Utilities & Industries Corp. v. Carter & Associates

287 S.E.2d 77, 160 Ga. App. 361, 1981 Ga. App. LEXIS 3073
CourtCourt of Appeals of Georgia
DecidedNovember 12, 1981
Docket62379; 62380
StatusPublished
Cited by3 cases

This text of 287 S.E.2d 77 (Utilities & Industries Corp. v. Carter & Associates) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Utilities & Industries Corp. v. Carter & Associates, 287 S.E.2d 77, 160 Ga. App. 361, 1981 Ga. App. LEXIS 3073 (Ga. Ct. App. 1981).

Opinion

Carley, Judge.

The instant case arises from a most complex set of facts. In 1967 D. M. Weatherly Company (Weatherly), a defendant below but not a party to this appeal, entered into a ten year lease agreement with the original owner-lessor of the premises. Appellee and cross-appellant Carter & Associates (Carter) was a party to this agreement and signed as the “agent.” The terms of this agreement relevant to the instant appeal are as follows: “Lessor agrees to pay [Carter] as compensation for services rendered in procuring this lease, the first month’s rent hereunder, and in addition thereto five percent (5%) of all rentals thereafter paid by [Weatherly] under this lease. Lessor, with consent of [Weatherly], hereby assigns to [Carter] the first month’s rent hereunder and five percent (5%) of all rentals paid under this lease. Lessor agrees if this lease is extended, or if a new lease is entered into between Lessor and [Weatherly] covering leased premises, or any part thereof, then in either of said events, Lessor, in consideration of [Carter’s] having procured [Weatherly] hereunder, agrees to pay [362]*362[Carter] five percent (5%) of all rentals paid Lessor by [Weatherly] under such extension or new lease. [Carter] agrees in the event Lessor sells leased premises that upon Lessor’s furnishing [Carter] with an agreement signed by Purchaser, assuming Lessor’s obligations to [Carter] under this lease, that [Carter] will release Lessor from any further obligations to [Carter] hereunder. . .”

In 1970 the building containing the leased premises was sold by the original owner-lessor to appellant-Utilities & Industries Corporation (U&I). The building leases, including Weatherly’s, were assigned to U&I as the new owner. The proposed lease assignment agreement had contained the following language: “[U&I] hereby accepts said assignment and agrees to comply with all the convenants and agreements in the leases with the tenants ...” This language of the assignment agreement was, however, stricken from the document. In its stead the following appeared: “[U&I] agrees to take said leases subject to agent’s commissions set forth therein.” It is undisputed that after the building was sold to U&I, Carter continued to receive its commissions from U&I under the 1967 Weatherly lease.

In 1971 U&I and Weatherly renegotiated the terms of the 1967 agreement and entered into a new lease which would be effective for the remainder of the original ten-year term. Under this 1971 lease, U&I agreed “to pay any and all agent’s fees, commissions or other compensation which may be due or become due as a result of this agreement, or any other agreement pursuant to which [Weatherly] now occupies or heretofore occupied all or any part of Premises.” Carter continued to receive its commission from U&I after the 1971 lease became effective.

In 1973 U&I sold the building to WHLT, Inc., not a party-defendant below and consequently not a party to this appeal. U&I assigned the leases to WHLT in an agreement containing the following language: “By acceptance hereof, [WHLT], as to obligations accruing after the date hereof, assumes all of [U&I’s] obligations under the Leases both to the Lessees (or Tenants) and to the brokers (or agents), if any, named therein, and agrees, as to such obligations so accruing after the date hereof, to hold [U&I] harmless from any liability arising from some act or omission of [WHLT] performed or omitted subsequent to the date hereof.” Within a very short time WHLT sold the building and assigned the leases to appellee and cross-appellant Johnson-Hicks (J-H). The assignment to J-H made no provision for its assumption of obligations to agents or brokers for commissions due under the leases. However, it is undisputed that Carter continued to receive its commission from J-H under Weatherly’s 1971 lease throughout the remaining term of that [363]*363lease.

In 1977, when Weatherly’s lease expired, J-H relet the premises to Weatherly under an entirely new lease agreement to which Carter was not a party. When Carter’s demands for commissions under this 1977 lease were refused, Carter instituted the instant action against U&I, J-H and Weatherly. Subsequently, in an order from which no appeal has been filed, Weatherly, the lessee, was granted summary judgment and Carter’s action continued solely against U&I and J-H. After discovery, all parties moved for summary judgment. The trial court heard all motions and granted Carter summary judgment against U&I and granted J-H summary judgment against Carter. In Case Number 62379 U&I appeals from the grant of summary judgment in favor of Carter and the denial of its motion for summary judgment. In Case Number 62380 Carter cross-appeals from the grant of summary judgment to J-H and the denial of its motion against J-H.

Case Number 62379.

1. The covenant in the original 1967 lease to pay commissions was the original lessor’s personal obligation to Carter. James Talcott, Inc. v. Roy D. Warren Commercial, 120 Ga. App. 544 (171 SE2d 907) (1969). It was not a covenant running with the land. Goldberg v. Varner, 72 Ga. App. 673 (34 SE2d 722) (1945). “If a covenant is personal, it binds only the original parties and those who may assume its obligation, and upon a conveyance of the land, or a transfer of the lease, as the case may be, the transferee takes free of the obligation of any personal covenant appearing in the deed or lease. [Cits.]” (Emphasis supplied.) James Talcott, 120 Ga. App. 544, 546 supra. Thus, it follows that Carter’s claim against the subsequent owners-lessors of the building must be premised upon their successive assumption of the original owner-lessor’s personal covenant in the 1967 lease.

Carter asserts and the trial court agreed that U&I assumed the original owner-lessor’s personal obligation under the 1967 lease. As noted above, the agreement whereby the 1967 lease was assigned by the original owner-lessor to U&I had a provision for U&I’s specific compliance with “all the covenants” in the lease. This language was stricken, however, and instead the parties agreed that U&I would accept the assignment of the leases “subject to agents’ commissions set forth therein.” Under these circumstances it is extremely doubtful whether the assignment agreement can be construed as evidencing U&I’s assumption of the original owner-lessor’s personal covenant with Carter concerning commissions. “ ‘[T]he words “subject to” normally connote, in legal parlance, an absence of [364]*364personal obligation.’ [Cits.]” Parker v. Rexall Drug Co., 132 Ga. App. 32, 34 (207 SE2d 617) (1974). As thus construed, the 1970 assignment of the leases to U&I was not “an agreement signed by [U&I] assuming Lessor’s obligation to [Carter] under [the 1967] lease” and the original owner-lessor was not released thereby. Furthermore, payments by U&I to Carter under the 1967 and the 1971 leases would constitute and evidence U&I’s voluntary payment of the original owner-lessor’s unassumed covenant with Carter for which no recovery can now be had and not U&I’s subsequently “signed” written assumption of personal liability therefor. See Hurt & Quinn v. Keen, 89 Ga. App. 4 (3) (78 SE2d 345) (1953). If U&I was not obligated as a party to the original covenant or as the subsequent assumer of the obligation to pay commissions to Carter, the fact that it continued to do so under the old leases does not entitle Carter to commissions from U&I under the newly negotiated one. See Goldberg v.

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Bluebook (online)
287 S.E.2d 77, 160 Ga. App. 361, 1981 Ga. App. LEXIS 3073, Counsel Stack Legal Research, https://law.counselstack.com/opinion/utilities-industries-corp-v-carter-associates-gactapp-1981.