Title & Trust Co. v. Durkheimer Inv. Co.

• Citation: 155 Or. 427,63 P.2d 909
• Parties: TITLE & TRUST CO. et al. v. DURKHEIMER INV. CO. [*]
• Decision Date: 29 December 1936
• Court: Oregon Supreme Court

63 P.2d 909

155 Or. 427

TITLE & TRUST CO. et al. v. DURKHEIMER INV. CO. ^[*]

Supreme Court of Oregon

December 29, 1936

In Banc.

Appeal from Circuit Court, Multnomah County; Hall S. Lusk, Judge.

Suit by the Title & Trust Company and others against the Durkheimer Investment Company. Decree for defendant, and plaintiffs appeal.

Affirmed.

This is a suit involving the validity of the forfeiture and termination of a lease of a six-story office building in the Portland business district and a sum of money, commenced on July 30, 1932.

On March 26, 1910, the predecessors in interest of defendant Durkheimer Investment Company, a corporation, leased to Harrison G. Platt, Robert Treat Platt, and the Fidelity Trust Company, a corporation, certain premises situated on the southwest corner of Park and Washington streets in the city of Portland, county of Multnomah, state of Oregon, described as lot 1 in Park block No. 2 in the city of Portland, for the term of 30 years commencing July 1, 1911, and ending June 30 1941, the cash rentals varying from $1,000 a month to $1,500 a month. At the termination of the first lease in 1925, the rentals included (a) the cash rental of $1,200 per month; (b) the payment of all taxes and assessments; (c) the payment of insurance upon the building; (d) the erection as a part of the rental of a six-story office building at a cost of not less than $50,000; (e) at the expiration or sooner termination of the lease, the tenants to quit and deliver up the leased premises and all erections to or upon the same to the lessors.

After the execution of this lease, March 26, 1910, the lessees went into possession of the demised premises, razed the old buildings, and erected thereon the Platt building, class A six-story store and office building, costing twice as much as the building required by the term of the lease. The lessees continued in possession and operation of said leased premises and the building thereon up to and including June 30, 1925 satisfactorily complying with the requirements of said lease in all respects. Prior to May 7, 1925, the Fidelity Trust Company was dissolved, all of its interest under said lease being taken over by Harrison G. Platt and Robert Treat Platt also prior to May 7, 1925, all the interest of the individual owners of said leased premises was transferred to the Durkheimer Investment Company, the defendant. During the early part of 1925 negotiations were carried on which culminated in a written agreement dated May 7, 1925, by and between Harrison G. Platt and Robert Treat Platt, as lessees, and the Durkheimer Investment Company, as lessor, whereby the lease of March 26, 1910, was mutually terminated, and a new lease dated May 7, 1925, was executed, becoming effective as of midnight June 30, 1925. The agreement embodying the cancellation of the earlier lease provided in part as follows:

"Whereas the parties hereto have agreed to enter upon a new lease of said premises, to take effect July 1st, 1925, and to run for a period of ninety-nine (99) years thereafter, terminating at midnight of June 30th, 2024,

"Now, Therefore, It is Hereby Agreed by and between the parties hereto that, upon the execution, delivery and taking effect of said new lease, said lease of March 26th, 1910 shall terminate at midnight of June 30th, 1925, and thereafter the parties shall hold under said new lease."

The agreement shows that the termination of the first lease and the execution of the second lease constituted a single transaction, and as a result there was no interval of time from 1910 to July, 1932, during which the lessees were out of possession and control of the leased premises in the Platt building erected thereon in compliance with the terms of the first lease. Two provisions of the first lease read as follows:

"Fifth: The lessees, jointly and severally, covenant and agree during the term of said lease, and as a part of the rent of said leased premises, to erect and construct upon said leased premises, in accordance with the building laws, ordinances and regulations of the City of Portland, Oregon, a store and office building of six stories or more in height, of the kind now designated by the building ordinances of the City of Portland as 'Class B,' and at an expense of not less than fifty thousand ($50,000.00) dollars, and to erect said building at their own cost and expense, and will promptly pay the cost and expense of erection in such manner that no liens may attach to said leased premises or to the buildings to be erected thereon, and to commence the construction of said building on or before the first day of July, 1911, and complete the same on or before the first day of January, 1912. ***"

"Ninth: The lessees, jointly and severally, covenant and agree *** that at the expiration of said term, or upon any sooner determination thereof, if any, in pursuance of the conditions of this agreement, they will quit and deliver up the leased premises and all erections to or upon the same to the lessors, peaceably, quietly and in as good condition and order as the same now are or may be put in, (reasonable wear and tear thereof excepted)."

