Ferguson v. Bank of the South

• Decision Date: 29 October 1982
• Docket Number: No. 64928,64928
• Citation: Ferguson v. Bank of the South, 296 S.E.2d 756, 164 Ga.App. 203 (Ga. App. 1982)
• Parties: FERGUSON, et al. v. BANK OF THE SOUTH, et al.
• Court: Georgia Court of Appeals

Page 756

296 S.E.2d 756

164 Ga.App. 203

FERGUSON, et al. v. BANK OF THE SOUTH, et al.

No. 64928.

Court of Appeals of Georgia.

Oct. 29, 1982.

Stanley F. Birch, Jr., Gainesville, for appellant.

William H. Blalock, Jr., William L. Rogers, Jr., William Hammond Johnson, Jr., Gainesville, for appellee.

DEEN, Presiding Judge.

1. In this action for delinquent rent the plaintiff, Points North Corporation (who had leased the property from the deceased owner here represented by executors Bank of the South and Nina Hosch), operated a restaurant and lounge known as Blackbeard's for a short time and then subleased the establishment. There were various changes and modifications among the sublessees. By December, 1978 the Fergusons and Gauders had formed a partnership and were operating Blackbeard's at a rental of $4,000 per month. The Gauders' involvement according to their testimony ceased by May, 1979. The sublease terminated on July 15, 1979, and was not renewed.

In February, 1979 the four partners converted into a corporation in which they held equal shares, under the name Blackbeard's, Inc. The operation failed and had completely shut down by December 15, 1980.

In 1981, Points North brought its action for rent against the four partners, the Gauders and the Fergusons, who had signed the sublease. The executors of the Hosch estate intervened seeking the collection of back rent from the plaintiff, the original lessee, whose lease was still in effect. The jury under special instructions and verdict forms returned a verdict finding for the intervenors against Points North Corporation in the amount of $17,600. It also found in favor of Points North against the Fergusons in the amount of $34,464, and in favor of the Gauders against Points North. This determination, under the special instructions, constituted findings that the corporation Blackbeard's, Inc. had not been substituted under the lease as the subtenant or as a tenant at will and that Points North was entitled to damages in the form of delinquent rentals after the termination of the sublease on July 15, 1979, against the Fergusons (who were operating the restaurant) but not against the Gauders.

That part of the verdict in favor of the plaintiff intervenors is not contested. The Fergusons appeal primarily on the basis that the corporation Blackbeard's, Inc. and not they individually was responsible for the delinquent rental.

2. Under the sublease as modified the Fergusons and Gauders were tenants of Points North, and accordingly could not dispute the latter's title. Code § 61-107. The option rests not with the subtenant or the original lessee, but with the owner, who may elect to evict a subtenant allowed in possession contrary to lease provisions and without his knowledge (see Bass v. West, 110 Ga. 698(5), 36 S.E. 244 (1900)) or to treat the subtenant as his own tenant, thus releasing the original lessee. See Stallings v. Shell Petroleum Corp., 54 Ga.App. 359(3), 188 S.E. 50 (1936). Even though the original lease between the owner and Points North may have required the approval of subtenancy to be in writing, this is a stipulation between those parties only. It may be waived by them. When both the plaintiff and the plaintiff intervenor made no objection to the subtenancy, which was observed by the surrender of possession and reception of rents by Points North, the appellants cannot complain of a failure to observe lease conditions to which they were not parties, and which inured to their advantage.

2. The evidence was in conflict and warranted but did not demand an inference that Points North, through its officer Lawson, was aware that the partners who were its tenants d/b/a Blackbeard's had applied for and obtained a corporate form designated Blackbeard's, Inc. in which they owned equal shares....