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Rosenblum v. Neisner Bros. Inc.

February 21, 1956

ROSE ROSENBLUM, EDWARD ROWE AND HARRIET R. WISE, AS TRUSTEES UNDER A TRUST INDENTURE DATED NOVEMBER 23, 1942, PLAINTIFFS-APPELLEES,
v.
NEISNER BROS., INC., DEFENDANT-APPELLANT.



Author: Swaim

Before DUFFY, Chief Judge, and MAJOR and SWAIM, Circuit Judges.

SWAIM, Circuit Judge.

The plaintiffs, Rose Rosenblum, Edward Rowe and Harriet R. Wise, as trustees, on December 1, 1944, leased to the defendant, Neisner Bros., Inc., for a period of 23 years and five months a part of Lots 5 and 6 in Block 18 in the City of Waukegan, Illinois. On the land so leased there was an L-shaped store building known as 6-8 Genesee Street and 206 Washington Street, Waukegan, Illinois. This was a two story and loft type of building. The agreed rental was at the rate of $21,258.00 per year for the first ten years of the term and at the rate of $18,000.00 per year for the remainder of the term, said rental to be paid on a monthly basis. As additional rental the lessee agreed to pay all taxes, assessments and water rents assessed against the premises and to keep the premises insured against fire and other hazards. At the time of the execution of this lease the defendant was in possession of these premises under the terms of a former lease which was executed February 4, 1928.

The plaintiffs' complaint charged that in July, August and September of 1952 the defendant, without notice to or the consent of the plaintiffs, constructed a third floor addition on a portion of the building on the leased premises; that said addition did not conform to the original architectural design of the premises; and that plaintiffs, on learning of the addition, protested and objected to the defendant, but that defendant denied that it had violated the lease and insisted that it had the right to so change or alter the building under the language of the lease, which expressly provided that:

"Lessee shall have the right to make such alterations and changes in any part of the premises occupied by it as it finds necessary for its purposes, at its own expense, providing such alterations will not injure the building, and must be done in a first-class workmanlike manner. Lessee agrees to restore the premises to the same condition as when received, if Lessors so desire and give at least Three (3) months notice to [that] effect before the expiration of the term of this lease."

The complaint further charged that the addition to the building was of the cheapest possible construction and tended to depreciate the value of the premises; that in so constructing the addition to the building the defendants committed waste and breached the lease; that unless a decree was entered terminating the lease and directing the defendant forthwith to remove the addition, the plaintiffs would suffer irreparable damages; and that plaintiffs were entitled to monetary damages in the amount of $100,000.00 for breach of the lease and for injuries to the premises by the defendant.

Defendant's answer alleged that the construction of a third floor on part of the building was expressly permitted by the above quoted provision of the lease relating to the right of the lessee to make alterations and changes in the premises; and that, in the alternative, plaintiffs had waived any right to notice of any alterations and changes, including additions, by their prior conduct in not insisting on notice and in failing to complain of extensive alterations, changes and additions to the premises which the defendant had made in 1946 and 1947 and at various times thereafter.

In its answer the defendant also quoted a provision of the lease which states that, in case of a violation of the terms of the lease by the lessee for 90 days after receipt of written notice by the lessors of such violation, the lessors may then cancel the lease by giving the lessee 30 days written notice, by registered mail addressed to the home office of the lessee. Defendant's answer alleged that no notice of a violation of the lease was given by the lessors, and that this action by the plaintiffs was therefore premature.

The District Court found that the defendant, in 1952, "erected a 28' X 50' X 10' structural steel, face brick and concrete block, fire resistant unit, which occupied one-third of the roof of the premises fronting on Washington Street." The court found that the defendant constructed this unit for the purpose of creating additional storage space in the leased premises, and that this construction was without notice to or the consent of the plaintiffs. The trial court concluded that the above described construction was not an "alteration" or "change" permitted by the terms of the lease, but was an "addition" not authorized by the lease and amounted to adding another story to a part of the building.

The court further found that the construction work by the defendant in 1952 did not enhance the market value of the demised premises but depreciated it, "at least from an esthetic view." The court also found that the plaintiffs' claim for damages had not been supported, "no evidence having been offered to prove the amount of damages allegedly sustained."

In their brief in this court the plaintiffs state, page 14: "At the trial the plaintiffs offered no evidence of pecuniary damages and abandoned that portion of their prayer. They expressly limited the relief requested to a declaratory judgment and to a mandatory injunction." We find nothing in the record to indicate such a change of heart until after the trial below. There was no such amendment by the plaintiffs of their complaint.

In the trial the plaintiffs offered the testimony of Elton Vick, a real estate broker and appraiser, in an attempt to show that the value of the building had been decreased by the construction of the storage space. Vick was asked if he had an opinion as to whether such construction appreciated the value of the building. He first answered, "No." But when the question was repeated he said: "Yes, I have my own opinion. * * * My opinion is that it detracts from the building as far as the outward appearance is concerned, and it adds nothing to the building in value." In explaining the reasons for this opinion he described the appearance of the inside of the storage space. When asked whether in his opinion the storage space was constructed in a workmanlike manner, Vick said: "I will say that the construction work is sturdy, but it isn't finished off to be of any use other than what it is used for." In answer to a further question as to whether in his opinion the storage space "adds or detracts from the rental value of the building as a whole," Vick said: "It detracts from the building and the space, to me, is not large enough for a building of that size to add any particular value." He also said that the stair case and conveyor belt going up to the storage unit used a certain amount of space on the second floor. Mr. Vick did admit that the 1400 square feet of additional storage space was beneficial to Neisner Bros., and was built because the defendant needed more storage space. But he said he could "see no uses to the landlord" of that additional 1400 square feet of storage space and thought it was "a gamble" as to whether the landlord would be able to get more rent because of the additional space. Finally, in answer to a question as to whether the additional storage space had decreased the rental value or capital value of the property, he said, "I can't say that it has increased it any"; and to a question as to whether it had decreased it any, he said, "Well, if I was appraising it, I think I would throw this additional in for nothing."

As we shall show, the opinion of this witness as to the question of whether the additional storage space increased the rental value of the property was diametrically opposed to the opinion of the plaintiffs. Vick's testimony on this point was also flatly contradicted by the defendant's expert witness, Mr. Olson, who testified without any equivocation or evasion that the added 1400 square feet of storage space increased both the rental value and the capital value of the property.

In the proposed findings of fact tendered by the plaintiffs below there was a suggested finding that: "The said addition was not constructed in a workmanlike manner and tended to depreciate rather than enhance the value of the premises * * *." Thus we see that the plaintiffs throughout the trial were insisting on their contention that the value of the building had been depreciated and that they were entitled to damages. The trial court failed to find, as contended by plaintiffs, that the addition "was not constructed in a workmanlike manner," and the court's failure to so find for the plaintiffs must be taken as a finding against them on their contention that even if ...


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