U.S. Rubber Co. v. White Tire Co.

• Decision Date: 31 December 1956
• Docket Number: No. 17242,17242
• Citation: 97 S.E.2d 403,231 S.C. 84
• Court: South Carolina Supreme Court
• Parties: UNITED STATES RUBBER COMPANY (Fiske Tire Division), Plaintiff, v. WHITE TIRE COMPANY, Inc., et al., Defendants, wherein J. Wright Nash, as Receiver of White Tire Company, Inc., is Appellant, and Mrs. Louise Henderson McDavid is Respondent.

Page 403

97 S.E.2d 403

231 S.C. 84

UNITED STATES RUBBER COMPANY (Fiske Tire Division), Plaintiff, v. WHITE TIRE COMPANY, Inc., et al., Defendants, wherein J. Wright Nash, as Receiver of White Tire Company, Inc., is Appellant, and Mrs. Louise Henderson McDavid is Respondent.

No. 17242.

Supreme Court of South Carolina.

Dec. 31, 1956.

Carlisle, Brown & Carlisle, Spartanburg, for appellant.

Holcombe & Bomar, Spartanburg, for respondent.

LEGGE, Justice.

This appeal involves the respective rights of a lessor and of the receiver of the lessee in a sum of money paid by the lessee to the lessor upon the execution of the lease as security for the lessee's performance of its obligations thereunder.

By written agreement dated November 6, 1951, Mrs. Louise Henderson McDavid, owner of a vacant lot in the City of Greenville, leased to White Tire Company, Inc., the said lot, together with the buildings and other improvements to be constructed by her thereon for a term of ten years to commence upon the completion of said building, the rental to be at the rate of $7,000 per year payable in monthly instalments in advance on the first day of each month of the term. Paragraphs 8, 14, 15 and 18 of the lease were as follows:

'8. It is expressly agreed and understood that the Lessor during the existence of this Lease shall maintain and keep in repair the roof and the outside of the building to be erected on the premises, and that the Lessee shall keep in repair and be responsible for the remainder of the property.

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'14. If the Lessee shall be adjudicated bankrupt, or if a Receiver be appointed for the property of the Lessee, or if it shall take or attempt to take the benefit of insolvency acts, statutes or laws now in force, or hereafter enacted, or shall make or attempt to make any assignment of property for the benefit of creditors, or if the interest of the Lessee under this Lease shall be levied upon by legal process, then and in that event this Lease shall terminate at once without notice of any kind to the Lessee or other persons, if the Lessor shall so elect, unless the said Lessee shall, before the Lessor exercises her option and right to terminate this Lease, give to the Lessor such security, satisfactory to the Lessor, as will fully guarantee the carrying out of the terms of this Lease and the payments therein provided.

'15. In case the property above described and the subject of this Lease shall be deserted or vacated, or if any default shall be made by the Lessee in any of the monthly payments herein provided for and required to be made, or if default be made by the Lessee in the faithful performance and carrying out of any of the covenants, agreements and conditions of this Lease, the Lessor shall have and is hereby given the right, without notice of any kind, to the Lessee or to any other person, to reenter said premises by force or otherwise and dispossess and remove therefrom the occupants thereof, and the Lessor may, at her option, either declare this Lease terminated or may pursue and enforce through legal proceedings or otherwise her legal rights as landlord or Lessor against a tenant in default.

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'18. Simultaneously with the execution of this Lease the Lessee is to pay to the Lessor the sum of Seven Thousand ($7,000.00) Dollars, the same to be held by the Lessor as security for the faithful performance of and compliance with all the terms, covenants and conditions of this Lease. The taking of said sum as security shall not, however, be construed as limiting or restricting the Lessor to this fund, but the Lessor may also pursue any remedy in law or in equity which the Lessor shall consider proper in order to protect her rights in the premises. If the Lessee shall faithfully comply with all the terms, covenants and conditions of this Lease, then it is agreed that the said sum of Seven Thousand ($7,000.00) Dollars shall be applied and credited by the Lessor on the beginning of the tenth year of this Lease as rent for the said tenth year. It is understood and agreed that if this Lease shall be terminated by reason of fire or other casualty as set out in paragraph 13 above, and the Lessee shall have complied with all terms and conditions of this Lease, the said sum of Seven Thousand ($7,000.00) Dollars deposited as security for faithful performance shall be returned to the Lessee, provided that if this Lease be so terminated by reason of fire or other casualty during the tenth year, then only so much or such part of said deposit as shall not have been applied to the payment of rent for the said year shall be returned to the Lessee.'

