Edward E. Gustin & Company v. Nebraska Building & Investment Company
| Citation | 193 N.W. 269,110 Neb. 241 |
| Decision Date | 21 April 1923 |
| Docket Number | 22268 |
| Parties | EDWARD E. GUSTIN & COMPANY, APPELLEE, v. NEBRASKA BUILDING & INVESTMENT COMPANY ET AL., APPELLANTS: F. B. BAYLOR, TRUSTEE, INTERVENER |
| Court | Supreme Court of Nebraska |
APPEAL from the district court for Lancaster county: FREDERICK E SHEPHERD, JUDGE. Affirmed.
AFFIRMED.
Johnson Moorhead & Rine, Good & Good and A. W. Lane, for appellants.
Stewart Perry & Stewart, for appellee.
Johnson, Moorhead & Rine and F. B. Baylor, for Baylor, Trustee.
Heard before MORRISSEY, C. J., GOOD and ALDRICH, JJ., BEGLEY and BUTTON, District Judges.
On the 20th day of February, 1919, Edward E. Gustin & Company, appellee, entered into a 99-year lease with the Nebraska Building & Investment Company, one of the appellants, to a parcel of ground, belonging to appellee, and situated between the Lincoln Hotel and the Lincoln Drug Company on P street, Lincoln, Nebraska, one of the business sections of the city. There were buildings situated on these premises at the time, of the value of $ 15,000; but they were in a bad state of repair, and to render them fit for rental purposes required an outlay of considerable money. By the terms of the lease these buildings were to be razed to the ground and removed. And, also, by the terms of the lease, appellant was to erect a new fire-proof edifice, at least four stories high, and complete the same by January 1, 1921. The covenant to erect this new building was the inducement that caused appellee to enter into the lease. Appellant agreed to pay $ 250 a month during the life of the lease as rental, and to pay taxes, keep up repairs, ordinary and extraordinary, and to pay all assessments, and keep up insurance, etc. The lease further provided that, if appellant failed to erect the building as agreed, appellee's actual damages should be $ 15,000. To procure the faithful performance of this lease an indemnity bond in the sum of $ 15,000 was given, with the Nebraska Building & Investment Company as principal and certain other of the appellants as sureties.
Appellant began the actual erection of a building, excavating, building footings and concrete walls and other foundation work, and then defaulted and ceased work entirely. After January 1, 1921, the Nebraska Building & Investment Company went into the hands of a receiver. One William E. Barkley was appointed receiver, and later the leasehold interest in the premises was sold to one Eugene C. Eppley, who is now in possession. In all other respects there has been no default in the terms of the lease, and the taxes and rentals are paid.
After January 1, 1921, this action was instituted on the bond, to recover the $ 15,000 damages. A trial by the court without a jury resulted in a judgment for appellee for the full amount. To reverse this judgment appellants have prosecuted an appeal to this court.
Appellants argue that the excavation and foundation work that has been done on the property has added value to the property far in excess of $ 15,000, and hence appellee is the gainer and the damages provided for in the bond should be treated as a penalty and recovery denied. This argument overlooks the rights of appellee under the contract. The inducement that caused appellee to enter into the contract was the building of the new structure. Possibly appellee did not have the money to put up the building itself. If not, of what value will this hole in the ground and foundation work be to appellee? If the old buildings had been repaired, appellee might have realized a better rental; without the building being erected appellee is not sure of his rent.
A modern building should last practically forever. If so, this would be a very valuable property at the end of the lease with such a building standing upon it. Then, too, is such a contract to be treated so lightly? Is it something to be brushed aside as a sort of a dream? If appellee could have erected the building itself, its rentals, no doubt, would have been large from such a structure. But it contracted to forego these large rentals and accept $ 250 a month and apply the balance for 99 years to pay for the new edifice. If we figure from this standpoint, appellee will pay a pretty big price for its building in 99 years. Everything considered, it seems to us that in this larger view, looking to the future, almost a century, rather than to the present, appellee is the loser rather than the gainer. And his rent has been rendered insecure, problematical, and very uncertain The consideration for this contract is ample.
The intention of the parties to this contract was to make certain the payment of the rent through the years to come, and to this end the inducement was the construction of this building. In determining the amount of the bond, it seems quite natural that the value of the old buildings removed should be adopted. Rentals to the amount of the value of the old buildings, at least, should be protected.
We now come to the question of damages. The evidence shows a six-story building of fire-proof construction would cost about $ 581,000. The evidence shows a four-story building of like construction would cost one-fourth less. At least such a...
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