H.M. Price Hardware Co. v. Meyer

• Decision Date: 17 December 1931
• Docket Number: 1 Div. 684.
• Citation: 138 So. 543,224 Ala. 35
• Parties: H. M. PRICE HARDWARE CO. ET AL. v. MEYER ET AL.
• Court: Alabama Supreme Court

138 So. 543

224 Ala. 35

H. M. PRICE HARDWARE CO. ET AL. v. MEYER ET AL.

1 Div. 684.

Supreme Court of Alabama

December 17, 1931

Appeal from Circuit Court, Mobile County; J. Blocker Thornton Judge.

Suit in equity by Phillip S. Meyer and Carl G. Meyer against the H M. Price Hardware Company, the Underwood Coal & Supply Company, the Kittrell-Milling Motor Company, and R.J Milling. From a decree overruling a demurrer to the bill respondents appeal.

Reversed and rendered.

Stevens, McCorvey, McLeod, Goode & Turner, of Mobile, for appellants.

F. S. Coffin and Wm. B. & C. C. Inge, all of Mobile, for appellees.

KNIGHT J.

The complainants in the court below, appellees here, leased to H. M. Price Hardware Company, Inc., the buildings and lots in the city of Mobile, Ala., locally known as Nos. 75-77-79, Dauphine street, for a term of nine years and nine months, for its business and purposes, as shown by its articles of incorporation. This lease ran from the 1st day of February, 1925, to and including the 31st day of October, 1931, the agreed rental price being $52,800, payable in monthly installments on the 1st day of each month thereafter during said term, the first fifty-seven installments being for $400 each, while the last sixty installments were for $500 each.

The lease contract contains certain conditions and stipulations, and, for a better understanding of this contract, we here set out those provisions which are presently pertinent and which seem to be the real basis of the contention between the parties:

"And the lessee further covenants and agrees that if the lessee should at any time, during the continuance of this lease, remove or attempt to remove the goods, furniture, effects, improvements and personal property brought thereon, out of or from said premises (except in the regular course of trade), without having paid in full all rent which shall become due during the term of this lease, or should an execution or other process be levied upon the goods and chattels of the lessee in and upon said premises and not within five (5) days thereafter released, or if a petition in bankruptcy be filed by the said lessee or if such petition in bankruptcy be filed against lessee and not immediately defended against by lessee, or an assignment be made for the benefit of the lessee's creditor or a receiver be appointed on petition filed against lessee and not immediately defended against or should the lessee violate any other condition of this lease, then in such case, or upon the happening of any one or more of such cases, the whole rent for the whole term of this lease shall at once become due and payable, and the lessors may proceed by attachment, suit or otherwise, to collect the whole rent reserved in the same manner, as if by the terms of this lease the whole rent for the entire term were payable in advance.

"And the lessee further agrees and covenants with the lessors that the furniture, goods, and effects which will be brought upon said premises will be owned by lessee.

"In the event of the employment of an attorney for the collection of any amount due hereunder, or for the institution of any suit for possession of said property, or for advice or service incident to the breach of any other conditions of this lease, or account of bankruptcy proceeding by or against the furniture and effects of the lessee, located upon the leased premises, or the leasehold interest, the lessee agrees to pay and shall be taxed with a reasonable attorney's fee which fee shall be a part of the debt evidenced and secured by this lease."

The present bill is filed by the complainants, as lessors, to have the court decree that certain terms of this lease contract had been breached by the lessee; and to decree that the entire amount of the rent as for the entire term was due and payable at once; and to declare and establish a lien in favor of complainants as for rent due on certain goods "transferred and removed" by the lessee from the rented premises, and delivered to the respondents, the Underwood Coal and Supply Company, Inc., Kittrell-Milling Motor Company, Inc., Marston & Quina of Pensacola, Fla., R. J. Milling, and Capt. Nichols; and that, in the event the merchandise cannot be recovered, in specie, to enforce said lien against the parties, then for a money decree; and to decree that complainants have a lien upon the stock of goods, furniture, and fixtures located in the leased premises; and for a money decree against the defendant the H. M. Price Hardware Company for the sum of $21,000, the entire amount then unpaid under the rental contract; and for an attorneys' fee. The above statement sets forth the principal features of the specific prayer of the bill, and then there was the usual general prayer.

