Land Clearance for Redevelopment Authority of Kansas City v. Dunn
1967 Mo. LEXIS 853, 416 S.W.2d 948 (1967)
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Rule of Law:
A lease of co-owned property executed by only one co-tenant, without the authority or subsequent ratification of the other co-tenants, is not binding on the non-signing co-tenants and does not create a compensable interest against them in a condemnation proceeding.
Facts:
- The Royal Building was owned by two co-tenants: Royal Building, Inc., and Jacob & Ray Gershon as tenants by the entirety.
- Charles E. Dunn, the son-in-law of the Gershons, sought to lease a restaurant space in the building.
- On August 4, 1960, Jacob Gershon and Dunn signed a five-year lease that listed 'Royal Building, Inc. and Jacob & Ray Gershon' as the lessors.
- Ray Gershon never signed the lease.
- Joseph Cohen, president of Royal Building, Inc., did not sign the lease and, upon learning of it, promptly objected to its terms and notified Dunn in writing that the corporation considered him a month-to-month tenant.
- Dunn invested approximately $30,000 in renovating the restaurant and made regular rental payments, which the owners accepted.
- Ray Gershon died in 1961, which under tenancy by the entirety, made Jacob Gershon the sole owner of their one-half interest; Jacob Gershon died in 1962.
- On October 15, 1964, the Land Clearance for Redevelopment Authority of Kansas City condemned the Royal Building.
Procedural Posture:
- The Land Clearance for Redevelopment Authority of Kansas City condemned the Royal Building, and an award of $285,000 was entered for the property.
- Charles E. Dunn brought an action in the trial court for an apportionment of the award, claiming a $60,000 leasehold interest against the fee owners (Respondents).
- The trial court, sitting without a jury, found that Dunn did not possess a compensable interest in the condemnation award.
- Dunn (Appellant) appealed the trial court's judgment to the Supreme Court of Missouri.
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Issue:
Does a lease signed by only one of two tenants in common, and by only one of two tenants by the entirety, create a compensable leasehold interest in a condemnation award when the other co-tenants did not authorize or ratify the lease?
Opinions:
Majority - Donnelly, J.
No. A lease signed by only one co-tenant without authorization from the others does not create a valid leasehold interest binding on the non-signing co-tenants. The court reasoned that Royal Building, Inc. never ratified the lease; its president, Cohen, immediately and explicitly rejected its validity, so the corporation was not estopped from denying it. The acceptance of rent was consistent with a month-to-month tenancy, which Cohen had asserted. Regarding the Gershons' interest, the doctrine of 'estoppel by lease' (after-acquired title) did not apply because the lease instrument itself disclosed Ray Gershon's un-acquired interest on its face, defeating a technical estoppel. Furthermore, there was no evidence of misrepresentation by Jacob Gershon to support an equitable estoppel. Therefore, Dunn was merely a month-to-month tenant who held no compensable property interest in the condemnation award.
Analysis:
This decision reinforces the strict requirement that all co-tenants must assent to a lease for it to be valid against their interests. It highlights that a co-tenant generally lacks the agency to bind other co-tenants to an encumbrance like a long-term lease. The court's analysis provides a clear distinction between technical estoppel (by deed/lease) and equitable estoppel, establishing that the former cannot be invoked when the instrument itself reveals the title defect. This precedent serves as a crucial warning to potential lessees to conduct due diligence and secure signatures from all owners of record to ensure an enforceable leasehold interest.
