Virginia Highland Associates v. Allen, 69656

• Decision Date: 02 April 1985
• Docket Number: No. 69656,69656
• Citation: 330 S.E.2d 892,174 Ga.App. 706
• Parties: VIRGINIA HIGHLAND ASSOCIATES v. ALLEN et al.
• Court: Georgia Court of Appeals

Page 892

330 S.E.2d 892

174 Ga.App. 706

VIRGINIA HIGHLAND ASSOCIATES v. ALLEN et al.

No. 69656.

Court of Appeals of Georgia.

April 2, 1985.

Rehearing Denied May 6, 1985.

Certiorari Denied June 11, 1985.

Sally A. Dorn, Atlanta, Ann H. Schnur, Decatur, for appellant.

Bruce E. Pashley, Atlanta, Robert J. Grayson, Marietta, E. Marcus Davis, Atlanta, for appellees.

CARLEY, Judge.

On July 22, 1983, appellant Virginia Highland Associates entered into a contract to purchase certain commercial real estate called The Corner. A portion of The Corner property consisted of leased premises on which a restaurant was being operated. At the closing on August 31, 1983, the seller presented appellant with a document denominated "Lessee's Estoppel Certificate" relating to the restaurant premises. This certificate contained the following relevant statements: that "[t]he copy of the Lease attached hereto is a true, correct and complete copy of the Lease"; that "[l]essee and Lessor have no agreements oral or written, other than the Lease concerning said property"; and that "[l]essee has not made any assignment of any of his rights under the Lease or any rights he might have by Georgia or Federal law concerning said property." The certificate was dated August 18, 1983, and contained the individual signatures of appellees Allen and Gagarin as the lessees. Attached to the certificate was a copy of a lease agreement dated April 13, 1981, which named appellees Allen and Gagarin as the individual lessees of the restaurant premises and which likewise contained their individual signatures as the lessees.

Some months later, appellant discovered that appellees Allen and Gagarin were no longer operating the restaurant. The new operator of the restaurant was Maximillian Willie. Willie asserted rightful possession of the premises on the ground that the lessee thereof was a corporate entity, appellee Crazy Ladies, Inc. (CLI), the ownership of which he had recently acquired from appellees Allen and Gagarin. Appellant, contending that the premises were leased only to appellees Allen and Gagarin individually and not to a corporate entity, instituted the instant dispossessory action, alleging that the lease had "been terminated because of a breach and [t]enant holds the premises over and beyond the termination date." The alleged breach was of a provision in the lease that assignment or subletting of the premises without the consent of the lessor would be grounds for termination. Appellant named only appellees Allen and Gagarin as the defendants in the dispossessory action. However, appellee CLI, the entity purporting to be in actual possession of the premises, moved to intervene as a defendant, and its motion was granted. The case then proceeded to trial before a jury.

At trial, the evidence established that the original lease of the premises had in fact been entered into on April 13, 1981, with appellees Allen and Gagarin as the individual lessees. However, on April 29, 1981, appellee CLI was incorporated. According to appellees Allen and Gagarin, they had requested their then lessor to substitute the newly incorporated entity as the named tenant of the premises. Although it was categorically denied by their then lessor, appellees Allen and Gagarin testified that their request was granted, and on or about May 6, 1981, a new lease was executed exactly like the original one with the sole exception that appellee CLI was named as the tenant. Appellees were unable to produce the original of this lease but offered a copy which, according to them, was all that they had ever had. This new lease, according to appellees' evidence, was backdated to April 13, 1981, the date of execution of the original lease. Also, this new lease bore the individual signatures of appellees Allen and Gagarin, rather than their signatures in a representative capacity. Nonetheless, it was appellees' position that this copy of the novated lease showed that the restaurant premises were actually leased to appellee CLI, and thus, that there had been no breach of the provisions of the lease since appellee CLI was still the tenant in possession, only the ownership of that corporation having changed hands.

At the close of all of the evidence, appellant moved for a directed verdict on the basis of the estoppel certificate. The motion was denied and the question of which lease was valid and enforceable--the original April 13, 1981 lease to appellees Allen and Gagarin individually and which had been attached to the estoppel certificate, or the alleged subsequent novation which had substituted appellee CLI as the named tenant--was submitted to the jury. A verdict was returned for appellees as to this issue. In addition, appellees Allen and Gagarin were awarded attorney fees which they had sought by way of counterclaim. Judgment was entered on the jury's verdict and appellant appeals.

1. Appellant first asserts that the trial court erroneously granted appellee CLI's motion to intervene in the proceedings.

OCGA § 9-11-24(a) provides: "Intervention of right. Upon timely application anyone shall be permitted to intervene in an action: ... (2) When the applicant claims an interest relating to the property or transaction which is the subject matter of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties." The instant action was instituted as a dispossessory proceeding against a tenant holding over. Such an action, in essence, seeks to remove the purported tenant in possession of the disputed premises and to return possession of the premises to the landlord. See OCGA § 44-7-50 et seq.; Bahde v. Wright, 76 Ga.App. 462, 46 S.E.2d 264 (1948). Accordingly, appellee CLI, the purported tenant in actual possession, would certainly appear to be a necessary party to the dispossessory action. It was the continued possession by appellee CLI that was at stake in the proceedings, since appellees Allen and Gagarin were no longer in possession. "[W]here, as in the present case, intervention is sought prior to judgment by a necessary party who should have been named and served in the original complaint, such intervention should [be] allowed and the failure to do so [would amount] to an abuse of discretion." State of Ga. v. Bruce, 231 Ga. 783, 786, 204 S.E.2d 106 (1974). Compare Fitzgerald Trust Co. v. Shepard, 60 Ga.App. 674, 4 S.E.2d 689 (1939).

Even if intervention of right was not mandated under the circumstances, permissive intervention pursuant to OCGA § 9-11-24(b)(2) clearly was authorized. It is beyond question that appellee CLI's "defense [to dispossession] and the main action [had] a question of law or fact in common." OCGA § 9-11-24(b)(2). Thus, assuming that intervention was permissive, there was no abuse of discretion in granting the motion of CLI. See Fletcher v. Fletcher, 123 Ga. 470, 51 S.E. 418 (1905). See generally Autry v. Palmour, 124 Ga.App. 407, 410(2), 184 S.E.2d 15 (1971).

2. In related enumerations, appellant contends that the trial court erred...