Collet v. American Nat. Stores, Inc.

• Decision Date: 11 March 1986
• Docket Number: No. 49423,49423
• Citation: 708 S.W.2d 273
• Parties: Nancy C. COLLET, et al., Respondents, v. AMERICAN NATIONAL STORES, INC., et al., Appellants.
• Court: Missouri Court of Appeals

Page 273

708 S.W.2d 273

Nancy C. COLLET, et al., Respondents, v. AMERICAN NATIONAL STORES, INC., et al., Appellants.

No. 49423.

Missouri Court of Appeals,

Eastern District,

Division Two.

March 11, 1986.

Motion for Rehearing and/or Transfer

Denied April 8, 1986.

Application to Transfer Denied

May 13, 1986.

Thompson & Mitchell, Charles A. Newman, James W. Erwin, Gallop, Johnson & Neuman, Edwin D. Akers, Jr., St. Louis, for appellants.

Grier & Swartzman, Paul D. Sinclair, Ramona K. Kantack, Kansas City, for respondents.

CRIST, Judge.

Nancy Collet and Centerre Bank of Kansas City, N.A., as the executor of the estate of William A. Collet, brought this action against American National Stores, Inc. (Stores) alleging the breach of a 25-year lease for a building in Terre Haute, Indiana. The Collets also sought recovery against defendants American Investment Company (AIC) and Public Acceptance Company (Acceptance), respectively the parent corporation and a sister corporation of Stores, on theories of piercing the corporate veil or breach of fiduciary duties.

Trial was held in two stages. At the first stage, in July of 1983, the issues related to Stores's breach of the lease were tried. The court filed findings of fact and conclusions of law which held Stores had breached the lease, and the Collets were entitled to damages. After the second stage of the trial, which was held in March of 1984, the court concluded AIC, the corporate parent of Stores, was liable for Stores's breach of the lease, but found Acceptance, Stores's sister corporation, not liable. The court entered an amended judgment on November 13, 1984, awarding the Collets compensatory damages of $270,125.96 against Stores and AIC, and punitive damages of $179,000 against AIC. Stores and AIC appeal.

AMERICAN NATIONAL STORES

Plaintiffs are the assignees of a 25-year lease dated December 31, 1970 between Stores and the Ted H. Greene Agency Company. Stores was created to facilitate AIC's acquisition of several furniture stores. In March of 1966, AIC funded the purchase of the assets of Biederman Furniture Company and Van Furniture Company. Due to restrictions in AIC's long-term debt instruments which limited the money AIC could invest in non-finance businesses, AIC incorporated two wholly-owned subsidiaries to accomplish the acquisition. Biederman National Stores, and its successor corporation Stores, acquired the buildings, leases, equipment, and other contract Stores occupied the demised premises, and used them as a furniture store under the trade name "Langs" for approximately three and one-half years. On July 22, 1974, Stores advised plaintiffs they would vacate the premises on or about October 15, 1974. The notice stated that Stores would "exert every effort to find a new tenant" and suggested that plaintiffs also act to "secur[e] a new tenant at possibly an increase of rental income[.]" Plaintiffs replied they would cooperate, but they continued to look primarily to Stores to fulfill the lease, and disclaimed any and all intent to release Stores from its obligations. On August 28, 1974, Stores wrote the Collets referring to one possible buyer or tenant of the property, and stated if this prospect was not interested, "then we certainly would have no objection to your trying to find a buyer without releasing us from our obligation until ... you are able to obtain a buyer who presumably use [sic] the building ... and result in our being released from any further liability." This letter further suggested plaintiffs might want to purchase two adjoining parcels of land which could make the building more attractive to potential tenants or buyers.

rights owned by the two original companies. B-N Acceptance Company and its successor Public Acceptance Company purchased the inventory and accounts receivable of those firms. The lease was assigned by the Greene Agency to plaintiffs on February 22, 1971, and the assignment was acknowledged by Stores on March 15, 1971.

Then, Stores, on September 6, 1974, advised plaintiffs they had exclusively listed the property for lease with Becker/Valentine & Associates Realtors (Becker), on the same terms as the existing lease. It was further stated Stores would be happy to relinquish their interest in the lease if plaintiffs found a buyer. Finally, in October, 1974, Stores closed the furniture business at the Terre Haute Building, turned the keys over to Becker, and abandoned the building. Stores ceased performance of its obligations under the lease, including the payment of rent and expenses (which included utilities, taxes and insurance) as provided in the lease. The amount due under the lease was $270,125.96 as computed by the trial court.

