Consideration of the issues involves the interlocking relationship *841 of appellant John Derbyshire and certain corporations he formed and the extent to which these corporate entities may be disregarded in this case. Derbyshire owns 100 percent of the stock in three corporations, Thermocon International, Inc., and Durlin & Associates, Inc., (d/b/a Weathertite Contracting Company), and Jeslan Enterprises, Inc. In turn Jeslan Enterprises, Inc., completely owns Stanley Steele Company, Inc., (d/b/а Thermocon Southeast) which controls National Boric Acid Corporation.
All were defendants in an action brought by United Builders Supplies, Inc., seeking recovery under a lease agreement and for damages to the premises owned by United Builders. Dеfendants appeal after a jury verdict in favor of plaintiff.
On February 15, 1984, Stanley Steele Company, then an independent business, leased premises in Columbus from United Builders Supplies. The agreement was for three years ending January 31, 1987, with an option for threе three-year additional terms. The lease also contained a provision for assignment and for payment of attorney fees in the event of default.
In 1985 and 1986 Richard Lane, Vice-President of United Builders, met with John Derbyshire who informed him that Derbyshire intended to move his insulation business, under the name Thermocon, into the Columbus area as part of a plan for national expansion. Derbyshire indicated an interest in purchasing Stanley Steele, extending the lease and later buying the property owned by United Builders.
In September 1986 Derbyshire formed a wholly-owned corporation, Jeslan Enterprises, for the purpose of acquiring 100 percent interest in Stanley Steele. On September 25 Jeslan Enterprises purchased all the stock of Stanley Steele.
On Octobеr 28, Keith Wright, signing as Secretary-Treasurer under a letter head styled “Thermocon” with the Columbus leased premises address, informed United Builders’ Lane that “we would like to exercise our option to extend the lease for an additional term of three years as indicated in paragraph 25 of the original lease,” bringing it to January 31, 1990.
In 1987 lease payments were delinquent and Lane met with certain corporate officers of Thermocon and Stanley Steele and also spoke with Derbyshire over the telеphone about bringing the payments current. Lane understood that Derbyshire and Thermocon were responsible for the rent and informed the officials that he was looking to them for payment. He received a letter on May 14 under the name of Thermоcon Southeast, signed by Keith Wright, setting forth a payment plan. Subsequently payments stopped and Lane contacted Derbyshire who said he would not be pressured about the rent.
During this time the building was occupied or being used by each of the defendant cоrporations and several of the officers worked for *842 more than one corporation. Besides his exclusive ownership and control of the three principal corporations, Derbyshire was president of Stanley Steele, Thermoсon International and Jeslan Enterprises. Stanley Steele and National Boric Acid issued paychecks out of the Columbus location.
On November 7 the premises were vacated and the lease agreement abandoned. Extensive damagеs were done to the premises when defendants moved out and two large vats of sulfuric acid, were left behind. United Builders expended almost $14,000 in repairs and renovations in order to make the property suitable for leasing. Neither Derbyshire nor his corporations gave any notice to United Builders. Derbyshire refused to respond to any inquiries about the damages or of future intentions with regard to the lease.
United Builders sued in December. Defendants answered; Derby-shire, Thermocon International and Durlin & Associates d/b/a Weathertite moved for summary judgment; Derbyshire and Thermocon moved to dismiss on jurisdictional grounds. Discovery was completed and the motions were denied.
Plaintiff filed an amended and recast complaint naming Derby-shire and the corporations as they appear in the initial paragraph of this opinion. A jury returned a verdict in favor of plaintiff for $125,000. Judgment was entered thereon and appeal was taken. The judgment was then modified to award $72,381.60 in lost rent, $10,857.13 for attorney fees, $5,366.26 for damages tо the property and $8,000 for expenses to make the premises rentable. Appeal also from that judgment followed.
1. Derbyshire, Thermocon and Jeslan assign error on the denial of their motions to dismiss for lack of jurisdiction. Jeslan must be eliminated from consideration because it did not file a motion to dismiss on this basis. As to Derbyshire and Thermocon their motions were denied on the grounds, as found by the trial court in separate orders as to each, that “there remain genuine issues as to material facts rеgarding whether this Court has jurisdiction over this defendant.”
This might be a proper ruling to make on motion for summary judgment, but a motion based on lack of jurisdiction targets a matter in abatement, not the merits of a case.
Behar v. Aero Med Intl.,
When ruling on a motion to dismiss based upon jurisdictional grounds, the trial court must make the determination acting as the trier of fact.
