Seattle Investors Syndicate v. West Dependable Stores of Washington, 24564.

• Decision Date: 03 April 1934
• Docket Number: 24564.
• Citation: 177 Wash. 125,30 P.2d 956
• Parties: SEATTLE INVESTORS SYNDICATE v. WEST DEPENDABLE STORES OF WASHINGTON.
• Court: Washington Supreme Court

30 P.2d 956

177 Wash. 125

SEATTLE INVESTORS SYNDICATE v. WEST DEPENDABLE STORES OF WASHINGTON.

No. 24564.

Supreme Court of Washington

April 3, 1934

Department 1.

Appeal from Superior Court, Snohomish County; Guy C. Alston, Judge.

Action by the Seattle Investors Syndicate against the West Dependable Stores of Washington and others. From an adverse judgment, named defendant appeals.

Affirmed.

Rigg Brown & Halverson, of Yakima, for appellant.

Peyser & Bailey, of Seattle, for respondent.

MAIN Justice.

This action was brought to recover rent for a store building. The cause was tried to the court without a jury, and resulted in findings of fact from which it was concluded that one of the defendants was liable. Judgment of nonsuit was entered as to the West Dependable Stores of Oregon and Dan A. West individually. As to the West Dependable Stores of Washington judgment was entered against it in the sum of $490, from which it appeals.

The facts are these: The respondent, Seattle Investors Syndicate and the appellant, West Dependable Stores of Washington, are both corporations organized under the laws of this state. The Red Robin Stores, Inc., was also a corporation organized under the laws of this state and operated a number of grocery stores. October 28, 1929, it entered into a lease with the respondent for a storeroom in the town of Stanwood. This lease was to cover a period of five years, and the rent provided for was $90 per month. Thereafter the Red Robin Stores operated one of its grocery stores in the storeroom and paid the rent specified in the lease. In September, 1930, the appellant corporation was organized for the purpose of taking over the stock and assets of the Red Robin Stores, which was done. The payment to the stockholders of the Red Robin Stores was made by issuing to them stock in the new corporation, or the appellant. Thereafter the appellant operated the Stanwood store and the others that it had taken over, and paid the rent for the Stanwood store in the sum specified in the lease until January 1, 1931, at which time it ceased to pay the rent. Thereupon correspondence took place between the respondent and the appellant, which culminated in a conference held on March 27, 1931, at which each of the corporations was represented. As a result of this conference, the rent was reduced to $70 per month and was made retroactive as of January 1, 1931. The rental of $70 per month was paid by the appellant until the 30th day of May, 1932. May 9th of that month it inclosed a check for $140, representing the rental on the premises for the months of April and May, 1932, and notified the respondent of its intention to terminate the tenancy at Stanwood June 1, 1932. The check for the $140 was cashed by the respondent after X-ing out on the voucher, on the back thereof, the recital that it was payment in full for all rent due 'until end of tenancy.' The Red Robin lease was not formally assigned or transferred in writing to the appellant. The respondent was unable to lease the storeroom to another tenant, and brought this action for the rent which had accrued subsequent to June 1, 1932, and up to the time of the trial, and recovery was sustained in the amount above mentioned.

The first question is whether the appellant, West Dependable Stores of Washington, is liable on the lease made by the respondent with the Red Robin Stores. As appears, the appellant purchased the capital stock and assets of the Red Robin Stores, operated the business thereafter, and paid the stockholders of the Red Robin Stores in stock of the new corporation. The Red Robin Stores, while its corporate existence was not destroyed, was nothing more than a shell. Under such circumstances, the appellant became obligated to pay the rent as provided for in the lease. In Okmulgee Window Glass Co. v. Frink (C. C. A.) 260 F. 159, 162, it is said: 'Where the new corporation is in its essence but a continuation of the activities and interests of the old company, which retains simply its franchise as a corporation thus becoming practically extinct as an active entity, direct recovery is...