184 F.2d 44 (9th Cir. 1950), 12389, R.F.C. v. Mouat

Docket Nº:12389.
Citation:184 F.2d 44
Case Date:August 10, 1950
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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184 F.2d 44 (9th Cir. 1950)







No. 12389.

United States Court of Appeals, Ninth Circuit.

August 10, 1950

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A. Devitt Banech, Asst. Atty. Gen., John B. Tansil, U.S. Atty., Billings, Mont., John F. Cotter, Atty., Dep. of Justice, Washington, D.C., for appellant R.F.C.

Thomas C. Colton, Billings, Mont., H. L. Maury, and A. G. Shone, Butte, Mont., for Mouats, et al.

Before MATHEWS, STEPHENS and ORR, Circuit Judges.

MATHEWS, Circuit Judge.

On December 20, 1941, M. W. Mouat, individually, and May Paula Mouat, individually and as trustee of an express trust, hereafter called the Mouats, and Metals

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Reserve Company, a corporation, 1 made a written agreement, hereafter called the lease, whereby the Mouats leased to Metals Reserve Company three patented lode mining claims, 20 unpatented lode mining claims, one unpatented placer mining claim known as the Lae placer mining claim and one unpatented tunnel site in Stillwater County, Montana, for the term of 10 years from and after December 20, 1941, subject to earlier termination as provided in the lease. The lease contained 31 numbered paragraphs. Paragraphs 14, 15, 17 and 20 are pertinent here.

Paragraph 14 provided: 'The Lessee (Metals Reserve Company) may at any time after January 1, 1942, on ninety days' notice to Lessors (the Mouats) and by the payment of One Thousand Dollars ($1, 000.00), surrender and terminate this lease * * * '

Paragraph 15 provided: ' * * * Upon the expiration of this lease or the termination of this lease * * * Lessee shall have six (6) months' additional time to remove from the leased premises its personal property and its tools, equipment, machinery, tracks and tramways, but shall leave intact all mine workings and timbering, ties and all excavations, foundations, wooden mine structures, wooden tramway towers and wooden buildings erected upon the demised premises * * * '

Paragraph 17 provided: 'Time is of the essence of this agreement and all of the grants, terms and covenants, stipulations and conditions expressed herein shall run with the land and in all respects shall extend to and be binding upon the successors and assigns of the parties hereto.'

Paragraph 20 provided: 'Lessee agrees with the lessors that unless there is an understanding to the contrary in writing, 2 anything remaining on the premises herein demised and leased upon the termination hereof, for a period of more than six months after such termination, shall conclusively be deemed to have been abandoned by the Lessee in favor of the Lessors.'

Between December 20, 1941, and April 16, 1945, Defense Plant Corporation 3 erected on the leased premises a large number of buildings, many of which contained plumbing fixtures. Some of the buildings were on the Lake placer mining claim. On April 16, 1945, by direction of the War Production Board, Defense Plant Corporation declared that all the buildings were surplus property, thus, in effect, declaring that the Surplus Property Board should have general supervision and direction over the care, handling and disposition of the buildings. 4 On September 18, 1945, the functions of the Surplus Property Board were transferred to the Surplus Property Administrator. 5 On January 31, 1946, the functions of the Surplus Property Administrator were transferred to the chairman of the board of directors of War Assets Corporation. 6 On March 25, 1946, War Assets Administration, headed by a War Assets Administrator, was established, and the functions of the chairman of the board of directors of War Assets Corporation were transferred to the War Assets Administrator. 7

On July 1, 1945- after the buildings on the leased premises were declared surplus- Metals Reserve Company and Defense

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Plant Corporation were dissolved, and all their functions, powers, duties, assets and liabilities were transferred to Reconstruction Finance Corporation. 8 On November 15, 1945, Reconstruction Finance Corporation notified the Mouats that it would terminate the lease on February 28, 1946. Accordingly, on February 28, 1946, the lease was terminated.

On September 17, 1946, the Mouats brought an action against Reconstruction Finance Corporation and War Assets Administration. The action was based on the lease. The complaint alleged, in substance, that on February 28, 1946, there were on the leased premises 81 buildings- 79 residence buildings, one store building and one barracks building- all of which contained plumbing fixtures; that after February 28, 1946, defendants (Reconstruction Finance Corporation and War Assets Administration) committed waste on the leased premises by removing from the 81 buildings and converting to their own use plumbing fixtures of the value of $41, 000 and by destroying 22 of the residence buildings, each of which, even without plumbing fixtures, was of the value of $600; that other property which was on the leased premises on February 28, 1946, was removed therefrom by defendants after August 28, 1946; and that the amount thereof was unknown to the Mouats, but was known to defendants. The complaint prayed for a judgment against defendants for $41, 000 for removal and conversion of plumbing fixtures and $13, 200 for destruction of buildings, prayed for an accounting of property removed from the leased premises by defendants after August 28, 1946, and prayed for a judgment against defendants for the value thereof. Other parts of the complaint are not pertinent here.

War Assets Administration moved for and obtained an order dismissing the action as to it. That order was entered on October 27, 1947, was not appealed from and is not here sought to be reviewed. After October 27, 1947, Reconstruction Finance Corporation was treated as the sole defendant in the action.

Reconstruction Finance Corporation answered the complaint and, in its answer, denied that it had committed waste on the leased premises or removed...

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