There was no offer in the bill to do equity or to submit themselves to the jurisdiction of the court.

So far as the bill shows to the contrary, the lessee was not in default in the payment of any installment of the rent, and, construing the bill against the pleader, we assume that each installment of rent was met promptly as the same fell due. Nor is there any averment of insolvency, or that the H. M. Price Hardware Company was embarrassed financially at the time of the filing of the bill, and we do not understand that such averments were necessary.

The insistence of the complainants is that there had been such a breach in the terms of the contract of lease that thereby they were authorized to exercise the option to declare the whole amount of the rent for the entire term due and payable at once. To give the lessee notice of this contention on their part, the lessors, under date of April 8, 1931, through their attorneys, notified the lessee, in writing, that he had made it optional with the lessors to declare the whole amount of the rent due, under the clause of the contract which reads, "And the lessee further covenants and agrees that if the lessee should at any time during the continuance of this lease remove or attempt to remove the goods, furniture, effects, improvements and personal property brought thereon, out of or from said premises (except in the regular course of trade), without having paid in full all rent which shall become due during the term of this lease *** then, in such case, and upon the happening of any one or more of such cases, the whole rent for the whole term of this lease shall at once became due and payable, and the lessors may proceed, by attachment, suit, or otherwise, to collect the whole rent reserved in the same manner as if by the terms of this lease the whole rent for the entire term was payable in advance." In this notification, among other things, the lessors advised the lessee that they had elected to declare the whole rent for the whole term of the lease due and payable, and that the amount of the rent due was $21,000.

The complainants in their bill aver that the lessee had in and on the rented premises on January 1, 1931, a stock of merchandise of the value of $30,000, approximately, and that on April 1, 1931, and since, this stock of merchandise had been reduced to about $5,300. And it is averred that the larger part of the "difference between the value of the stock of merchandise on hand on January 1, 1931 and April 1, 1931, was removed in large lots and transferred and delivered to the Underwood Coal and Supply Company, Inc., Kittrell-Milling Motor Company, and Marston and Quina, of Pensacola, Florida, and to R. J. Milling, or his agent upon credits of less than the cost price of said merchandise, said transfers and removals of said merchandise being not in the regular course of trade"; and that much of it delivered to parties above mentioned was such class of merchandise as was not usually handled by the party to whom it was delivered.

It is also averred that the said R. J. Milling was the president of the H. M. Price Hardware Company, and the dominating stockholder, and the said R. J. Milling was and is affiliated and the dominating stockholder in the Underwood Coal and Supply Company, Kittrell-Milling Motor Company, and Marston and Quina of Pensacola.

It appears from the bill also that between the dates of January 1, 1931, and April 1, 1931, merchandise of the value of $1,500 to $2,000 was transferred and removed to Underwood Coal & Supply Company; that about $1,600 worth was transferred and delivered to Kittrell-Milling Motor Company; that between five and ten thousand dollars worth was delivered to Marston & Quina; and that about $1,000 worth was delivered to R. J. Milling, or his agent. It is also averred "that the said transfers or removal of the said stock of merchandise as set forth in paragraph six hereof, were not bona fide for value, without notice of the lien the law gives to your orators, but were transfers and removals of property at a price less than the cost, and delivery was made to the parties with actual or constructive notice of your orator's lien."

While the bill avers that the terms of the lease contract were also violated by the lessee, in that he brought, or allowed to be brought, upon leased premises goods and effects not owned by the lessee, the main insistence for relief is based upon the transfer and removal of goods, not in the regular course of trade upon "credits...