Kalevas v. Ferguson

• Decision Date: 20 October 1927
• Docket Number: 7 Div. 727
• Citation: 216 Ala. 625,114 So. 292
• Parties: KALEVAS v. FERGUSON et al.
• Court: Alabama Supreme Court

114 So. 292

216 Ala. 625

KALEVAS v. FERGUSON et al.

7 Div. 727

Supreme Court of Alabama

October 20, 1927

Appeal from Circuit Court, Etowah County; Woodson J. Martin, Judge.

Action on promissory notes by Nick Kalevas against T.J. Ferguson L.E. Ferguson, and M.M. Harris. From a judgment for defendants, plaintiff appeals. Transferred from Court of Appeals under Code 1923, § 7326. Reversed and remanded.

Goodhue & Lusk, of Gadsden, for appellant.

Alto V Lee and O.R. Hood, both of Gadsden, for appellees.

GARDNER J.

Appellant is the owner of a certain storehouse in Attalla, Ala. The Attalla Realty Company is a corporation dealing in real estate, rentals, and insurance. C.B. Foreman is president of the corporation, and one Neely is manager. Acting for the owner, Nick Kalevas (appellant), the realty company leased this store for a period of 2 years to T.J. Ferguson, L.E Ferguson, and M.M. Harris, the lease contract being reduced to writing and duly signed and notes executed by these lessees for the amount of the monthly rentals. The lease contract and notes were delivered to Kalevas upon their execution. The realty company collected for Kalevas the notes as they fell due, Kalevas delivering to the company the note for collection and the latter surrendering the note upon payment being made. The lease contract was made between the lessees and "Attalla Realty Company, Agent for Nick Kalevas," and the notes made payable "to the order of Attalla Realty Company, Agent, Nick Kalevas," and it is without dispute that the realty company was without any interest whatever in the notes or in the lease contract--merely charging a percentage on collection of the notes. This was the only transaction in which the realty company had acted for Kalevas. A number of these notes remaining unpaid, this suit was instituted against the lessees and makers of the notes.

On behalf of defendants T.J. and L.E. Ferguson, it was insisted there had been a novation of the contract whereby they were released from liability, and one Hollingsworth accepted in their stead, and on behalf of all defendants that the notes had been paid. The issues presented by these defenses were submitted to the jury, resulting in a verdict for the defendants, and from the judgment following the plaintiff prosecutes this appeal.

Considering, first, the defense of novation and release interposed by the Fergusons, we are persuaded the learned trial judge fell into error in submitting the issue to the jury. These defendants insist that just prior to the beginning of the term of the lease they verbally assigned the same to one Hollingsworth, who, with defendant Harris went into possession of the store and conducted a business therein, and paid the rent therefor so long as such business continued in existence; that the Fergusons did not occupy the premises, but, on the contrary, saw S.B. Foreman, president of the realty company, and informed him of such arrangement, whereupon it was agreed by said Foreman that Hollingsworth would be accepted in their stead, and they would be released. Foreman's denial of any such agreement is not now necessary to be considered. It is not pretended, however, that Kalevas had any knowledge or notice of any such alleged agreement, or that he had given any authority to the realty company or any one connected therewith to release any one from the lease contract and notes executed pursuant thereto.

It is a well-understood principle of law that:

"A general authority to collect or receive payment implies no authority, in the absence of the principal's consent *** to release some of the parties who are liable on the claim, or to substitute other persons in their stead." 2 Corpus Juris, 634.

See, also, Johnson v. Wilson & Co., 137 Ala. 468, 34 So. 392, 97 Am.St.Rep. 52.

As supportive of the theory of implied authority, appellees direct attention to the fact that the Fergusons did not occupy the store, but that the business therein conducted was by Hollingsworth and Harris under their partnership name, knowledge of which on the part of Kalevas may be inferred, and that they paid the rent during such occupancy, and upon their demand therefor to the realty company a statement was rendered to them in their name. But these facts are not inconsistent with the continued liability of the Fergusons on their contract and notes, and have no tendency to show any release by Kalevas from such obligations. The following rule of law as expressed in the second headnote of Kanawha-Gauley Coal & Coke Co. v. Sharp, 73 W.Va. 427, 80 S.E. 781, 52 L.R.A. (N.S.) 968, Ann.Cas.1916E, 786, is very generally accepted by the authorities:

"Although a lessee assigns the lease with the lessor's assent, he nevertheless remains liable on his express covenant to pay rent, notwithstanding rent is accepted from the assignee, unless the

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