Willing v. Chicago Auditorium Ass, 561

Decision Date21 May 1928
Docket NumberNo. 561,561
PartiesWILLING et al. v. CHICAGO AUDITORIUM ASS'N
CourtU.S. Supreme Court

Messrs. Charles E. Hughes, of New York City, and Homer H. Cooper and Samuel Topliff, both of Chicago, Ill., for petitioners.

[Argument of Counsel from pages 275-277 intentionally omitted] Mr. Walter L. Fisher, of Chicago, Ill., for respondent.

[Argument of Counsel from pages 278-283 intentionally omitted] Mr. Justice BRANDEIS delivered the opinion of the Court.

This suit, which was begun in a state court of Illinois by the Chicago Auditorium Association, is said to be in the nature of a bill to remove a cloud upon title. All of the parties, except a few of the defendants, are citizens of Illinois. These claimed that as to them there was a separable controversy, and they secured a removal of the whole cause to the federal court for northern Illinois. There Willing and other defendants moved to dismiss, on the ground that the bill was not within the jurisdiction of a court of equity, and that the court 'is without jurisdiction of the subject-matter of the case made or at- tempted to be made by the bill.' The court was of opinion that the case presented questions which should be determined only upon answers and proofs, denied the motions to dismiss, without prejudice to any question raised by either party touching the motions, and directed the defendants to answer. After hearing the case fully on the evidence, the District Court dismissed the bill 'for want of equity jurisdiction in the court to grant any relief upon the pleadings and the evidence, but without prejudice to whatever rights the plaintiff may have * * * when asserted in any appropriate proceeding or otherwise.' 8 F.(2d) 998.

The Circuit Court of Appeals held that the suit was cognizable in a court of equity as one to remove a cloud upon title, and it reversed the decree, with direction to the District Court to hear the evidence and determine the issues involved. 20 F.(2d) 837. This court granted a writ of certiorari. 275 U. S. 579, 48 S. Ct. 122, 72 L. Ed. —. Motions by Willing and others to remand the cause to the state court had been made in the District Court, on the ground that the controversy involved was single and entire as to all the defendants. The motions, which that court denied, were renewed in the Circuit Court of Appeals and again denied. We have no occasion to consider whether the alleged controversy was separable; for we are of opinion that the proceeding does not present a case or controversy within the range of judicial decision, as defined in article 3 of the Federal Constitution.

The facts alleged and proved are these: The association, an Illinois corporation, was organized in 1886 for the purpose of constructing and maintaining in Chicago a building containing a large auditorium, galleries for exhibition of works of art, offices, and other rooms; to provide thereby, and otherwise, for the cultivation of music, the drama, and the fine arts, and for holding in Chicago political and other conventions; and to use the premises for any and all purposes of profit. To this end, the association became, in 1887, the ground lessee of five adjacent parcels of land for the term of 99 years, under five separate, substantially similar indentures. Three of the leases were later extended to the year 2085. On this land the association built, before 1889, the single monumental structure now standing, known as the Auditorium Building, which contains, besides the auditorium, a recital hall, studios, a hotel, and many business offices. The cost of construction and maintenance was defrayed by stock issues aggregating $2,000,000, and by issues of bonds of which $1,375,000 are outstanding.

The building is now in fairly good condition, and continues to serve well the purposes for which it was constructed. The payments of rent and interest have been made regularly. Thus neither the public, the landlords, nor the bondholders have cause for dissatisfaction. But, for the stockholders, the investment has never been financially remurnerative. In 40 years only one dividend has been paid, and that was 1 1/2 per cent. Considered as a financial investment, the building is now obsolete in design, and it is incapable of alteration without unjustifiable expense. The highest and best use of the property for the financial gain of the tenant would now be the replacement of this structure by a modern one adapted for business. The association desires to erect a large modern commercial building of greatly increased height, the cost of which may be as much as $15,000,000. Appropriate changes in its charter powers have been made. Recently some of the stock has been acquired by the president of the corporation at a small fraction of its par value.

There is no provision in the leases which in terms gives the association the right to tear down this building and erect another in its place. It may be that the building, as and when constructed, became, and now is, property of the lessors. Compare Kutter v. Smith, 2 Wall. 491, 17 L. Ed. 830; Bass v. Metropolitan West Side Elevated Railway Co. (C. C. A.) 82 F. 857, 39 L. R. A. 711. The leases contain certain provisions which may be construed as denying, by implication, any right to tear down the building even to replace it by a better one. They declare that the building is security for payment of rent and for the performance of all other covenants imposed upon the tenant; that the tenant shall 'keep the building situated upon said demised premises * * * in good repair, and in a safe and secure condition, * * * and all rooms in said building in a good, safe, clean and tenantable condition and repair during the entire term of this lease'; that the tenant shall rebuild or repair the building, in event of damage or destruction by fire, upon the same plan as was followed in the original structure, or upon such other plans as are approved by the lessors; and that the landlords shall pay the tenant the appraised value of the improvements at the end of the term.

Counsel for the association are of opinion that it has the legal right to tear down the building and to construct the new one, without first obtaining the consent of the several lessors and of the trustee for the bondholders, provided adequate security is furnished for the payment of the ground rent pending the completion of the new building. But the association deemed it advisable to obtain the consent of the lessors and of the trustee. To that end, negotiations were opened with Willing and one other of the lessors, and there was some talk of purchasing their interests. In the course of an informal, friendly, private conversation, Willing stated to the president of the association that his counsel had advised that the lessee had no right to tear down the Auditorium Building without the consent of the lessors and of the trustee for the bondholders. Several of the lessors were never approached by any one on behalf of the association. Nor was the trustee for the bondholders. After this talk with Willing, a year passed without further occurrence. Then the suit at bar was begun against all the lessors and the trustee for the bondholders.

The bill alleged that:

'Under the proper construction and interpretation of the terms, covenants, and conditions of said several leases, your orator is fully empowered and has the right to tear down and remove the present improvement as a part of and incidental to the erection of a new improvement of equal or greater value, not impairing in any way the security and property right of the said lessors or their successors and assigns, upon furnishing proper and adequate security during the removal of the present improvement and until the completion of the new improvement; but the defendants hereinafter named, or some of them, nevertheless claim and assert, and by reason of such claim and assertion certain persons with whom your orator is obliged to deal in the financing of its aforesaid plans are fearful, that the present building cannot be removed without a violation of the terms, covenants, and conditions of said leases. * * * The aforesaid claims, fears and uncertainties respecting the rights of the parties to said leases, based upon the terms, covenants, and conditions of the leases of said property, have greatly impaired the value of the leasehold interests of your orator, and have made them unmarketable, and have prevented your orator from exercising its rights with respect to said leasehold interests so as to secure therefrom the highest and best use of its interest in the land, and the terms, covenants, and conditions of the said leases, in so far as they give color to said claims, fears, and uncertainties, are clouds upon the title of your orator, for the removal of and relief against which your orator has no adequate remedy in a court of law.'

The bill prayed:

'That this court will remove from the several...

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