Court Opinion

ID: 5392277
Source: CourtListenerOpinion
Date Created: 2022-01-08 09:55:49.759974+00
Date Added: 2024-06-11T08:30:18.697180
License: Public Domain

Callahan, J.
(concurring). While I agree with the views expressed in the opinion of the Presiding Justice and in the conclusion he arrives at, I think it might be well to add what I consider additional grounds supporting the determination made.
The meaning of the twenty-sixth clause in the lease and the basic intention of the parties concerning the apportionment of any condemnation award can, it seems to me, be best ascertained by keeping in mind the chronology of events in relation to the *452execution of the lease and the arrangements for the addition to the building. When the lease was executed on June 12, 1936, a building was contemplated which was depicted in plans and specifications attached to the lease. This was the building which eventually cost $145,907.21 to erect. None of the so-called extras or additions costing $64,149.83, which were later asked, contracted and paid for by the tenant, were included in the plans attached to the lease. When the lease was made, however, it might have been contemplated that the tenant would request some additions to the planned building, but the lease did not purport to make any provision with respect to the same. Accordingly, I deem it was improper for the Trial Term to construe the lease “ in the light of the letter ” of September 2, 1936. That letter was written long after the execution of the lease. It did not purport to make any practical construction of any term of the lease, but had to do with the additions to the building, which had been decided on after the lease was executed.
When the lease referred to the “ cost of construction of the building ” and “ the total cost of said building ” in its twenty-sixth clause, it seems to me that it was referring to the cost of the particular building shown on the plans and specifications. It may be noted that said clause mentioned the amount paid by the tenant “ to the landlord ”, again showing that the parties were referring to a cost represented by the amount the landlord was to advance. The phrase “ cost of construction ” is used several times in the lease prior to the twenty-sixth clause thereof. In each of such instances, the term referred to the cost of the building as first planned and to be paid for by the landlord.
It might be well to point out that the tenant, when it learned of an impending condemnation, could have prepaid the remaining installments of the landlord’s building expenditures, and it then would have received the entire amount of any award made for the building. It would seem that the basic scheme of the parties was to secure the landlord for the return of the moneys it advanced, and that the tenant would own the building and receive any award for it in condemnation after repaying in full the expenditures of the landlord. That this was the intention of the parties is further indicated by a clause found in the earlier provisions of the lease, reading: “ the tenant further agrees that its obligation and agreement to repay the amount so advanced by the landlord to erect said building shall survive and continue after the termination of this indenture of lease whether in any manner herein or in any part of this indenture *453set forth or in any other manner, and the tenant agrees to make said payments in the manner herein set forth, so that and to the end that the tenant shall, anything to the contrary notwithstanding, repay to the landlord the full amount of money so advanced by the landlord for the erection of said building.”
The bringing of a proceeding in eminent domain was specifically provided as a ground for terminating the lease. The clause above quoted shows that the tenant was to pay the landlord the moneys which the latter had advanced for construction of the building upon termination of the lease for any cause. The twenty-sixth clause of the lease providing for apportionment of a condemnation award should be construed in the light of the above requirement. The decision of the Trial Term defeats the intent of the parties to secure the return to the landlord of its investment in any event.
When the parties used the phraseology found in the twenty-sixth clause for apportionment of an award, they were trying to cover a contingency of condemnation occurring during the twenty-year period of installment payments for the building. They selected language which showed an intention to divide any such award in the same proportion that the sums paid on account bore to the sum which the landlord had advanced. Of course, an award might be smaller, equal to or larger than the actual cost of construction advanced by the landlord. It would only be in the event of an award less than the landlord’s investment that the landlord could suffer any deficit, and then the question would arise as to whether the tenant under other provisions of the lease had to make that deficit good. If the award for the building equaled or exceeded the landlord’s investment, the latter would be made whole. True, the clause provided that the landlord was to share in any excess of the award over the cost to it in the proportion indicated. This was no doubt in recognition of the fact that the building would not be entirely paid for at such time. • But at the time this provision was written, the factor of an investment by the tenant in the building had not entered the picture nor had it been provided for. By reason of such an investment by the tenant later the need arose of equitably providing for some compensation to the tenant in a contingency not covered by the contract. We find that when this is done to the extent left possible by the contract requirements, there remains no excess in which the landlord can share in accordance with the fórmula provided. The judgment, in providing that after the landlord has been repaid its investment, *454the balance shall go to the tenant as partial compensation for its investment, carries out the basic scheme of the parties and accords with the equities in the situation.
I only wish to add that the Trial Term further erred, it seems to me, when it said that the landlord requested and presumably obtained an award based on the total cost of construction, including payments made by plaintiff directly to the contractor. While it is true that in the condemnation proceedings defendants’ witnesses testified to the total expenses of construction by both plaintiff and defendants as evidence of the building value, defendants recognized that under the law the award for the building will be measured by the amount in which said building enhanced the value of the land. This was a commercial property, presumably having a market value and ‘1 just compensation ’ ’ would be the sum by which said building enhanced the market value of the land. .Defendants’ experts recognized this and testified to a building value of $170,000, although the total cost of construction was about $210,000. It, therefore, was not entirely accurate to say that defendants obtained an award for the building based on the sums invested by plaintiff, nor would any equities arise in favor of plaintiff because of the nature of the claims made to the condemnation court as to the cost of construction.
Dore, J., concurs with Peck, P. J.; Callahan, J., concurs in opinion; Cohn, J., dissents and votes to affirm on the opinion of Benvenga, J., at Trial Term. (203 Mise. 216.)
Judgment modified in accordance with the opinion herein. Settle order on notice.