Court Opinion

ID: 8864915
Source: CourtListenerOpinion
Date Created: 2022-11-26 18:02:00.896563+00
Date Added: 2024-06-11T17:05:57.783783
License: Public Domain

Mr. Justice O’Connor dissenting: I dissent, since no sufficient reason is shown that the right result was not reached by the chancellor. A few of the controlling facts are that Todd executed 99-year leases on the two pieces of property to the Lehmanns, which leases do not expire until 2008, — about 75 years. Under the terms of the leases the Lehmanns deposited $150,000 of securities with the bank as a guaranty that they would construct on the lots a building costing $150,000, and when so constructed the securities were to be returned to them. The leases further provided that should the leases be assigned all the covenants and agreements of the leases would be binding on the assignee, and that after such assignment the Lehmanns would be forever released and discharged from all obligations of the leases after the completion of the building. May 20, 1929, the Lehmanns sold and assigned their leasehold interest to Kesner. He made a down payment, the amount of which does not appear, and executed his note for $400,000, the balance of the purchase price, payable to the Lehmanns, payment of which was secured by a mortgage on the leasehold interest. At that time the Lehmanns withdrew the $150,000 securities theretofore deposited by them with the bank, and Kesner substituted other securities to the same amount. Kesner went into possession under the leases and 10 months thereafter, February 6, 1930, purchased the fee from Todd for $500,000, — $150,000 in cash, and trust deeds securing the balance of $350,000 which are here in foreclosure. At the same time Todd assigned his interest in the leases to Kesner. By the assignments, Todd and his wife, “being the owners of the lessor’s interest . . . hereby sell, assign, transfer and convey” to Kesner their interest in the leases “for a term of seventy-nine (79) years and three (3) months . . . together with the lessor’s interest in and to said lease and the leasehold estate thereby created, and in and to all moneys, securities and insurance policies on deposit with the First Union Trust and Savings Bank . . . trustee for insurance and deposits under said lease.” Shortly after the purchase of the fee and the assignment of the leases from Todd, Kesner withdrew the $150,000 securities, insurance, etc., from the bank, as he was authorized to do by Todd, as shown by the assignment from which I have quoted. After Kesner purchased the fee and took an assignment of the leases from Todd, obviously he paid no rent, being the owner of the leasehold and the fee; there was no rent to pay nor any one to whom it should be paid. The trust deed from Kesner securing the $400,000 mortgage on the leasehold conveyed not only the leasehold interest, but the rents, issues and profits of the property. The trust deeds from Kesner to Todd, of the fee, contained a similar provision. The Lehmanns had a lien of $400,000 on the property for about 75 years, which was prior to the lien of the $350,000 due Todd. But the effect of the majority opinion is to give Todd a first lien on all of the property, leasehold and fee, although not one cent has been paid on the $400,000 mortgage. Not only this, but the Lehmanns, in addition to losing their $400,000, are held liable for the rent. Such a result, in my opinion, is obviously wholly inequitable. The Lehmanns were, in my opinion, released of all liability under the leases when after the assignment by them to Kesner he took down the $150,000 as authorized by Todd. A great deal is said in the briefs filed by able counsel for all parties, as to whether the 99-year leases were still in effect, or whether that interest had merged with the fee when Kesner purchased the property and took an assignment of the leases from Todd. Any discussion of the law or the authorities “will plunge this branch of the law into a Serbonian Bog.” Landress v. Phoenix Mut. Life Ins. Co., 291 U. S. 499. It will also plunge court and counsel into a “Serbonian Bog.”