Cassaday v. De Jarnette

• Decision Date: 09 February 1960
• Docket Number: No. 49856,49856
• Citation: 251 Iowa 391,101 N.W.2d 21
• Parties: H. V. CASSADAY, d/b/a H. V. Cassaday Refrigeration and Electric Co., Plaintiff, v. Henry B. DE JARNETTE, La Von I. DeJarnette, Marian Brown, Administratrix of the Estate of Louis P. Brown, Deceased, J. C. White Excavating Co., Merle Hay Block Co., Doyle Streit, A. & R. Concrete & Construction Co., and George De Moss, Defendants.
• Court: Iowa Supreme Court

Page 21

101 N.W.2d 21

251 Iowa 391

H. V. CASSADAY, d/b/a H. V. Cassaday Refrigeration and Electric Co., Plaintiff, v. Henry B. DE JARNETTE, La Von I. DeJarnette, Marian Brown, Administratrix of the Estate of Louis P. Brown, Deceased, J. C. White Excavating Co., Merle Hay Block Co., Doyle Streit, A. & R. Concrete & Construction Co., and George De Moss, Defendants.

No. 49856.

Supreme Court of Iowa.

Feb. 9, 1960.

Evans, Duncan, Jones, Hughes & Riley, Des Moines, for Marian Brown, adm'x of estate of Louis P. Brown, deceased, defendant-appellant.

John B. Dyer, Des Moines, for plaintiff-appellee.

Bradshaw, Fowler, Proctor & Fairgrave, Des Moines, for Henry B. DeJarnette and La Von I. DeJarnette, defendants-appellees.

Brunk, Janss & Dreher, Des Moines, for J. C. White Excavating Co., defendant-appellee.

Neiman, Neiman & Stone, Des Moines, for Merle Hay Block Co., defendant-appellee.

Steward, Crouch & Kelly, Des Moines, for George DeMoss, defendant-appellee.

Clarence I. Spencer, Des Moines, for A. & R. Concrete & Construction Co., defendant-appellee.

Louis A. Anania, Des Moines, for Doyle R. Streit, defendant-appellee.

LARSON, Chief Justice.

This is a suit in equity brought against defendants Henry B. DeJarnette and La Von I. DeJarnette, lessees, and Marian Brown, administratrix of the estate of Louis P. Brown, deceased, lessor, as well as certain other named claimants who also furnished labor and materials to lessee in the construction of a golf range on lessor's land. The five other claimants filed cross-petitions praying similar relief and, after a hearing on a motion to determine law points under Rule 105 R.C.P., 58 I.C.A., the trial court entered a judgment in favor of the various claimants, established mechanics' liens against lessor's real estate, and ordered their foreclosure. Defendant-lessor appeals.

The sole question involved in this appeal is whether, under the terms of the written lease and the related circumstances surrounding its execution, the trial court was justified in finding an expressed or implied contract or agreement between lessor and lessee whereby lessee was to place upon lessor's land improvements of some permanence, beneficial to lessor, which were to become lessor's property upon the termination of the lease, and which improvements created an additional value included in computing the sums to be paid as rental. Here as in many such cases, we find statements of the law quite clear, but their application has left much to be desired. This suit being in equity, we strive to reach a fair and equitable conclusion under the circumstances disclosed. In so doing, we give weight to the findings of the trial court, especially where credibility of the witnesses is a factor. Nevertheless, where the facts are not in dispute, we reserve the final determination for ourselves. After a careful examination of the record, documents, and exhibits, we draw our own inferences when necessary. We do so here.

I. It is well settled in this jurisdiction that mere knowledge of or consent to the making of improvements by a lessee does not usually subject the interest of the lessor to a mechanic's lien. Denniston & Partridge Co. v. Romp, 244 Iowa 204, 208, 56 N.W.2d 601, and cases cited; Thompson Yards v. Haakinson & Beaty Co., 209 Iowa 985, 229 N.W. 266; Perkins Supply & Fuel Service v. Rosenberg, 226 Iowa 27, 282 N.W. 371; Queal Lumber Co. v. Lipman, 200 Iowa 1376, 206 N.W. 627; and many other cases so state the rule; 36 Am.Jur., Mechanics' Liens, §§ 93-95, pages 73-75.

