Haddad v. Francis
| Decision Date | 30 June 1986 |
| Docket Number | No. 02061,02061 |
| Citation | 40 Conn.Supp. 567,537 A.2d 174 |
| Court | Connecticut Superior Court |
| Parties | Carolyn HADDAD v. Peter J. FRANCIS. Housing Session, Judicial District of Waterbury |
Blazzard, Grodd & Hasenauer, Westport, for plaintiff.
Brunnock & Cicchetti, Waterbury, for defendant.
In this summary process action, the plaintiff seeks to evict the defendant for failure to pay increases in real estate taxes and insurance premiums. According to the complaint, such defaults are to be treated as defaults in rent pursuant to the lease between the parties.
The defendant contends that the court lacks jurisdiction because his leasehold interest was assigned to PJR, Inc., a Connecticut corporation and the corporation is not a party to the action. With respect to the merits of the plaintiff's claims, the defendant contends that the increases in real estate taxes have been paid, that the provisions in the lease concerning increases in taxes and insurance premiums have not been breached and that whatever defaults may have occurred were not material breaches of the lease.
On March 15, 1977, a lease was executed between the plaintiff landlord, and the defendant and Roland Colucci, collectively, as tenant. The leased premises are located at 893-895 Meriden Road, Waterbury, and, as described in the lease, consist of "a bar-room, kitchen, dining room and storeroom downstairs and an office and storage room upstairs with an outside parking area sufficient for twenty cars." The lease specifies that the premises are to be used only for a "restaurant bar business" and for no other purpose without the written consent of the landlord. The lease provided for an initial term of five years commencing on May 1, 1977, with two successive five year option periods. At the present time, the first of the two option periods is in effect. For both the initial term and the first option period, the rent is $6600 per year payable in equal monthly installments of $550 on the first day of each month.
Several provisions of the lease are material to the claims of the parties. At the outset, however, the court must discuss the defendant's jurisdictional claim or, in other words, explain how PJR, Inc., fits into the picture.
Paragraph 7 of the lease prohibits a subleasing or assignment without the consent of the landlord. A written assignment, to which the plaintiff consented was executed on April 4, 1977, prior to the commencement date of the lease. By the terms of the assignment, PJR, Inc., received all of the right, title and interest of the defendant and Colucci in the lease and they, in effect, became the guarantors of the corporation's performance. The document of assignment was executed by the defendant, Colucci and the plaintiff. Colucci also signed for the corporation.
When the assignment was executed, the defendant and Colucci were shareholders of PJR, Inc. At some later date, Colucci, in the defendant's words, "dropped out." No issue has been made of the absence of Colucci, as a party, in the present litigation.
As of May 1, 1977, when the tenancy began, PJR, Inc., was undoubtedly entitled to possession. The insurance that is required of the tenant, under the lease, has been renewed annually in the name of "PJR, Inc., dba My Place." The rental payments, both before and after the exercise of the option, however, have always been made by checks imprinted with the name "My Place Cafe" and have been signed by the defendant individually, with no reference to the corporation.
As noted above, the lease was renewed by the exercise of the first of the two year options. At issue, however, is by whom. The plaintiff contends that the defendant exercised the option to renew on or about May, 1982. The defendant urges that the option was exercised by PJR, Inc. In the lease, a condition of the right to renew is a written notice from the tenant of the intention to exercise the option. Unfortunately, no such written notice which, by its terms would have identified the option or was ever introduced into evidence. Presumably no such notice was given.
Complicating the issue of whether PJR, Inc., is a necessary party to this action are two events which occurred before the option was exercised. On May 30, 1980, PJR, Inc., was dissolved by forfeiture for failing to file two successive annual reports. General Statutes § 33-387 (b). On April 29, 1981, the defendant, acting as an individual, sublet part of the leased premises to Mary's Diner, Inc., a seemingly unrelated corporation.
The sublease was for a period of one year commencing on May 1, 1981, with options to renew for five additional terms of one year each. The sublease describes the defendant as "Tenant" and Mary's Diner, Inc., as "Sub-Tenant." One provision of the sublease entitled "Warranty of Title" recites that the defendant "warrants that he has a valid lease to the premises and that he has and can deliver the peaceable possession thereof to Sub-Tenant on May 1, 1981." The final paragraph of the sublease states that "[t]his sublease is subject to the terms of the written lease of the Tenant and Landlord (a copy of which had been provided to the Sub-Tenant) and nothing herein shall be deemed to alter the terms of said lease." Conspicuously absent from the sublease is any reference to the assignment to PJR, Inc. At the trial, the defendant testified that the reason why the sublease was from him, individually, and not from PJR, Inc., was due to an error by his attorney. 1
No evidence was introduced to show that the plaintiff, as required by paragraph 7 of the lease, had ever been asked to consent to the sublease. In this litigation, however, it is apparent that the plaintiff's principal concern with the sublease is the effect that it has on her insurance premiums.
Since both parties agree that the option was exercised, a landlord-tenant relationship obviously existed. The question of whether PJR, Inc., is an indispensible party depends upon whether PJR, Inc., had the status of "tenant" when the plaintiff by service of the notice to quit on December 10, 1984, purported to terminate the lease. It is undisputed that the notice to quit was served on the defendant and not on the corporation. Service of a notice to quit on the tenant is, of course, an indispensible prerequisite to the maintenance of a summary process action. O'Keefe v. Atlantic Refining Co., 132 Conn. 613, 621, 46 A.2d 343 (1946).
