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Collignon v. Levy

A-2275-00T3 (N.J. Super. App. Div. 2001) (Unpublished)

LEASES; CORPORATIONS; PERSONAL LIABILITY—A corporation is a corporate tenant even if a landlord reasonably believes it is dealing with an individual tenant, liability for rent lies with the corporation not with its individual officer.

A lease between a landlord and a corporate tenant was signed by an individual as vice president of the corporate tenant. It provided that, at its expiration date, the landlord could, at its option, evict the tenant or treat it as a month to month tenant. After the lease expired, a different corporation operated by prior tenant’s vice president remained on the premises. In the three and a half years that followed, rent was generally paid by checks drawn on its corporate account, although on a few occasions rent was paid with cash generated from that bank account. The officer never paid rent by personal check. At one point, the landlord sent a new lease, listing the new corporation as the tenant, but that lease was never signed. Nevertheless, the landlord continued to accept rent and allowed the new business to remain. Eventually, the replacement tenant left in the middle of the night and the landlord sued to collect back rent from both the new corporation and from the vice-president as the individual who had operated the corporation. The lower court ruled that the individual who had operated both businesses was personally liable for the rent and stated the following: “I also feel that based on the course of dealing between the parties which originally was with respect to the [first corporate tenant] but then became a month-to-month tenancy, especially in light of the fact that there was cash given for rent on a few occasions, that the landlord did in fact feel that he was dealing with [the tenant’s officer] individually since there was no proof as to the existence of the corporation at the time as evidenced by the failure of the defendant to sign a new lease in that regard.” The Appellate Division rejected the lower court’s “interpretation of the law and the legal consequences that” flowed from the lower court’s finding of facts. According to the Appellate Division, the original corporation remained the tenant as a matter of law. It also believed that the landlord accepted the second corporation as the successor to the first tenant. It didn’t matter to the Court that the second corporation did not sign the lease. “Without a lease the month-to-month tenancy simply continued.” In the Court’s belief, the individual officer of the corporation took no action inconsistent with corporate tenancy. It didn’t matter to the Court that the rent was paid in cash on a few occasions. There was uncontradicted testimony that the cash came from the second corporation’s bank account. Further, it didn’t matter that the landlord thought he was dealing with the corporations’ officer “individually.” The landlord’s feelings, “whether reasonable or not, do not control; either the tenancy remained a corporate one or not. It is the facts which determine the result, not [the landlord’s] view of the matter.”

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