Weeks v. Cal-Maine Foods, Inc.

• Decision Date: 16 December 1987
• Docket Number: No. 57157,CAL-MAINE,57157
• Citation: 522 So.2d 725
• Court: Mississippi Supreme Court
• Parties: Charles L. WEEKS & Walter Roman v.FOODS, INC.

Page 725

522 So.2d 725

Charles L. WEEKS & Walter Roman v. CAL-MAINE FOODS, INC.

No. 57157.

Supreme Court of Mississippi.

Dec. 16, 1987.

Rehearing Denied April 20, 1988.

William R. Armstrong, Jr., Henderson, Duke, Dantone & Hines, Greenville, for appellants.

William H. Gault, Jr., Wells, Moore, Simmons, Stubblefield & Neeld Jackson, for appellee.

Before HAWKINS, P.J., and ANDERSON and GRIFFIN, JJ.

HAWKINS, Presiding Justice, for the Court:

Charles L. Weeks, the assignee of a lease between Chicken Chef Systems, Inc. (Chicken Chef), and the owner Walter Roman, appeals from a directed verdict in favor of Cal-Maine Foods, Inc. (Cal-Maine) (the successor corporation to Chicken Chef), rendered in the circuit court of Washington County.

Following a suit by Roman against Cal-Maine for nonpayment of rent, Cal-Maine (without contacting Weeks) paid Roman and settled the case. Cal-Maine then instituted this action against Weeks.

Because it appears Weeks and Cal-Maine had, prior to any dispute between Roman and Cal-Maine, been released by Roman from most of the lease obligations, we affirm in part and reverse and remand in part.

FACTS

On July 29, 1969, Chicken Chef, a Mississippi corporation, entered into a written lease agreement with Roman, owner of a restaurant building. The lease agreement was for a period of 15 years at a monthly rental of $571.13, with an option to extend the term two additional five-year periods; Chicken Chef also agreed to pay city and county ad valorem taxes as they became due. Chicken Chef subsequently vacated the building, but continued rent payments. In 1970 there was a corporate merger of Chicken Chef into Cal-Maine.

Weeks noticed the vacant building and wanted it for a restaurant. Thereafter, on March 27, 1970, eight months after the original lease, Chicken Chef entered into an assignment with Weeks, which was called a "sublease" by the parties, and which was consented to in writing by Roman. In the sublease Weeks rented the property for the remainder of the lease term, agreeing to fulfill all obligations of Chicken Chef in the prior lease, and thereby receiving all Chicken Chef's rights, including the option to renew the lease. Chicken Chef agreed that it would remain primarily liable under the lease. After the sublease was executed, Weeks entered the building and made payment of rentals directly to Roman. Weeks also paid city and county taxes directly to the city and county. Weeks maintained insurance on the premises as required by the lease through April 28, 1977. When Weeks occasionally would miss one of the payments, Roman would call Mr. or Mrs. Weeks to bring the rent current.

Weeks decided to close his restaurant effective January 1, 1976, and contacted Roman for permission. He did not contact Chicken Chef, thinking he was not required to do so in the lease. (All Weeks' dealings for almost six years had been with Roman.) Weeks then subleased the building to several other parties who occupied the building for short periods of time. Weeks contacted Roman before subleasing and continued to make the rental payments and pay the taxes. Weeks would sometimes fall behind in his rental payments, and Roman would, as noted, call him to get his payments current. Weeks testified that he continued to make the rental payments to Roman through August of 1977 and to pay the taxes through half of 1977.

In August of 1977 when the building was vacant, Weeks again tried to find sub-lessees. Weeks then made an attempt to re-zone the property, but failed. Then early in 1978, almost eight years after the execution of the "sublease," Roman approached Weeks and asked him not to do anything with the property because he wanted to sell it. Roman told Weeks that Roy Fulton (Fulton) was interested in leasing the property and possibly buying it. Weeks gave Roman the key to the building. A few days later Weeks called to meet Fulton and Roman at the building. There, Weeks was asked by either Roman or Fulton to remove his equipment. At this same time, Weeks was asked to have the heating and air conditioning system repaired. Weeks did hire and pay the repairman. Roman testified that:

[I]n the spring of '78 [Fulton] came to me and wanted to lease the building. I contacted Mr. Weeks and got the key and showed him the building and leased him the building for five or six months.

