Pierson v. H. R. Leonard Furniture Co.

256 N.W. 529, 268 Mich. 507, 98 A.L.R. 244, 1934 Mich. LEXIS 836
CourtMichigan Supreme Court
DecidedOctober 1, 1934
DocketDocket No. 60, Calendar No. 37,648.
StatusPublished
Cited by10 cases

This text of 256 N.W. 529 (Pierson v. H. R. Leonard Furniture Co.) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pierson v. H. R. Leonard Furniture Co., 256 N.W. 529, 268 Mich. 507, 98 A.L.R. 244, 1934 Mich. LEXIS 836 (Mich. 1934).

Opinion

Butzel, J.

On May 20, 1913, George O. Robinson leased to the H. R. Leonard Furniture Company, a Michigan corporation, property at 306-308-310 Woodward avenue, Detroit, Michigan, for a term of 99 years from June 1, 1913. The property has a frontage of 54.08 feet on the east side of Woodward avenue, and a depth of approximately 100 feet. The lease provided for a graduated rental, rising from lower amounts for the first 16 years to $6,000 per year for the five-year period after April 1, 1929, then to $6,600 per year for the following five years, and to $7,200 per year for the remainder of the term. Lessee agreed to pay all taxes and assessments levied on the demised premises, as well as insurance premiums, water rates, etc. It also expressly agreed that on or before April 1, 1916, it would erect at its own expense a permanent new building, at least five stories in height, covering substantially the entire premises, and costing not less than $50,000; that it would keep the building adequately insured, and would rebuild it in the event of fire or other damage; and that the building would be surrendered to lessor without compensation and in good condition, reasonable use, wear and tear thereof excepted, upon the termination of the lease, or sooner, in the event of forfeiture, there being provisions for forfeiture and repossession in case of lessee’s default in its payments, or in the performance of other covenants. The lessee was entitled to *512 mortgage its leasehold interest as security for any loans, but a subsequent clause distinctly provided that lessor should have a valid first lien upon the leasehold interest of the lessee and upon all buildings and improvements erected thereon for the payment of the rent, notwithstanding anything appearing thereinbefore to the contrary in the lease.

The sole reference in the lease to condemnation proceedings appears in the following clause, entitled “eminent domain:”

“If at any time during the existence of this lease the State or municipality under any legal power of eminent domain shall condemn and acquire title to any portion of the premises herein demised, then and in that case the rent herein stipulated and payable at that time shall be decreased in proportion to the amount or portion of said premises as shall be taken under such proceedings.”

Lessee erected a five-story building, with basement, in accordance with the terms of the lease, and on May 16, 1914, borrowed $45,000 from Mary S. Mandelbaum (who subsequently changed her name to Mary S. Mandelle) in order to pay the cost of construction. On November 1, 1914, it secured a further loan of $20,000 from Mrs. Mandelle in order to complete and equip the building. About 14 years later it borrowed from her the additional sum of $20,000 for purposes undisclosed by the record. The three loans, aggregating $85,000, were secured by successive mortgages of the leasehold. Upon the death of Mrs. Mandelle the mortgage interest in the leasehold became vested in Claude M. Harmon and the Union Guardian Trust Company, as executors of the Mandelle estate and as trustees of certain trusts created by her.will. The lessor’s interest in the title to the fee of the property is now vested *513 in Caroline R. Pierson et al., who for, convenience are referred to as the lessors. Reference herein to the rights of the lessee also includes those of the trustees of the Mandelle estate.

In the proceedings to widen Woodward avenue, the city of Detroit condemned a strip of land approximately 38 feet in depth off the west side of the property. When the widening is completed, it will leave the property with a depth of approximately 62 feet, but the amount of frontage on Woodward avenue will remain unchanged. Since 37.4 per cent, of the demised premises is to be taken, there will be a corresponding reduction of the rent under the eminent domain clause of the lease.

On October 12, 1931, prior to the verdict in the widening proceedings, the lessor, lessee and the trustees of the Mandelle estate stipulated that a joint award might be entered; that a bill should subsequently be filed by the interested parties in the Wayne circuit court, in chancery, to determine the rights, if any, of the various parties in the award, and to apportion it accordingly; that from any part of the award that might be apportioned to the lessee in such proceedings there should first be paid to lessor all rents due, including the amounts due and unpaid at the time the stipulation was entered into, together with interest at the rate of five per cent, per annum from the due dates of the respective rentals to the time of payment; that no action should be taken to forfeit the lease until 30 days after the rights of the parties to the award had been determined and payment had been made by the city; that any notices of forfeiture theretofore given to the lessee by lessor should not be avoided by the stipulation, but that action thereon should be suspended until the expiration of the 30 days; that the *514 stipulation was not an admission by the lessor that the lessee or any person other than the lessor had any right or interest in the award.

The record presents but a meager statement of the factual background so necessary for the proper determination of the law of a case of this nature. Lessee occupied the building for several years after its erection, but vacated it about the year 1927. At one time it sublet the northerly 20 feet of the building to a restaurant; later the building was sublet “for a while” to a concern by the name of “Wextark,” at a rental much less than lessee was obligated to pay the lessor. The building has been vacant for a number of years. The Leonard Furniture Company ceased to use it for a furniture store over six years ago, although the widening has not yet taken place. The record shows that the building is being carried by lessee at a large loss, that the rent due to lessors under the lease has been unpaid since April 1, 1931, and that a large sum is due for unpaid taxes. It appears from the stipulation that at least one notice of forfeiture of the lease has been given to lessee, but the record does not reveal any other facts relating thereto. Taken altogether, the testimony indicates indisputably that the lease, though at one time of great value, has become a liability rather than an asset. Whether it will ever be of any value again is largely a matter of conjecture. There is no doubt but that the widening proceedings which have been pending for so many years would discourage prospective tenants from leasing a building which is shortly to be cut down in size and which will possibly become untenantable during the process of rehabilitation. Many other buildings in the neighborhood are also unoccupied. In addition, it is undisputed that the depression has *515 had a most disastrous effect upon business, and that a collapse of real estate values has taken place. The record, moreover, indicates that the furniture company ceased to occupy the building even prior to the beginning of the depression in 1929.

Inasmuch as the briefs filed on behalf of plaintiffs refer to the distressed financial condition of the lessee, and this is largely borne out by the record, the question, of the ability of the lessee to carry out its obligations under the lease becomes all important.

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Cite This Page — Counsel Stack

Bluebook (online)
256 N.W. 529, 268 Mich. 507, 98 A.L.R. 244, 1934 Mich. LEXIS 836, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pierson-v-h-r-leonard-furniture-co-mich-1934.