Brown v. Tobriner

BASTIAN, Circuit Judge.

These are appeals from a judgment for $24,000 in favor of appellees [defendants in the District Court]. The litigation stems from a fire which extensively damaged a cooperative apartment building located at 2501-03 Fourteenth Street, N. W., on March 7, 1958.

After an inspection by the Director of the Department of Licenses and Inspections (the inspector of buildings), the appellant in No. 16,861, 2501-03 Fourteenth Street, N. W. Cooperative Association, owner of the apartment, was ordered on March 10, 1958, to raze the building to make.the area safe and was allowed until noon of March 11, 1958, to commence removal of the unsafe structure. This action was taken pursuant to Title 5, § 501, D.C.Code (1961).¹ When the contractor for the removal of the building failed to have the necessary ' equipment on the site on March' 11, the • Cooperative’s permit to raze ivas cancel-led and a permit to raze was issued by appellees to A & A Wrecking Company, the low bidder for the work, which proceeded to remove the remaining portions of the building. The Wrecking Company was paid $24,000 for its work by appel-lees, which the trial court found was a reasonable fee for the job.

Appellant Cooperative filed this proceeding in the District Court, seeking a judgment “declaring the rights of [appellant] and that the costs of razing [appellant’s] structure be paid by [ap-pellees], and/or that no valid inchoate lien exists,” and praying the court to restrain appellees “from placing a lien against the * * * property in any amount,” and for damages in the amount of $24,000.

Brown and Paulson intervened in the proceeding, seeking a judgment against the Cooperative in the amount of $21,-691.62, with interest, for the balance of their note secured by deed of trust on the property, and for a declaration of priority over both the Cooperative Association and appellees. Appellees counterclaimed for $24,000, the amount the District of Columbia had paid the Wrecking Company, and asserted a lien against the property or the proceeds of the sale thereof.²

The District Court made findings of fact and conclusions of law, and entered judgment for appellees on all claims.

Appeal No. 16,680

In this case, the initial contention of appellants, Brown and Paulson, is that the District of Columbia is not entitled to reimbursement for the expense incurred in razing the residue of the apartment building. They argue that the sole provisions for reimbursement to the District are contained in Title 5, § 503,³ of the code and that that section refers only to razing undertaken under the provisions of Title 5, § 502.⁴ Admittedly in this case, appellees proceeded under the provisions of § 501, because the structure was considered so unsafe that immediate action was necessary, and not under § 502, which prescribes the steps the District must take preparatory to razing, if the building is not so unsafe that immediate action is required.

If appellants’ reading of § 503 were correct, we would be faced with an anomalous situation, namely, that the District is to be reimbursed if it razes structures which are not so dangerous as to require immediate demolition but is not to be reimbursed if it razes structures which are so dangerous as to make immediate destruction necessary. Counsel have offered no reason why this distinction should exist and we have found none ourselves.

In fact, reason suggests the contrary. Under § 501, the District undertakes to raze a building only after the owner has failed to fulfill his duty to have it tom down himself. If the District had no means of obtaining reimbursement, there would be little pressure on the owner to meet his obligation. Admittedly, § 503 provides reimbursement to the District if the owner of a building not so unsafe as to require immediate razing fails to take it down after ten days from the time the demolition was recommended by a report of survey. It would be unreasonable to permit the District recovery in such a case and not to permit recovery when the owner of a building so unsafe that it needs immediate razing fails to fulfill his obligation to remove the structure.

Further, it seems very clear that the last sentence of § 503, which provides for reimbursement to the District for monies expended in razing unsafe structures, applies whether the structure was razed under the provisions of § 501 or § 502. That sentence of § 503 appears to be a general remedial provision not confined to § 502 undertakings. We believe that Congress intended the provisions for reimbursement to apply to both § 501 and § 502. Any other interpretation would lead to absurd consequences, and it is an elementary principle of statutory construction that statutes should not be so interpreted.

Finally, appellants assert that, even if the District is entitled to reimbursement, it is not entitled to priority over their notes secured by a prior recorded second deed of trust on the property. The trial court found, however, that no true mortgagor-mortgagee relationship existed between Brown and Paulson on the one hand and the Cooperative on the other, since their interests were not shown to be separate and distinct. Examination of the record convinces us that this conclusion of the trial court should not be disturbed. The court had evidence that the arrangement between appellants and the occupants of the apartment building was that of landlord and tenant rather than mortgagor and mortgagee. The occupants received no certificates of ownership. Failure of an occupant to make payment resulted not in foreclosure but in proceedings before the Landlord and Tenant Branch of the Municipal Court. Appellants apparently retained any surplus after expenses from the monthly payments they received, although these payments exceeded those specified by the notes.

There was also evidence that appellants controlled the Cooperative Association. Brown and Paulson, along with their wives and a third party, were its founders. Brown’s wife and Paulson were its first President and Secretary, respectively. Appellants remained on the Board of Directors until shortly before the fire, although they owned no apartment in the building. There is also testimony that, after their resignation from the Board, appellants remained the guiding force of the Cooperative Association, as they had been before.

Considering these facts, we feel that the District Court was justified in concluding that there was no true mortgagor-mortgagee relationship between appellants and the Cooperative Association. Certainly its finding on this point was not “clearly erroneous.”⁵ Under these circumstances, appellants are not entitled to a priority.

Appeal No. 16,861

For the reasons stated in Appeal No. 16,860, the claim of appellant in this appeal must be denied. Appellees proceeded in accordance with the proper code provisions and are entitled to reimbursement for the amount expended to raze the structure.

No. 16,860 is affirmed.

No. 16,861 is affirmed.

2 . It appears that, prior to trial, the property in question was sold to a third party and the proceeds of the sale, $25,000, were deposited in the Registry of the court.

3 . Note 1, supra.

4 . Ibid.

5 . Fed.R.Civ.P. 52(a).