Darling Stores Corp. v. William Beatus Inc. , 68 Ga. App. 869 ( 1943 )

1. Under the facts of this case, where a landlord had the option of cancelling a lease on thirty days written notice to the tenant, and elected to cancel it and gave the required notice, and the tenant held over and beyond the time at which the cancellation took effect, the tenant was liable for double the reasonable rental from the time of demand, or from the time from which demand was excused or waived, and not double the rental stipulated in the contract of lease.

2. Under the facts of this case proof of demand for possession of the premises was unnecessary.

3. Under the facts of this case the tenant could not dispute the title of its landlord, under which it entered the premises, before it surrendered possession to such landlord. The tenant showed no change in the title adversely to the landlord after the creation of the tenancy; and the court properly held that the tenant was liable to its landlord for rent.

DECIDED FEBRUARY 25, 1943. REHEARING DENIED MARCH 9, 1943. On October 17, 1941, William Beatus Inc. instituted a dispossessory proceeding against Darling Stores Corporation. The defendant filed a counter affidavit denying that it was holding beyond the term of rental and denying that it held possession of the premises under the plaintiff.

The facts were as follows: On October 1, 1938, William Beatus leased to William Beatus Inc. the premises at 66 Whitehall Street, Atlanta, which property at that time was encumbered with a first loan deed in favor of the Provident Life and Accident Insurance Company, and by a second loan deed in favor of Alberta L. Eubank. On January 23, 1939, William Beatus Inc., as lessor, leased space in several buildings, including the one above mentioned, to Darling Stores Corporation for the remainder of the term covered by the original lease which was for 15-1/2 years, dated January 23, 1939. The last-named agreement provided that either party might cancel it as of the first day of any month after January 1, 1940, by giving thirty days written notice to the other by registered mail. Each party gave the required notice to the other that the contract of lease between them would be cancelled as of July 1, 1941. In 1939 Alberta L. Eubank foreclosed her second loan on the premises and the property was sold on the first Tuesday in August, 1939, subject to the first loan deed, to Beatus Realty Corporation, the entire capital stock of which was owned by William Beatus.

On October 31, 1939, Beatus Realty Corporation conveyed the property to William Beatus. William Beatus Inc. was never disturbed by any one in its possession and rights as lessee under its lease. After purchase at the foreclosure sale and through October 31, 1939, Beatus Realty Corporation collected every month from William Beatus Inc. the minimum rental stipulated and recognized the lease, elected to continue it in force, and so notified William Beatus Inc. After October 31, 1939, William Beatus Inc. paid to William Beatus the minimum rental called for by the lease. William Beatus, promptly after October 31, 1939, elected to keep the lease in force and so notified William Beatus Inc. Darling Stores Corporation entered into possession of the premises under the lease from William Beatus Inc. and has never surrendered possession to William Beatus Inc. During the last few days of June, 1941, Darling Stores Corporation advised William Beatus Inc. that it would not vacate the premises by July 1, 1941. Darling Stores Corporation has not paid rent for the premises for any period since July 1, 1941. A dispossessory warrant was sued out by William Beatus Inc. against Darling Stores Corporation, alleging a demand for the premises, on July 2, 1941, but on October 15, 1941, it was nonsuited on motion of the defendant.

