[86 Ariz. 330] William C. Eliot, City Atty., and George Mariscal, John F. Mills, Dale E. Marenda, Asst. City Attys., Phoenix, for appellant.
Brice I. Bishop and Donald R. Kunz, Phoenix, for appellees.
PHELPS, Chief Justice.
The present action was commenced by the duly appointed executors of the lessor of certain premises, against the City of Phoenix, lessee. The executors allege that certain 'sewer and water connections' became the property of the lessor upon termination of the lease, and that their subsequent sale and removal constituted conversion against the estate.
In 1946 the City of Phoenix undertook to build and operate an 'Emergency Veteran's Housing Project'. Pre-fabricated housing units were acquired from the Federal Government. The City sought suitable land upon which to erect them. At that time the city manager began to negotiate with Mrs. Ottilia Linsenmeyer for the leasing of her property located on the northeast corner of Sixteenth and Roosevelt streets. Mrs. Linsenmeyer seemed to be reluctant to accept the monetary terms offered by the City (initially only $125 per month for approximately ten acres of
land). Thereupon the city manager explained to her that the project would require the installation of considerable water and sewer pipe, and that upon termination [86 Ariz. 331] of the lease title to all the pipe installed and used in connection with the project, would pass to her as additional rent. With the approval of Mrs. Linsenmeyer the city attorney's office prepared an instrument which she and the city manager believed to embody the terms of their oral agreement. This document, in addition to the money rental reserved to the lessor provided:
'Lessee further agrees that all sewer and water connections used in the operation of said Veteran's Emergency Housing Project on said premises shall remain installed.' (Emphasis ours.)
The validity of this transaction was immediately challenged, City of Phoenix v. Superior Court of Maricopa County, 65 Ariz. 139, 175 P.2d 811, and found to be a nullity. The city council's resolution empowering the city manager to execute the lease had not been enacted pursuant to the prescribed procedure required by the city charter. Thereupon the city council of the City of Phoenix validly re-enacted the authorizing resolution and directed the city manager to execute 'that certain lease between the City of Phoenix and Ottilia Linsenmeyer, dated March 1, 1946.'
In the construction and operation of the project three classes of pipe were installed on the premises, viz.: (1) Underground 'mains' to connect the land with existing city sewer and water systems; (2) Pipe and plumbing installed in the housing units for use with shower, lavatory, kitchen, laundry, etc.; and (3) Pipe necessary to connect the plumbing in category one, supra, with the plumbing in category two, supra. Upon termination of the operation of the housing units and their removal from the leased premises, the city caused all of the pipe and plumbing in categories (2) and (3), supra, to be sold to third persons engaged by the city to wreck and remove the housing units. Only the pipe and plumbing in category (1), supra, was allowed to remain on the premises.
Mrs. Ottilia Linsenmeyer passed away in 1951, and her will was duly admitted to probate. In 1952 when the housing units were being removed at the instance of the city, the first dispute arose. Mr. Otto Linsenmeyer instituted an action against the city claiming an interest in the pipe in question as devisee under his mother's will of one-half the land covered by the lease. His theory was that upon termination of the lease title to the pipe having passed to Mrs. Linsenmeyer it became 'fixtures', and that its subsequent sale and removal gave him a claim against the city for conversion. Judgment upon a jury's verdict in his favor was reversed by this Court, City of Phoenix v. Linsenmeyer, 78 Ariz. 378, 280 P.2d 698, 701, 52 A.L.R.2d 219, holding that the pipe was not realty, but personalty, and that Mr. Linsenmeyer was not therefore a proper party plaintiff. This Court also stated that '* * * if [86 Ariz. 332] there be a right of recovery, the personal representative is the only one entitled to seek the same.' Thereupon the executors of Mrs. Linsenmeyer's estate, the appellees herein, commenced the instant action.
The amended complaint alleged that a contract of lease had been entered into by the city and Mrs. Linsenmeyer, setting out the lease by reference thereto in haec verba. It then alleged in Count I:
'That by reason of said contract, all sewer and water connections above ground level used in the operation of the Emergency Veterans Housing Project on said premises became and were the personal property of said Ottilia Linsenmeyer.'
and in Count II of said amended complaint on which appellees elected to stand, it was alleged that
'* * * upon the expiration of said contract or any extension thereof, * * * that all sewer and water connections used in the operation of the Emergency Veterans Housing Project
on said premises should remain as installed.'
and that the city in effecting a sale and removal of certain of this pipe had ...