Gentry v. Recreation, Inc.
| Decision Date | 06 February 1940 |
| Docket Number | 15011. |
| Citation | 7 S.E.2d 63,192 S.C. 429 |
| Parties | GENTRY v. RECREATION, Inc. |
| Court | South Carolina Supreme Court |
Wyche & Burgess, of Greenville, for appellant.
Johnson & Johnson, of Spartanburg, for respondent.
On October 14, 1936, O. E. Dooly and Constance D. Dooly, as lessors, executed a lease to J. Francis Drake, as lessee, for a certain building on South Main Street in the City of Greenville for the term of five years commencing November 1 1936, and ending October 31, 1941, at a rental of $350 per month, payable in advance on the first day of each month for the first three years of the lease, and $400 per month payable in advance on the first day of each month for the last two years of the lease. The lease contains the following clause: "If the business is discontinued or the premises vacated before the expiration of the lease, then full rental price for the whole of the unexpired term shall become immediately due and payable." The lease was executed both by the lessors and the lessee and probated as to all of them, but was never recorded.
J. Francis Drake, the lessee, equipped the premises with furniture and fixtures, at a cost price of approximately $23,000, and operated thereon a restaurant, pool room and bowling alley under the trade name of "Sir Francis"; and continued so to operate the same until June 23, 1937, when he executed a bill of sale to his brother, John F. Drake, for all his property and rights in connection with the business, including his "interest in leases", and this bill of sale was duly recorded. The lessors, however, were not notified and there was no formal assignment of the lease. John F. Drake continued the business until on or about September 15, 1937, when he sold out to Sam Lovitt for $8,531.74, of which $6,000 was paid in cash. The balance was represented by a series of promissory notes given by Lovitt to John F. Drake and secured by a conditional sales contract covering the personal property, in legal effect a chattel mortgage, and will hereinafter be so called. The chattel mortgage was dated September 15, 1937, and duly recorded October 25, 1937.
In connection with this transaction J. Francis Drake executed an assignment of the lease to Sam Lovitt, this assignment being dated September 18, 1937, and the lessors agreed to the arrangement, the lease being modified in a particular, immaterial here, and the rent was increased $50 a month from October 1, 1937.
John F. Drake gave to his brother J. Francis Drake seven of the Lovitt notes in the sum of $200 each, dated September 15, 1937, and maturing on the 15th day of each month commencing with the month of January, 1938. J. Francis Drake took these notes to his brother-in-law, Jack L. Gentry, in Spartanburg, who endorsed them and thus procured for him the full principal amount thereof, to wit, $1,400. The notes were discounted by the Citizens and Southern Bank, but Lovitt failed to pay the first note, maturing January 15, 1938, and upon the demand of the bank Mr. Gentry then took up all the notes, and is now the owner and holder thereof, none of which has ever been paid.
Meanwhile Lovitt continued to operate the business as usual and paid the rent as it matured through the year 1937, but on January 1, 1938, he failed to pay the $400 monthly rent then due, and about January 15, 1938, ceased to operate the business, locked the doors and delivered the keys to his attorney who delivered them to C. G. Wyche, Esq. whose firm were attorneys for the lessors.
Thereafter, to wit, on January 21, 1938, a distress warrant was issued by the landlords for rent in the sum of $19,600, that being the full amount of the rental price for the remainder of the five-year term of the lease. A distress was levied under this warrant on January 27, 1938 and the property so distrained was appraised at $6,000. When Jack L. Gentry learned of the distress proceedings he came to Greenville and interviewed the attorneys for the lessors, to whom he offered to pay the rent which had accrued under the lease, provided he could remove the distrained property from the premises. The lessors through their attorneys, however, refused to accept this offer and expressed their unwillingness for the property to be removed unless Gentry would assume full responsibility for the entire amount of the rent claimed, to wit, $19,600, as stated in the distress warrant. While there is some uncertainty suggested in the testimony as to whether the lessors required the full amount to be paid in cash, or were willing for Gentry to assume the lease, it is uncontradicted that they expected him to be ultimately responsible for the full amount of the rent which they claimed.
The distrained property, having been advertised for sale, was sold at public auction on February 21, 1938. Gentry was present at the sale with his attorney who protested the sale on the ground that Gentry's claim as a mortgagee was a preferred claim, but the sale proceeded and the property was bid off by Mr. Wyche as attorney for the lessors at and for the sum of $500; and a bill of sale was later executed by the lessors to Recreation, Inc., a corporation, which operated the business for several months when the premises were destroyed by fire, including the property involved herein.
In the meantime, to wit, on March 25, 1938, this action was commenced by Jack L. Gentry as plaintiff against Recreation, Inc., as defendant, for the recovery of the personal property in question, the plaintiff alleging that he was the owner of and entitled to the possession thereof, the ground of his claim being the chattel mortgage securing the notes held by him. The defendant denied the material allegations of the complaint, and the cause came on to be tried before Honorable G. Dewey Oxner, Presiding Judge, and a jury, at the May, 1939, term of the Court of Common Pleas for Greenville County.
At the close of all the testimony the defendant moved for a directed verdict upon the ground that the evidence in the case showed "that the landlord's lien for rent and the title acquired by the distress warrant for rent are superior to any claim the plaintiff might have in the property". There was no motion by the plaintiff for a directed verdict. The court overruled the defendant's motion and submitted the cause to the jury which found for the plaintiff, assessing the value of the property at $1,400, which it will be remembered was the precise principal amount of the seven notes held by Mr. Gentry. Judge Oxner overruled the defendant's motion for a new trial, and the cause comes before us upon the exceptions set forth in the record.
(There being no objection on the part of counsel for appellant, the transcript of record will be deemed amended in accordance with the printed motion of counsel for respondent.)
There are thirteen exceptions, each of which is elaborately stated, but in their brief under the head of "Questions Involved" counsel for the appellant reduce the exceptions to five questions, and they further correctly state that the thirteen exceptions really raise but one issue, and that is whether or not the appellant acquired good title and right to retain possession of the furniture and fixtures in question; and that an inquiry into this matter would only involve two questions, the first of which is stated by them as follows: "(1) Is a provision in a lease for a term of years providing for an acceleration of rent installments so as to make the rent for the entire term due upon the happening of a specified contingency valid and enforceable?"
More precisely, the question to be determined is whether such an acceleration clause would authorize a landlord to distrain for rent which had not been earned or accrued.
The question thus presented is an interesting one and of novel impression in this state. The view taken by appellant is that such a clause is effective for this purpose because, among other things, it is a well-established principle that if a debt is payable in installments it is perfectly legal to provide that upon failure to meet any installment, or in certain other contingencies, the entire amount of the debt shall become immediately due and payable. There is, however, quite an obvious difference between the acceleration of an ordinary debt and the acceleration of rent. In the case of an ordinary debt the debtor has already received the entire consideration, either in money or in property, while in the case of rent an...
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