State By and Through State Highway Commission v. Oregon Inv. Co.

• Decision Date: 26 April 1961
• Parties: , 96 A.L.R.2d 1137 STATE of Oregon, by and through its STATE HIGHWAY COMMISSION, composed of M. K. Mclver, Robert B. Chessman and Kenneth M. Fridley, Plaintiff, v. OREGON INVESTMENT COMPANY, an Oregon corporation, Defendant-Respondent, The First National Bank of Oregon, a National banking association, Defendant, Northwestern Transfer Company, an Oregon corporation, Defendant-Appellant.
• Court: Oregon Supreme Court

Page 71

361 P.2d 71

227 Or. 106, 96 A.L.R.2d 1137

STATE of Oregon, by and through its STATE HIGHWAY

COMMISSION, composed of M. K. Mclver, Robert B.

Chessman and Kenneth M. Fridley, Plaintiff, v. OREGON INVESTMENT COMPANY, an Oregon corporation, Defendant-Respondent,

The First National Bank of Oregon, a National banking

association, Defendant,

Northwestern Transfer Company, an Oregon corporation,

Defendant-Appellant.

Supreme Court of Oregon, Department 2.

Argued and Submitted Feb. 15, 1961.

Decided April 26, 1961.

Seymour L. Coblens, Portland, argued the cause for appellant. With him on the brief were Reinhardt, Coblens & Stoll, Portland.

George W. Mead, Portland, argued the cause and filed a brief for respondent.

Before McALLISTER, C. J., and WARNER, SLOAN, O'CONNELL and LUSK, JJ.

McALLISTER, Chief Justice.

This proceeding was commenced by the State Highway Commission to condemn certain real property in Portland, owned by Oregon Investment Company, hereinafter called the owner, and occupied as lessee by the Northwestern Transfer Company, hereinafter called the tenant. After the proceeding was instituted the parties agreed upon the value of the property, the stipulated sum was paid into court and a judgment was entered in favor of the Highway Commission. Thereafter the proceeding, as between the owner and tenant, was continued to determine whether the tenant was entitled to any part of the award. The trial court found that it was not and the tenant has appealed.

The real property in question is situated on southeast Belmont Street and was improved with a building used as a warehouse. On August 15, 1955 the owner leased the premises to the tenant for a term of five years, with an option to renew for an additional five years. The lease contained a provision generally referred to as a 'condemnation clause' reading as follows:

'It is further understood and agreed that if the whole or any part of the demised premises shall be taken by any Governmental authority for any public purpose, then the Lessee shall not receive any portion of any award made to the Lessor, but the sole right of the Lessee shall be limited to a separate claim against said Governmental authority for damages to its business and personal effects, and the Lessee hereby waives any claim or claims against the Lessor, and the rent shall be prorated and paid up to the date of such taking or refunded in the event of payment in advance, or prorated if only part of the building should be so taken. It is agreed by the parties hereto, however, that in the event either party deems it advisable to file such suit, they will give the other party reasonable notice of their intention to do so.'

Generally a tenant is entitled to share in the condemnation award to the extent of his leasehold interest. State Highway Comm. v. Burk et al., 200 Or. 211, 265 P.2d 783; Lewis, Eminent Domain (3d ed.) § 525, P. 952; 2 Nichols, Eminent Domain (3d ed.) § 5.23, P. 35; 18 Am.Jur., Eminent Domain § 232, P. 685. However, the tenant may be contract waive his right to participate in a condemnation award. United States v. Petty Motor Co., 1946, 327 U.S. 372, 66 S.Ct. 596, 90 L.Ed. 729; Capitol Monument Co. v. State Capitol Grounds Commission ex rel. Murry, 1952, 220 Ark. 946, 251 S.W.2d 473, 475; United States v. Improved Premises etc., D.C.1944, 54 F.Supp. 469, 472; In re Improvement of Third Street, St. Paul, 178 Minn. 552, 228 N.W. 162; Zeckendorf v....