Woods v. Petchell

• Decision Date: 07 June 1949
• Docket Number: No. 13861.,13861.
• Citation: 175 F.2d 202
• Parties: WOODS v. PETCHELL et al.
• Court: U.S. Court of Appeals — Eighth Circuit

175 F.2d 202 (1949)

WOODS v. PETCHELL et al.

No. 13861.

United States Court of Appeals Eighth Circuit.

June 7, 1949.

COPYRIGHT MATERIAL OMITTED

Louise F. McCarthy, Special Litigation Attorney, Office of the Housing Expediter, Washington, D. C. (Ed Dupree, General Counsel, and Hugo V. Prucha, Assistant General Counsel, Office of the Housing Expediter, Washington, D. C., on the brief), for appellant.

Perry W. Seaton, Kansas City, Mo., for appellees Pat McDonough, Rose Mather, Frank Thompson and Robert E. Logan.

Ira B. Burns and Burns & Burns, Kansas City, Mo., for appellee T. C. Petchell.

Before GARDNER, Chief Judge, and WOODROUGH and THOMAS, Circuit Judges.

THOMAS, Circuit Judge.

The appellee, Frank M. Thompson, is the owner and landlord of two three-story six unit apartment buildings situated within the Kansas City, Missouri, Defense Rental Area, and subject to the Housing and Rent Act of 1947, as amended. 50 U.S.C.A. Appendix, § 1881 et seq. The other appellees are his agents.

In this proceeding the appellant, Woods, Housing Expediter, Office of the Housing Expediter, brought suit under § 206(b) of the Act to enjoin defendants-appellees from directly or indirectly evicting or attempting to evict the tenants from the two structures, charging that such acts violated § 209 of the Act. The facts were stipulated, and the court found for the defendants and entered judgment dismissing the complaint. This appeal followed.

Thompson sought to evict his tenants occupying the two structures to enable him to sell and convey to different persons each individual apartment therein. The question presented is whether, such plan and purpose having been consummated, the several purchasers of the apartments in each building will constitute "a cooperative corporation or association" within the meaning of § 209(a) (2) of the Act.

The agreed statement of facts discloses that notices have been served by defendants upon the tenants in the subject structures to vacate their respective apartments; and that Thompson, the owner, has entered into contracts for the sale of some units in the apartment structures (but less than 65 per centum of all units), and that he intends to issue general warranty deeds conveying fee simple title to the interests purchased.

A copy of the contract of sale used in the selling of such units is set out in the stipulated facts. It shows that the interest sold to each purchaser is defined in a "standard plural residence declaration" filed of record. A copy of the Declaration referred to is attached to the contract. It provides that each structure is divided into six separate "interests" for the purpose of sale and management, each of which is made subject to the restrictions, agreements, covenants, charges and assessments stated in the Declaration.

An interest consists of two parts: (1) a "private apartment" for living quarters including a living room, dining room, sun room, kitchen, bathroom, 2 bedrooms and 3 closets together with the floors, inner surface of the walls and ceilings including the lath and plastering, partitions, doors, windows, trim, decorations, heating, lighting and water supply apparatus, and other parts wholly within the private apartment; and (2) an undivided one-sixth interest in the "common property" which term includes all the real estate and improvements thereon not included in the term "private apartment."

The Declaration provides, also, for a "Managing Trustee" who shall have complete charge of the operation of the apartment property with all the power and authority usually belonging to the owner of such property. It is his duty to estimate annually the amount necessary to operate the structure, to pay the taxes and insurance, to pay for heating, repairing, janitor and other necessary services, and compensation for himself, and to levy an assessment for one-sixth of such estimate against each interest, payable in equal monthly installments in advance. Upon failure to pay an assessment the owner may be evicted, his apartment rented by the Manager and credit given the owner for the rentals collected.

There are no provisions in the Declaration for the organization of Associations, or the adoption of By-laws, or the election of officers, other than the election of the Managing Trustee. No organization or corporate structure is provided for, and no stock or stock certificate is issued to any purchaser. There is no provision for the leasing or renting of apartment units to a purchaser, and no such leases are made by the sellers to the purchasers. Title to each individual unit passes by deed, will or descent and not by assignment of lease or of stock certificate.

Five units in the two appartment buildings have already been vacated by the tenants, and the defendants propose to proceed with the eviction of the remaining tenants in accordance with the Declaration and the contracts.

