Appeal from the District Court of the Virgin Islands Division of St. Croix.
Seitz, Garth, and Higginbotham, Circuit Judges. Higginbotham, A. Leon, Jr., dissenting.
This is an appeal from an order of the District Court of the Virgin Islands entering judgment against defendants in an action for unlawful detainer. This court has jurisdiction under 28 U.S.C. § 1291.
Mrs. Marie Billman and Captain Chester A. Ingvolstad were fee simple owners of the property at #55 King Street, Christiansted, St. Croix, known as "King's Alley." On June 15, 1961, they leased the property to Mr. Wendy Hilty. John H. Billman and Mable Dale Ingvoldstad ("landlords") became the owners of King's Alley upon the death of their spouses, in 1968 and 1969 respectively.
The King's Alley lease provided for a 20 year term ending on January 31, 1981. It also provided an option for two additional five year terms. Mr. Hilty or his successors and assigns could exercise this option by giving the landlords at least 30 days notice.
On November 17, 1961, Mr. Hilty assigned his interest in the lease to King Christian Enterprises, Incorporated ("KCE"), a corporation formed by Hilty. This assignment was contemplated in the lease agreement, but no further assignments were permitted without the landlords' consent, except assignments to corporations in which Hilty was the majority shareholder.
In 1961 Hilty became associated with George Becker, a lawyer. In February of 1962 they formed the Virgin Islands Equities Corporation ("VIE"), of which Hilty was originally the sole shareholder, and Becker was an officer. On March 4, 1962, KCE assigned its interest in the lease to VIE, which intended to use a part of King's Alley as a servient estate to an adjoining hotel. VIE sublet the unneeded part of King's Alley back to KCE.
This sublease provided that KCE (as sublessee) would perform all of the duties owed by VIE (the lessee) under the lease, including payment of the rent directly to the landlords. The term of the sublease extended until January 30, 1981, one day less than the term of the lease. If VIE exercised its option for the two additional five year terms, the term of the sublease would be extended until one day prior to the termination of the second additional lease term.
A limited partnership named Alley Associates ("Alley") was formed in 1965, and KCE assigned its sublease to Alley. This fact was communicated to the landlords, who expressed concern that this assignment without the landlords' consent was a violation of the lease. Becker informed the landlords that KCE had assigned a sublease, and only a sublease, to Alley, and that the transaction did not violate the terms of the lease agreement.
In sum, after 1965 there were three primary actors relevant to this opinion. They were the landlords, VIE [hereinafter referred to as "lessee"], and Alley [hereinafter referred to as "sublessee"].
On November 11, 1971, nearly ten years before the expiration of the lease, Mr. Becker wrote to the landlords on ...