Handler v. Horns

Facts

In 1929, parents leased a five story brick building to their son, Fred Horns, who intended to operate a meat packing business therein. The lease was to begin September 1, 1929 and continue until six months after the last surviving parent died. The lease gave Fred the right to install a new front to the building and to alter the interior for use as a meat packing and sales business. Fred covenanted to keep the building “in as good and sufficient repair as it is the date of the execution hereof” [September 1, 1929]. At the end of the term, Fred covenanted to deliver the premises and its fixtures in as good a condition, minus regular depreciation, as the date of the execution hereof, or September 1, 1929. Fred was given the option to purchase the premises at any time prior to the end of the lease with $75,000, which he did not exercise. Fred installed a large refrigeration system in the building such that each floor above the first was entirely a cold storage facility with meat r acks running to an elevator. The additions by Fred cost $89,000. Augusta Horns, Fred’s last surviving parent died on October 11, 1937, and by her will devised the premises to her three children, Hulda Muller, now deceased [her interests have passed to Hazel Handler, Plaintiff, Handler being Mullers only child], Fred Horns, tenant in possession, and Clara Horns. The three children became tenants in common. Six months after his mother’s death Fred had not exercised his option to purchase and the lease expired. Fred remained in possession as a hold over tenant and then in April of 1939, the corporation Fred formed to maintain his business [later Fred Horns & Son] entered into a lease with the then owners of the premises [which was himself, and his sisters] for a term of two years with an option to renew for another three years. That lease provided that no alterations, additions or improvements was to be made without the consent of the landlords, and that all additions would belong to the landlords. The tenant was given the right to remove any and all trade fixtures that belong to tenant or which had been installed by tenant except those that are so fixed as to become part of the building such that their removal could not be accomplished without causing material damage to the premises. When the term of this lease expired the parties went on year to year. Fred died in 1945 and left the business, including any fixtures, to his son, Defendant Henry Horns. Hazel Handler, Plaintiff, who owns an undivided one-third of the building sued for partition. Plaintiff claims that all the improvements made by Fred to the building became part of the building and may not be removed from the building. The case was referred to a special master who reported that the premises could not be partitioned but should be sold as one parcel and that the fixtures placed by Defendant had become part of the building. The Vice Chancellor found that the tenant intended to make the fixtures become part of the real estate and that it constituted one single business entity. Defendant appealed.