections of Capital, the court admitted into evidence Exhibits D-2 and D-3, which are copies of invoices from Stanco to Capital. The back of Exhibit D-2 states:

Stanco guarantee

STANCO WILL GUARANTEE 100% TRADE-IN VALUE ON ITS INACTIVE CAMERA FOR A STANCO ACTIVE CAMERA. STANCO WILL GIVE 100% CREDIT FOR ANY STANCO INACTIVE CAMERA TOWARDS THE PURCHASE OR LEASE OF A STANCO ACTIVE CAMERA.

It also states that the cameras are shipped to Sally Southland, Inc., d/b/a as Sunflower in Brookhaven and it is signed by Stanley A. Mislow, President, Stanco Communications Products, Inc. Exhibit D-3 states on the back:

STANCO FIVE-YEAR WARRANTY PARTS AND LABOR.

PARTS AND LABOR WARRANTED FIVE YEARS FROM DATE OF INSTALLATION--VIDEO HEAD 90 DAYS ONLY. THIS WARRANTY COVERS NORMAL USE, BUT DOES NOT COVER DAMAGE FAILURE WHICH RESULTS IN ALTERATIONS, ACCIDENT, MISUSE, ABUSE, NEGLECT, WATER, FIRE, WINDSTORM, EARTHQUAKE, LIGHTNING OR HIGH VOLTAGE.

Exhibit D-3 also states the cameras are shipped to Sally Southland, Inc., d/b/a Sunflower Brookhaven, and is signed by Stanley A. Mislow, President, Stanco Communications Products, Inc. Also, over objection of Capital, the court granted the following instruction for Malta, which states:

The Court instructs the Jury that if you find from a preponderance of the credible evidence in this case that on or about June 23, 1982, the plaintiff, Capital Associates, Inc., or its agent or representative, gave unto Frank J. Malta a guarantee or warranty that it would trade inactive or dummy cameras...