Des Moines Bldg. Loan & Sav. Ass'n v. Bomer

• Decision Date: 08 March 1949
• Docket Number: 47402.
• Court: Iowa Supreme Court
• Parties: DES MOINES BUILDING-LOAN & SAVINGS ASS'N v. BOMER et al.

36 N.W.2d 366

240 Iowa 1192

DES MOINES BUILDING-LOAN & SAVINGS ASS'N v. BOMER et al.

No. 47402.

Supreme Court of Iowa

March 8, 1949

Tesdell & Tesdell, of Des Moines, for appellant.

F. T. Van Liew, Frank B. Hallagan and Herrick Sloan & Langdon, all of Des Moines, for appellees.

WENNERSTRUM Justice.

Plaintiff has appealed to this court from a decree of the Polk County District Court, which had refused on an appeal from the decision of the Board of Review of the City of Des Moines, to reduce the assessor's valuation of plaintiff's building and the quarter block of land on which it had been erected.

The Des Moines Building-Loan & Savings Association purchased the property in question late in December 1944 for $260,000 plus the payment of the 1944 taxes of $16,439 payable in 1945 making a total purchase price of $276,439 and took possession of it on January 1, 1945. The 100% valuation in question was made as of the same date and was in the amount of $394,260. The 60% assessed valuation was placed at $236,555. Appellant asserts that the actual value should not be placed higher than $275,000 and that the 60% assessment valuation should be $165,000.

This building was erected in 1912 and is located on the southeast quarter block at Sixth Avenue and Mulberry Street in the City of Des Moines. It has twelve stories and is of steel and concrete construction. It is not entirely fireproof in that it has hardwood floors in the offices and there are no fire doors on the several floor levels of the stairway. The corridors are of a tile, concrete and terraza character and have marble wainscoting. The elevators are not of a modern character although the interior of the elevator cages is of a comparatively modern design and construction. It is claimed that new elevators are needed which with other necessary equipment would cost approximately $250,000. The evidence further discloses that the wiring and electrical system in the building is inadequate and should be replaced. The north half of the first floor of the building was originally used by a banking institution. Prior to the time of the purchase of the building by appellant this room was used by the Insurance Department of the State of Iowa for its offices. It has continued in these quarters since the sale although the appellant association now uses a portion of this room. There is testimony to the effect that the association contemplates making use of this entire space in connection with its business which has increased materially during the past few years. It has been prevented however, from doing so by reason of the fact that the Insurance Department has continued to use the greater portion of this room by reason of the delay in the construction of a state office building wherein it is contemplated that this department will later be quartered. It is contended that this banking room is not suitable to the needs of the appellant association and that there is a necessity for an expensive remodeling program when it attains complete possession.

The property had previously been owned by the Bankers Life Company of Des Moines who had obtained possession of it by foreclosure approximately 2 1/2 years prior to the date of appellant's purchase. The mortgage which the insurance company foreclosed had been given as security for a loan in the original amount of $475,000 as of June 16, 1924. By reason of the foreclosure the insurance company on May 9 1941 bid in the building at foreclosure sale at $430,000.

It is the contention of the appellant that the value of its building is materially lessened by reason of its location, the character of the surrounding structures and the type of businesses in them. It is shown that the property is a block away from Walnut Street, one of the main retail streets of Des Moines, and it is claimed the ground floor space is not suitable for retail purposes. The rentals received from the ground floor spaces are materially less than those received for similar property on Walnut Street. It is maintained that the type of businesses that are located to the east, south and west of the building are indicative of the economic deterioration of its location and the surrounding buildings. Mortgages on a number of the properties near or adjacent to the appellant's building have been foreclosed. The building in question is within one block of the Union Station in Des Moines, and Sixth Avenue, by reason of the railroad tracks serving the station, is not a through street to the south. The appellant contends that by reason of the conditions heretofore related the property has suffered from economic and functional obsolescence. To the south of the entrance lobby there is a restaurant and in the corner room a bus depot is located, both of which it is claimed do not add to the economic value of the building. It is also asserted that the property in its entirety has been permitted to run down and that necessary and expensive improvements will have to be made to restore the building to a satisfactory condition.

The record discloses that prior to the sale to the appellant the Bankers Life Company had received from another party an offer of $250,000 which was not accepted. The appellant association later made an offer of $250,000 in cash which was not accepted but upon the offer by it to pay an additional amount of $10,000 for certain fixtures and equipment and the payment of the 1944 taxes due in 1945 this last offer was accepted. It was also shown that the association was limited under the law to the amount of money which it might invest in a building for its business offices and that the total amount expended in the purchase of this building by the appellant was approximately the total amount which it could expend for this purpose out of its assets. There is nothing in the evidence to indicate that the sale made to the appellant was not a legitimate one with the Bankers Life Company a willing seller and the purchaser a willing buyer.

The assessing officials and several other witnesses testified that even though the property is not located within the main retail area this particular building is located on Sixth Avenue on which are located several of the main office buildings of the city, namely, the Fleming Building, Iowa Des Moines National Bank & Trust Company Building, Empire Building, K. P. or Butler Building, Equitable Building, Bankers Trust Building, Des Moines Building, Liberty Building and Iowa Building. It is also shown that the appellant's building is located diagonally across from the Polk County Court House.

Witnesses for the appellees place valuations upon this building and grounds from a high of $495,558 to a low of $404,725. These witnesses in reaching their respective...