The defendant argues that PJR, Inc., as the assignee of himself and Colucci, must be regarded as the tenant for two reasons. First, because the dissolution by forfeiture did not terminate the lease. And, second, because PJR, Inc., although dissolved, can still be sued in its corporate name. It is true that the dissolution of a corporation lessee, before the expiration of the term, does not constitute an automatic breach or termination in the absence of an express provision to that effect in the lease. Annot., 147 A.L.R. 360, 362. It is also true that "[a]ny action or proceeding by or against a dissolved corporation may be prosecuted or defended by the corporation in its corporate name...." General Statutes § 33-378(e); Don Rich Corporation v. Rossini, 1 Conn.App. 120, 122, 468 A.2d 1273 (1983). The court has no quarrel with the defendant's pronouncements of law. On the facts of this case, as established by direct and circumstantial evidence, however, the court finds that the defendant's legal pronouncements have little, if any, relevancy.
A corporation dissolved by forfeiture, pursuant to § 33-387(b) may reinstate itself within three years after dissolution. General Statutes § 33-388. The defendant testified that he had just learned of the dissolution and had applied for PJR, Inc.'s reinstatement. 2 The three year limitation period had long since gone by. Moreover, there was no evidence, other than the continuation of the insurance coverage in the corporate name to warrant a conclusion that, at any time after dissolution, PJR, Inc., did business as a de facto corporation. Cf. Lettieri v. American Savings Bank, 182 Conn. 1, 4, 437 A.2d 822 (1980). 3 Indeed, the more probative evidence points to a contrary conclusion.
The court considers the earlier discussed provisions in the sublease from the defendant to Mary's Diner, Inc., as telling admissions that the defendant knew of and acquiesced in the dissolution of PJR, Inc. In the sublease, the defendant waranteed that it was he who owned the leasehold and made no mention of PJR, Inc., as his assignee. When compared to the affirmative acts of asserting title, the routine renewal of the insurance policy becomes of lesser significance.
Upon dissolution, a corporation is supposed to wind up its affairs, satisfy its creditors and distribute its assets to its shareholders. See General Statutes § 33-378(b). In essence that is what occurred here albeit in the most informal manner. The general rule is that after dissolution of a corporation, its property passes to its shareholders subject to the payment of corporate debts. Hampton v. Hampton Beach Improvement Co., 107 N.H. 89, 94, 218 A.2d 442 (1966).
What happens to a dissolved corporation's leasehold interests when there is no formal conveyance or assignment is a problem that, apparently, is seldom encountered. Where the question has been considered, the decisions appear to be uniform.
The decisive test for determining if the lease has remained with a corporation or has passed to its shareholders is whether the lease was abandoned or treated as a valuable asset. Only if the lease is abandoned, in the sense that it is repudiated, does it remain as a primary obligation of the corporation with a consequent claim by the landlord for damages. Otherwise, the lease passes to the shareholders who succeed to the rights and obligations of the corporation in the leasehold estate. Middendorf v. Fuqua Industries, Inc., 623 F.2d 13, 17 (6th Cir.1980); Rauch v. Circle Theatre Co., 176 Ind.App....
To continue reading
Request your trial
-
Fellows v. Martin, 14055
...634, 635 n. 1, 474 A.2d 1261 (1984); Southland Corporation v. Vernon, 1 Conn.App. 439, 445, 473 A.2d 318 (1984); Haddad v. Francis, 40 Conn.Sup. 567, 537 A.2d 174 (1986), aff'd, 13 Conn.App. 324, 536 A.2d 597 (1988); Zitomer v. Palmer, 38 Conn.Sup. 341, 446 A.2d 1084 (1982); Danpar Associat......
-
Shakey's Inc. v. Caple, LR-C-93-225.
...Realty Corp., 250 N.J.Super. 11, 593 A.2d 347, 349 (A.D.1991), aff'd, 130 N.J. 313, 613 A.2d 1163 (1992); Haddad v. Francis, 40 Conn.Supp. 567, 537 A.2d 174, 177 (1986); Jenot v. White Mountain Acceptance Corp., 124 N.H. 701, 474 A.2d 1382, 1385 Shakey's does not contend the Lease Agreement......
-
Heyman Assocs. No. 5, L.P. v. Felcor TRS Guarantor, L.P.
...§ 4.01(C), pp. 4–12; see also Mukon v. Gollnick, 151 Conn.App. 126, 131–32, 92 A.3d 1052 (2014) ;13 Haddad v. Francis, 40 Conn.Supp. 567, 572–73, 537 A.2d 174, 177 (1986), aff'd, 13 Conn.App. 324, 536 A.2d 597 (1988).Accordingly, even if the restrictive covenant was not explicitly transferr......
-
Kelly v. Alstores Realty Corp.
...the lessee has intentionally abandoned the lease. Middendorf v. Fuqua Industries, Inc., 623 F.2d 13 (6th Cir.1980); Haddad v. Francis, 40 Conn.Supp. 567, 537 A.2d 174 (1986), aff'd 13 Conn.App. 324, 536 A.2d 597 (1988); Falcone v. Hinsdale Gynecology & Obstetrics, 148 Ill.App.3d 439, 102 Il......