Home Trust Co. v. Shapiro

• Decision Date: 06 November 1933
• Parties: HOME TRUST COMPANY, RESPONDENT, v. SAM SHAPIRO ET AL., APPELLANTS
• Court: Kansas Court of Appeals

64 S.W.2d 717

228 Mo.App. 266

HOME TRUST COMPANY, RESPONDENT, v. SAM SHAPIRO ET AL., APPELLANTS

Court of Appeals of Missouri, Kansas City

November 6, 1933

Appeal from Circuit Court of Jackson County.--Hon. A. Stanford Lyon Judge.

REVERSED AND INJUNCTION DISSOLVED.

Judgment reversed, and injunction dissolved.

Ringolsky Boatright & Jacobs and Daniel S. Millman for respondent.

B. M Achtenberg and Trusty & Pugh for appellant.

REYNOLDS, C. Campbell, C., concurs.

OPINION

REYNOLDS, C.

The plaintiff, Home Trust Company, respondent herein, is a banking corporation engaged in business at Kansas City, Missouri. In February, 1924, it desired to find new business quarters. At that time, Alexander Rieger was its president, Nathan Rieger its treasurer, Gus A. Sievers its vice-president, and Sam Wedlan its secretary. For these new quarters, it selected the building at 1117-1119 Walnut street, Kansas City, Missouri, and at once began negotiations for the same. At such time, it appears that the Columbia Realty Company, a corporation, was the owner of the unexpired term of a ninety-nine year lease thereon and had subleased the same to the defendant Childs Company, a corporation, for a term beginning March 1, 1920, and expiring February 28, 1940. The Childs Company had by different leases sublet each of the floors in said building, except the first floor and the basement, to different tenants for various terms, each of whom was in possession of the floor leased him. Among these subtenants was the defendant Shapiro, in possession of the second floor of the building under a written lease of date May 23, 1922, for a term expiring July 31, 1930, where he was conducting a wholesale business in ladies' ready-to-wear goods. A clause in the lease under which he held provided that the lessor might terminate the same at any time before maturity if it should dispose of its leasehold or should make a bona-fide lease for the entire building to one tenant, upon giving the lessee six months' written notice and upon the further condition of paying the lessee the sum of thirty-five hundred dollars upon the delivery of the premises under said clause, should said lease be terminated between August 1, 1924, and July 31, 1927. For the purpose of acquiring said building through the merger and ownership of the outstanding leases thereon, the plaintiff entered into negotiations with the Columbia Realty Company, hereinafter called Realty Company for convenience, and caused said company to procure the surrender or assignment to it by the Childs Company of its unexpired leasehold on said building, reserving to the respective subtenants their rights under their respective subcontracts, which surrender was accomplished through written instrument executed by Childs Company to the Realty Company under date of February 28, 1924, to become effective April 1, 1924. It also appears that the Realty Company acquired by assignment from Childs Company the various leases with the subtenants in said building, including the lease with the defendant Shapiro. At the same time, plaintiff purchased from the then owners thereof the entire issued and outstanding shares of stock in the Realty Company and caused the same to be assigned and transferred to Gus A. Sievers, Sam Wedlan, and Nathan Rieger, certain of its officers, for its benefit; and subsequently thereto, on May 31, 1924, the Realty Company transferred to plaintiff by assignment the unexpired term of the ninety-nine year lease held by it and dissolved as a corporation.

Upon the acquisition by plaintiff of the stock of the Realty Company as hereinbefore indicated, it appears that plaintiff's officers holding said stock became and acted as the officers of the Realty Company and conducted and managed its affairs. Gus A. Sievers became its president and Sam Wedlan its secretary. It seems to have been continued as a separate entity for plaintiff's convenience in executing its plan for acquiring said building and the dominant lease thereon until all the details of said plan had been satisfactorily worked out and the deal for said building and the merger and ownership of said leases accomplished when it was dissolved by said officers as its sole stockholders.

