ST McKnight Co. v. Central Hanover Bank & Trust Co.

Citation120 F.2d 310
Decision Date16 May 1941
Docket Number11891.,No. 11888,11888
PartiesS. T. McKNIGHT CO. v. CENTRAL HANOVER BANK & TRUST CO. et al. CENTRAL HANOVER BANK & TRUST CO. et al. v. S. T. McKNIGHT CO.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

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James E. Dorsey, of Minneapolis, Minn. (Leland S. Duxbury, Harry A. Blackmun, and Fletcher, Dorsey, Barker, Colman & Barber, all of Minneapolis, Minn., on the brief), for S. T. McKnight Co.

Franklin D. Gray, of Minneapolis, Minn. (Harold G. Cant and Kingman, Cross, Morley, Cant & Taylor, all of Minneapolis, Minn., on the brief), for Central Hanover Bank & Trust Co. et al.

Before WOODROUGH, JOHNSEN, and VAN VALKENBURGH, Circuit Judges.

WOODROUGH, Circuit Judge.

The S. T. McKnight company is, and long has been, the owner of a half of Lot 9, Block 222, Hoag & Bell's Addition to Minneapolis, Minnesota, on South Sixth Street, in the downtown part of the city. In 1909 it executed a lease of the property for 100 years to Charles D. Collins, lessee. The lease was assignable and Collins promised, but failed, to assign it to John E. Andrus. By the decree in a suit for specific performance brought by Andrus against Collins and others in 1913, the lease was assigned to Andrus. In 1921 Andrus assigned the lease and transferred it in trust together with many other of his assets, and the Central Hanover Bank & Trust Company, Hamlin F. Andrus and William H. Taylor have succeeded to the Trust as trustees. The trustees remained in possession of the leased property until April 11, 1938, when they assigned their interest in the lease, vacated the property and denied further liability under the lease. The McKnight company brought this civil action against them to subject them in effect to the obligations of the lease for the term thereof and to recover from them for alleged breaches of the lease and certain related agreements, six causes of action being stated in separately numbered counts of the amended complaint. Issues having been joined, the court tried the case without jury, made findings of fact and conclusions of law, accompanied by memorandum opinion, and entered judgment in favor of the McKnight company on the third, fifth and sixth causes of action of the complaint and in favor of the trustees on the first, second and fourth causes of action. The parties have taken separate appeals from the parts of the judgment which were adverse to them respectively.

No. 11,888, S. T. McKnight Co. v. Central Hanover Bank et al.

The Judgments Against the McKnight Company Upon the First, Second and Fourth Causes of Action.

It was alleged in the first cause of action of plaintiff's amended complaint that jurisdiction existed by reason of diversity of citizenship and requisite amount involved; that plaintiff was, and at all times referred to had been, the owner in fee of the described property; that on or about May 28, 1909, plaintiff, as lessor, and Charles D. Collins, an individual, acting for and on behalf of John E. Andrus, an individual, as lessee entered into and executed a written agreement (hereinafter called the lease) whereby plaintiff leased the leased premises to said lessee for the term of one hundred years from and after May 1, 1909; that the lease demised the half lot above described and contained among its provisions the following: "7. Each covenant, agreement and grant in this instrument made by the Lessor shall bind its successors and assigns and shall inure to the benefit of the Lessee's heirs, executors, administrators and assigns, and each covenant and agreement in this instrument made by the Lessee shall bind his heirs, executors, administrators, and assigns, and shall inure to the benefit of the Lessor's successors and assigns."

It was also alleged that: "By judgment and decree made and entered on the 16th day of July, 1913, by the District Court in and for the County of Hennepin, State of Minnesota, in a consolidated action known as Case No. 126462, in which said John E. Andrus was plaintiff and Dyckman Hotel Company, a corporation, was defendant, and said John E. Andrus was plaintiff and said Charles D. Collins, Anna L. Collins, his wife, and Dyckman Hotel Company, a corporation, were defendants, it was adjudged and decreed that said Andrus was the owner of all the right, title, interest, and estate acquired by said Collins in and by said lease described in the preceding paragraph IV hereof, in the leasehold estate thereby created, and in the buildings situated on said leased premises; that said Collins and his wife, said Anna L. Collins, and each of them, had no right, title or interest in said lease or in the leasehold estate thereby created or in the buildings situated on the leased premises; that said Collins and his said wife should forthwith assign said lease to said Andrus. At all times after May 1, 1909, and until on or about December 30, 1921, said Andrus was in possession of and occupied the leased premises, either by and through the said Collins acting on behalf of the said Andrus, or in his own person."