Big Canoe Corp. v. Williamson,
The effect of the trial court’s ruling was to avoid its responsibility to decide the jurisdictional question. OCGA §§ 9-11-12 (d) and 9-11-43 (b);
Ogden Equip. Co.,
supra;
Montgomery,
supra at 190;
Myers v. McLarty,
The ruling on the motions must be reversed and remanded for a hеaring and judgment predicated on the relevant principles of law. If the court finds no jurisdiction as to Derbyshire and Thermocon, the final judgment rendered against them must fall.
2. (a) Because they were not signatories on the lease, defendants Derbyshire, Thermоcon, Jeslan, Durlin and National Boric Acid contend there is no basis for holding them liable.
Evidence that defendant corporations jointly occupied the building gives a sound reason for finding them jointly liable for the physical damages to the building. Whether they all may be liable on the lease is another matter. Their using the premises does not per se impose liability upon them for the rent. A sublessee incurs liability to the lessor for the rent only where he assumes liability not merely because of his status. 49 AmJur2d 488, Landlord & Tenant, § 509, аnd cases cited. Unless they were joint tenants or cotenants they would not be liable for the rent.
Two reasons would sustain liability here. First, the letter from Thermocon, signed by Keith Wright, indicates that Thermocon and Derbyshire were exercising the right to extend the leаse although there was no written assignment of the lease to those two. Performance by one party and acceptance by the other or such part performance as would render it a fraud on the part of the party refusing to comply would establish an enforceable contract even though there was no compliance with the Statute of Frauds. OCGA § 13-5-31 (2) & *844 (3). This theory for sustaining the verdict, while viable, was not presented to the jury.
Second, the individual defendant and the corporations, in addition to Stanley Steele, could be impressed with responsibility for complying with the obligations of the lease and particularly its requirements for payment of rent by the process of piercing the corporate veil or disregarding the corpоrate entity.
An inherent purpose of incorporation is insulation from liability. A corporation possesses a legal existence separate and apart from that of its officers and shareholders so that the operation of a corporate business does not render officers and shareholders personally liable for corporate acts.
Raynor v. American States Ins. Co.,
Using terminology such as “piercing the corporate veil,” “looking at the substance rather than at the form,” or “disregarding the сorporate fiction,” our courts have disregarded the separate entity of a corporation where it has overextended its privileges.
Bone Constr. Co. v. Lewis,
The law intervenes when the separate personalities of the corporation and its owner no longer exist. The question is whether the corporation serves as the alter ego or business conduit of its owner. To establish this, “it must be shown that the stockholders’ disregard of the corporate entity made it a mere instrumentality for the transaction of their own affairs; that there is such unity of interest and ownership that the separate personalities of the corporation and the owners no longer exist; and to adhere to the doctrine of corporate entity would promote injustice or protect fraud.”
Trans-American Communications v. Nolle,
“When litigated, the issue of ‘piercing the corporate veil’ is a jury question.”
Fla. Shade &c. Growers v. Duncan,
The proof offered was somewhat ambiguous and certainly not *845 free from doubt, but it indicated Derbyshire and his family of corporations acted as a unit. Derbyshire referred to his corporations in an interchаngeable manner and in testifying had difficulty, remembering what corporation did what and which corporation had which officers. His confusion was understandable because some of them worked for more than one corporation and because Derbyshire was also the president of Stanley, Thermocon and Jeslan as well as the sole owner of three corporations. In dealings with United Builders the corporations appeared not as separate units but as an amalgamated whole. The acceptance of the option for an extension of the lease was on “Thermocon” letterhead and stated “we would like to exercise our option.” The corporations functioned together to producе a common product and of course used the same address and were housed in the same building, the leased premises.
Derbyshire apparently employed the corporations as his alter egos or as business conduits. When used as a subterfuge tо work an injustice, this furnishes grounds which in equity and good conscience would justify the disregard of their separate entities.
Applying the rule that an appellate court construes the evidence in favor of the verdict,
Wright v. Thompson,
(b) Having determined there were grounds to disregard the corporate entities, the Statute of Frauds issue becomes moot as it is immaterial which of Derbyshire’s alter egos actually executed the lease extension.
3. Defendants moved for directed verdict as to attorney fees under the contract on the grounds that plaintiff failed to comply with OCGA § 13-1-11. On appeal they enumerate as error the denial of their joint motion. Plaintiff contended below that it was not necessary to give notice or otherwise comply with the Code section. It now asserts that if the Code section were applicable then there was substantial compliance, citing
Carlos v. Murphy Warehouse Co.,
The provision for attorney fees in the lease agreement is governed by OCGA § 13-1-11.
Kasum Communications v. CPI North Druid Co.,
Direction is given that attorney fees be written off.
Judgments affirmed in part and reversed in part; and case remanded with direction.