Dealers Hobby, Inc. v. Marie Ann Realty Co.

• Decision Date: 29 June 1977
• Docket Number: No. 2-58831,2-58831
• Citation: 255 N.W.2d 131
• Parties: DEALERS HOBBY, INC., Appellant, v. MARIE ANN LINN REALTY CO., Appellee-Cross-Petitioner, v. ABILD CONSTRUCTION COMPANY, INC., Appellee to Cross-Petition, v. SAVAGE AND VER PLOEG, Appellee to Cross-Petition.
• Court: Iowa Supreme Court

Page 131

255 N.W.2d 131

DEALERS HOBBY, INC., Appellant, v. MARIE ANN LINN REALTY CO., Appellee-Cross-Petitioner, v. ABILD CONSTRUCTION COMPANY, INC., Appellee to Cross-Petition, v. SAVAGE AND VER PLOEG, Appellee to Cross-Petition.

No. 2-58831.

Supreme Court of Iowa.

June 29, 1977.

Johnson, Bauerle & Hester, Ottumwa, for appellant.

Putnam, Putnam & Putnam, Bradshaw, Fowler, Proctor & Fairgrave, Dickinson, Throckmorton, Parker, Mannheimer & Raife, and Jones, Hoffmann & Davison, Des Moines, for appellees.

Heard by MOORE, C. J., and MASON, REES, UHLENHOPP and HARRIS, JJ.

MOORE, Chief Justice.

Plaintiff tenant brought this action for breach of lease agreement to recover damages after partial collapse of leased warehouse building roof. From trial court order dismissing its petition as it related to damages for breach of warranty, plaintiff has appealed. We affirm.

On June 10, 1959 defendant Marie Ann Linn Realty Company leased a warehouse then under construction at 2150 Delaware Avenue in Des Moines, consisting of 20,000 square feet, to plaintiff Dealers Hobby, Inc. for storage purposes. The commercial lease which the parties executed was to commence in September of that year and continue for a term of 15 years at the monthly rate of $1,166.66. Included in its terms was the following clause:

"SIXTH: That the landlord shall at his own expense maintain in good repair the roof and exterior structure, except as to damage caused by the negligence of the tenants, its agents, employees, invitees or guests. Tenant shall make no alterations or changes of the interior or exterior without first receiving permission from the landlord in writing."

On April 30, 1973 after a heavy rain, a small portion of the roof collapsed and as a result damage was caused to some of plaintiff's property stored in the building although only 1000 square feet of the warehouse was rendered unusable by the leakage. An inspection on May 3, 1973 by Des Moines city officials disclosed that the building did not comply with the city building code in several particulars and an "Official Notice of Unsafe Building" was issued by the City's Building Inspection Department. Neither party was aware of any defects in the building prior to the collapse.

Despite the incident, plaintiff continued to use a vast majority of the warehouse for storage during the 18-day period in which the premises were being repaired. When this work was completed the parties renewed the lease and plaintiff continued its occupancy.

In October 1973 plaintiff tenant initiated this action against Marie Ann Linn Realty Company. Plaintiff sought recovery for damages caused to its merchandise and inventory stored in the building together with incidental damages which totaled $16,037.94. These claimed damages were itemized in paragraph 7 of plaintiff's petition. Additionally in paragraph 8 it sought to recover $193,082.23 which sum allegedly represented the difference between the fair rental value of the premises as warranted and the fair rental value of the premises as they actually existed for the entire duration of the lease prior to the collapse.

By way of answer defendant denied plaintiff's claims and further affirmatively alleged plaintiff waived any building defects by continued occupancy and payment of rent.

Subsequently defendant landlord filed a cross-petition against Abild Construction Co., the contractor which built the warehouse, seeking indemnity and contribution. The contractor in turn filed a cross-petition seeking indemnity and contribution against Savage and Ver Ploeg, the architects who designed the building. In addition, plaintiff tenant cross-petitioned against Abild alleging negligent construction.

Defendants landlord and contractor then filed a motion for partial summary judgment seeking dismissal of that portion of plaintiff's petition which sought damages under paragraph 8 for retroactive diminution of the fair rental value of the premises based on the implied and express warranty theories. Plaintiff resisted contending the facts as developed through depositions clearly established it suffered damages in the manner contemplated in the case of Mease v. Fox, Iowa, 200 N.W.2d 791. Trial court sustained the motion on the basis, inter alia, the doctrines announced in Mease v. Fox, supra, did not apply to warehouse facilities.

Prior to trial defendants landlord, contractor and architect paid plaintiff all the paragraph 7 itemized damages, an agreed amount of $16,921.41. The parties then entered into a stipulation reciting that this payment had been made, plaintiff acknowledged receipt of same, parties defendants denied liability and plaintiff did not waive any right to appeal the ruling sustaining the summary judgment motion. Subsequently the contractor, Abild, dismissed with prejudice its cross-petition against the architects, Savage and Ver Ploeg.

On September 25, 1975 trial court dismissed the remaining portions of the petition as moot. Plaintiff appeals from this final order challenging the earlier interlocutory ruling dismissing its claim for retroactive diminution of the fair rental value of the warehouse premises.

The primary questions presented on this appeal are: (1) whether the doctrine of implied warranty of habitability as announced in Mease v. Fox, Iowa, 200 N.W.2d 791 is applicable to a commercial lease of a partially constructed building; (2) what the proper measure of damages is for landlord's breach of an express warranty to maintain and repair the roof of a commercial warehouse; and (3) whether the trial court erred in sustaining defendants' motion for partial summary judgment and dismissing that portion of plaintiff's petition which sought damages under both implied and express warranty theories for the alleged retroactive diminution of the fair rental value.

Our research and study of the record presented here reveals the decisive issue is one of damages. Determination of the other issues is therefore unnecessary.

To determine the appropriate measure of recovery here it is necessary to turn to the general law of damages. It is axiomatic that the principle underlying allowance of damages is that of compensation, the ultimate purpose being to place the injured party in as favorable a position as though no wrong had been committed. Schiltz v. Cullen-Schiltz & Assoc., Inc., Iowa, 228 N.W.2d 10, 20; DeWall v. Prentice, Iowa, 224 N.W.2d 428, 434; Adams v. Deur, Iowa, 173 N.W.2d 100, 105; 25 C.J.S. Damages § 3, page 626. Stated otherwise, the plaintiff's damages are limited to its actual loss. DeWaay v. Muhr, Iowa, 160 N.W.2d 454, 459; 22 Am.Jur.2d Damages, section 47, page 74. Of course, mere difficulty in...