White Tire Company made the payment required under Paragraph 18 and entered into possession on April 7, 1952, the building having been then completed. Thereafter, at the suit of a creditor, White Tire Company was placed in receivership in February, 1954. It had paid rent through March 6, 1954. It appears that White Tire Company had vacated the property in December, 1953, leaving its sub-lessee, Webster Oil Company, in possession of a portion of it. Webster Oil Company, having paid rent to Mrs. McDavid, at the rate provided in the lease, for the months ending April 6 and May 6, 1954, entered into a written agreement with her whereby it took over the premises for the remainder of the term of the original lease, and upon the same terms, except as below noted. This agreement was evidenced by the following letter and acceptance:

'Greenville, S. C.

'April 29, 1954

'Mrs. Louise H. McDavid,

'Greenville, S. C.

'Dear Mrs. McDavid:

'In re: Property at corner of Broadus Ave., and E. North Street, Greenville, S. C.

'The Webster Oil Company, Inc. of Greenville, S. C. under an agreement with White Tire Company, Inc. and for several months prior to its abandonment of the property described in your lease, has been operating the filling station on said property. We are interested in renting the whole property described in said lease upon the same terms as White Tire Company if you will agree to certain changes which are set out below.

'We would like to take over this property, the lease beginning May 7, 1954, and occupy it as tenant until the 6th day of April, 1962, which is the date of expiration of said lease.

'The Webster Oil Company does hereby expressly agree to take over the lease between you and White Tire Company, Inc. and will make all payments required to be made under said lease and perform and abide by all the terms and provisions and obligations of said lease, except as set out below herein.

'(1) It is understood that the building and improvements referred to in paragraphs No. 1 and 2 of the lease have been completed.

'(2) Paragraph No. 6 of the lease is to be changed to allow the tenant to make alterations and repairs to the buildings and, as changed, it shall read as follows:

"The Lessee is granted the right to make alterations or changes within or upon the leased premises at its expense and may construct additional buildings or installations on portions of the property now vacant, at its expense, subject to approval of Lessor, but all alterations, changes, additional buildings or installations shall belong to and be the property of the Lessor and shall, upon the expiration of the lease, or its earlier termination for any cause, be delivered with the other leased premises to the Lessor'.

'(3) Paragraph No. 7 of the lease is to be changed to allow the tenant to sublet any portions of the leased premises, and, as changed shall read as follows:

"The Lessee is granted the right to sublet any portion of the leased premises but the Lessee shall remain bound to the Lessor for the full amount of rent. If any portion of the property shall be sublet, the tenant of the Lessee shall be bound by and subject to all the terms, provisions and requirements of this lease.'

'(4) There shall be added at the end of Paragraph No. 8 of the following:

"Except where damage results from construction defects in the present building'.

'(5) Paragraph No. 15 is changed so that the Lessee will not take action against the tenant in case of default in payment of rent until expiration of 30 days from date when rent falls due. In all other respects the paragraph remains unchanged.

'(6) Under Paragraph No. 18 of the lease, the Lessee is required to pay upon the execution of the lease the sum of $7,000.00 to the Lessor to be held as security and applied on the rent of the tenth year. It is understood that Webster Oil Company will not be required to make such deposit and that if before the commencement of the tenth year, Webster Oil Company shall present the Lessor satisfactory proof that neither J. R. White, individually nor White Tire Company, Inc., the original lessee, claims any interest in said $7,000.00 and that the Receiver of White Tire Company, Inc. does not claim any interest in said sum then, if all provisions of the lease shall have been carried out and all payments made by Webster Oil Company in accordance with the requirements of the lease the Webster Oil Company shall be entitled to have the said $7,000.00, less any expense incurred by the Lessor in connection with this item, applied on the rent for the tenth year. It is also agreed that should the Webster Oil Company fail to furnish proof above stated within the time stated and any questions or litigation concerning the said $7,000.00 remain undecided, then Webster Oil Company will pay in cash the rental for the said tenth year. It is also understood and agreed that should it be adjudicated...