Opinion
No. 5200.
January 3, 1935. Rehearing Denied January 31, 1935.
Appeal from the District Court of the United States for the Eastern District of Wisconsin; Ferdinand A. Geiger, Judge.
Suit by E.G. Shinner Company, Inc., against the Bennell Realty Company. From an adverse decree, the defendant appeals. On plaintiff's motion to dismiss the appeal.
Motion granted.
This appeal is from an interlocutory decree in favor of appellee, the lessee of certain premises owned by appellant. The action was brought by appellee who filed a bill in equity asking that an award of appraisers determining the value of the premises be set aside, that the court fix the value of the land for the purpose of determining the rental due for the balance of the term of the lease, and the manner of payments of that rental, and enjoin the lessor from taking any steps toward terminating the lease during the proceedings. The basis for the action was the alleged invalidity of the award due to the failure of the appraisers to hear evidence which appellee wished to present to them.
The controversy arose over the rental of a certain piece of property owned by appellant and leased to appellee under a thirty-five year lease executed in 1907. The provisions regarding the amount of rent to be paid by the lessee were as follows:
"Eight hundred sixty-five dollars annually for each of the first ten years of said term.
"For the period of twelve and one-half years next following said ten years annual rent equal to five per cent on the valuation of said premises, exclusive of improvements thereon. * * * Said valuation is to be agreed upon between the lessors and the lessee and reduced to writing signed by them respectively at or prior to the expiration of the last ten months of said period of ten years. If the lessors and lessee shall not then have agreed thereon, the value of said land, * * * shall be determined by appraisers, one of whom is to be named by the lessors and one by the lessee. If said appraisers agree upon the then value of said land * * * they shall declare the same in writing and set their hands thereto, and such valuation shall become the basis of the rent for the period of twelve and one-half years. * * * If said appraisers do not agree upon such value they shall choose a third appraiser and the majority of said three appraisers shall thereupon fix said value. If said appraisers chosen by said parties shall be unable either to agree upon the value or upon a third appraiser within ten days after their appointment, a third appraiser shall be designated by the then judge of Branch Number One of the Circuit Court of Milwaukee County and the majority of the appraisers thus chosen and designated shall fix the value of said land.
"The annual rent for the last twelve years and six months of said term of thirty-five years shall be five per cent upon the valuation of said land * * * to be made in like manner as aforesaid at or after the expiration of the last ten months of said prior period of twelve and one-half years, such valuation to be made as of the time of the expiration of said prior period.
"Provided, always, that said lessee reserves and shall have the privilege at any time during each of said periods of twelve and one-half years and after at least two years after either of the aforesaid appraisals, to demand a re-appraisal of the value of said lands * * * in the manner aforesaid and upon such demand in writing appraisers for a re-appraisal shall be named and appointed as aforesaid and an appraisal of the then value shall be made in manner aforesaid and the same shall thereafter be the basis for the annual rent for the remnant of the pending period of twelve and one-half years."
No dispute arose between the parties as to the valuation of the property until the last twelve and one-half year period, at which time it was necessary for them to appoint appraisers in order to arrive at a valuation. The majority of the three appraisers then fixed the value at $185,000, to be used as the basis for fixing the rental for the last twelve and one-half year period beginning May 1, 1930. In September, 1931, appellee demanded a re-appraisal in accordance with the provisions of the lease. Each party then appointed an appraiser, and when the two were unable to agree either upon the value of the premises or upon a third appraiser, the court specified in the lease appointed the third. Appellee made written demand upon the appraisers, both before and after the appointment of the third by the court, that it be allowed to appear before them and offer proof as to the value of the premises. The majority of the appraisers agreed to hear such proofs only in the event that both parties consented to appear before them and present their statements, but without counsel. The appellant refused to appear, and the appraisers then proceeded, without proofs from either of the parties, to render an award fixing the value of the premises at $110,000. The appraiser appointed by appellee dissented from this decision, stating his opinion that the value was $75,000. Appellee thereupon instituted the proceedings herein involved. On May 31, 1932, the court entered a temporary restraining order to prevent appellant from terminating the lease, and on June 9, 1932, fixed the rent at $5,500 annually pending further proceedings, and subject to revision depending upon the outcome of the re-appraisal.
The District Court found as conclusions of law that the award rendered by the arbitrators in 1929 ceased to be a basis for the rents due under the lease on April 30, 1932, the end of the first two years of the last twelve and one-half year period, and that the award rendered by the appraisers in 1932 was void for failure to hear evidence offered by the appellee. On February 13, 1934, the court entered an interlocutory decree vacating the 1932 appraisal and providing a means for the parties voluntarily to proceed, within a specified time, to a new appraisal, to be reported to the court. The decree further provided that in the event of the failure of the parties to appoint new appraisers voluntarily within the time limited, or in the event of the failure of such re-appraisal, or upon the report of the appraisers being filed, the action might, upon application of either party, upon due notice to the other, be brought on for further trial and disposition, and all further questions were reserved until such time. The decree also provided that, in lieu of rental payable for the period commencing February 1, 1934, the lessee was to pay $4,000 a year to be applied upon the rents ultimately found to be due, and if the ground valuation were found to be less than $80,000, the excess to be credited upon subsequent installments of rent. The decree also continued in effect the restraining order of May, 1932, and the order of June 9, 1932, as modified.
