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COURT OF APPEALS DECISION DATED AND RELEASED SEPTEMBER 10, 1996 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62(1), Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 96-0984-FT
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT III
DAVID KOSMO,
Plaintiff-Appellant,
v.
STATE OF WISCONSIN,
DEPARTMENT OF
TRANSPORTATION,
Defendant-Respondent,
CITY OF EAU CLAIRE, a
municipal
corporation of the
State of
Wisconsin, and EAU
CLAIRE AREA
SCHOOL DISTRICT, a
quasi-municipal
corporation of the
State of
Wisconsin,
Defendants.
APPEAL from a judgment
of the circuit court for Eau Claire County:
GREGORY A. PETERSON, Judge. Affirmed.
Before Cane, P.J.,
LaRocque and Myse, JJ.
PER CURIAM. David Kosmo appeals a judgment dismissing
his inverse condemnation complaint against the Department of Transportation for
failure to state a claim upon which relief may be granted, and awarding costs
for filing a frivolous action.[1] See § 814.025, Stats.[2] He argues that his complaint states a claim
and that the trial court erroneously concluded that his claim was
frivolous. We affirm the judgment.
Kosmo's complaint
against the department states the Chicago, Milwaukee, St. Paul and Pacific
Railroad Company owned record title to certain property that it leased to
various individuals pursuant to a written indefinite term lease. It
alleges that the written lease gave the individual ownership of the
building on the property and the right to occupy the property in perpetuity, as
long as rent was paid. He also alleged
that these rights were transferable, and he purchased these rights from one of
the tenants.
Kosmo alleges that he
conducted a business on the property until the department exercised its power
of eminent domain and acquired ownership of the property from the trustee for
the railroad. By quitclaim deed, the
department deeded the property to the City of Eau Claire. Kosmo claims that he vacated the property
upon the department's demand and is entitled therefore to relocation benefits,
and compensation for the taking of his property rights.
Kosmo argues that
because his complaint states a claim against the department, the trial court
erroneously dismissed it. Whether a complaint states a claim upon which relief
may be granted is a question of law that we review de novo. Heinritz v. Lawrence Univ.,
194 Wis.2d 606, 610, 535 N.W.2d 81, 83 (Ct. App. 1995). We must liberally construe the complaint and
accept its allegations as true, drawing inferences in favor of the party
against whom the motion is brought. Id. Under this analysis, we are confined to the
facts alleged in the complaint. Id.
at 611, 535 N.W.2d at 83. To succeed in
this initial stage of an inverse condemnation claim, the plaintiff "must
allege facts that, prima facie at least, show there has been either an
occupation of its property under sec. 32.10, Stats.,
or a taking, which must be compensated under the terms of the Wisconsin
Constitution." Howell Plaza,
Inc. v. State Highway Comm'n, 66 Wis.2d 720, 723, 226 N.W.2d 185, 187
(1975).
At the outset, we note
that the complaint alleges Kosmo is entitled to compensation under ch. 32, Stats., "assuming that plaintiff
complies with the procedural requirements" set forth. The complaint however fails to state that
Kosmo complied with procedural requirements.
Also, the complaint
fails to set forth facts alleging a compensable property interest. Kosmo claims that his complaint states a
property interest because he has "the right to occupy the property in
perpetuity, in accordance with a written indefinite term lease with the
Railroad, as long as the tenant paid the required rent." The complaint
fails to allege a property interest compensable in eminent domain
proceedings.
We agree that a lessee
has a property interest and, when such interest is completely taken by a
condemning authority, the lessee is entitled to compensation. Maxey v. Redevelopment Auth.,
94 Wis.2d 375, 400, 288 N.W.2d 794, 806 (1980). "To entitle a person having a right of occupancy of real
estate to recover compensation when the land is taken, he must have an actual
estate or interest in the soil." See
2 Nichols, Law of Eminent Domain,
§ 5.06[7] at 5-131 (1982). Chapter 706,
Stats., governs every transaction
by which an interest in land is created or assigned. Section 706.01(1), Stats. Excluded, however, are leases for a term
limited to one year or less. Section
706.01(2)(c), Stats.
Kosmo claims that his
interest arises out of a lease for an indefinite term. A lease for an indefinite term is not a
lease for more than a year, creating an interest in the land under ch. 706, Stats.
