William H. Low Estate Co. v. Lederer Realty Corp.

• Decision Date: 05 July 1916
• Docket Number: No. 355.,355.
• Citation: 98 A. 180
• Parties: WILLIAM H. LOW ESTATE CO. v. LEDERER REALTY CORP.
• Court: Rhode Island Supreme Court

98 A. 180

WILLIAM H. LOW ESTATE CO.

v. LEDERER REALTY CORP.

No. 355.

Supreme Court of Rhode Island.

July 5, 1916.

Case Certified from Superior Court, Providence and Bristol Counties.

Suit in equity by the William H. Low Estate Company against the Lederer Realty Corporation to set aside an award of appraisers. Case certified, under Gen. Laws 1909, c. 289, § 35, on motion to confirm the report and defendant's exceptions thereto. Exceptions overruled, report confirmed, and petition for modification of order of remand denied.

See, also, 35 R. I. 352, 86 Atl. 881, Ann. Cas. 1916A, 341; 86 Atl. 1055.

Eliot G. Parkhurst, Eugene A. Kingman, and Edwards & Angell, all of Providence, for complainant. Oscar Lapham, Mumford, Huddy & Emerson, and George II. Huddy, Jr., all of Providence, for respondent.

SWEETLAND, J. This cause is before us upon certification by the superior court. It is a suit in equity, originally brought to set aside an award of appraisers made under a submission entered into upon the termination of a lease in accordance with the provisions of a certain covenant contained therein. In said lease the predecessors in title of the respondent are lessors and the predecessor in title of the complainant is lessee. The cause has previously been before this court. At that time, after setting aside the award of appraisers and holding that "the parties will not be required to proceed to a new appraisal under the lease, but the court may substitute itself for the appraisers," we entered the following order:

"It is ordered that the cause be remanded to the superior court, with direction to proceed by itself or with the assistance of a master to determine the value of the building and improvements upon said leased premises on July 15, 1907, and by proper decree or decrees to provide for the payment by the said respondent to the said complainant of said value, with interest at the rate of 6 per cent. per annum from July 15, 1007, to the time of payment, and to make such further orders and decrees in the cause as to said Superior Court shall seem meet." Low Estate Co. v. Lederer Realty Corp., 35 R. I. 352, 86 Atl. 881, Ann. Cas. 1916A, 341.

Thereafter the superior court entered its decree referring the cause to William B. Greenough, Esq., as master in chancery, "to determine and state to the court the sound value on July 15, 1907, of the buildings and improvements then upon, the premises described in said lease." The master filed his report, in which he found that:

"The sound value of the buildings and improvements on the premises described in the lease in this case on July 15, 1907, is $76,737.84."

Thereafter the respondent filed its exceptions to said report, and the complainant moved to confirm the same. The case was then certified by the superior court to this court for final determination.

A number of the respondent's exceptions relate to what it claims is the failure of the master to show in his report the constitueut items found by him and the methods or principles used by him in ascertaining reproduction cost, depreciation, and sound value of said buildings and improvements. These exceptions are without merit. Under the remanding order of this court the superior court was directed to proceed by itself or with the assistance of a master to determine the value of said building and improvements. By the terms of the decree of reference the master was directed to determine and state the sound value of said building and improvements. The methods and principles to be used in ascertaining the sound value of said building and improvements were prescribed by this court in its former opinion. Low Estate Co. v. Lederer, 35 R. I. 352, 86 Atl. 881, Ann. Cas. 1916A, 341. We held that the word "value," as employed in said lease, meant "sound value"; i. e., the actual value of said buildings and improvements in the condition in which they stood upon the land at the termination of the lease. We said:

"This would be the cost of their reproduction at that time as new construction, less a proper deduction for depreciation."

It appears from the report that the finding of the master was made in accordance with the directions set out in our decision. He says in the report:

"In ascertaining the reproduction cost, the proper deduction for depreciation, and the sound value of the buildings and improvements on the premises described in this lease, I have followed the principles set forth in the opinion of the Supreme Court in this cause. In accordance therewith, I have first ascertained from the testimony and exhibits the actual cost of reproduction on July 15, 1907, as new material, of the buildings and improvements then on the premises described in said lease. * * * I next found the proper deduction for depreciation. In doing so, I noted that the opinion of the Supreme Court defines three kinds of value. It is clear from this opinion that the proper allowance for depreciation in a given case depends upon the kind of value which it is sought to ascertain. As I had been directed to find sound value, I did not seek to ascertain the depreciation in market value or the depreciation in 'profitableness for some particular purpose.' Instead, I sought to ascertain the difference between the physical value of the building and improvements as new construction and as they actually existed on July 15, 1907. It is evident from the testimony that the building and improvements were less valuable on July 15, 1907, than new construction by reason of deterioration due to decay, age, use, and wear and tear. The amount which I determined to be the proper allowance for depreciation was the result of a careful consideration and weighing of the voluminous testimony and exhibits, a careful perusal of all briefs, and a visit to the building. After determining the cost of reproduction and the proper allowance for depreciation, I deducted the latter from the former to find sound value."

With regard to the objection that the master failed to show in his report the constituent items of reproduction cost, depreciation, and sound value found by him, the master says:

"I have considered with great care all of the testimony and exhibits in the case, and my report is based thereon. To classify and identify the constituent items of reproduction cost and depreciation, with the explanations necessary to make clear what each item included, would be a difficult task, and would necessitate and involve a complicated report. Not until after the testimony had been closed and briefs filed was the master requested to make such findings. * * * I find nothing in the opinion of the Supreme Court, or in its remanding order, or in the decree of reference, which shows that such a report was contemplated, nor do I find any provision in the statutes or rules of this court which makes such requirement. Furthermore, an examination of the authorities convinces me that, except in the case of accounts (where the order to state the account presupposes detailed items), such a report, in the absence of general or special rules of court, is not required and is not customary. As stated above, I am of the opinion that, if such a report could be prepared, it would of necessity lead to confusion and misunderstanding, because of the intricacy and conflicting character of the testimony and exhibits."

We think the position taken by the master is correct. It is a sufficient answer to this objection of the respondent that the decree of reference did not make it the master's duty to render such report....