B.F. Saltzstein, of Milwaukee, Wis., for appellant.
W.L. Gold, W.G. Sullivan, and Morris Karon, all of Milwaukee, Wis., for appellee.
Before ALSCHULER, SPARKS, and FITZHENRY, Circuit Judges.
Two questions are presented by this appeal: (1) Is the interlocutory decree from which the appeal is taken, subject to appeal, and (2) did the District Court err in holding that the award was one of arbitration rather than one of appraisement, hence invalid for failure to hear evidence.
Appellee moved to dismiss this appeal on the ground that (1) the decree appealed from is an interlocutory one, and (2) the restraining order does not prevent appellant from doing anything which it had the right to do in the absence of such an order, and appellant admitted that it had no intention of taking the action enjoined anyway, hence the question relating to the restraining order is a moot one. We think there can be little question but that the order was not a final one. Appellant argues that in attempting to provide a voluntary means for the parties to settle their dispute, the court jeopardized its rights, although it concedes that, had the court entered a decree directing a reference to appraisers appointed under its order, the matter would not be appealable. We do not agree with this contention. It seems to us that the court, in providing for the reopening of the cause upon application of either party in the event of their failure to voluntarily appoint new appraisers or the failure of the re-appraisal, left the way open for appellant simply to refrain from taking any action in the matter, thereby leaving it open for the court to proceed to the appraisal in accordance with the prayer of the original bill of complaint. It is true that various cases have held that where a decree interlocutory in form settles the principal matter in controversy, it is to be considered as a final decree for purposes of appeal. See Thomson v. Dean, 7 Wall. 342, 19 L. Ed. 94; Forgay v. Conrad, 6 How. 201, 12 L. Ed. 404; French v. Shoemaker, 12 Wall. 86, 20 L. Ed. 270; Cumberland Telephone Telegraph Company v. City of Memphis (C.C.A.) 200 F. 657. However, in each of these cases, the decree appealed from in effect put an end to the litigation on the merits between the parties, whereas in the case at bar, the decree leaves the principal matter originally in controversy between them, namely, the valuation of the leased premises, still to be determined, and retains jurisdiction for the purpose of considering any further questions which may arise relating to that determination. It contemplated further proceedings of a judicial character. In North Carolina Railroad Company v. Story, 268 U.S. 288, 45 S. Ct. 531, 533, 69 L. Ed. 959, the court said: "* * * An appellate court has the power on appeal from a temporary or interlocutory order or decree to examine the merits of the case if sufficiently shown by the pleadings and the record and upon deciding them in favor of the defendant to dismiss the bill and save both parties the needless expense of further prosecution of the suit. * * *" The converse of this would be equally true, that if the court found in favor of the complainant, it would have the power to affirm the decree. But if that were done in the case at bar, it would simply mean affirming something upon which further proceedings remained to be had, which might turn out in favor of either party, and the final order regarding which would still be appealable to this court. We therefore hold that the decree is not of sufficient finality to permit an appeal to this court. See Jones' Administrator v. Craig, 127 U.S. 213, 8 S. Ct. 1175, 32 L. Ed. 147; Waialua Agricultural Company, Limited, v. Christian (C.C.A.) 52 F.2d 847; Mercantile Trust Company of New York v. Chicago, Peoria St. Louis Railway Company (C.C.A.) 123 F. 389.
Appellant contends, however, that the appeal must be allowed under section 129 of the Judicial Code (28 USCA § 227), which is as follows:
"Where, upon a hearing in a district court, * * * an injunction is granted, continued, modified, * * * by an interlocutory order or decree, * * * an appeal may be taken from such interlocutory order or decree to the circuit court of appeals; * * * and the proceedings in other respects in the district court shall not be stayed during the pendency of such appeal unless otherwise ordered by the court, or the appellate court. * * * The district court, may, in its discretion, require an additional bond as a condition of the appeal."
We think that this statute contemplates an injunction or restraining order which actually infringes some right on the part of the appellant and the continuation of which pending the final determination of the action will materially affect its interests. This can scarcely be said to be the situation here. The original restraining order was entered in May, 1932, and yet appellant was apparently so little concerned that it took no appeal at that time, waiting until the full hearing on the matter had resulted in an interlocutory decree unfavorable to itself, to take its appeal. We find no case in which injunctions have been classified, according to whether they involved substantial or nominal issues, but it was suggested in Potter v. Beal (C.C.A.) 50 F. 860, at page 863, that no appeal would lie under the section herein considered in a case in which the injunction order was nominal, or in which the decree would be equally effectual without it. We think that the order restraining appellant from terminating the lease, and fixing a temporary rate for the collection of the rent does not interfere with any of its rights in the absence of a showing of some substantial damage such as might result, for instance, in case the lessee were on the verge of insolvency and there were, therefore, danger that the lessor would never be able to collect additional rent if such were found due by the new appraisers or the court. However, here the matter involved in the restraining order seems to be of such trivial importance as compared with the matter involved in the proceedings as a whole, that we think no good purpose can be effected by our consideration of the matter at this time.
The motion to dismiss the appeal is therefore granted.