Altman v. Shopping Center Bldg. Co.

• Decision Date: 11 March 1936
• Docket Number: No. 10391.,10391.
• Citation: 82 F.2d 521
• Parties: ALTMAN et al. v. SHOPPING CENTER BLDG. CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

82 F.2d 521 (1936)

ALTMAN et al. v. SHOPPING CENTER BLDG. CO. et al.

No. 10391.

Circuit Court of Appeals, Eighth Circuit.

March 11, 1936.

A. Z. Patterson and Clyde Taylor, both of Kansas City, Mo. (D. C. Chastain, of Kansas City, Mo., on the brief), for appellants.

Richard S. Righter and Cyrus Crane, both of Kansas City, Mo., for appellees Arthur P. Tureman and others.

Before GARDNER, SANBORN, and WOODROUGH, Circuit Judges.

WOODROUGH, Circuit Judge.

On the motion of Mr. and Mrs. Tureman to dismiss the appeal of the Altman heirs allowed by the trial court to review a portion of its decree.

The original bill in equity which was filed by the plaintiff Shopping Center Building Corporation, a Delaware corporation, in this case on August 26, 1933, is not included in the record, but it appears to have made parties all persons who had or claimed an interest in lots 44, 45, and 46 in Swopes addition and the Altman Building thereon, at the corner of Eleventh and Walnut streets in Kansas City, Mo. After the bill was filed, and on September 2, 1933, all of the parties appeared in person or by attorney, and, after a hearing, the trial court entered an interlocutory order in which it found that the improvements on the land were connected and operated as one building, known as the Altman Building; that it was all in the possession of the plaintiff as lessee and occupied by plaintiff and a large number of subtenants claiming under plaintiff; that various and conflicting claims of default were being made, demands for forfeiture and possession asserted, and suits concerning the possession had been brought and were threatened; and that irreparable injury would ensue unless injunction issued. Accordingly, an order was entered impounding the net revenues of the building and enjoining all the defendants from proceeding against the plaintiff or the property otherwise than in the one suit. The parties acquiesced in the interlocutory order.

It appears that there are three long-time ground leases covering the three lots upon which the Altman Building rests, referred to as the Adams, Walpole, and Pasfield leases, respectively, all of which had been acquired by the Merchants Realty Company from the owners, referred to as the Altman heirs, on April 21, 1919, pursuant to a written indenture of that date. By the terms of the indenture the Merchants Realty Company had been required to and had paid an immediate consideration of $40,000 in cash to the Altman heirs and had discharged $80,000 of encumbrances, and agreed to pay the Altman heirs $24,000 per annum throughout the concurring period of the three leases and a reduced sum thereafter until the termination of the last lease. The indenture provided that the Altman heirs leased to the Merchants Realty Company "the real estate described in the said Adams, Pasfield and Walpole leases, including all buildings and improvements thereon, * * * located upon the premises and including any and all * * * interests of the said Altman heirs in connection therewith"; the intention being "to let and lease to said Company everything pertaining to said properties, so that the said Company may have and enjoy all property and rights which the said Altman heirs, in absence of this instrument might themselves have and enjoy." The Merchants Company assumed all the obligations of the leases and there were provisions for forfeiture to the Altman heirs in case of default in the obligations of the leases or of the indenture. On May 26, 1933, the Merchants Realty Company assigned the leases and turned over the property to the plaintiff Shopping Center Company, which assumed all the obligations of the Merchants Realty Company in regard thereto. The plaintiff failed to pay a tax on lot 46 due June 1, 1933, and on August 16, 1933, the owners of the fee of the lot served notice of forfeiture pursuant to the provisions of their ground lease unless payment of the tax was made in ten days. Two days afterwards, on August 18, 1933, the Altman heirs served notice upon the Shopping Center Company that default existed under the terms of the indenture of April 21, 1919, for failure to pay taxes assessed against the real estate demised under the Adams, Pasfield, and Walpole leases, and demanded to be restored to the possession of the property within ten days. The suit in equity of the Shopping Center Company in which the revenues of the property were impounded and the injunction as issued was filed, as stated, within that ten-day period, on August 26, 1933, and the parties filed their pleadings and joined issues in the suit.

