Thibodo v. United States

• Decision Date: 28 March 1955
• Docket Number: Civ. No. 1030.
• Citation: 134 F. Supp. 88
• Court: U.S. District Court — Southern District of California
• Parties: F. E. THIBODO, Plaintiff, v. UNITED STATES of America, Defendant.

134 F. Supp. 88

F. E. THIBODO, Plaintiff, v. UNITED STATES of America, Defendant.

Civ. No. 1030.

United States District Court S. D. California, S. D.

March 28, 1955.

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Roscoe R. Hess, Los Angeles, Cal., for plaintiff.

Laughlin E. Waters, U. S. Atty., Los Angeles, Cal., by Albert N. Minton, Special Attorney, Lands Division, Los Angeles, Cal., for defendant.

YANKWICH, Chief Judge.

A pre-trial order entered on March 28, 1955 (which is appended to this opinion as Exhibit A) called for determination by the Court, in advance of trial, of certain legal principles which in the opinion of court and counsel would determine the course of the future litigation. This is one of the most beneficial uses of the pre-trial procedure.¹

I The Factual Background

A consideration of the problems presented requires a statement of the prior proceedings which culminated in a decision of the Court of Appeals determining certain questions which are the law of the case.

On November 23, 1948, plaintiff instituted his original action claiming damages for deprivation of rights founded upon the Constitution of the United States.² Plaintiff was the owner of certain street improvement bonds issued to him by the Treasurer of the City of National City, California, on August 24, 1931, under the California Improvement Act of 1911. The bonds were payable in ten annual installments beginning January 2, 1932.³ At the time of the institution of the action and ever since, the bonds were a lien on certain lands within the city limits of National City, California. On February 9, 1943, the United States instituted an action in the District Court for the Southern District of California to condemn lands which included the lands on which the bonds were a lien.

A Declaration of Taking was filed on the same day and the Court made an Order of Immediate Possession pursuant to it.⁴ The plaintiff was not made a party to the action and was not served with summons or complaint in it.

On November 23, 1948, plaintiff filed an action in this court seeking judgment against the United States in the amount of the principal sums on the bonds. He also sought a declaration that each bond constituted a lien upon the property described until the amounts are paid. The total amount sought to be recovered is less than $10,000, the plaintiff having waived any amount in excess thus bringing the action within the Tucker Act already referred to.⁵

A Motion to dismiss was sustained by the writer upon the ground that the plaintiff was not a necessary party to the condemnation proceedings, that the United States did not have notice of the claim of lien by plaintiff by reason of the bonds when it instituted the action and that for these reasons the complaint stated no claim against the United States.⁶

Reversing the case, the Court of Appeals held that while under California law, a lienholder, such as the plaintiff, was not a necessary party,

"his interest must be protected in some practical manner".⁷

The Court, however, held that plaintiff should show by proper amendments to his complaint that he had exhausted his remedies in the State Courts. Certain statements from the Court of Appeals' opinion may be quoted as bearing upon the legal problems involved. They are as follows:

"Under the California law, a lienholder has a present proprietary interest in the subject matter of land sought to be taken by eminent domain proceedings which confers a right to have such interest considered and determined in said action. City of Vallejo v. Superior Court, 1926, 199 Cal. 408, 249 P. 1084, 48 A.L.R. 610; Calif.Code Civ.Proc. (1949) §§ 1244, subd. 2, 1246, 1246.1, 1248. See Harrington v. Superior Court, 1924, 194 Cal. 185, 228 P. 15. Section 1248, subd. 8, of the California Code of Civil Procedure provides that if the amount of a lien is not due at the time of entry of the judgment, the amount may be deducted from the judgment with the lien continuing until the indebtedness is paid. This section is held applicable to street improvement liens. City of Los Angeles v. Superior Court, 1934, 2 Cal.2d 138, 39 P.2d 401. If the lien is due and overdue, the security holder is entitled to have the money awarded in the condemnation proceedings applied to the payment of his claim. City of Vallejo v. Superior Court, supra. The very purpose of the statute is to prevent a situation wherein the condemnor will pay the full value of the land, and thereafter will be forced to pay again to holders of liens on the land. City of Los Angeles v. Superior Court, supra. * * *

"The California courts recognize the doctrine that when land is taken for public use, the money awarded for such land remains, and is to be considered as, representing the land in respect to all rights and interests relating thereto. The money is applied to discharge the liens upon the land in accordance with the rights of encumbrances in respect to the land. Los Angeles Trust & Savings Bank v. Bortenstein, 1920, 47 Cal.App. 421, 190 P. 850. The lien claimant may follow the fund in order to subject it to his claim even if it has been paid out to others. Rose v. Conlin, 1921, 52 Cal.App. 225, 198 P. 653.

