McKee's Cash Store v. Otero

• Decision Date: 30 March 1918
• Docket Number: Civil 1579
• Citation: 19 Ariz. 418,171 P. 910
• Parties: McKEE'S CASH STORE, a Corporation, Appellant, v. MARIA O. OTERO and C. W. McKEE, Appellees
• Court: Arizona Supreme Court

171 P. 910

19 Ariz. 418

McKEE'S CASH STORE, a Corporation, Appellant, v. MARIA O. OTERO and C. W. McKEE, Appellees

Civil No. 1579

Supreme Court of Arizona

March 30, 1918

APPEAL from a judgment of the Superior Court of the county of Maricopa. F. H. Lyman, Judge. Affirmed.

Mr George J. Stoneman, for Appellant.

Mr. C F. Ainsworth and Mr. Fred Blair Townsend, for Appellees.

OPINION

FRANKLIN, C J.

The appellee Maria O. Otero brought this suit to recover of the appellant, McKee's Cash Store, and appellee, C. W. McKee the rent for an unexpired term of a written lease, said lease being for a term of five years, from April 1, 1913, to April 1, 1918. The cause was tried to a court and jury, and at the close of the testimony the court, on its own motion, directed a verdict for the plaintiff against both defendants, and submitted to the jury, on the stipulation of the attorneys for the defendants, the question which of said defendants was primarily liable to the plaintiff for the payment of said judgment. The verdict of the jury being that McKee's Cash Store was primarily liable, the judgment was entered accordingly. McKee's Cash Store appeals. The question in this case is whether, as between the appellee Maria O. Otero and McKee's Cash Store, the latter is liable for the payment of the rent. The lease was in writing and purported on its face to be made by C. W. McKee with Maria O. Otero. It is a simple non-negotiable contract. There is no covenant in the lease, nor is there any statutory provision restraining an assignment of the lease.

The uncontradicted testimony shows that McKee's Cash Store was a corporation engaged in carrying on a grocery business in the city of Phoenix. It occupied the Talbot Building at the corner of First Avenue and Adams Street. It was a family concern, consisting of a father and two sons. H. A. McKee, the father, was president, C. W. McKee vice-president and general manager, and C. E. McKee the secretary. C. W. McKee practically controlled the business. In the business transactions, the corporation sometimes used the corporate name and sometimes the name of C. W. McKee. The corporation had added other lines to its stock, and this enlarged business required additional space. Mrs. Otero owned a building on Adams Street in the rear of the one the corporation occupied, and it decided to lease these adjoining premises from her. The negotiations for the lease, which finally resulted in the execution of the instrument upon which this suit is based, were carried on between Arthur M. Otero as agent for Mrs. Otero and C. W. McKee as agent for the McKee's Cash Store. It was known to the parties that McKee was contracting as agent for McKee's Cash Store.

After the execution of the lease on March 11, 1913, C. W. McKee in writing on the back of the instrument formally assigned the leasehold interest to McKee's Cash Store. The term commenced April 1, 1913, and on or about that day the corporation went into possession of the leased premises. This was done with the full knowledge of the circumstances on the part of all the directors and stockholders of the corporation. The corporation thereafter occupied the premises, with the exception of a certain portion which it sublet to another person. This sublease was made for the corporation in the name of C. W. McKee. At the stipulated times the corporation paid to Mrs. Otero the rent, and also collected and received for its own use the rental from the subtenant. This continued until February 1, 1916, when the McKee's Cash Store, without any reassignment, vacated and abandoned the premises and refused to pay rent thereafter. On July 31, 1914, A. D. Stewart bought some of the capital stock and became an officer of the corporation. After the premises were vacated the controversy arose as to who was bound by the lease because Mr. Stewart had not known what took place prior to July 31, 1914, when he became interested in the business.

The complaint was drawn upon the theory that C. W. McKee leased the property individually, and thereafter assigned the leasehold estate to the McKee's Cash Store. Upon the facts of this case, however, the liability of the defendants is so plain in either of two aspects presented by the testimony that we should be astute to uphold the judgment of the superior court. If McKee, in executing the lease, was acting for and on behalf of the corporation, nevertheless he executed the instrument in his own name, covenanting personally to pay the rent, and as between him and the lessor he is liable for the payment of the rent. But, the corporation being the real principal and the party for whose benefit the contract was made, it is also liable for the rent. The highly technical rule that those persons only can be charged who appear upon the face of the instrument to be parties to it does not obtain here. Arizona Life Ins. Co. v. Lindell, 15 Ariz. 471, 140 P. 60. Mr. Justice HOLMES, in Byington v. Simpson, 134 Mass. 169, 45 Am. Rep. 314, said:

"Whatever the original merits of the rule that a party not mentioned in a simple contract in writing may be charged as a principal upon oral evidence, even where the writing gives no indication of an intent to bind any other person than the signer, we cannot reopen it, for it is as well settled as any part of the law of agency."

Mechem says: "For the purpose of identifying the principal, parol evidence may be admitted. It does not violate the principle which forbids the contradiction of a written agreement by parol evidence, nor that which forbids the discharging of a party by parol from the obligations of his written contract. The writing is not contradicted, nor is the agent discharged; the result is merely that an additional party is made liable." Paragraph 1733, Mechem on Agency.

See, also, Tiffany on Landlord and Tenant, par. 57b, and par. 181e.

"It is no contradiction of a contract which is silent as to the fact to prove that a party is acting therein not on his own behalf, but for another. "This does not deny,' said Parke, B., 'that it is binding on those whom on the face of it, it purports to bind; but shows that it also binds another, by reason that the act of the agent in signing the agreement in pursuance of his authority is, in law, the act of the principal." Bishop on Contracts, par. 1084.

In these circumstances there is a double obligation, although there can be but one satisfaction. In the other aspect...