'Lessee' Didn't Own Advertising Sign Structure

April 30, 2007

Corporation A signed a 10-year lease to place equipment and materials on an advertising sign at Corp. B's car wash. A few days before the lease was set to expire, Corp. A asked the court to block Corp. B from removing or modifying the sign. Corp. A claimed that it was the true owner of the sign structure, in addition to the equipment and materials placed on the sign. However, Corp. B argued that it was the true owner of the sign structure.

Corporation A signed a 10-year lease to place equipment and materials on an advertising sign at Corp. B's car wash. A few days before the lease was set to expire, Corp. A asked the court to block Corp. B from removing or modifying the sign. Corp. A claimed that it was the true owner of the sign structure, in addition to the equipment and materials placed on the sign. However, Corp. B argued that it was the true owner of the sign structure.

A Tennessee appeals court ruled that Corp. B owned the sign structure. The court noticed that Corp. A was named in the lease as the “Lessee,” while Corp. B was “Lessor.” Those designations were important because they indicated that Corp. A did “not own, outright, the property being leased,” said the court. Also, the court pointed out that had Corp. A owned the sign structure as well as the equipment and the materials, there would be no need for Corp. A to enter into a lease for the sign. The court noted that in the lease, Corp. B specifically represented that it was the owner of the sign structure and had the authority to enter into the lease. And the lease gave Corp. B the right to buy the equipment and materials on the sign from Corp. A. Looking at the lease as a whole, the court reasoned that Corp. B owned the sign structure, while Corp. A owned the equipment and materials placed on the sign.

  • Clear Channel Outdoor, Inc. v. A Quality, Inc.: No. W2006-00946-COA-R3-CV, 2007 Tenn. App. LEXIS 201 (Tenn. Ct. App. 4/9/07).

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