"Plaintiff should be given the opportunity to amend his complaint to show that he has exhausted the state remedy or that this relief is not available to him, or that pursuit for relief through the state courts would be fruitless. When appellant has taken proper steps as just suggested he may then state his claim for relief based upon a deprivation of constitutional rights, by virtue of the `taking' of his right to have his bonds discharged through foreclosure of the lien upon the land. * * *

"The Government stresses its own assertion that plaintiff knew of the proceeding and therefore is estopped by laches from recovering in this action, but we find no admission of such fact in the pleadings. It may be that in the necessitous haste to get possession and title to the land in suit for navy use during the great war that the lienholder was overlooked and if so, he should not be deprived of his day in court to show, if he can, that the Government's action nullified his statutory right to enforce his claim, thereby depriving him of his constitutional right under the Fifth Amendment to the Constitution of the United States."⁸

Under California law, two remedies are provided for the lienholder, — (a) foreclosure by the City Treasurer⁹ and (b) action to foreclose the bond which is a separate, direct and cumulative remedy.¹⁰ As to these remedies, the Court of Appeals stated explicitly:

"Both of the above doors to recovery on his bonds were closed to the plaintiff when the United States exercised its power over the land in 1943. Mullen Benevolent Corp. v. United States, 290 U.S. 89, 54 S.Ct. 38, 78 L.Ed. 192 supra."¹¹

This statement cannot be questioned as the Government is urging us to do in this proceeding. The Court of Appeals was considering the sufficiency of the Complaint. While holding that the Complaint was deficient, it pointed to certain allegations which, if supplied, would warrant a trial on the merits. So doing, it referred to the remedies which were available to the plaintiff under the State law, had the condemnation not intervened. There is also good logic behind the conclusion of the Court of Appeals in this respect. For an action in condemnation is a forced sale.¹²

II The Relief Sought Now

Be that as it may, these statements are a part of the law of the case and are binding on us in determining the matters before us. In his amended complaint, the plaintiff has alleged certain facts, some of which are admitted in the pretrial order. It is conceded that so far as the lots upon which the bonds were owned by the plaintiff, the Government and the City entered into a stipulation fixing their value in the sum of $4,577, and that a judgment was entered on December 10, 1947, fixing that sum as the just compensation for their taking.

On October 3, 1944, $1,777 had been deposited in the Registry of the court to apply to these parcels. On December 10, 1947, the Court entered an Order of Distribution awarding the compensation to Ruth L. Rubin, Carl Levy and Norman George Levy, less taxes in favor of National City, the County of San Diego and the State of California. No money was withheld in the condemnation proceedings for the payment of plaintiff's bonds on which, on February 9, 1943, the sum of $10,664.84 was due.

The amended complaint alleged that the plaintiff has no remedy either against the property under the State law or the fund which the Court had distributed in the condemnation proceeding. It is his contention, therefore, that his only remedy is to sue not for the value of the bonds, but for the value of the lots covered by his lien which he asserts to be in excess of the amount stipulated, and for which he seeks judgment.

III The Scope of Condemnation

By condemnation title to the property condemned is vested in the Government.¹³ But only the final judgment can achieve this. However, under the statutes of the United States, the Government may take possession and title in advance of final judgment. As already stated, in the condemnation case from which this action springs, a Declaration of Taking was filed as of February 9, 1943, and an Order of Immediate Possession was issued. The effect of these acts on the part of the Government are of utmost importance in this case. It is therefore necessary to state that by the Declaration of Taking the title to the property is transferred immediately to the Government. Indeed, the statute itself states that

"Upon the filing said declaration of taking and of the deposit in the court, to the use of the persons entitled thereto, of the amount of the estimated compensation stated in said declaration, title to the said lands in fee simple absolute, or such less estate or interest therein as is specified in said

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