Charles Israel Chevrolet, Inc. v. Walter E. Heller & Co.

• Court: Alabama Supreme Court
• Writing for the Court: JONES; TORBERT
• Citation: Charles Israel Chevrolet, Inc. v. Walter E. Heller & Co., 476 So.2d 71 (Ala. 1985)
• Decision Date: 30 August 1985
• Parties: CHARLES ISRAEL CHEVROLET, INC., a corporation, Economy Finance, Inc., a corporation, and Charles Israel, an individual v. WALTER E. HELLER & COMPANY. 84-87.

Page 71

476 So.2d 71

CHARLES ISRAEL CHEVROLET, INC., a corporation, Economy Finance, Inc., a corporation, and Charles Israel, an individual v. WALTER E. HELLER & COMPANY.

84-87.

Supreme Court of Alabama.

Aug. 30, 1985.

David B. Anderson, and Jo Beth Murphree of Cabanniss, Johnston, Gardner, Dumas & O'Neal, Birmingham, for appellants.

Richard F. Ogle of Najjar, Denaburg, Schoel, Meyerson, Ogle & Zarzaur, Birmingham, for appellee.

JONES, Justice.

Walter E. Heller & Company (Heller) brought an action against Appellants for monies due Heller under a lease executed by Charles Israel as President of Charles Israel Chevrolet, Inc., and guaranteed by both Economy Finance, Inc., and Charles Israel, individually. The trial court, sitting without a jury, entered a judgment for Heller. We affirm.

Charles Israel purchased Wood Chevrolet Company in January of 1981 and changed the name of the dealership to Charles Israel Chevrolet (CIC). Charles Israel was president of both CIC and Economy Finance, Inc. (EFI).

Shortly after Israel purchased the dealership, he was approached by Pete Wilson, an employee of Blackstocks, Inc. Israel and Wilson discussed a service offered by Blackstocks known as "parts return," whereby Blackstocks would inventory and box the large volume of undesirable parts and materials from the previous dealership and ship these parts to the manufacturer, which, in turn, would allow CIC full credit for these parts when CIC ordered new parts for restocking. Blackstocks, via written quotation, offered to perform the parts return for six percent (6%) of the total value of the parts returned, with payment "due upon completion." CIC accepted Blackstocks' proposal and quotation.

A second proposal made by Blackstocks to CIC was for the performance of a planograph (a computer study of the parts stocked by CIC) and for a recommendation, based on the results of the planograph, for the best manner of storing parts based on size and demand. The written quotation for the planograph study was accepted by CIC on the same day the first quotation was accepted. The payment term for the second quotation was "net ten days."

Blackstocks performed the parts return and the planograph. The computer study revealed that new parts storage bins and shelves were necessary. Blackstocks, in a third written quotation, offered to sell to CIC new bins and new shelves and to supply the labor necessary to erect the new bins and shelves and to restock when the new parts arrived. The third quotation from Blackstocks to CIC included a figure for implementation of the planograph study results in supplying and restocking the new bins and shelves. This quotation also summarized the amounts already due Blackstocks from CIC and later included the price of a steel platform not originally discussed. CIC accepted this third quotation, which reflected a total figure of $64,575.21.

Although the record is unclear as to an exact time, it appears that either during the time Blackstocks was performing the planograph or at the time the planograph was completed, a Blackstocks representative told Charles Israel that financing for the Blackstocks services could be arranged. The testimony is clear, however, that Heller's name was never mentioned by a Blackstocks representative in any conversation with Israel.

Israel later received a call from a representative of Heller who explained that he was calling Israel at the request of Blackstocks. After several discussions, CIC and Heller reached an agreement and Israel executed a lease to Heller on behalf of CIC, and executed both a corporate guaranty of the indebtedness as president of EFI, and a personal guaranty.

While the contract executed between Heller and CIC was denominated a "lease," it must be understood in terms of what actually transpired between the parties. Heller purchased from Blackstocks what it understood to be the equipment installed by Blackstocks on CIC's premises and paid therefor the sum of $64,575.21--the exact amount of the indebtedness owed by CIC to Blackstocks. Israel testified at trial that the contract between CIC and Heller was set up as a "true lease" (as opposed to a sale), because CIC had no need of an investment tax credit and because Israel wanted to keep the monthly payments as low as possible.

At the time Israel executed the lease, Blackstocks had fully performed all services offered to CIC in the three quotations. Blackstocks invoiced Heller for the cost of the equipment and its services to CIC, and Heller issued a check to Blackstocks for $65,575.21 in full payment of the invoice.

CIC began to make monthly lease payments to Heller and continued to do so for several months, paying to Heller a total of $7,179.42. The CIC dealership failed, however, and no further lease payments were made. Because Heller failed in several attempts to collect the balance of the debt owed by CIC, it sued CIC on the lease and guaranties.

At trial, CIC made two arguments in defense of nonpayment. CIC first contended that the lease and guaranties executed by CIC, EFI, and Israel to Heller were unenforceable because Blackstocks, although doing business in this State, had failed to qualify to do business in Alabama as required by Article XII, § 232, Ala. Const. (1901), and § 10-2A-226, Alabama Code 1975 (1984 Supp.). The "contract" between Blackstocks and CIC (as evidenced by the three quotations) was, according to CIC, a voidable contract under § 10-2A-247. This voidable contract, says CIC, was assigned by Blackstocks to Heller, but that assignment to a qualified business (Heller) did not and...