II. It is well established where a lessor has, by agreement expressed or implied with his lessee, contracted for an improvement of his real estate by the lessee, and it further appears that such improvement itself is a part of the value for which compensation is paid, and that the improvement is to become the sole property of lessor within a relatively short period of time, that the interest of the lessor in the realty is subject to the claim of a mechanic's lien for the reasonable value of the material or labor furnished in making that improvement. Denniston & Partridge Co. v. Romp, supra; American Trust & Savings Bank of Cedar Rapids v. West, 214 Iowa 568, 243 N.W. 297; Veale Lumber Co. v. Brown, 197 Iowa 240, 195 N.W. 284; Denniston & Partridge Co. v. Brown, 183 Iowa 398, 167 N.W. 190.

A rather extended statement of the facts revealed by the record seems necessary. Louis P. Brown, age 73, the lessor, owned and rented considerable unimproved land in and about Des Moines, Iowa. Being confined to his home due to a heart attack, which took his life a week later, the lessee Henry B. DeJarnette came to his house on the evening of June 6, 1958, to discuss renting a piece of ground 1,000 feet in length by 200 feet in the front and 400 feet in the rear, located on East 14th Street in Des Moines. Mr. Brown himself was a lawyer and had in the past made rental arrangements and drawn leases in longhand. He had rented the piece north of this one for a trailer sales yard. On this occasion he called on his friend Mr. Eaton to aid him in settling the terms of a proposed written lease and do the leg work necessary to its preparation and execution. At this time Mr. Brown, his grandson Anthony Louis Brown, Mr. Eaton, and Mr. DeJarnette were present. The lessor's grandson testified 'there wasn't too much discussion about it. * * * He (lessor) asked him, 'Are you sure you know how to run your business and that?' And he said he was. * * * All he (Brown) was concerned with was that he got rent and there was a lease drawn up.' Mr. Eaton was to have some lawyer draw up the lease. On the next day Mr. Eaton and DeJarnette called on Attorney Colavecchio, who took notes (defendant's Exhibit 4 herein), and from them prepared the lease (Exhibit 3). That evening the lawyer and Mr. Eaton went over the lease with Brown before it was signed. According to the testimony offered, there was no discussion as to the fill-in later made near 14th Street, no conversation as to concrete pads, nor as to the poles and lights later installed by lessee, and nothing was said as to a transformer box or concrete block building. There was some conversation as to a building to be used for an office. Brown's grandson said: 'he (lessee) said it was an office. * * * all I can remember is he said it was just a small building. I mean, it was just going to be something to operate out of. He didn't say what it was to be constructed of.' From these discussions of lessee's proposals, plus the stated rental of some $500 per acre per year during the five-year period, plus the fact that lessee might not be able under the lease to remove the so-called improvements if he defaulted, plus the words used in the written agreement, the trial court inferred an agreement between lessee and lessor which compelled lessee to make valuable improvements on the land that were to remain and become lessor's property. We do not think such an inference or conclusion was justified under this record.

The formal written lease prepared by the attorney from his notes, was for the most park taken verbatim from the Des Moines standard lease. The period covered was from June 7, 1958, to January 1, 1963. The consideration of $17,500 was to be paid during the summer months at $3,500 per annum. Lessee paid the first 2,000 and then defaulted and surrendered the premises to the defendant-administratrix herein on November 12, 1958. The written lease provided: 'in consideration of the following covenants and agreements made by the Lessee to be by Lessee kept and performed', lessee would pay the compensation above set out at stated times, that lessee would 'use said premises for a miniature golf course and driving range. Lessee may sell soft drinks and refreshments but is not to operate a restaurant. Lessee will not permit any alcoholic drinks of any kind on said premises, the violation thereof will void this lease', and 'that no mechanic's lien or any other lien shall in any manner or degree attach to or affect the rights of the lessor in and to said premises * * *.' It also provided: 'Lessee may grade the premises, but the ground not to be changed or graded more than one foot without the consent of Lessor' and 'That at the expiration of this lease, if all rent is paid up in full, Lessee may remove personal property at his own expense.' As to this last provision, the attorney's notes (Exhibit 4) state 'lessee may remove improvements at expiration of 5 years if all rent to be paid under lease has been paid at lessee's expense.' (Emphasis supplied.) The trial court was troubled by this provision and concluded it meant golf balls, clubs, and other unattached apparatus. We think it referred to all installations made for lessee's benefit and use in conducting the proposed games.

Subsequent to Mr. Brown's death lessee did some grading, which seemed necessary in the southeast corner of the tract--at least desirbale for its use as a driving range. Poles and lights were erected to enable after-dark use of the range; cement slabs were installed as driving platforms; crushed rock was brought in to provide auto parking and a driveway; and a small concrete block house was erected; all as disclosed by Defendant's Exhibit 1. Claimants are the unpaid parties who furnished the labor and materials used in these additions. However, no miniature golf course was ever installed.

The issue as to whether a lessee under such...