Hastings Realty Corp. v. Texas Co.
| Decision Date | 05 October 1965 |
| Citation | 137 N.W.2d 79,28 Wis.2d 305 |
| Parties | HASTINGS REALTY CORPORATION, a Wis. corp., Appellant, v. The TEXAS CO., a Delaware corporation, Respondent. |
| Court | Wisconsin Supreme Court |
Plaintiff, Hastings Realty Corporation, hereinafter referred to as Hastings, and the defendant, The Texas Company, hereinafter referred to as Texaco, sought a declaration of their respective rights and obligations flowing from a lease agreement executed as supplemented in 1958.
Hastings leased to Texaco 'premises' consisting of a tract of land and improvements thereon 'together with all appurtenances thereto and all right, title and interest of lessor in and to any and all roads, streets and ways bounding the said premises,' for use as a retail gasoline service station.
The lease was to run for a period of 10 years with a minimum monthly rental of $500.
Traffic counts in 1959, soon after the commencement of operations of the service station, showed that West Forest Home Avenue carried more than 55 percent and West Layton Avenue less than 45 percent of the traffic flowing through the intersection of the two streets. West Forest Home Avenue has not been designated as a controlled access highway.
Hastings was notified in May 1962 that the Wisconsin state highway commission proposed to eliminate access rights to the leased premises from West Forest Home Avenue in connection with its proposed reconstruction of the highway. At the same time, the commission submitted a jurisdictional offer of $2,000, which recited that:
'Pursuant to sec. 32.05(3)(d), Wisconsin Statutes, the above purchase price is allocated as follows: * * * (b) Damages caused by loss of existing rights of access and a Limited Highway Easement $2000.00.'
On July 10, 1962, the commission wrote Hastings that 'The Award is for a Limited Highway Easement and Access Rights and is made pursuant to Section 84.09(2) of our Wisconsin Statutes.' The check for $2,000 was transmitted to Hastings and later cashed.
Texaco was notified by Hastings of all actions of the commission.
In July of 1962 Texaco abandoned the use of the premises after almost four years of its operation as a service station. It continued, however, to pay the minimum rent of $500 per month through February 1963.
On February 13, 1963, Texaco advised Hastings it had elected under the provisions of the lease to cancel and terminate the lease effective immediately for the reason that the 'remainder' of the 'premises' was not suitable for the purpose of conducting a retail service station.
On March 1, 1963, Texaco sent Hastings a check for $500, presumably rent for the month of March, but, as Texaco claimed, the 'check was sent by our Accounting Department by mistake and in error.' Its return was demanded by Texaco.
Texaco seeks to terminate the lease and claims that it is legally entitled to do so under the following clause of the lease agreement:
The action was commenced by Hastings seeking a declaration of the rights of the parties as provided for by sec. 269.56, Stats. (Declaratory Judgments Act). From a decision of the circuit court holding that Texaco was entitled to terminate the lease and determining that the deprivation of access rights constitutes a taking of a portion of the premises by eminent domain, plaintiff, Hastings, appeals.
Michael, Best & Friedrich, Milwaukee, Frank J. Pelisek and David R. Olson, Milwaukee, of counsel, for appellant.
Quarles, Herriott & Clemons, Milwaukee, Neal E. Madisen and William A. Nohr, Milwaukee, of counsel, for respondent.
The action of the state highway commission resulted in closing off access to the service station by way of West Forest Home Avenue. Admittedly, except for a temporary encroachment, the state took no part of the leased property within the curb line. It is the contention, therefore, of Hastings, the landowner, that no part of the premises were taken, since irrespective of whether the conduct of the state was an eminent domain taking, it was not a taking of the premises leased. Hastings contends that the land description set forth in the lease itself excludes the street area. The property as described in the lease runs to the center of West Forest Home Avenue. However, the following language appears:
'reserving the north 60 feet and the Southeasterly 60 feet for street purposes.'
The area where access was possible to West Forest Home Avenue was encompassed in the Southeasterly 60 feet.
Hastings is apparently contending that since that portion was reserved for street purposes it was not leased to Texaco. The sentence following the clause reserving a portion of the property for street purposes makes it apparent that Hastings' position is untenable. That sentence reads:
'Together with all appurtenances thereto and all right, title and interest of lessor in and to any and all roads, streets and ways bounding the said premises.'
This additional proviso makes it clear that the right to make use of the streets in the same manner that the lessor or owner had theretofore been able to do was part of the grant to the lessee. It clearly granted to Texaco the appurtenant rights in the abutting street. In view of repeated declarations of our court, the clause may have been superfluous. In any event, it makes clear the intention of the parties that the street area, subject to the use by the public was included in the premises. Our court in Royal Transit, Inc. v. Village of West Milwaukee (1954), 266 Wis. 271, 277, 63 N.W.2d 62, 64, quoted with approval 25 Am.Jur., Highways, p. 448, sec. 154:
In the concurring opinion to Nick v. State Highway Comm. (1961), 13 Wis.2d 511, 109 N.W.2d 71, 111 N.W.2d 95, Justice Currie stated:
'The writer of this opinion believes * * * that highway access rights are but one of a bundle of rights which appertain to a parcel of real estate.'
We deem that to be a correct statement of the law.
In addition, the very nature of the lease agreement--an agreement for the rental of a service station--reasonably would contemplate the leasing of the appurtenant access rights. To hold otherwise would result in strained construction alien to the purpose of the lease and which neither party could have reasonably contemplated at the time of the agreement. Viewing the provisions of the lease and the entire transaction, we can only conclude that the street access rights were a part of the bundle of rights appurtenant to and a part of the leased premises.
If there was a 'taking' as contemplated in the lease, it was a taking of the premises.
Hastings contends, however, that even if access rights are to be considered as a part of the leased premises, there was no taking under eminent domain, and as set forth in the statement of facts, Lease Clause (6) permits termination when the premises are 'taken for public use under right of eminent domain.'
The appellant takes the position that the taking of access rights constitutes an exercise of the police power and not eminent domain and, hence, the exculpatory clause of the lease is inoperative.
We cannot agree. It is our opinion that this was a taking under eminent domain. It is admitted that the state highway commission did proceed under the eminent domain statute, sec. 84.09, Stats., which authorized the commission to 'acquire by gift, devise, purchase or condemnation any lands for * * * improving * * * highways.' None of these phrases enable the commission to acquire lands (except when granted by gift or devise) without payment. The same portion of the statute provides that if the land cannot be 'purchased expeditiously for a price deemed reasonable by the commission, the commission may acquire the same by condemnation under ch. 32.'
The 'Jurisdictional Offer' which was submitted to Hastings is, of course, one of the initial steps in a condemnation proceeding.
Moreover, the Wisconsin Statutes specifically provide that compensation shall be paid when there is a partial taking of premises, such as access rights under the power of eminent domain.
Sec. 32.09(6)(b), Stats., provides that damages shall be paid for:
'Deprivation or restriction of existing right of access to highway from abutting land, provided that nothing herein shall operate to restrict the power of the state or any of its subdivisions or any municipality to deprive or restrict such access without compensation under any duly authorized exercise of the police power.' (Ehphasis supplied.)
It is clear, therefore, that the state highway commission is authorized to pay for access rights acquired by condemnation.
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