It was further alleged that on December 30, 1921, Andrus created the trust of which defendants have become trustees by succession and conveyed to the trustees the property and assets sometimes called the Trust Estate "subject to any and all other obligations of any kind or nature then existing against said Andrus, which obligations were to be paid from the Trust Estate"; and that the lease, together with the other assets, was assigned and conveyed to the trustees who "accepted said lease and entered into possession and occupation of said leased premises and thereby assumed all the covenants and obligations of the lessee under said lease for and throughout the entire term thereof". Alleging that it was informed and believed that the property held by the trustees under the Deed of Trust was sufficient to pay all the obligations of Andrus under said lease, the McKnight company asserted that it had demanded from the trustees the rent due under the lease for the quarter-year extending from May 1, 1938, to July 31, 1938, inclusive, the amount of $937.50, but that this amount had not been paid in full or in part by the trustees.

In the second cause of action the McKnight company repeated the allegations of the first cause of action and asserted that rent was due from the trustees for the next quarter, August 1, 1938, to and through October 31, 1938, and that although demanded, it remained unpaid.

In the fourth cause of action McKnight repeated the allegations of the first cause of action, omitting reference to non-payment of rent and asserting that the terms of the lease required the lessee to keep the building on the premises insured up to a specified amount against loss by fire; that on May 24, 1938, the trustees had cancelled the fire insurance theretofore taken out and carried by them in respect to said building, "and continuously ever since said date said building has not been insured by defendants against loss by fire in any amount."

The McKnight company prayed that it recover judgment against the trustees for the amounts due as rent stated in the first and second causes of action, with interest and costs; and as to the fourth cause of action, it prayed alternative relief, either that the court determine the cost of insuring the building in accordance with the terms of the lease and require that the trustees effect the insurance, or that the court refer the matter to a master and decree that the trustees pay an amount equal to the cost of insurance.

The trustees answered these causes of action, admitting execution of the lease by the McKnight company to Collins, but denying that Andrus was ever lessee of the lease or that Collins had acted for or on behalf of Andrus in becoming lessee of the lease. They admitted that Andrus had brought action for specific performance against Collins in the state courts of Minnesota, which action terminated in a decree that Collins assign the lease to Andrus, that Andrus received the lease under the assignment so decreed and took possession, and subsequently, on December 30, 1921, assigned the lease to the trust, and that the trustees were in possession of the leased premises from December 30, 1921 to April 11, 1938. They asserted that on April 11, 1938, they assigned the lease to one George Dam, and vacated the premises on that day, disclaiming further interest in the lease or premises, as to all of which they gave notice to McKnight company by written instrument dated April 27, 1938. The trustees demanded judgment dismissing the McKnight company's action and for their costs.

The district court found the ownership of the realty in the plaintiff and that plaintiff had executed the lease to Collins and that its terms are as alleged in the complaint; that Collins was not the agent of Andrus in procuring the lease, and that Collins and not Andrus is lessee of the lease; that it had been adjudged and decreed in the case of Andrus v. Collins in the State court that Collins and his wife should assign the McKnight lease to Andrus, and that by the decree the lease was assigned to Andrus; that Andrus occupied the leased premises as assignee of the lease from July 16, 1913, to December 30, 1921, and that Andrus then transferred it, among other assets, to the trustees then acting, also executing an assignment of the lease to them, the whole trust conveyance being "subject to the payment of any and all federal income taxes now or hereafter assessed against the grantor for any year prior to the calendar year 1922, and any and all other obligations of any kind or nature now existing against the grantor, which taxes and obligations are to be paid from said trust estate, the trustees, however, assuming no personal liability therefor." That the trustees occupied the leased premises as assignees of the McKnight lease from December 30, 1921, until or about April 11, 1938. On that date they assigned the lease to one George Dam,...

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