The trial court found the facts as stipulated and concluded that

1. The subject premises are not structures owned or leased by a cooperative corporation or association within the meaning of § 209(a) (2) of the Housing and Rent Control Act of 1947, as amended, and that

2. The acts of the defendants described in the agreed statement of facts do not constitute violations of the Housing and Rent Control Act of 1947, as amended, denied an injunction and dismissed the complaint.

Section 209 of the Housing and Rent Control Act of 1947, 50 U.S.C.A.Appendix, § 1899, relates to actions or proceedings for the eviction of tenants by landlords seeking to recover possession of controlled housing accommodations. Subsection (a) provides that no such action shall be maintainable unless

"(2) the landlord seeks in good faith to recover possession of such housing accommodations for his immediate and personal use and occupancy as housing accommodations, * * * Provided, That in the case of housing accommodations in a structure or premises owned or leased by a cooperative corporation or association no action or proceeding under this paragraph or paragraph (3) to recover possession of any such housing accommodations shall be maintained unless stock in the cooperative corporation or association has been purchased by persons who are then stockholder tenants in occupancy of at least 65 per centum of the dwelling units in the structure or premises and are entitled by reason of stock ownership to proprietary leases of dwelling units in the structure or premises; but this proviso shall not apply where such corporation or association acquires or leases such structure or premises after the effective date of the Housing and Rent Act of 1948 pursuant to a contract entered into prior to such date;

"(3) the landlord has in good faith contracted in writing to sell the housing accommodations to a purchaser for the immediate and personal use and occupancy as housing accommodations by such purchaser."

Section 206(b) of the Act 50 U.S.C.A. Appendix, § 1896(b), provides:

"Whenever in the judgment of the Housing Expediter any person has engaged or is about to engage in any act or practice which constitutes or will constitute a violation of any provision of this title, he may make application to any Federal, State, or Territorial court of competent jurisdiction, for an order enjoining such act or practice, or for an order enforcing compliance with such provision, and upon a showing by the Housing Expediter that such person has engaged or is about to engage in any such act or practice a permanent or temporary injunction, restraining order, or other order shall be granted without bond."

Under § 206 the Housing Expediter was authorized to bring this action in the Federal court, although a proceeding in eviction of a tenant is within the exclusive jurisdiction of the state courts. Woods v. Hillcrest Terrace Corporation, 8 Cir., 170 F.2d 980, 984; Porter v. Lee, 328 U.S. 246, 66 S.Ct. 1096, 90 L.Ed. 1199.

The decisive question for determination is whether the purchasers of interests in the apartment structures will, under the deeds of conveyance and the restrictions and plan of operation provided in the Declaration, constitute a cooperative association within the meaning of § 209(a) (2) of the Act, supra. If so, the court erred in denying an injunction; if not, the judgment must be affirmed. Upon this point the parties do not agree as to the controlling law. Without laboring the point, we think the incidents of title are governed by Missouri law, Clarke v. Clarke, 178 U.S. 186, 20 S.Ct. 873, 44 L.Ed. 1028; but that the meaning and application of the Housing and Rent Act is controlled by federal law. Schwabacher v. United States, 334 U.S. 182, 68 S.Ct. 958, 92 L.Ed. 1305; Porter v. Lee, 328 U.S. 246, 66 S.Ct. 1096, 90 L.Ed. 1199; National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170; Case, Commissioner, v. Bowles, 327 U.S. 92, 66 S.Ct. 438, 90 L.Ed. 552; Wholesalers Adjustment Co. v. Commissioner of Internal Revenue, 8 Cir., 88 F. 2d 156; Woods v. Hillcrest Terrace Corporation, 8 Cir., 170 F.2d 980. Applying these rules, technically under Missouri law, the purchasers of interests in the subject apartment structures will as to the "private living apartments" be adjoining tenants, and as to the "common property" they will be tenants in common. Badger Lumber Company v. Stepp, 157 Mo. 366, 57 S.W. 1059. A building, under Missouri law, is not necessarily a part of the real estate. Title to the building and to the land on which it stands may be separated by contract and the building then becomes personal property. Marshall v. Moore, 146 Mo. App. 618, 124 S.W. 585. Since the living apartments could not be occupied or operated without cooperation of their owners and tenants with the owners of the building, the owners will for all practical purposes be tenants in common only.

We are not concerned here with the power of Congress to include in the term "cooperative association" a group of owners of an...