The testimony of a witness for Darling Stores Corporation showed that a corporation of Tennessee, a subsidiary of Darling Stores Corporation, had possession of the premises up to July 1, 1941, and that on that date possession was taken by another subsidiary of Darling Stores Corporation. There was a conflict in the evidence as to whether there had been a demand by William Beatus Inc. on the Darling Stores Corporation for the possession of the premises after July 1, 1941. The court directed a verdict for the plaintiff in the dispossessory warrant for double the rental stipulated in the lease between the parties for the period beginning July 1, 1941. Darling Stores Corporation filed a motion for new trial and an amendment in which it contended (1) that the court erred in directing a verdict for double the contract rental, and in refusing to admit evidence on the question of the reasonable rental value of the premises; (2) that the evidence was conflicting on the question of demand for possession of the premises; and (3) that the plaintiff had parted with whatever title it had to the premises before the time for which double rent was sought to be collected, and that for that reason a verdict was demanded for the defendant. The motion was overruled and Darling Stores Corporation excepted. 1. The court erred in holding that the plaintiff was entitled to double rent in the amount double the amount stipulated in the lease, and in excluding evidence of the reasonable rental value of the premises. Under the provisions of the lease providing for cancellation, when the lessor gave the notice the lease terminated by lapse of time at the time specified in the notice, which was July 1, 1941. This notice had the effect of making the expiration date of the lease July 1, 1941, instead of the date named in the lease. In such a case a tenant holding over is liable for double the reasonable rental value of the premises from the date of the demand proved or presumed, as the case may be. Stanley v. Stembridge,140 Ga. 750 (79 S.E. 842). Talley v. Mitchell, 138 Ga. 392 (75 S.E. 465), is cited by defendant in error as authority to contrary. In that case the lease provided that "should the premises be destroyed or damaged by fire so as to be untenantable, the conditions of this lease shall cease from the date of the fire until the premises shall be restored to as good condition as they were in previous to the fire." In such case it was contemplated that there might be an interruption of the conditions of the lease until the landlord restored the premises, or, that there would be a termination of the lease by a refusal of the landlord to repair, and, inferentially, that the tenant would surrender possession in case the landlord elected not to repair. The effect of the stipulation was that the tenant could terminate the lease in the event there was no restoration of the premises provided he would surrender possession. It was distinctly held in the case last mentioned that surrender of the premises was necessary under such a provision to the release of the tenant from the liability to pay rent. The tenant was estopped by his conduct from contending that the lease had expired or that he was released. The Mitchell case was based on the theory that the rent was not paid or possession surrendered, and not that the tenant was holding over. Stanley v.Stembridge, supra. So, in this case, if the tenant alone had given the notice stipulated for, and had not surrendered the premises, it would have been liable for the stipulated rent, because its conduct would have belied its words. In this case notice by both parties was not necessary, and notice by the landlord was effective to terminate the lease as of July 1, 1941. If it was not, it had no right to dispossess the tenant for holding beyondthe term.

2. No proof of demand for possession of the premises was necessary in this case because it would have been futile. The tenant gave notice just prior to July 1, 1941, that it would not surrender possession by that date. Werner v. Footman,54 Ga. 128.

3. A tenant, before surrendering possession, is estopped to dispute the landlord's title recognized by entry under lease with the landlord. Code § 61-107. The tenant in this case entered under the lease with William Beatus Inc., had always recognized it, and sought to cancel it under its terms. There is no evidence as to who owns the legal title to the property. If William Beatus had no title at all, William Beatus Inc. could not take umbrage under it without surrendering possession, nor could Darling Stores Corporation as against William Beatus Inc. If William Beatus leased the property to William Beatus Inc. without having any title or without having all of the title, the purchase of it at the foreclosure sale by William Beatus Corporation and conveyance to William Beatus cured the defect. Code § 29-111. The effect of the sale to William Beatus Corporation simply had the effect of changing the landlord, if the purchaser ratified the lease. Dollar v. Roddenbery, 97 Ga. 148 (25 S.E. 410);Chastain v. Gardner, 187 Ga. 462 (200 S.E. 786), and cit. William Beatus Corporation ratified the lease and kept it and the sublease in life. Upon conveyance of the premises by William Beatus Corporation to William Beatus he became bound by the lease, having actual notice of it and its ratification by William Beatus Corporation and of possession under it and the sublease. Both leases were valid and operative at all times until cancellation of the sublease.

The court erred in directing a verdict for double the contract rental, and in excluding evidence as to the reasonable rental value, and in overruling the motion for new trial.

Judgment reversed. Stephens, P. J., and Sutton, J., concur.