Gilbert Hotel No. 22 Inc. v. Black

I dissent from the rulings of the majority of the court as hereinafter discussed, and from the judgment of reversal, for the following reasons:

1. Under the terms of the contract the lease could not be assigned or sublet to other than a corporation organized by the Gilberts, nor could the Gilberts sublet the premises or any part thereof without the written consent of the lessor. Admittedly no such consent was given. The defendants can not be said to have substituted the plaintiff as a tenant even if "Gilbert Hotel No. 22 Inc." was in possession of and rents were accepted from a third party during such possession. If such remittances were made by the original lessees, Hubert Gilbert and Earline Gilbert, the acceptance of such rent is not an affirmative action on the part of the landlord as to amount to an election by him to treat as his tenant a subtenant of the former. As was said in Cuesta v.Goldsmith, 1 Ga. App. 48, 50 (57 S.E. 983): "In order for the relation of landlord and tenant to exist between the owner of the property and a subtenant, some affirmative action must be had by the landlord showing that he elected to treat the subtenant as his tenant. It is not sufficient that the landlord has knowledge and makes no objection. As an instance, it may readily be seen that the owner of a storehouse may be unwilling to rent the house to A, on account, say, of his insolvency, but is entirely willing to rent it to B, who is a friend or relative of A, and does so. Without having obtained the consent of the landlord, B sublets it to A and puts him in possession for B's term. The landlord, with a knowledge of the fact that A is occupying his store, makes no objection, but does not elect to treat him as a tenant, preferring to hold B. It can not be said that the owner of the premises occupies the relation of landlord to A because he knew of the occupancy of the latter of his house." See also AmericusMfg. Co. v. Hightower, 3 Ga. App. 65 (59 S.E. 309); Hooks v. Bailey, 5 Ga. App. 211 (62 S.E. 1054); Hudson v.Stewart, 110 Ga. 37 (35 S.E. 178). The defendant here resides in New York, and there was no evidence that he even knew that a corporation was purporting to operate, as assignee, the hotel as "Gilbert Hotel No. 22 Inc." Checks for rentals were sent to him in New York by Gilbert System Hotels, a corporation, Jacksonville, Florida, indicating that they were in payment of rent for a "Gilbert" hotel at 73 and 75 Pryor Street, Atlanta, Georgia, but there were many such hotels, constituting a chain, which were supervised by the Gilbert System Hotels corporation. But even if the checks had indicated that the rents were paid for a corporation, Gilbert Hotel No. 22 Inc., the acceptance of the rents would not, under the above-cited authorities, conclude the defendant as having elected to treat the latter corporation as his tenant. In this situation it was subject to summary dispossession at the pleasure of the defendant, and can not complain that the dispossessory warrant proceeding against Gilbert System Hotels, a corporation, was improperly brought.Bass v. West, 110 Ga. 698, 705 (36 S.E. 244). The majority opinion points out that no demand was made on Gilbert Hotel No. 22 Inc. for possession before the dispossessory warrant proceeding was instituted, and that, therefore, it was not subject to eviction at that time. This is not a case where a demand would be necessary. It is an instance of a mere intruder, in so far as tenancy may be claimed, and it does not appear that Gilbert Hotel No. 22 Inc. was ever recognized by Black. Rents were, as hereinbefore stated, sent from Jacksonville by Gilbert System Hotels without reference to "Gilbert Hotel No. 22 Inc." Black instituted the dispossessory proceeding against Gilbert System Hotels, Rose Herrington, agent-manager, and Mrs. Rose Herrington, as defendants in possession of the premises in question, but not against Gilbert Hotel No. 22 Inc. If, incident to the execution of the proceeding, Gilbert Hotel No. 22 Inc. was evicted, it was not evicted as a tenant entitled to a demand for the premises before eviction and can not complain, Black having the right to dispossess it summarily as an intruder.

2. But while the plaintiff can not, in my opinion, maintain the action for wrongful eviction, it might, if a de jure or a de facto corporation, recover for a trespass committed by the defendant as respects the personal property owned by it in the hotel. I dissent from the rulings of the majority of the court that the evidence shows Gilbert Hotel No. 22 to have been a de facto corporation, and also dissent from the rulings on the admissibility of certain evidence hereinafter discussed.

While Mrs. Herrington took possession of the hotel in October, 1937, there was no charter issued to Gilbert Hotel No. 22 Inc. until April 18, 1939. Manifestly any personal property placed in the hotel by her or any one else in 1937 was not the property of such a corporation, and she could not at that time have been an agent of an unchartered corporation. The evidence shows conclusively, in my opinion, that before any charter was obtained by the alleged corporation the Neon sign was purchased by Hubert Gilbert in 1937, and the mattresses, blankets, curtains, and wastepaper baskets were procured by Mrs. Herrington. According to her own testimony she is still paying for some of the merchandise under a contract of purchase. There is no evidence that "Gilbert Hotel No. 22 Inc." bought any of the merchandise or that title thereto was transferred to it after its incorporation. No attempt was made to prove the amount of accounts receivable except by a certain "daily transcript" which was a sort of recapitulation of guests' accounts. this was properly rejected by the court as not being an original book of entry. There was testimony that more than $70 was on hand when the defendant's agent, W. M. Mabson, took charge of the premises, and a clerk in the hotel, acting under Mrs. Herrington, turned over to him the cash on hand. Did it belong to Gilbert Hotel No. 22 Inc.? Not unless there existed such an entity, either as a de jure or de facto corporation, and the money had come into his hands through operation of the hotel.

