Section 8 Leasehold Interests

• Library: Damages 2012

Generally, as stated in Brouster v. Shell Pipe Line Corp., 16 S.W.2d 672, 674 (Mo. App. E.D. 1929), the owner of the freehold interest in real estate occupied by a tenant may recover for permanent injury to the real estate. The tenant, whose rights are merely possessory, may recover for the injury to the tenant’s use and enjoyment. Therefore, the general rules for measuring permanent damage to real estate should apply to measuring damages to a freehold landlord’s reversionary interest. Likewise, because injuries to the tenant’s interest of use and enjoyment are temporary in nature, the measure of damage should follow the rules for temporary damage described in §9.12below.

It is a well-settled rule that a landlord and a tenant each have a separate estate to which each has a right of action for injuries by third parties. Shaw v. Greathouse, 296 S.W.2d 151, 153 (Mo. App. W.D. 1956). In Shaw, an interpleader action, the court denied the plaintiff’s contention that its aggregate liability to both landlord and tenant for injury to a building should be limited to the resulting difference in the building’s market value. In upholding the settled rule, the court noted that, on the contrary, the rule requires the wrongdoer to compensate each party for the damage each respectively sustains as a consequence of the injury and that such a result is not tantamount to requiring double payment for the same injury. Id.

Typically, the duty to maintain, repair, and restore real estate is apportioned between the landlord and tenant by the terms of a written lease agreement. Either party may have some or all of those duties. The tenant may have the duty to pay rent for the entire lease term regardless of damage or destruction of the property, or the parties may have the option to terminate the lease in...