It was the further intention and desire of the plaintiff, upon the acquisition of the stock of the Realty Company, the surrender to it of the Childs Company lease, its merger with the ninety-nine year lease, and the assignment to it of the various leases of the subtenants in February, 1924, to obtain immediate possession through the Realty Company of the first floor and basement of said building which it desired to have remodeled and improved for its own occupancy and also in connection therewith and at the same time to have remodeled, altered, and improved the remainder of said building at an estimated cost of about eighty thousand dollars ($ 80,000). Plans and specifications had been prepared therefor. There being no provisions for an entry for such purpose in his contract, defendant Shapiro objected on account of the necessary interruption and interference with the operation of his business that would follow and refused to consent to the work being done. A number of conferences were had with the same result, whereupon the plaintiff determined to have the Realty Company take advantage of the termination clause in the lease contract and obtain possession of the premises for it with as little delay as possible, so that it might proceed with its plan. It advised Shapiro of its intention and of the fact that in doing so it would be required to advance and pay the sum of thirty-five hundred dollars to become due him in such event. The Realty Company, thereupon, during the latter part of March, 1924, caused him to be served with a written notice from the Childs Company, reciting the fact of his lease with the Childs Company and continuing as follows: "You are hereby notified that the undersigned do hereby terminate and cancel the said lease on October 1, 1924. The amount specified to be paid you in the event of said termination will be paid to you on such date in cash." The notice further recited that the Childs Company had disposed of its leasehold estate in the entire building and that it was to give possession on March 31, 1924. The Realty Company also endorsed its approval thereon. The Realty Company had an arrangement with the Childs Company, in consideration of the giving of said notice, to hold it harmless from any liability incurred by reason of the giving of the same, and to hold it harmless from the payment of the $ 3,500 provided to be paid defendant Shapiro in the event of the termination of his lease under the termination clause in said contract; and under said arrangement, it caused to be deposited in escrow with the defendant Commerce Trust Company, a banking corporation at Kansas City, Missouri, hereinafter for convenience called Commerce Company, the sum of $ 3500 in the form of a treasurer's check, the same being accepted by the defendant Commerce Company with the understanding that it was not in any event to be paid the defendant Shapiro except upon the written consent of both the Realty Company and the Childs Company, to which understanding both assented. It does not appear from the record that the defendant Shapiro was in any way a party to said arrangement.

Upon the service of the notice of termination, defendant Shapiro continued in possession under his lease; and such negotiations were had between the Realty Company and him that, on the ninth day of May, 1924, a written contract was entered into between the Realty Company as party of the first part and him as party of the second part, reciting his lease and stating that, "in consideration of the mutual benefits each to the other accruing by virtue of the provisions hereof and of one dollar each to the other in hand paid," it was agreed as thereinafter set forth. Then followed a description of certain alterations and improvements in and upon the premises which it was agreed might be made by party of the first part according to certain plans and specifications identified and further agreements for the use of second party's floor space, if found necessary in making such improvements, and for the removal of second party's property therefrom, if desired, and for the temporary suspension of elevator service as might be necessary. It was also agreed that there should be no abatement or diminution of rent payable by defendant Shapiro during the period and concluded with the following:

"This agreement does not constitute any modification, alteration, change, diminution or enlargement of the said lease, executed by second party and Childs Company and assigned to first party, covering said second floor of said premises, but said lease shall be and remain in full force and effect as to all of its provisions and agreements, except that the provision on page 2 of said lease as to termination under certain conditions, is hereby cancelled and struck out of said lease."

Nathan Rieger, a witness for the plaintiff, upon trial testified as to the negotiations had with Shapiro leading up to the execution of said contract of May 9; and we quote the following from his testimony:

"Q. What did he say? Did he come to see you? A. He came down and wanted to talk about withdrawing this notice and putting the lease back to the same effect as it was before.

"Q. Tell what he said to you and what you said to him about withdrawing the notice, if anything, and about the money and so on. A. Before the notice was given, we talked to him about we would have to give him notice and we would have to put up the money in order to pay it when the time came, and after this notice was given, he came down and talked to us about...