The rent Fulton paid was $600 per month, which he paid directly to Roman. Around January of 1978 when the taxes for 1977 were due, Roman told Weeks that if Weeks would pay half the taxes for the year, Roman would pick it up from then on. Roman testified that after 1977 when he stopped receiving payments, he did not contact Weeks and request any further payments. After that time Weeks was never told by Roman, Chicken Chef, or Cal-Maine that he should resume occupancy and payment of the rent. Roman never contacted Weeks because:

I never thought Mr. Weeks was the man that I had my lease with. I know Mr Weeks was contacted by several persons after that time who wanted to rent or occupy the building. Weeks would always have them call Roman. After Fulton had vacated the building, Roman allowed a civic organization that sold Christmas trees and "some pottery outfit" to occupy the building at no charge. Weeks, because of Roman's statements and actions, considered that Roman had released him.

Weeks was paying me my rent and that was a unique situation with me, but I felt like Chicken Chef were the people that owed me and that is who I was trying to contact trying to do something about it.

On February 20, 1979, around one year after Roman had requested Weeks vacate the building, the attorney for Roman sent Cal-Maine a letter demanding past due rent under the lease. Cal-Maine's letter eventually reached the attorney for and secretary of Cal-Maine. Correspondence passed between the attorneys including a statement prepared by Roman of the past due amounts. In June, 1979, Roman filed suit against Cal-Maine in the Washington County circuit court for the past due rent. Cal-Maine made only a cursory review of the matter and eventually settled the lawsuit thereby terminating the lease between Cal-Maine and Roman on the 29th of July, 1979, for $27,500. Cal-Maine then filed the present action on December 14, 1979, against Weeks and Roman (who was dismissed just before trial) in the circuit court of Washington County for breach of the sublease agreement.

Following trial the circuit judge granted a peremptory instruction in favor of Cal-Maine, because it was not proven that Roman was an agent of Cal-Maine, or that if he were an agent it was for the very limited purpose of collecting the rents. Therefore, Roman could not release Weeks from his assignment.

Weeks has appealed.

LAW

EFFECT OF ROMAN'S RELEASE OF WEEKS

As above noted, Cal-Maine imprudently settled the lease dispute with Roman without contacting Weeks.

The question, therefore, is what obligation Cal-Maine had to Roman under the lease following Roman's agreement with Weeks to release him. If Roman had released Weeks, the assignee, from the lease, then Cal-Maine was released and had no further contractual obligation. Also, under these facts, in its subsequent suit against Weeks, Cal-Maine could have no greater right against him for breach of the lease than Roman would have in the same suit. The fact that Cal-Maine may have paid Roman money it did not owe gave Cal-Maine no right to recovery from Weeks.

The agreement entered into by the parties on March 27, 1970, was called a sublease but was in actuality an assignment. "[I]f the lessee parts with his entire interest in the term, it constitutes and assignment, not a subletting, although the transfer is in form a sublease." Johnson v. Moxley, 216 Ala. 466, 467, 113 So. 656, 657 (1927). In the agreement between Weeks, Chicken Chef and Roman, Weeks expressly:

[A]ccepts and agrees to discharge all terms, conditions and obligations of lessee as set forth in the lease aforesaid, which is attached as Exhibit "1" hereto and agrees to discharge all terms and conditions of said lease as if he had been the original lessee therein.

Since under the "sublease" agreement Chicken Chef transferred its entire interest in the lease, while agreeing to remain primarily liable, it constituted an assignment.

This Court has recently stated:

On numerous occasions this Court has said that in assignments of contracts between parties an assignee obtains no greater right in the thing assigned than was possessed by the assignor, but simply stands in the shoes of the latter and assignee's rights can rise no higher than assignor's. See, Indiana Lumbermen's Mutual Insurance Co. v. Curtis Mathes Mfg. Co., 456 So.2d 750 (Miss.1984); Smith v. Copiah County, 232 Miss. 838, 100 So.2d 614 (Miss.1958); Simmons v The logical inversion of this rule dictates that the assignee must acquire all those rights, interests and remedies available to assignor, and in the case sub judice this apparently includes those the lessor incorporated in the original lease, one of which granted the lessee and subsequent assignees right to timely make a request for reconstruction of the building in the event of fire, casualty or other act of God. [Emphasis added]

Smith County Bank, 225 Miss. 384, 83 So.2d 441 (Miss.1955); and Canton Exchange Bank v. Yazoo County, 144 Miss. 579, 109 So. 1 (Miss.1926).

Ford v. White, 495 So.2d 494, 497 (Miss.1986).

Because Weeks "stood in the shoes" of both himself and Cal-Maine, a surrender of the leased premises by himself to Roman, and an acceptance by Roman, would release not only Weeks, but Cal-Maine as well from the lease obligations.

In Cauble v. Hanson, 224 S.W. 922, 925 (Tex.Civ.App.1920), the Texas Court of Appeals held:

[T]he liability of the original lessees ... is regarded as being in the nature of a surety for their assignee ... therefore any credit to which the assignee is entitled would inure to the benefit of the original lessees.

Roman's...