Court Opinion

ID: 5392276
Source: CourtListenerOpinion
Date Created: 2022-01-08 09:55:49.756487+00
Date Added: 2024-06-11T08:30:18.726959
License: Public Domain

Peck, P. J.
The question in this case is the proper division of a condemnation award, pursuant to a contract of lease by which defendants, as landlord, agreed to erect a building for plaintiff, as tenant, in accordance with plaintiff’s specifications for its bottling and distributing business. The specifications were incorporated in the lease and it was provided that the cost of the construction was to be paid by defendants and repaid by plaintiff in installments over a twenty-year period. The lease provided that in the event of condemnation the tenant shall be entitled to that proportion of the award “ which the amount theretofore paid by the tenant to the landlord on account of the cost of the construction of said building bears to the total cost of said building ”.
Following the execution of the lease, but prior to the erection of the building, plaintiff decided that it wished to incorporate in the building certain extras, which were not contained in the contract specifications and costs to be defrayed by defendants. The parties made a separate agreement in respect to such extras, providing that if by reason of any changes or extras requested by the tenant the cost of construction is increased, the tenant would pay the increased cost directly to the contractor.
The cost of the specified construction, assumed by the defendants, was $145,907.21, on account of which plaintiff made repay*450ment in installments, prior- to the condemnation, of $55,323.41. Extras requested and paid for by plaintiff amounted to $64,149.83. The difficulty as to the division of the condemnation award arose because the amount of the award was not as great as the total cost of constructing the building including the extras. The building award came to $160,000 as against a total cost of $210,057.04. Plaintiff contended that its share of the award should be the proportion which its total contributions, being $119,473.24, bore to the total cost of $210,057.04, or 56.87%, while defendants contended that the only construction cost which was to be considered in determining the ratios of participation in the award was the original construction cost of $145,907.21, to which plaintiff had contributed by repayment 37.917%. The resulting differences in figures may be summarized as follows: On plaintiff’s theory it would receive $90,992 and defendants would receive $69,008, each sustaining a loss of approximately 25% on its investment. On defendants’ theory they would receive $99,332.80 and plaintiff would receive $60,667.20, resulting in defendants making a gain on their investment, and plaintiff sustaining more than the full loss because of the condemnation. The trial court agreed with plaintiff’s interpretation of the contract provisions for division of the award.
We think that a result more consonant with the equities and contract of the parties can be reached than that urged by either party or reached by the trial court. It is fair to conclude that the parties intended, and that it would be most equitable under the circumstances, to separate the basic construction originally paid for by defendants, in reference to which the parties contracted, from the extras contracted for and paid by plaintiff, and apportion the condemnation award between the two, and then apply the contract formula for the division of the award to the portion of the award attributable to the basic construction. Plaintiff will receive any balance attributable to the extras. That seems right because it quite clearly appears that the two items did not contribute to the award in proportion to their relative costs, and that consistently with the nature and purpose of the two expenditures and arrangement of the parties, the defendants should be charged and credited only with the basic cost they paid and the plaintiff should bear the burden and derive the benefit of the extra cost which it incurred for its more particular purposes.
This approach might suggest ordering a new trial to determine the extent to which the two costs are reflected in the con*451demnation award. Despite the difficulty that a judge, other than the condemnation judge, might have in making such division, it would not seem insuperable, and we would order a new trial if it were necessary to make an adequate determination of the facts. It appears to be sufficiently clear upon the record, however, that the basic construction was entitled to, and should be regarded as having received, acceptance in the condemnation award at full cost, and that the extent to which the award fell short of the total construction cost represented a discount on the contribution of the extras to the value of the building in condemnation. This seems clear from the facts that the building was still relatively new when the condemnation took place, and reconstruction costs had risen to such an extent that the building as originally planned and encompassed in the basic construction cost would have been valued in condemnation at full cost, while the extras contributed more to the niceties of the building and to the particular use of the plaintiff than they did to the structural value. Therefore, the court in the condemnation proceeding observed: “ While the court in fixing- the building values has considered reconstruction costs- and recognized the increase in prices, the reconstruction value alone is not the measure of value. It is some evidence of value, and has so been treated. After considering all of the evidence, the court has based its finding on the amount which the improvements enhance the value of the land.”
The record before us justifies awarding to each party out of the condemnation award the amount which each contributed to the basic construction cost, and the remainder of the award should go to the plaintiff. Or, to put it otherwise, defendants are entitled to recover the balance of the amount of their investment, $90,583.80, and plaintiff is entitled to the remainder of $69,416.20, each to receive proportionately their share of interest on the award.
The judgment appealed from should be modified accordingly. Settle order.