The charter was issued to Gilbert Hotel No. 22 Inc. on April 18, 1939, nearly two years after Mrs. Herrington took charge. The application for charter stated: "The maximum capital stock of said corporation shall be six thousand ($6000) dollars, which shall be represented by one hundred (100) shares no-par value stock, but the minimum capital with which the corporation shall begin business is one thousand ($1000) dollars." The Code, § 22-804, provides that "Before any such corporation [non-par stock corporation] can begin business as a corporation there must be at least $1000 paid in for such non-par value common stock either in cash or in tangible assets at their fairly appraised valuation," and it will be noted that the charter itself so provides. There was testimony that informally, without any record by minutes, Hubert Gilbert and Earline Gilbert met with Mrs. Herrington in the room of the latter and verbally "accepted" the charter, but the evidence does not show that any portion of the capital stock was actually paid in, either in money or in tangible assets. Obviously, the Gilbert Hotel No. 22 Inc. never became in fact a corporation de jure.

Did it become a corporation de facto? "A corporation is a de facto corporation where there is a law authorizing such a corporation, and where the company has made an effort to organize under the law, and is transacting business in the corporate name." Wright Co. v. Saul, 31 Ga. App. 129 (1) (120 S.E. 23). See also Georgia Southern Fla. R. Co. v. MercantileTrust Deposit Co., 94 Ga. 306, 316 (supra); Brown v.Atlanta Railway Co., 113 Ga. 462, 468 (39 S.E. 71); Brooke v. Day, 129 Ga. 694, 696 (59 S.E. 769). "User of corporate powers may be shown by proof that the association elected officers or held meetings as a corporate body, that it maintained an office, or that it transacted business in a way which imports that it was acting as a corporation. User may be proved either by the production of written instruments executed by the corporation, or its records and books showing corporate meetings, or other corporate acts, or by parol evidence of corporate powers." 8 Fletcher Cyclopedia corporations, 601, § 4142. See also Ward-Truitt Co. v. Bryan, 144 Ga. 769 (87 S.E. 1037). It is clear that no de facto corporation as Gilbert Hotel No. 22 Inc. is shown by the evidence. When Mrs. Herrington took possession of the hotel in 1937 she certainly was not acting for such a corporation. Its charter was not issued until April 18, 1939. There was some testimony that an informal meeting was held in her room and the charter "accepted," though no minutes were made, and that Hubert Gilbert became president and Mrs. Herrington secretary and treasurer, but there is a total lack of evidence of user of the franchise as a corporation in the operation of a hotel. It necessarily follows that no claim, in the name of such an alleged corporation, can be upheld as to any personal property said to have been seized in the hotel by the defendant. Burns v. Beck, 83 Ga. 471, and Howard v.Long, 142 Ga. 789 (supra), are not contrary to and do not require any ruling different from what is said above.

I dissent from the rulings of the majority of the court upon the following assignments of error: The court properly excluded an agreement entered into between the Gilberts and Mrs. Herrington in 1937 wherein it was recited that she had paid to them $3000 and that they would form a corporation, Gilbert Hotel No. 22 Inc., for the operation of a hotel under a lease which had been executed to the Gilberts by the defendant, and of which hotel she was to be manager at a stated salary etc. This written agreement was not in any way illustrative of an actual user of a corporate franchise, and was not binding on the defendant whose written consent was requisite to the assignment of the lease and which the evidence shows not to have been obtained. It constituted only an agreement between individuals, and was not for any reason urged by the plaintiff relevant to any issue in the case. The court did not err in excluding from evidence statement from Mrs. Herrington that at a meeting in April, 1939, the lease in question was "verbally" transferred to Gilbert Hotel No. 22 Inc. or in excluding her statement that the association had been "treated" as a corporation, such statement being only a conclusion. Neither did the court err in excluding an answer from Hubert Gilbert as to the dates when certain payments were made by Gilbert System Hotels to the defendant, the checks themselves being the best evidence. Furthermore, the payments would not of themselves show an election by the defendant, as already pointed out, to accept the Gilbert Hotel No. 22 Inc. as his tenant. The statement of Hubert Gilbert that the hotel was operated as a corporation was likewise objectionable as being only a conclusion. Actual user is necessary to be shown, and such facts do not appear here.

No error of law appears, and it not being shown that the plaintiff had a right to maintain the suit for eviction or for trespass to the personal property in question, I am of the opinion that the trial court properly awarded a nonsuit and think that the judgment should be affirmed.