Court Opinion

ID: 9621837
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:08:01.48663+00
Date Added: 2024-06-11T18:05:10.259154
License: Public Domain

Schroeder, J.,
dissenting: On the facts in this case when the Phillips -Petroleum Company terminated its lease in accordance with the specific provisions of section 7 in the leasing agreement, all rights Phillips had to the proceeds of the condemnation award were terminated.
The lease in question between the Phillips Petroleum Company and the Bradleys was prepared by Phillips, and specifically made provision for termination of the lease by the lessee in the event the premises were taken in whole or in part by condemnation. Under these circumstances the lease must be construed favorably to the Bradleys.
While the court in its opinion speaks of the general rule — that the taking of an entire tract of land under lease by eminent domain abrogates the relation of landlord and tenant — the lease in this case provided otherwise.
The date of the taking of the property in question under the condemnation action was March 9,1966. The operator of the service station for Phillips left the station on April 25, 1966, but Phillips continued to pay rent to the Bradleys through September, 1966.
The court, in speaking of provision No. 7 of the leasing agreement, which gives the lessee the option to terminate the lease if the property is condemned, making the premises unsuitable for use as a service station, says: “This option to terminate has meaning where only a portion of the property is taken in the condemnation action.” (p. 245.) This statement is absolutely contrary to the wording of the option provision which says, “if all or any part of said premises is taken in condemnation, making premises unsuitable for use as a service station, Lessee may, at its option by giving to Lessor thirty (30) days’ notice of its intention so to do, terminate this lease upon payment of all rentals due up to the expiration of said thirty (30) day period.” (Emphasis added.)
By the express language of provision No. 7 the right to terminate does not accrue to the lessee until “all or any part of said premises *250is taken in condemnation.” Therefore, the actual taking in condemnation is a condition precedent to the exercise of the right of Phillips to terminate the lease, and it is a condition which was placed in the lease by Phillips. Upon the happening of that condition, Phillips voluntarily and properly exercised its option to terminate the lease by its letter of June 3, 1966. Thereafter Phillips no longer had any rights or interest in the award for the taking of the leased premises.
This is the construction Phillips placed upon the leasing agreement which it drafted. The lease, as it appears in the record, purports to be a form lease used by the Phillips Petroleum Company for its purposes in leasing premises to be used for service stations.
The court in its opinion says, “where there has been a total taking the lessee’s rights to share in the award become vested at the time of the taking, absent an agreement to the contrary.” (p. 245.)
The rights of the lessors and lessee are provided for in this lease in the event there is a condemnation action. These terms are controlling in this contractual relationship. (See annotation entitled “Condemnation — Rights of Lessee,” 96 A. L. R. 2d 1140, 1144.)
In the present case only Phillips, the lessee, had authority to terminate the lease. The general rule is that the exercise of such authority by the lessee to terminate the lease terminates the right of the lessee to an interest in the property and the condemnation award. (96 A. L. R. 2d 1140, 1143.)
A Kansas case directly in point is State Highway Commission v. Safeway Stores, 170 Kan. 413, 226 P. 2d 850. There the state was widening the highway and took part of the parking area of the Safeway Store. After the condemnation Safeway exercised its option to terminate, as provided by the lease. This court affirmed the trial court which denied Safeway the right to recover on the ground it had exercised its contractual right to terminate the lease. On rehearing of the Safeway Stores case (170 Kan. 545, 228 P. 2d 208), this court reversed on a wholly separate ground ordering the final judgment previously entered by the Supreme Court set aside.
A parallel case is Newman v. Commonwealth, 336 Mass. 444, 146 N. E. 2d 485. There the Shell Oil Company was the lessee, and the lease contained a provision giving Shell the right to terminate the lease if any or all of the premises were condemned. There was a partial condemnation of the premises on November 2, 1954, and Shell gave notice of its election to terminate the lease effective *251August 31, 1955. It was held Shell was not entitled to share in the condemnation award after electing to terminate its leasehold interest.
In Carroll Weir Funeral Home v. Miller, 2 Ohio St. 2d 189, 207 N. E. 2d 747, the lessors were given the option to terminate if the entire building was condemned by eminent domain. After the condemnation the lessors gave written notice of their termination of the lease. The court there stated the rule:
“. . . A lessor and lessee may, by including a properly worded provision in their lease, provide that upon appropriation of the property under eminent domain the lessor may at his option terminate the lease. Under such an agreement, if the property is appropriated, the lessor may terminate the lease. The lessee would then have no property right in the premises. Thus, he would have no right to compensation. . . .” (p. 191.)
In the syllabus of State v. Sheets, 48 Wn. (2d) 65, 290 P. 2d 974, the following rule is stated:
“When a written lease provides that the taking of all or a portion of the leased property may terminte the lease at the option of either party, the term expires when such taking occurs and the option is exercised; and no unexpired leasehold remains for which the lessee can claim compensation.” (Syl. ¶ 3.)
The Kansas cases upon which the majority opinion relies have no provisions in the lease in the event of condemnation, and therefore have no application here.
In my opinion Phillips is barred from sharing in the award, because it voluntarily terminated its lease in accordance with the specific written provisions in the lease designed to cover the event of total condemnation.
Further, I am of the opinion the court is establishing a bad precedent when it says, “the trial court properly added to lessee’s apportioned share the value of the fixtures which were placed on the real estate by the lessee and which it had a right to remove.” (p. 248.)
Where a lessee has specifically provided that upon termination of the lease it has the right to remove fixtures placed upon the leased premises, it should not be permitted to recover compensation for these fixtures when the lease is terminated. In this case the insult is compounded because the parties settled for a total award in the sum of $100,000 which became fixed. To allow Phillips the value of the fixtures it removed or had the right to remove from the premises in accordance with the terms of the lease subtracts from the landowners’ share. This is absolutely contrary to provisions of *252the lease, and it prevents the landowners from receiving full compensation for the property taken from them.
I respectfully submit the judgment of the lower court should be reversed in toto.
Fatzer and Fontron, J., j’oin in the foregoing dissent.