Stores first claims plaintiffs accepted Stores's attempted surrender of the lease when they did not give notice of their re-entry into the premises, and when they attempted to re-let the premises at a rent in excess of that provided for in the lease. However, the evidence clearly indicates Stores was in fact notified, prior to their vacation of the building, any re-entry by plaintiffs for the purpose of re-letting and/or selling the property was not to be considered a release of Stores's obligations under the lease. This was acknowledged by Stores on one occasion. Furthermore, the lease specifically provided (upon Stores's default) for the landlord to re-enter and re-let the premises without such re-entry being considered as a termination of the lease. Such a clause in the lease creates a presumption the re-entry was not the acceptance of a surrender or a termination of the lease, Windsor Real Estate & Mortg. Co. v. Ruma, 674 S.W.2d 252, 255[6, 8] (Mo.App.1984), even when the re-entry was without subsequent notice. See Gruber v. Adler, 600 S.W.2d 669, 671-72 (Mo.App.1980) (Tenant "understood" re-entry not to release him from obligation for rent and was notified he "would" be liable for rent). Also, acceptance of the proffered surrender by re-entry and attempt to re-let, even if without notice to the tenant, is only valid if the attempt to re-let is successful, which it was not in this case. Windsor, 674 S.W.2d at 255; Gruber, 600 S.W.2d at 672.

Stores contends the attempt to re-let at a higher rental shows acceptance of the surrender. The record, however, indicates plaintiffs were willing to accept any reasonable offer, including an offer to lease the premises at the same rental as did Stores. Additionally, the lease gave plaintiffs the right to attempt to re-let "for such terms and at such rental and upon such other terms and conditions as Landlord may deem advisable," without the attempt Stores also proffers error in the admission of certain documents, claiming that they were not properly qualified as business records due to Mrs. Collet's lack of personal knowledge of the mode of preparation of the documents. Mrs. Collet testified while she was not personally involved in the creation of most of the records, she had been able, from her vantage point in sharing an office with her husband, to observe the creation of some of the records. She was able to describe the process by which they were created. However, even if she totally lacked personal knowledge of the mode of preparation, the records would be admissible. Personal knowledge of the sponsoring witness of the mode of preparation of documents sought to be admitted as business records is not required for admission of those documents. Koenig v. Babka, 682 S.W.2d 96, 100 (Mo.App.1984). The admission of business records rests on the trial court's discretionary determination of the trustworthiness of the records. This discretion was not abused here. Id. The judgment against Stores should be affirmed.

to re-let being considered the acceptance of a surrender. Stores recognized this right, as they were the first to suggest re-letting the premises at a higher rate. The point is denied.

AMERICAN INVESTMENT COMPANY

Acquisition and Operation of Stores: 1966-1974.

In 1966, AIC acquired the assets of Biederman's Furniture Company and Van Furniture Company, and divided those assets between Biederman National Stores and B-N Acceptance Company as stated above. The initial acquisition cost of the two companies was $38,000,000. The initial paid-in capital of Stores was $5,000,000, contributed by AIC. The remainder of the purchase price was loaned from AIC. Six additional furniture companies were acquired by Stores and Acceptance during the next two years. No additional capital was contributed to Stores; the funds used to purchase the various furniture companies were loaned by AIC.

The purpose of Stores was to operate a chain of retail furniture stores, and own buildings, leases and equipment. These stores were operated under various tradenames acquired as the result of the acquisition of the furniture chains. AIC, not Stores, formed various subsidiary corporations in the various states to protect these tradenames. The purpose of Acceptance was to serve as Stores's inventory and receivable financier.

Nominally, Stores was a wholly owned subsidiary of AIC until December 31, 1973, when AIC sold the stock in Stores to a company owned by Wayne Klopp, Stores's last president. This sale effectively divides the corporate history into two parts. While AIC claims all pre-1974 matters are irrelevant, as a factual matter an understanding of the history of the corporation between 1966 and 1973 is necessary to an understanding of what transpired thereafter.

As a matter of formal corporate structure, Stores and Acceptance were wholly-owned subsidiaries of AIC, the parent corporation. AIC and Stores had a number of common officers and directors. AIC officers were always the majority on Stores's Board of Directors. The key officers of Stores, with the exception of the president, were all officers of AIC and all were on AIC's payroll. Other officers, responsible for some day-to-day operations, were on Stores's payroll. It appears those officers paid by...