157 Va. 13 | Va. | 1931
delivered the opinion of the court.
The appellee, the Twin Qity Market, Inc., filed its bill against the appellants in the Corporation Court of the city of Bristol. The objects of the suit were to enjoin the prosecution of a writ of unlawful detainer in the Circuit Court of Washington county; to construe the lease of certain real estate in the city of Bristol made by F. T. Blanchard and Sue B. Blanchard to it; to secure a declaratory decree fixing the rights of the parties thereunder; and for the avoidance of a forfeiture of that lease claimed, by the lessors, the appellants.
The first and second assignments of error present the same question.
The appellants, who were defendants in the court below, instead of filing a plea in abatement, appeared and moved to dissolve the interlocutory injunction which had been
The contention of the appellants is that the Corporation Court of the city of Bristol had no jurisdiction to entertain the bill, and that appellee, complainant below, had a complete and adequate remedy in the pending writ of unlawful detainer which had been instituted in the Circuit Court of Washington county, a court having concurrent jurisdiction in Bristol with the Corporation Court of the city of Bristol. This contention is based upon Code, section 6318, which reads:
“Jurisdiction of a bill for an injunction to any judgment or judicial proceeding shall be in the court in which the judgment was rendered or such proceeding is pending; except that jurisdiction of an injunction to a judgment of a justice, or to any proceeding before a justice, shall be in the circuit court of the county, or the circuit, corporation, or other court of the city, having chancery jurisdiction of the county or city in which the judgment was rendered or such proceeding is pending; .and jurisdiction of an injunction to any other act or proceeding shall be in the circuit court of the county or the circuit, corporation or other court of the city, having chancery jurisdiction, in which the act or proceeding is to be done, or is doing, or apprehended.”
The appellants were claiming that the lease which was involved had been terminated by them after due notice, because of alleged breaches of conditions subsequent contained in the lease, relying chiefly upon the provision of the lease which reads: “The property hereby leased shall at all times be under the management of a competent resident manager, appointed by the board of directors and properly bonded, who shall devote his entire time to the operation, control and supervision of the entire property.”
The property involved was a market house and premises.
“It will be observed that defendants were present in court
“The views hereinabove expressed are strongly supported by other text-writers and cases, involving somewhat similar statutes, decided by the United States Supreme Court.”
Burks, J., in a concurring opinion, says, by way of emphasis: “ ‘Jurisdiction/ said Mr. Justice Brown, in The Resolute, 168 U. S. 437, 18 S. Ct. 112, 42 L. Ed. 533, ‘is the power to adjudicate a case upon the merits and dispose of it as justice may require’
“Venue is merely the place fixed for a trial. Both are prescribed by statute. The policy of the statute in fixing venue is the convenience of the parties. It is a mere privilege of the defendant which he may waive, if he wishes, and which he will be deemed to have waived, unless he raised the objection in the manner prescribed by statute. On the other hand, the policy of the statute in fixing jurisdiction is to determine the character or nature of the cause of which the several courts of the State may take cognizance, which cannot be enlarged or defeated by any act of
“The circuit courts of the State have general equity jurisdiction, including the power to grant injunctions, under section 5890 of the Code, and section 6321 directs an order granting an injunction to be sent to the clerk of such court as has jurisdiction under section 6318. This is not a limitation upon the power of the court granting the injunction, but simply fixes the venue of the case to be tried. Manifestly, it seemed to the legislature that section 6318 furnished the most convenient place to hear the controversy. But equity acts in personam, and may compel a party within its jurisdiction to perform an act outside of its jurisdiction. The statute is a venue statute and not a jurisdictional one.”
These views are fully supported by the citations in that case. They apply in this case and the Corporation Court of the city of Bristol committed no error in overruling the demurrer and in taking jurisdiction.
Another assignment of error is that the court should have refused to perpetuate the injunction, and should have dismissed the bill. This requires a consideration of the merits of the case.
