Lincoln Trust Co. v. Nathan

• Decision Date: 22 January 1907
• Citation: 99 S.W. 484,122 Mo. App. 319
• Parties: LINCOLN TRUST CO. et al. v. NATHAN et al.
• Court: Missouri Court of Appeals

99 S.W. 484

122 Mo. App. 319

LINCOLN TRUST CO. et al. v. NATHAN et al.

St. Louis Court of Appeals. Missouri.

January 22, 1907.

1. JUDGMENT—MATTERS CONCLUDED.

Where a lease contained a covenant that the lessees should expend a certain sum for improvements, which should belong to the lessors after the expiration of the lease, and in the event of the loss of the property during the life of the lease the insurance money recovered for their loss should be devoted to replacing the improvements in a new building to be erected by the lessors, in an action by the lessors for rent after the building was destroyed by fire, a judgment in favor of the lessees on their defense that the lessors had not fulfilled their covenant to rebuild, and canceling the lease, was not conclusive on the right of the lessors to recover the insurance money received by the lessees on the improvements.

2. LANDLORD AND TENANT—IMPROVEMENTS— INSURANCE—COVENANT IN LEASE.

Where a lease contained a covenant that the lessees should expend a certain sum for improvements, which should belong to them till the expiration of the lease, when they should become the property of the lessors, but that in the event of the destruction of the property by fire the insurance should be devoted to replacing the improvements in a new building, and the building was destroyed by fire, and the lease rescinded because of lack of diligence of the lessors in performing their covenant to rebuild, the lessors were entitled to recover such a proportion of the insurance money received by the lessees as the portion of the term before the destruction of the building bore to the entire term of the lease.

Appeal from St. Louis Circuit Court; Warwick Hough, Judge.

Action by the Lincoln Trust Company and another against Henry J. Nathan and another. From a judgment in favor of plaintiffs, defendants appeal. Affirmed.

Rombauer & Rombauer, for appellants. Geo. W. Lubke and Geo. W. Lubke, Jr., for respondents.

BLAND, P. J.

Fred C., Joseph J., and Otto L. Mersman were trustees under their father's will, and as such were seised in fee of a lot of ground with a four-story stone-front, brick building thereon, in block 94, city of St. Louis, Mo., and known as "Nos. 814 and 816 North Broadway." On December 29, 1892, these trustees leased said premises, in writing, for a term of ten years (expiring December 31, 1902) to Henry J. and Isaac Nathan, at a rental of $600 per month, payable monthly in advance. The Nathans were given the privilege of assigning the lease; they, however, to remain liable for the rent and to perform all other covenants of the lessees. A short time after the lease was executed the Nathans formed and incorporated the People's House Furnishing Company, and in August, 1893, assigned the lease to this corporation. Joseph J. and Otto L. Mersman resigned their offices as trustees under their father's will, and the Lincoln Trust Company, a corporation, and Arthur A. B. Woerheide, were appointed their successors by the St. Louis circuit court. They duly qualified and entered upon their duties in 1897. One of the covenants in the lease, the one out of which this suit arose, is as follows: "And as a further consideration for the leasing of said premises the said parties of the second part agree to expend and lay out for elevators, heating apparatus, and lighting apparatus and other fixtures, in the interior of said buildings, to be used therein during the term of said lease, a sum of money which shall not be less than four thousand dollars, and which said fixtures and elevators and heating and lighting apparatus shall belong to the said parties of the second part until the expiration of said lease, when the same shall become the sole property of the said parties of the first part; but, in the event of the loss or destruction of said property during the life of this lease, the insurance money which shall be recovered for their loss shall be devoted for the purpose of replacing said elevators, heating and lighting apparatus, and fixtures in a new building to be erected upon the aforesaid lot of ground, or a repaired building thereon; and said elevators, apparatus, and fixtures shall be kept insured by said parties of the second part to the amount of four thousand dollars." The lessees went into possession of the leased premises, and occupied them until the 4th day of February, 1900, when they were totally destroyed by fire. They paid the rent for the months of February and March, 1900. Prior to the fire, defendants expended about $4,000 for installing elevators and heating and lighting apparatus in the premises. They insured these fixtures against loss by fire in the sum of $4,000, which insurance was in force at the time of the fire, and of which defendants collected $3,980. The suit is in equity to compel defendants to account for and pay over the $3,980 insurance money collected by them.

Two defenses are pleaded in the answer— one, that plaintiffs, under the covenant of the lease, are not entitled to the insurance fund; the other, that the matter was or could and should have been adjudicated in a prior suit between the same parties. It was provided in the lease that, in case of the destruction of the building during the life of the lease, the lessors or their successors would immediately erect a new building on the premises, of the same size, dimensions, strength, and arrangement as the building let, and have the same ready for occupancy by the lessees as soon as possible after the destruction of the building originally let. Relying on this covenant defendants paid the rent for March; but after March, being of opinion that plaintiffs were not diligently performing the covenant to rebuild, notified them they had acquired other premises and rescinded the lease. In May, 1900, plaintiffs commenced an action in the St. Louis circuit court against defendants to recover the rents of the leased premises for the months of April and May, 1900. To this suit defendants filed an answer, alleging a breach of the lease by plaintiffs in failing to speedily erect a new building as they had covenanted to do, and prayed for a cancellation and surrender of the lease, and also for a return of the $1,200 rent paid plaintiffs for the months of February and March, 1900. The reply was a general denial. It appears that on the trial of the case plaintiffs offered to introduce in evidence the fact that defendants had collected $3,980 insurance on the fixtures; but the evidence was excluded, and in the finding of facts and judgment of the circuit court this insurance money is nowhere mentioned. Defendants were successful in their defense. The court entered a decree canceling the lease and ordering plaintiffs to surrender it, and decreed that plaintiffs should return to defendants the $1,200 of rent collected for February and March, less rent for four days in the month of February. Plaintiffs appealed the cause to the Supreme Court, and in June, 1903, said court handed down an opinion affirming the judgment of the circuit court. See 175 Mo. 32, 74 S. W. 1007.

The trial judge found that "by the occupancy and use of the building leased, and the elevator, heating and lighting apparatus, and other fixtures, by the defendants for a period of seven years, one month, and four days of the ten-year term, the plaintiffs have partially discharged their obligation to pay for the said elevator and other fixtures, and have thereby acquired an equitable interest in the same to the extent of the payment so made, and to the same extent are therefore entitled in equity to a corresponding interest in the proceeds of the insurance on said property now in the defendants' hands; that is to say, the plaintiffs are entitled to a sum which bears the same relation to $3,980 that seven years, one month, and four days bears to the full term of ten years, which sum amounts to $2,823.58. As this sum represents an existing interest in the plaintiffs in the property insured at the time of its destruction by fire, the defendants became trustees thereof for the benefit of plaintiffs, and the plaintiffs will be allowed interest thereon at the rate of 6 per cent. per annum from the time it came into the possession of defendants, to wit, on the 1st day of April, 1900, to the present time." On a motion for new trial, the judge modified his judgment so as to allow interest on the principal sum awarded plaintiffs from the date of the judgment in the circuit court rescinding the lease. The case was tried before Judge Hough who filed a written opinion in the case, which plaintiffs have printed in their brief.

In disposing of the defense of res adjudicata,...