Edmund Realty Co. v. Walmer Bldg. Co.
| Citation | 123 F.2d 54 |
| Decision Date | 16 October 1941 |
| Docket Number | No. 11968.,11968. |
| Parties | EDMUND REALTY CO. v. WALMER BLDG. CO. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Paul Bakewell, Jr., of St. Louis, Mo. (Claude I. Bakewell and John E. Cramer, Jr., both of St. Louis, Mo., on the brief), for appellant.
Maurice L. Stewart, of St. Louis, Mo. (G. T. Meyer, of St. Louis, Mo., on the brief), for appellee.
Before GARDNER, WOODROUGH, and THOMAS, Circuit Judges.
This appeal arises out of a suit in condemnation brought by the United States in furtherance of the Jefferson Expansion Memorial Project in which the United States took for the Project certain property located at the northeast corner of Fourth and Market Streets in the City of St. Louis, together with the improvements thereon. Appellant is the owner of the fee and appellee is the lessee under a ninety-nine year lease having 61 years and 201 days to run at the date of the taking. Judgment was rendered fixing the value of the whole property in one lump sum at $158,950, and the parties acquiesced.
After the award had been settled and paid into the registry of the court, the owner of the fee and the lessee each presented an intervening petition asserting its respective claims. Trial of the issues so defined was had to the court and the court found from the evidence that the value of the leasehold estate was $92,283.33 and that the value of the reversion was $66,666.67. Its judgment distributed the award accordingly (after substracting an agreed item of $1,802.36) and the owner of the fee prosecutes this appeal, claiming that the portion of the award allotted to the lessee was excessive and that the portion allotted to it was inadequate.
It appears that when the case came on for trial the fee owner contented itself with offering in evidence only: (1) the lease, (2) the award of $158,950 (six percent of which would be $9,537), and (3) proof that the average annual cost of occupancy by the tenant under the lease, including rental, taxes and other required payments, would be $8,801.09, and thereupon it rested. It pointed out that the difference between $9,537 and $8,801.09 was $735.91, and it contended that the value of the lessee's interest was the present value of $735.91 a year over the years the lease had to run in the future, the amount so produced being $9,651.68 (from which it contended the agreed item of $1,802.36 should be deducted). It claimed the balance of the award in the sum of $149,298.32 for the owner of the fee. It took the position that the St. Louis Court of Appeals had established that method of distributing a lump award between the fee owner and the tenant as the law of Missouri by its decisions in McAllister v. Reel, 53 Mo.App. 81; McAllister v. Reel, 59 Mo. App. 70, and City of St. Louis v. Senter Commission Co., 233 Mo.App. 804, 108 S. W.2d 1070, 1073, that the law was so established at the time the lease was made, and that the District Court was bound to apply the method in its findings and Judgment. The formula assumes six percent to be the prevailing rate of interest and the result of applying the formula here would be to give the owner a sum which at six percent interest would produce $8,947.88 a year (which was more than twice the $4,000 a year rental due it under the lease) and it would leave the lessee a sum which at the same rate of interest would produce $470.95 a year, or only a fraction of the income which it got net out of its ownership of the lease before the condemnation. It had sublet the premises for terms of years and had received an average of $16,274.30 gross rental from 1929 to 1937, inclusive. The testimony adduced by the lessee tended to show that the actual value of its interest was about $100,000.
The district judge took the case under advisement and filed an opinion in writing in which he discussed the decisions of the St. Louis Court of Appeals relied on by appellant and also the decisions of the Missouri Supreme Court. He recognized that he was bound to apply the Missouri law, but held upon the facts before him that the law as declared by the Supreme Court of the state did not sanction or permit the application of the formula contended for by appellant but required that the landlord be awarded the present value of its reversion and of the rents that were to become due to it during the continuance of the term and that the tenant be awarded the present value of its leasehold interest over and above the rents payable during the term. He stated that inasmuch as his ruling might result in a decision based upon only the...
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