Little Rock Municipal Airport Commission v. Arkansas Val. Compress & Warehouse Co.

• Citation: 224 Ark. 1018,277 S.W.2d 836
• Decision Date: 18 April 1955
• Docket Number: No. 5-624,5-624
• Parties: LITTLE ROCK MUNICIPAL AIRPORT COMMISSION et al., Appellants, v. ARKANSAS VALLEY COMPRESS & WAREHOUSE COMPANY, Appellee.
• Court: Supreme Court of Arkansas

Page 836

277 S.W.2d 836

224 Ark. 1018

LITTLE ROCK MUNICIPAL AIRPORT COMMISSION et al., Appellants, v. ARKANSAS VALLEY COMPRESS & WAREHOUSE COMPANY, Appellee.

No. 5-624.

Supreme Court of Arkansas.

April 18, 1955.

Bailey, Warren & Bullion, Little Rock, for appellants.

House, Moses & Holmes and Townsend & Townsend, Little Rock, for appellee.

McFADDIN, Justice.

The present case is a sequel to that of Arkansas Valley Compress & Warehouse Co. v. Morgan, 217 Ark. 161, 229 S.W.2d 133, 142, sometimes hereinafter referred to as 'the first case', which must be read for an understanding of the background of the present case. The first case was filed April 2, 1948, decree rendered in the Chancery Court on July 2, 1949, and opinion of this Court delivered on April 17, 1950. We there held that Arkansas Valley's lease from the City of Little Rock was valid, and we incorporated this paragraph in the concluding portion of that opinion:

'Negotiations for Increased Rentals. During World War II the United States Government took possession of all of the airport property, including Building No. 19, and constructed an additional (i. e. second) floor on a portion of Building No. 19. After the United States Government returned the airport property to the City, and the City returned Building No. 19 to Arkansas Valley, the City began negotiations with Arkansas Valley for additional rent because of the enlargement of Building No. 19 by the United States Government. While these negotiations were being conducted, the appellee, Morgan, filed this taxpayer's suit which necessarily suspended the correspondence. We presume that the negotiations will be resumed after this litigation is concluded; and we point out that nothing in this opinion is to be considered as an expression concerning the rights of either party in the matter of increased rentals because of enlargement of the building.'

The appellant, Little Rock Municipal Airport Commission (hereinafter called 'City'), filed the present suit against appellee, Arkansas Valley Compress & Warehouse Company (hereinafter called 'Arkansas Valley'), in the Chancery Court on March 4, 1953. The complaint alleged inter alia: that the Little Rock Municipal Airport Commission had full power to act for the City in this case; that Arkansas Valley held the lease on Building No. 19 of the airport property (as decided in our opinion in the first case) subject to the recapture rights of the Federal Government; that in 1941 the Federal Government recaptured the Building No. 19, along with the entire airport, for the period of World War II; that during such recapture the Federal Government added a second floor to a part of said Building No. 19 and installed heating and other equipment in all of Building No. 19; that in March, 1946 the Federal Government released Building No. 19 from the recapture; that Arkansas Valley immediately took possession of the Building No. 19 and the heating and other equipment installed by the Federal Government during the recapture period; that in May, 1951 the City received the deed returning the Building No. 19 from the Federal Government to the City and also conveying the said heating and other equipment to the City; that the City has demanded of Arkansas Valley increased rent payments because of the second floor on Building No. 19 and such increased payments have been refused; that the City has demanded payment for the heating and other equipment which Arkansas Valley has converted, and such payment has been refused; that since 1947 Arkansas Valley has been receiving $55,000 annual rental from U. S. Time Corporation on Building No. 19; that Arkansas Valley is being unjustly enriched because of the second floor on Building No. 19 and should make restitution to the City because of such unjust enrichment; and that the City should also have judgment for $40,000 for the heating and other equipment placed in the Building No. 19 by the Federal Government in the recapture period and deeded to the City in 1951 and converted by Arkansas Valley.

Upon issue joined a trial in the Chancery Court resulted in a decree refusing the City any relief for increased rentals but allowing the City damages of $16,000 for the heating and other equipment converted by Arkansas Valley. The City has appealed from the decree refusing the increased rentals; and Arkansas Valley has cross-appealed from the judgment of $16,000 against it for the conversion of the heating and other equipment.

I. The City's Claim For Increased Rentals. The City seeks increased rentals on the sole theory that Arkansas Valley is being unjustly enriched by having and using the second floor of the building, whereas there was only one floor to the Building No. 19 when the original lease was made in 1931. The City offered considerable evidence that the 16,800 square feet of floor space of the second floor would be worth a rental of at least $5,600 per annum.

In its briefs in this Court the City, with becoming candor, states that its entire case for increased rentals rests on the doctrine of unjust enrichment. Here is the language:

'It is the firm belief that this case presents one of unjust enrichment to a private corporation at the expense of government and public funds. Quite frankly, and in spite of vast research on this case, we state to the Court that we have failed to find any adjudicated case wherein the facts approach similarity to the present facts. Therefore, our brief in this instance will be limited, primarily, to general principles of unjust enrichment ¹ and the firm rights of the Commission to restitution thereunder.'

Here is the heart of the City's argument:

'The facts of the case at bar * * * are that the City (landlord) leased to Arkansas Valley (tenant) a public building for a long period of years--almost two generations. Through no fault of the lessor or lessee and not at their instigation, insistence or suggestion, that public building was vastly improved and enhanced by the federal government at a time when the U. S. had the absolute right to do so. When these improvements were made neither the lessor nor lessee had any rights in and to the building (other than contingent reversionary) nor did either of them have the right or duty to prevent the U. S. from doing anything it wanted to, including the destruction of this building, if it became necessary in terms of the emergency.'

Our study leads us to the conclusion that the doctrine of unjust enrichment is not applicable to the situation existing in this case. A number of factors concurrently impel such conclusion:

(a) When the City made the 1931 lease to Arkansas Valley the City was acting in a proprietary capacity rather than in a governmental capacity. This is detailed in our opinion in the first case--Arkansas Valley Compress & Warehouse Co. v. Morgan, 217 Ark. 161, 229 S.W.2d 133.

(b) The said 1931 lease provided that if the Federal Government ever recaptured the Building No. 19 and subsequently returned it to the City, then the 1931 lease between the City and Arkansas Valley would come back into full force upon such return: so it is under the 1931 lease that the rights of the City and Arkansas Valley are to be measured.

(c) The evidence herein does not show that Arkansas Valley is receiving any additional amount from U. S. Time because of the second floor. The evidence shows that the second floor of the Building No. 19 by itself would be of little value. The first floor has 201,000 square feet of floor space and the second floor has only 16,800 square feet of floor space and has no way of ingress or egress except by use of the first floor. So it is very doubtful that there is any enrichment by reason of the second floor.

(d) Even if there had been any enrichment it is not unjust so as to give the City a cause of action. The situation between the City and Arkansas Valley is much the same as if some third person has seen fit to gratuitously improve a building that any individual had rented from another individual. The City did not spend one penny in putting the second floor on the Building No. 19.

Usually unjust enrichment arises either (a) when the person claiming the unjust enrichment has made an expenditure, or (b) when the person receiving the unjust enrichment has obtained it by reason of color of authority of the other. We have two comparatively recent cases in Arkansas on this matter of unjust enrichment and these point to the conclusion that we now reach.

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