By the terms of the lease of May 7, 1925, which we will hereafter refer to as the second lease, the Durkheimer Investment Company, as lessor, leased to Harrison G. Platt and Robert Treat Platt, as lessees, "those certain premises situated on the southwest corner of Park and Washington Streets, in the City of Portland, County of Multnomah, and State of Oregon, described as lot one (1) in Park Block two (2) in the City of Portland, for the term of ninety-nine (99) years commencing July 1st, 1925, and terminating at midnight of June 30th, 2024."

In the negotiations for the second lease the Platts agreed to pay the Durkheimer Investment Company $75,000 if it would terminate the old lease and enter into a new 99-year lease. This offer was accepted and the money paid to the defendant. This $75,000 was a part of the proceeds amounting to $175,000 obtained from the sale of a bond issue secured by a trust deed on said premises and permitted by the terms of the second lease, the Title & Trust Company being the trustee for the bondholders.

The rent reserved in the lease paid to the lessor the 1st day of July, 1925, and on the 1st day of each month thereafter, to and including the 1st day of June, 1926, was $1,200; on the 1st day of July, 1926, and on the 1st day of each month thereafter, to and including the 1st day of June, 1931, the sum of $1,300; on the 1st day of July, 1931, and on the 1st day of each month thereafter, to and including the 1st day of June, 1936, the sum of $1,400; thereafter increasing in specified amounts until the end of the term.

The lessees further agreed that as a part of the rent they would pay all the water rents and taxes assessed against said leased premises each year, to and including the water rents and taxes which shall become due and payable in the year 2024, and also pay all assessments which may be lawfully levied against the demised premises during the term of the lease and pay such water rents, taxes, and assessments prior to the maturity of the same, except where the lessees contested unlawful water rents, taxes, and other charges, for which provision was made.

Paragraph 6 of said lease reads as follows:

"Insurance: The lessees shall, during the term hereof, keep the building now on said premises, or which, during the term, may be erected thereon, insured in a sum equal to two-thirds ( 2/3) of the insurable value of said building, said building to be insured in responsible fire insurance companies satisfactory to the lessor, and any loss or damage arising under said policies of insurance shall be made payable to The United States National Bank of Portland (Oregon) as trustee, or such other bank or trust company in the City of Portland, Oregon, as the lessor may, from time to time, designate. All insurance money received by the trustee shall be held,

"(1) as security to the lessor for the performance by the lessees of all their obligations hereunder;

"(2) for the purpose of repair or reconstruction of the building on the leased premises; and

"(3) to pay to the lessees the balance, if any, after complete repair or reconstruction as herein provided.

"The lessees shall pay all premiums on said insurance and keep the same in force."

Paragraph 9 reads as follows:

"General Covenant: The lessees jointly and severally covenant and agree that they will make no unlawful, improper or offensive use of said leased premises, and will not suffer nor permit any strip or waste thereof, and that, at the expiration of said term, or upon any sooner determination thereof, if any, in pursuance of the conditions of this agreement, they will quit and deliver up the said leased premises and all erections to or upon the same to the lessor, peaceably, quietly and in as good condition and order as the same now are, or may be put in (reasonable use and wearing thereof excepted)."

Paragraph 11 reads as follows:

"Forfeiture This lease is made on the express condition that if the lessees shall neglect or fail to do or perform or observe any of the covenants, promises or agreements herein contained which, on their part, are to be performed, done or observed, and such neglect, failure or default shall continue for a period of sixty (60) days after written notice thereof shall have been given to the lessees, then, and in such case, the lessor may, at any time after the expiration of the sixty (60) day period after such notice, and while such neglect or failure or default continues, terminate this lease, and re-enter into the upon the leased premises, or any part thereof in the name of the whole, and repossess itself of the same, and...