Much of the evidence is documentary and uncontradicted.
It appears that on September 26, 1928, the appellants, in writing, leased to the appellee certain valuable property located in Bristol, Virginia, known as the Bristol City Market, for the period beginning September 26, 1928, and ending February 2, 1955. The appellants had previously leased it to the Bristol City Market, Inc., which had been organized by F. T. Blanchard, one of the appellants, and certain associates who lived in Bristol. That corporation had taken possession of the premises and changed and improved the buildings so as to make them, suitable for conducting a market there. It is said that the expense of such im
Among other things agreed upon at the formation of the new corporation was that the stock therein should be equally subscribed by F. T. Blanchard (one of the appellants who has actively represented the lessors before and during this controversy), R. H. Angelí and H. C. Kelsey. Blanchard, in his testimony in this case, vigorously denies that he subscribed to the stock of the junior corporation, appellee here, and while it is true that he never signed any subscription therefor, his own letters, together with the parol evidence, prove beyond peradventure that he demanded the right to subscribe for one-third of the stock, and that this was agreed to by the only other subscribers, Angelí and Kelsey, though then and thereafter he asked for extensions of time in which to pay therefor. These extensions were granted to him, which forced the other stockholders, Angelí and Kelsey, to advance additional funds for which they would have been reimbursed had Blanchard paid for the stock so allotted to him.
Contemporaneously with the organization of the Twin City Market, Inc., under these conditions, the lease which is here involved was executed and substituted for the previous lease.
One of the provisions of this new lease about which this controversy chiefly arises reads:
“(2) The property hereby leased shall, at all times, be under the management of a competent resident manager, appointed by the board of directors and properly bonded, who shall devote his entire time to the operation, control and supervision of the entire property. None of the officers or directors of the corporation, except those who devote at least one-half their time to the active management thereof, shall receive any compensation; and the combined salaries of such officers, the manager and employees shall not exceed in the aggregate more than $3,000.00 per annum, without the consent of the lessors first'had and obtained in writing.”
It is shown that at the time of this lease Blanchard urged, and Angelí and Kelsey agreed, that, if possible, one R. E. Coleman, who had been successful as manager of the Roanoke city market, should be employed under this clause of the lease as resident manager of the market house in Bristol. There were negotiations, and Coleman paid at least one visit to Bristol because he had been approached with the view of engaging his services, but no contract was consummated, and it is perfectly clear that he was unwilling to accept $150.00, the monthly salary which had been authorized and which Angelí and Kelsey were willing to offer. Coleman and Blanchard had long been friends, and Blanchard was very much more anxious and insistent upon Coleman’s employment than Angelí and Kelsey were.
Because of this Blanchard was made manager of the corporation and placed in charge of its market house and business. He claims that this was only a temporary expedient, because he could not afford to neglect his other business in order to devote his whole time to his duties as manager of the market. He, however, continued in that service from. September 26, 1928, the date of the lease, through to May 15, 1929, and received a salary of $150.00 a month therefor.
The market, however, did not prosper, and Angelí and Kelsey, who were the only stockholders who had paid for their stock, or contributed any funds, became dissatisfied. There is abundant evidence to support their conclusion that Blanchard had proved to be so tactless in his intercourse with the tenants of the market, and had been so arbitrary in his dealings with them., that a change of management was necessary. They, therefore, removed Blanchard as manager, and entered into a contract with S. K. M., Inc., real estate and rental agents, as manager of the market, to perform all the duties devolving upon such manager, as required by the lease under the clause that has been quoted. This change was also desired by them, because, while Blanchard had received $150.00 per month, they contracted for similar services with S. K. M., Inc., for approximately $65.00 per month.
