McKee's Cash Store v. Otero

171 P. 910, 19 Ariz. 418, 1918 Ariz. LEXIS 95
CourtArizona Supreme Court
DecidedMarch 30, 1918
DocketCivil No. 1579
StatusPublished
Cited by5 cases

This text of 171 P. 910 (McKee's Cash Store v. Otero) is published on Counsel Stack Legal Research, covering Arizona Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McKee's Cash Store v. Otero, 171 P. 910, 19 Ariz. 418, 1918 Ariz. LEXIS 95 (Ark. 1918).

Opinion

FRANKLIN, C. J.

The appellee Maria O. Otero brought this suit to recover of the appellant, McKee’s Cash Store, and appellee, C. "W. McKee, the rent for an unexpired term of a written lease, said lease being for a term of five years, from April 1, 1918, to April 1, 1918. The cause was tried to a court and jury, and at the close of the testimony the court, on its own motion, directed a verdict for the plaintiff against both defendants, and submitted to the jury, on the stipulation of the attorneys for the defendants, the question which of said defendants was primarily liable to the plaintiff for the payment of said judgment. The verdict of the jury being that McKee’s Cash Store was primarily liable, the judgment was entered accordingly. McKee’s Cash Store appeals. The question in this ease is whether, as between the appellee Maria O. Otero and McKee’s Cash Store, the latter is liable for the payment of the rent. The lease was in writing and purported on its face to be made by C. "W. McKee with Maria O. Otero. It is a simple non-negotiable contract. There is no covenant in the lease, nor is there any statutory provision restraining an assignment of the lease.

The uncont'radicted testimony shows that McKee’s Cash Store was a corporation engaged in carrying on a grocery business in the city of Phoenix. It occupied the Talbot [420]*420Building at the corner of First Avenue and Adams Street. It was a family concern, consisting of a father and two sons. H. A. McKee, the father, was president, C. W. McKee vice-president and general manager, and C. E. McKee the secretary. C. W. McKee practically controlled the business. In the business transactions, the corporation sometimes used the corporate name and sometimes the name of C. W. McKee. The corporation had added other lines to its stock, and this enlarged business required additional space. Mrs. Otero owned a building on Adams Street in the rear of the one the corporation occupied, and it decided to lease these adjoining premises from her. The negotiations for the lease, which finally resulted in the execution of the instrument upon which this suit is based, were carried on between Arthur M. Otero as agent for Mrs. Otero and C. W. McKee as agent for the McKee’s Cash Store. It was known to the parties that McKee was contracting as agent for McKee’s Cash Store.

After the execution of the lease on March 11, 1913, C. W. McKee in.writing on the back of the instrument formally assigned the leasehold interest to McKee’s Cash Store. The term commenced April 1, 1913, and on or about that day the corporation went into possession of the leased premises. This was done with the full knowledge of the circumstances on the part of all the directors and stockholders of the corporation. The corporation thereafter occupied the premises, with the exception of a, certain portion which it sublet to another person. This sublease was made for the corporation in the name of C. W. McKee. At the stipulated times the corporation paid to Mrs. Otero the rent, and also collected and received for its own use the rental from the subtenant. This continued until February 1, 1916, when the McKee’s Cash Store, without any reassignment, vacated and abandoned the premises and refused to pay rent thereafter. On July 31, 1914, A. D. Stewart bought some of the capital stock and became an officer of the corporation. After the premises were vacated the controversy arose as to who was bound by the lease because Mr. Stewart had not known what took place prior to July 31, 1914, when he became interested in the business.

The complaint was drawn upon the theory that C. W. McKee leased the property individually, and thereafter assigned the leasehold estate to the McKee’s Cash Store. Upon [421]*421the facts of this case, however, the liability of the defendants is so plain in either of two aspects presented by the testimony that we should be astute to uphold the judgment of the superior court. If McKee, in executing the lease, was acting for and on behalf of the corporation, nevertheless he executed the instrument in his own name, covenanting personally to pay the rent, and as between him and the lessor he is liable for the payment of the rent. But, the corporation being the real principal and the party for whose benefit the contract was made, it is also liable for the rent. The highly technical rule that those persons only can be charged who appear upon the face of the instrument to be parties to it does not obtain here. Arizona Life Ins. Co. v. Lindell, 15 Ariz. 471, 140 Pac. 60. Mr. Justice HOLMES, in Byington v. Simpson, 134 Mass. 169, 45 Am. Rep. 314, said:

“Whatever the original merits of the rule that a party not mentioned in a simple contract in writing may be charged as a principal upon oral evidence, even where the writing gives no indication of an intent to bind any other person than the signer, we cannot reopen it, for it is as well settled as any part of the law of agency. ’ ’

Meehem says: “For the purpose of identifying the principal, parol evidence may be admitted. It does not violate the principle which forbids the contradiction of a written agreement by parol evidence, nor that which forbids the discharging of a party by parol from the obligations of his written contract. The writing is not contradicted, nor is the agent discharged; the result is merely that an additional party is made liable.” Paragraph 1733, Meehem on Agency.

See, also, Tiffany on Landlord and Tenant, par. 57b, and par. 181e.

“It is no contradiction of a contract which is silent as to the fact to prove that a party is acting therein not on his own behalf, but for another. ‘This does not deny,’ said Parke, B., ‘that it is binding on those whom on the face of it, it purports to bind; but shows that it also binds another, by reason that the act of the agent in signing the agreement in pursuance of his authority is, in law, the act of the principal.” Bishop on Contracts, par. 1084.

In these circumstances there is a double obligation, although there can be but one satisfaction. In the other aspect of the case if McKee contracted this lease individually and assigned [422]*422the leasehold estate to the McKee’s Cash Store, the liability of the defendants to plaintiff is not substantially- different than if the lease had been executed in the name of C. W. McKee individually, but in fact for the McKee’s Cash Store as principal.

Mr. Washburn sums up the doctrine in question as follows:

“There is an important distinction to be observed between express and implied covenants in a lease since one who enters into an express covenant remains bound by it, though the lease he assigned over, while such as are implied are coextensive only with the occupation of the premises; the lessee, for instance, not being liable under his implied covenant for rent after his assignment to another, and the acceptance of rent by the lessor from the assignee. The lessee remains liable upon his express covenant to pay rent, notwithstanding his having assigned his lease with the lessor’s assent, and the lessor may have accepted rent from the assignee. The lessor, in such case, may sue the lessee, or his assignee, or both, at his election and at the same time though he can have but one satisfaction. The lessee continues liable upon his personal covenant, in the nature of a surety for his assignee, who is ultimately liable to him for the amount paid by him.

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Bluebook (online)
171 P. 910, 19 Ariz. 418, 1918 Ariz. LEXIS 95, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mckees-cash-store-v-otero-ariz-1918.