Ill. Cent. Gulf R. Co. v. INTERN. HARVESTER CO.

405 So. 2d 545
CourtLouisiana Court of Appeal
DecidedSeptember 24, 1981
Docket12606
StatusPublished
Cited by3 cases

This text of 405 So. 2d 545 (Ill. Cent. Gulf R. Co. v. INTERN. HARVESTER CO.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ill. Cent. Gulf R. Co. v. INTERN. HARVESTER CO., 405 So. 2d 545 (La. Ct. App. 1981).

Opinion

405 So.2d 545 (1981)

ILLINOIS CENTRAL GULF RAILROAD COMPANY
v.
INTERNATIONAL HARVESTER COMPANY
v.
David FINEGOLD, Alvin B. Werner, and 1601 Poydras Corporation.

No. 12606.

Court of Appeal of Louisiana, Fourth Circuit.

September 24, 1981.
Writ Denied December 4, 1981.

*547 Barham & Churchill, Mack E. Barham, Ralph S. Hubbard, III, New Orleans, for appellant Illinois Cent. Gulf R. Co.

Deutsch, Kerrigan & Stiles, Malcolm W. Monroe, New Orleans, for defendant-appellant International Harvester Co.

Nelson, Nelson & Koch, Ltd., Irving H. Koch, New Orleans, for third party defendant and relator David Finegold.

Before GULOTTA, GARRISON and CHEHARDY, JJ.

GULOTTA, Judge.

The dispute in this case centers around the quantum of damages that Illinois Central Gulf Railroad (ICG), lessor, is entitled to receive from International Harvester (Harvester), lessee, because of Harvester's breach of a lease. In an earlier eviction suit, the Louisiana Supreme Court dissolved the lease after concluding that Harvester had violated the lease terms.[1]

In response to ICG's petition for damages for the period of time Harvester occupied the property after ICG's demand to vacate because of the lease violation, Harvester third partied the sub-lessee, 1601 Poydras Corporation, David Finegold and Alvin Werner seeking indemnification from them in accordance with the terms of the sub-lease. In that lease agreement, third party defendants had agreed to hold harmless and indemnify Harvester for any damages resulting from the sub-lessee's failure to surrender the property timely.

A jury verdict resulted in a judgment in favor of ICG and against Harvester in the sum of $73,700.00, with interest from date of judicial demand, and costs, and a further judgment in favor of Harvester and against third party defendants, Poydras Corporation, Finegold and Werner, in solido for the same amount, $73,700.00 with interests and costs. Harvester suspensively appealed. ICG devolutively appealed. Finegold and Werner's appeals were dismissed.[2]

On appeal, Harvester claims the jury verdict is excessive and seeks a reduction to $19,721.00. On the other hand, ICG complains of the inadequacy of the award and *548 seeks an increase to the sum of $340,000.00. We amend the judgment by increasing it from $73,700.00 to $100,000.00.

BACKGROUND

In 1960, ICG leased the subject property (approximately 53,000 square feet of land fronting on Poydras Street, across from the Superdome in the City of New Orleans) to Harvester until 1986 at an annual rental of $9,466.08. The property was to be used as a truck sales and service outlet. In 1975, Harvester subleased the property to 1601 Poydras Corporation for use as a parking lot without ICG's permission which was required under the terms of the lease. Because of this breach, ICG demanded Harvester vacate the premises by December 1, 1977. After the March, 1979 Supreme Court decree dissolving the lease, the sub-lessee vacated the premises and Harvester subsequently demolished improvements that had been placed on the premises in 1972. ICG regained possession of the property clear of the improvements on January 1, 1980. The property was then leased to Downtown Parking Service, Inc. by ICG for operation as a parking lot. On September 30, 1980, ICG sold the site to a third party for $3,076,073.70.

HARVESTER'S APPEAL

In support of its argument that ICG is not entitled to any damages (other than the stipulated rent under the lease for the twenty-five-month period from December 1, 1977 to January 1, 1980), Harvester claims the railroad has sustained no loss from Harvester's sub-lease of the property to the third party defendants. Relying on LSA-C.C. Art. 2711, which provides:

"If the lessee makes another use of the thing than that for which it was intended, and if any loss is thereby sustained by the lessor, the latter may obtain the dissolution of the lease.
The lessee, in that case, shall be bound to pay the rent, until the thing is again leased out; and the lessee is also liable for all the losses which the owner may have sustained through his misconduct."

Harvester points out that during the occupancy period from December 1, 1977 (the date of demand to vacate) to January 1, 1980 (the date the property was returned to ICG) the leased property increased in value because of inflation and escalation of realty values during that interim period. According to Harvester, the delay in returning the property to ICG enured to the lessor's benefit since it was able to sell the property in September, 1980 for an amount in excess of $3,000,000.00, a price higher than it would have received had it sold the property in 1977 or 1978.

Alternatively, Harvester contends that ICG is entitled to no damages since the lease remained in effect until the judgment of eviction became final in April, 1979. Harvester thus argues that ICG is only entitled to receive rental payments from Harvester in the amount stipulated in the lease until finality of that judgment and for a reasonable period thereafter when the improvements were being removed from the leased premises. Harvester contends ICG is entitled only to the contractual rental for the twenty-five-month period or a sum of $19,721.00. In this connection, Harvester argues further that any legal interest on a judgment in favor of ICG should commence, not from date of judicial demand (December 20, 1977), but only from the date the Supreme Court's judgment in the eviction suit became final (April 9, 1979). Alternatively, Harvester contends ICG is only entitled to legal interest on each monthly installment of rental from the date each installment became due during the twenty-five-month period Harvester occupied the property after ICG's demand to vacate.

We find no merit to these contentions. Assuming that LSA-C.C. Art. 2711 governs entitlement to damages in this case, we are not persuaded by Harvester's contention that ICG has failed to prove a loss, as contemplated under the codal article, for the twenty-five-month period subsequent to December 1, 1977. The earlier Supreme Court decree in the litigation between ICG and Harvester, terminated the *549 lease because of Harvester's contravention of the lease provisions. Between demand for occupancy on December 1, 1977 and the return of the property to ICG on January 1, 1980, plaintiff was entitled to receive a fair market rental for the property. ICG was deprived of the rental proceeds by the wrongful occupancy of the property subsequent to December 1, 1977. It is of no moment that an inflated economy during the interim period resulted in increased value of the property. ICG has established loss and is entitled to recover. We find no error therefore, in the jury's determination of ICG's entitlement to damages.

We also reject Harvester's contention that ICG is only entitled to the contractual rental for the period of Harvester's occupancy subsequent to December 1, 1977. As authority for its position, Harvester cites Reed v. Classified Parking System, 324 So.2d 484 (La.App. 2nd Cir. 1976) where the court held that a lease remains in effect, with a lessee entitled to occupancy and obliged to pay rent, until a court judicially dissolves the lease. Although we do not quarrel with Reed, the mere fact that a lessee is entitled to occupancy and obliged to pay rent until a final judgment of eviction does not mean that the injured party cannot receive damages relating back to the time of breach. As we interpret the cited language in Reed,

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Bluebook (online)
405 So. 2d 545, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ill-cent-gulf-r-co-v-intern-harvester-co-lactapp-1981.