At the time of this change, Blanchard made no protest or objection, for on May 15 he wrote this letter to H. C. Kelsey:
“I just received your letter and notice turning over the management of the m&rket to S. K. M. I expected a letter from you but I thought it would be about Coleman. I wrote you a letter this morning which I would not have written if I had gotten this sooner. I at once called up Arthur King and had him come to my office and turned blank contracts over to him with all information I had that would be of benefit to him in the handling of the market, I told him to call on me any time and that I would help out any way I could.
“Be sure to send me those two last statements I made to you and I will send you a complete report up to May 15th.
“You will please write me just what you and Mr. Angelí said about the issuing of my stock in the Twin City Market, so I can make arrangements to take it up soon as I can.
“Please let me hear from you at once.”
Arthur King was manager of S. K. M., Inc., real estate agency in Bristol, Tennessee, duly licensed in Bristol, Virginia, whose offices were located two or three blocks distant from the market house—the leased premises.
This apparent satisfaction with the change of management did not, however, last long, for August 26 Blanchard sent to Kelsey as secretary-treasurer of the Twin City Market, Inc., a notice of breach of contract, reading:
“1st: This contract was breached January 1, 1929, by your not having the accounts audited.and distributing the rental funds January 1, April 1 and July 1. If there was no money to pay out the lessor should be so notified with a statement of conditions at that time.
“2nd: On May 15th you placed the market properties in the hands of S. K. M., general real estate and rental agents, situated on the corner of Sixth and Shelby streets, Bristol, Tennessee, instead of employing a manager for the market with experience who would give his entire time and
It is remarked in passing that for a large part of the period involved Blanchard had himself been the manager, and knew more about the receipts and disbursements of the corporation than any one else; so that in this notice of the breach of the contract his reference to auditing the accounts is not impressive.
After the receipt of this notice, Blanchard was told that as he had charge of the market as manager until May 15, 1929, he should be fully advised as to the accounts and transactions of the corporation in connection with the market business, and it had not been thought that an audit would be either necessary or desirable; but that if he was not satisfied with the management of the property by S. K. M., Inc., he could say so, and he could recommend somebody who he thought could conduct the business better than it had been conducted. Afterwards there was a meeting between Blanchard, Angelí and Kelsey, in Roanoke, and it was agreed that there should be an audit of the books of the company by certified auditors, and the auditors who were designated by Blanchard were selected, and the accounts have been audited.
There had been an unusual flood in the summer of 1929, which had damaged the market property, and because of this, as well as because of the extension and development of chain store business in Bristol, it seems to have been recognized that it had become impossible to conduct the market house business profitably in Bristol pursuant to the original plans of these parties. Angelí and Kelsey then sought to induce Blanchard to release the lessee corporation from the obligation of the lease to use the property strictly for market purposes, and to authorize the subletting of the premises for any other purposes for which it might be available.
It is now agreed by all of the parties (and this is about the only thing about which they do agree) that because of the changed conditions it is not probable that the market house business can be conducted there profitably. This is a matter of supreme importance to them all, because, instead of a specific rental, the lease provides that the lessors and the lessee corporation shall each have one-half of the net profits of the business. So far, the profits have been negligible, though it is claimed for the lessee that the prospects are better. The outlook is bad for both—for the Blanchards (the lessors) because the property is subject to the lease until 1955, and for Angelí and Kelsey because of their large investment in the enterprise, so that should the lease be surrendered without compensation to the lessee corporation, they will lose their entire investment.
On March 31, 1930, through their attorney, the appellants gave notice to the appellee of the forfeiture of the lease on account of the breaches complained of in the notice heretofore referred to. This notice, after reciting the same alleged breaches, concluded: “Therefore, this is to notify you that under the terms of paragraph last above quoted, I am entering upon and taking possession of the premises described in the said lease and have re-entered upon the said demised premises as of my former estate.”
Following this, Blanchard attempted to make forcible entry upon the property by removing the outer locks and substituting other locks therefor. This was resisted, the new locks were taken off and Blanchard was notified to cease interference with the property, and to desist in his attempts to take forcible possession thereof. This was followed by the action of unlawful detainer, to which reference has been made, and this suit.
