Opinion ID: 1387222
Heading Depth: 3
Heading Rank: 2

Heading: Who Owned the Improvements?

Text: TNC's right to compensation for the improvements placed on the land by the State prior to the condemnation therefore depends on which party owned the improvements under the lease. See 51C C.J.S. Landlord & Tenant § 394(1)(a) (1968) ([T]he ownership and right to remove improvements placed on the leased premises by a tenant are determined by the intention of the parties as evidenced by the terms of the lease and the circumstances of the case.). Unfortunately, the lease does not directly address this question, and the unusual circumstances leading to the landlord-tenant relationship between TNC and the State [5] make divining the intention of the parties more difficult. The airport lease, originally entered into between BLM and the State, provides for a twenty-year term. The State was granted a preference right if at the end of that time the lessor determined that a new lease would be granted, but the lessor was not required to offer a new lease. In section 3(d), the lease provides: That upon the termination of this lease, by expiration or forfeiture, or whenever the United States may claim the right of possession as herein provided, the lessee agrees to surrender to it possession of the premises and to comply with such provisions and conditions respecting the removal of improvements and equipment on the property as may be made by the lessor. This provision appears to imply that the State, as lessee, retained the right to remove all improvements, subject only to whatever reasonable conditions might be placed on this right by the United States as lessor. However, the right of possession which the United States may claim under the lease clearly anticipates the continued use of the premises by the United States as an airport. Under the lease the State is required to establish and maintain a public airport which meets federal requirements and which federal agencies may use without charge or restriction. The Secretary of Defense may assume control of the airport at any time when doing so is deemed necessary for military purposes. The United States paid ninety-four percent of the cost of the airport and permitted gravel to be extracted from federal land for its construction free of charge. All of these factors indicate a federal interest in the airport which is not limited to the twenty-year lease term. TNC also argues that the improvements made by the State were not removable because they were required by the terms of the lease and thus were contemplated fruits of the lease. Improvements may be denied the status of a removable trade fixture belonging to the lessee and treated as belonging to the lessor if the lease specifies as part of the tenant's consideration for the lease that he will construct certain improvements on the property. 5 Richard R. Powell & Patrick J. Rohan, Powell on Real Property ¶ 653, at 57-54 (1994). The lease between BLM and the State does provide: For and in consideration of the foregoing, the lessee hereby agrees: (a) To establish a public airport on such tract and to maintain such airport during the life of this lease. (Emphasis added.) While it is clear that the State was required to build and maintain an airport during the terms of the lease, this term, by itself, does not necessarily require the State to leave a developed airport at the expiration of the lease. However, given the fact that the lease anticipates at least the possibility that the United States would operate the property as an airport at the termination of the lease with the State, and given that no additional consideration is given to the State for improvements seized at that time, it is reasonable to interpret the lease as making improvements fruits of the lease. In addition, because removal of most of the improvements involved in this case would probably be quite costly, it also seems probable that, at the end of the lease term, complete removal of these improvements would not have been a reasonable removal term. [6] This interpretation of the lease is similar to the one made in Five Parcels, 180 F.2d 75. That lease provided that the United States would be entitled to remove facilities and improvements which it placed on the land. Nevertheless, the court concluded that dredging, filling, and leveling of the land  improvements which could not be removed and which were essential to the use of the land anticipated under the lease  were normal, incidental, and contemplated fruits of the leases which rightfully inured to the landowners at the end of the leases. Id. at 77. That the United States would improve landowner's property by dredging, filling, and leveling was within the intent, purpose, and contemplation of the parties to the leases; that the United States would spend large sums of the taxpayers' money to disimprove, or unfill, or unlevel the lands upon the termination of the lease is fantastic and unthinkable, and not within the intent of the parties to the leases. The right to receive the lands back with the improvements to the lands as distinguished from the improvements on the lands was a right implied in the leases that inhered in the landowners. Id. (emphasis added). [7] Similarly, the lease between BLM and the State is most reasonably interpreted as granting the State the right only to remove removable improvements and as reserving for the lessor the right to other improvements as fruits of the lease. [8]