|
The Tennessee Supreme
Court has one again addressed a key issue that comes up often in commercial
leases. The question in this case, decided September 2, 2016, was
whether an individual who signed the lease (in a peculiar way) was personally
responsible for the terms of the commercial lease. This case is MLG
Enterprises, LLC v. Richard L. Johnson, 2016 WL 4582174 (Tenn. 2016). In this case, the individual Defendant,
Richard Johnson, signed a lease on behalf of the tenant as well as
individually. The key issue in this case
was where Mr. Johnson signed the lease individually in such a way that made him
personally obligated as a guarantor for the lease terms. The Tennessee Supreme Court identified the
key signature line as follows:
The third signature
space, located on the right side of the Lease and below the second signature
space, provides a signature line beneath which appears the typed text “Richard
L. Johnson.” On this line is the handwritten signature “Richard L. Johnson” followed by the handwritten words “for Mobile
Master Mfg. LLC.” To the left of this signature appears the typed text
“EXECUTED BY Richard L. Johnson, THIS ___ DAY OF OCTOBER, 2007.”
As you can see, Mr.
Johnson signed the lease individually but then added the words “for Mobile
Master Mfg. LLC”. The implication was
that he was not signing on his own behalf but instead he was signing for the
entity. The Tennessee Supreme Court
found that this modification of the signature was ineffective because it was
contrary to the clear language in the lease.
The Court found that
Mr. Johnson was liable under the lease because of the clear intent of the lease
to hold him personally liable. That is
due to the fact that the preceding paragraph prior to the signatures contained
the following personal guaranty language:
37. PERSONAL LIABILITY:
In consideration of Landlord entering into this Lease with Tenant,
Richard L. Johnson hereby agrees that he shall be personally liable for all of
Tenant's obligations under this Lease and executes this Lease for this purpose.
|