Ladner v. Bowles (142 F.2d 566, 1944)

MAGRUDER, Judge.

In October, 1941, complainant bought a brick apartment building in Tulsa, Oklahoma. His rentals became subject to Maximum Rent Regulation No. 45 for the Tulsa Defense-Rental Area. This regulation was issued August 20, 1942, to become effective September 1, 1942, and established March 1, 1942, as the rent freezing date. 7 F.R. 6641. Pursuant to adjustment provisions contained in the regulation, complainant petitioned for increases in the maximum rents with respect to three of the four apartment units in the building. These petitions were denied by orders of the area rent director. In accordance with the then existing provisions of the Administrator’s Procedural Regulation No. 3,. complainant protested to the Regional Administrator of the Office of Price Administration for the Fifth Region against these orders denying his petitions for adjustment. The Regional Administrator entered an order denying the protest, and complainant, deeming himself aggrieved thereby, duly-filed his complaint in this court.

With respect to two of the apartment units, the landlord claimed an adjustment under § 5(a) (4) of the regulation on the asserted ground that “the rent on the date determining the maximum rent was materially affected by the blood, personal or other special relationship between the landlord and the tenant and as a result was substantially lower than the rent generally prevailing in the Defense-Rental Area for comparable housing accommodations on March 1, 1942.” The “special relationship” was claimed to result from the circumstance that when complainant bought the apartment building in October, 1941, he took subject to existing leases, in one case not expiring until June 1, 1942, and in the other case not expiring until April 1, 1942, and hence that complainant was “personally powerless” to change the rentals in these two apartment units until said leases had expired. We think the Regional Administrator was right in ruling that this did not constitute a “special relationship” within the meaning of the adjustment provision. As we pointed out in Northwood Apartments, Inc., v. Brown, Em.App.1943, 137 F.2d 809, 814, the general purpose of this adjustment provision was to afford relief in cases where the rent in effect on the maximum rent date did not fairly represent a bargaining valuation of the property for rental purposes under the then existing market conditions of supply and demand, but embodied a rent concession given to a favored tenant on some personal motive. There is nothing in the record to indicate that the rents under these two leases were fixed on any special personal basis; we must assume that they were the product of ordinary arm’s length bargaining between the contracting parties. A separate adjustment provision covers the situation where the housing accommodations were, on the freezing date, subject to a long term lease. Section 5(a) (5), as amended, provides for an adjustment where there was in force on March 1, 1942, the rent freezing date, a written lease for a term commencing on or prior to March 1, 1941, requiring a rent substantially lower than the rent generally prevailing in the defense-rental area for comparable housing accommodations on March 1, 1942. But this provision avails complainant nothing, because the leases which were in force on the freezing date, March 1, 1942, were for terms commencing less than one year prior to that date. See Patrick Cudahy Family Co. v. Bowles, Em.App.1943, 138 F.2d 574.

Complainant also bases his claim for relief upon another adjustment provision covering the situation where, subsequent to the maximum rent date, the landlord had made a “major capital improvement” as distinguished from ordinary repair, replacement and maintenance. See OPA Rent Interpretation 4(d)-I, Pike & Fischer OPA Service, p. 200:1251. It appears that between March 1, 1942, and July 1, 1942, complainant made certain expenditures as follows: At a cost of $145.00 all the mortar in the joints of the brickwork on the front of the building was removed and the same repointed with mason cement for the purpose of waterproofing the building; a new roof was installed upon the building at a cost of $98.31; the old awnings were replaced with new ones at a cost of $59.25; the sign on the front of the building was replaced and four new mailboxes were installed for the use of the tenants, at a cost