Opinion ID: 427595
Heading Depth: 2
Heading Rank: 1

Heading: The Miner's Saga

Text: 7 Returning to the case at bar, our prospector is Milton F. Steinhardt, the developer of a condominium apartment project in North Miami Beach, Florida. The project is known as the Eastern Shores White House. For business reasons, title to the land is held in trust with Gladys Goldman--an employee of Steinhardt--as trustee. 8 On March 2, 1970, Goldman and Steinhardt entered into a 99-year ground lease, with Goldman as lessor and Steinhardt as lessee. The lease permitted Steinhardt to assign a pro-rata interest in the lease to each apartment owner as the units were sold. Upon purchase of an apartment and assignment of the lease interest, the individual unit owner would become liable for a pro-rata portion of the rental payments under the lease. 9 The lease contains a schedule of rental payments, payable quarterly and varying in amount from $90 to $135 per quarter depending upon the size of the apartments. In addition, the lease contains a clause that provides: 10 DEVALUATION: In the event that the United States Dollar should ever be officially devalued by the United States Government or replaced by a regular specie of a lesser value, then and in that event the rental to be paid by the Lessee to the Lessor or any purchase price to be paid to the Lessor by the Lessee shall be increased in proportion to said devaluation so that the rental to be paid to the Lessor or the purchase price of the property covered by this Lease to be paid to the Lessor, shall be the same in terms of actual value as the United States Dollar was on March 2, 1970. 11 Ground Lease, p 29, Record at 24. 16 In short, rents would be escalated in proportion to official devaluations of the dollar. Steinhardt's stated reason for including the devaluation clause was to maintain the real buying power of rents received from the unit owners. Appellant's Brief at 13-14. 12 He was content for a few years with the original rent levels. However, in 1974, the gold bug bit Steinhardt. He wrote to the Department of the Treasury on Dec. 2, 1974, inquiring about the percentage devaluation of the dollar since 1970. He struck pay dirt. The response from the Treasury explained that the dollar was devalued by 7.98% in 1972, and by another 10% in 1973. Steinhardt subsequently informed the unit owners that their rents would be increased, in part because of the Gold Devaluations of 1972 and 1973. See, e.g., Letter to Wilfred Frank, February 26, 1975, Record at 98; Letter to Joseph Nichols, August 6, 1975, Record at 100.