The plaintiff Shopping Center alleged among other things in its amended bill that prior to the year 1932 the revenues from the Altman Building had been sufficient to pay all ground lease charges and also the $24,000 per annum payable to the Altman heirs under the said indenture and to enable the Merchants Company to accumulate a reserve of approximately $30,000, but that throughout the business depression the income had continuously decreased and the reserve had been exhausted and the income had become barely sufficient to pay ground rents, taxes, insurance, and cost of operation, and was insufficient to permit of any payments to the Altman heirs. It was alleged that the indenture of April 21, 1919, between the Altman heirs and the Merchants Company was in truth and fact an assignment and was not a sublease and that the Altman heirs had not reserved to themselves and did not have any legal interest in the Altman Building properties or leaseholds. The position of the plaintiff was that if the court would protect it against lawsuits pending and threatened and the forfeitures declared and threatened and permit it to apply the net revenues of the building to the ground rent charges and taxes and permit it to efficiently operate the property for the benefit of all interested parties, it would be able to and would pay all obligations and also "any personal obligations which may rightfully become due to the Altman heirs."

The Walpole ground lease covering lot 46 contained provision for reappraisal and changing the rental rates at intervals and the fee owners had been claiming that their lot, which is the corner lot, was undervalued, and attempting for several years to get the ground rent raised. It was alleged in the bill that the plaintiff Shopping Center, upon becoming assignee of the Merchants Realty Company, had entered into a compromise agreement with the fee owners of lot 46 to increase the rent on that lot from $20,000 a year to $30,000 for the period from September 1, 1933, to February 28, 1935, and to $40,000 a year for the next five years.

Mr. and Mrs. Tureman, who own the fee of the corner lot 46 in the entirety, pleaded, among other things, that they had served upon the plaintiff a ten-day notice to pay overdue taxes and that the taxes had been paid by someone. If they were paid on behalf of the plaintiff, then the plaintiff was not in default. But that the indenture of April 21, 1919, was an assignment and not a sublease and the Altman heirs had no estate in the property, and if they had paid the tax for their sole benefit they were volunteers and the plaintiff was in default. They admitted that they had made the agreement with the plaintiff to increase the ground rent on their lot after September 1, 1933, and prayed that their title to the lot be quieted as to any claim of the Altman heirs to any interest in the same. They also prayed for termination of the ground lease and for possession if default should be found to have been made. But in their amended pleading it was alleged that their "immediate interest * * was not the forfeiture of the (Walpole) lease * * * but to secure prompt payment of the rent" specified in the ground lease and increased by the agreement with the Shopping Center Company.

The Altman heirs pleaded that the indenture of April 21, 1919, was a sublease and not an assignment and that the plaintiff had forfeited to the Altman heirs whatever interest it had acquired in the Adams, Pasfield, and Walpole leases by reason of default in payment of taxes and that the Altman heirs had served notice upon the plaintiff and had demanded possession and were entitled to possession of the entire property under the terms of the indenture, a copy of the indenture being attached to the pleading. They alleged that the plaintiff's default in the payment of the taxes and refusal to deliver the property to the Altman heirs had been brought about "under the domination of Mr. and Mrs. Tureman" and had caused them loss and damage in the sum of $120,000 because they could have rented the property at an increased rental of $2,000 a month for five years on or about August 30, 1933. They had had to incur attorney's fees in the sum of $20,000 and the taxes they had been obliged to and had paid amounted to $13,998.25. They prayed for immediate possession of the property and for judgment against the plaintiff and Mr. and Mrs. Tureman in the total of those three sums, to wit, $153,998.25, and for the payment to themselves of the impounded revenues.

Thereafter, in May, 1934, they filed an amended answer and cross-bill in which they omitted any claim against Mr. and Mrs. Tureman for damages on the ground that the Altman Building could have been rented at the greater rentals referred to. They reasserted that their indenture of April 21, 1919, was a sublease and not an assignment and that "without regard to whether it be denominated a sublease or an assignment all of the rights reserved to the Altman heirs thereunder are valid * * precisely as if the Altman heirs were at law a landlord and the Merchants Realty Company and its successors were tenants." That they had declared a forfeiture against the Shopping Center Company and the Merchants Realty Company for default in payment of taxes, which taxes they had been obliged to and had paid themselves.

The indenture of April 21, 1919, contained no...