It is shown that the audit referred to has been made by auditors selected by Blanchard.
It is shown that the placing of the property in the hands of S. K. M., Inc., at least for the time, was acquiesced in by Blanchard, and it is contended that because of this acquiescence the lessors are estopped to claim that there has- been a breach of the covenant requiring the employment of a manager. It is alleged that Blanchard well knew that under present conditions and those which have existed ever since the lease became effective, it is unnecessary to employ a manager for the property who will devote his entire time and attention to the management of the property, and that by accepting the position of manager himself, when he was conducting another independent business, and by acquiescing in the employment and continuance of S. K. M., Inc., as manager, he has waived any right to insist upon a forfeiture of the lease on this ground.
It is shown by the minutes of the initial or organization meeting of the Twin City Market, Inc., that Blanchard was present as one of the incorporators; that he was elected chairman; that he was elected a member of the board of directors for the ensuing year, and until their successors should be elected and qualified; and that the directors were authorized- and directed to issue the maximum capital authorized by the certificate of incorporation, $75,000.00, in such amounts as from time to time might be determined by the board, and as provided by law, at the price of $25.00 a share. On the same date, October 1, 1928, the minutes of the first meeting of the board of directors of the corporation show that Angelí, Blanchard and Kelsey, all the members of the board of directors, were present; that Blanchard was chosen temporary chairman and Kelsey temporary secretary; that the minutes of the first meeting of the incorporators were
There is much testimony, oral and written. The writings consist chiefly of letters exchanged between the parties, are inconsistent with each other, their expressions naturally
It is also apparent that his associates, Angelí and Kelsey, who have contributed all of the capital which has been necessary to conduct the affairs of the lessee corporation (unless the unexpected should happen and the market become profitable), have no other means of reimbursing themselves except by driving as hard a bargain as they can with the lessors.
That it is also to the interest of the lessors and lessee alike to compromise their differences by a fair agreement with each other in order to relieve themselves from still greater losses, is quite apparent.
The trial court seems to have fully met and disposed of the present litigation in the best way immediately possible. Blanchard, as lessor, is estopped to deny every fact which he knew as incorporator and director of the lessee corporation, so that he cannot now complain of its capitalization with which he was familiar, and one-third of which he agreed to supply.
The decree perpetuates the injunction against the unlawful detainer proceeding. It holds that F. T. Blanchard and Sue B. Blanchard, under the allegations of their cross bill, are not entitled to a rescission of the lease agreement, and so adjudges and decrees. Of course, this adjudication applies only to the facts then shown to exist. It does not prevent them from reopening the question, if
The decree proceeds: “Responding to paragraph 6 of complainant’s bill and to clause 3 of the prayer thereof, asking for a declaratory decree as to the stipulation in the lease agreement involved relating to the employment of a full time resident manager, the court is of opinion that such manager may reside either in Bristol, Virginia, or Bristol, Tennessee, and that a corporation may be employed as such manager. However, if a corporation is employed, it must act through some competent person as though an individual were employed, that is to say, some one 'who shall devote his entire time to the operation, control and supervision of the entire property.’ Such person to be put in charge shall devote his undivided time and attention to building up, maintaining and supervising the market in question. Although defendants have by their assent and acquiescence waived a full compliance with this stipulation on the part of complainant for the time being, they are not precluded from exacting full performance thereof in the future. All of which the court doth so declare, adjudge and decree.”
This is all that the appellants are entitled to under the facts shown by this record. Compliance with this and other essential requirements of the lease will doubtless continue to exhaust the revenues of the lessee company, but the decree construes that clause of the contract of lease properly. This construction the lessors have the right to insist upon. That the trial court realized that each of the litigants had strong equities is apparent, because it directed the costs to be equally apportioned between them. We can do no better with this difficult condition at present than the trial court has done.
The decree will, therefore, be affirmed, without costs.
Affirmed.