It is also not a lease for less than a year, valid under § 704.01(1) Stats., which provides:
"Lease" means an agreement,
whether oral or written, for transfer of possession of real property, or both
real and personal property, for a definite period of time. A lease is for a definite period of time if
it has a fixed commencement date and a fixed expiration date or if the
commencement and expiration can be ascertained by reference to some event, such
as completion of a building.[3]
On the other hand, a
tenant who holds possession without a valid lease and pays rent on a periodic
basis is a periodic tenant. Section
704.01(2), Stats. A tenant at will holds possession with
permission of the landlord without a valid lease and under circumstances not
involving periodic payment of rent.
Section 704.01(5), Stats.
Here, the complaint
claims tenancy according to a written indefinite term lease. Because a lease, by definition, must be for
a definite period of time, Kosmo's tenancy is not a leasehold under Wisconsin
law but rather a tenancy at will or a periodic tenancy. The complaint fails to allege any facts
regarding the rental payment periods.
Consequently, it is impossible to determine from he complaint which
tenancy applies.
Nonetheless, either a
periodic or an at-will tenancy may be terminated according to § 704.19, Stats., absent express written
agreement upon another termination method.
The complaint alleges no other expressly agreed termination method. With exceptions not suggested here, upon
twenty-eight-day written notice, a tenancy may be terminated at the end of the
rental period. Sections 704.19(2) and
(3), Stats. An inaccurate termination date in a notice
does not invalidate the notice but merely makes it effective as of the first
date which could have been properly specified.
Section 704.19(5), Stats.
A periodic tenant from
month to month, for example, has no such interest as would entitle him to
compensation. 2 Nichols, supra, § 5.06[4] at 5‑129. The State, having succeeded to the title of
the landlord, would have the right to terminate the tenancy on a month's
notice. Id. at
5-130. The right of a tenant at will is
afforded even less dignity. "A
mere expectation of continued possession based upon the previous conduct of the
parties cannot be considered" by the court. Id. Kosmo's
complaint fails to allege any facts to show a valid lease for a definite term.[4]
We also conclude Kosmo
fails to allege facts to show a taking.
Without citation to authority, Kosmo argues: "It is difficult to
imagine a clearer 'taking' of Appellant's property than was alleged in this
case: the Department simply exercised
its power of condemnation and took fee title ownership to the property. There could not be a clearer assertion of a
taking than that!" We are
unpersuaded. In any event, "the
fact that title vested in the state at a particular time has no bearing on the
question of whether the lease was breached." Kilps v. Pawinski, 27 Wis.2d 467, 473, 134 N.W.2d
470, 473 (1965). A transfer of title
does not necessarily imply a transfer of possession. See id.
In the event the facts
could be interpreted to imply a constructive eviction, Kosmo must show in any
event a reduced value of his leasehold interest.[5]
Cf. Kilps, 27 Wis.2d at 474, 134 N.W.2d at 473 (The tenant
must look to the landlord for "an apportionment of the damages assessed
against the condemning authority based on the reduced value of his
lease."). As previously discussed,
the complaint fails to allege facts to support an inference Kosmo held a valid
leasehold interest.
Therefore, we agree with
the trial court that the complaint fails to state a claim upon which relief may
be granted. Because Kosmo fails to cite
legal authority to support the proposition that an indefinite term lease is a compensable
property interest, or that a transfer of title amounts to a taking of
possession, we also affirm the trial court's discretion to tax costs for a
frivolous action under § 814.025, Stats.
By the Court.—Judgment
affirmed.
This opinion will not be
published. Rule 809.23(1)(b)5, Stats.
[2] Kosmo does not challenge the trial court's dismissal of his claims against the City of Eau Claire and the Eau Claire Area School District.
[3] A lease is included within ch. 704, Stats., even though it may also be treated as a conveyance under § 706, Stats. Section 704.01(1), Stats.
[4] Kosmo cites no legal authority for the proposition that an indefinite term lease creates a property interest. There is authority that it does not. See Ratcliff v. Aspros, 254 Wis. 126, 129, 35 N.W.2d 217, 218 (1948); Leider v. Schmidt, 260 Wis. 273, 275, 50 N.W.2d 233, 234 (1951); Batavian Nat'l Bank v. S & H, Inc., 3 Wis.2d 565, 569-70, 89 N.W.2d 309, 312 (1958); cf., Capital Inv., Inc. v. Whitehall Packing Co., 91 Wis.2d 178, 193, 280 N.W.2d 254, 260-61 (1979).