Baker v. United States, 2215.

• Decision Date: 30 July 1928
• Docket Number: No. 2215.,2215.
• Citation: 27 F.2d 863
• Parties: BAKER et al. v. UNITED STATES et al.
• Court: U.S. Court of Appeals — First Circuit

27 F.2d 863 (1928)

BAKER et al. v. UNITED STATES et al.

No. 2215.

Circuit Court of Appeals, First Circuit.

July 30, 1928.

Nelson Gammans, of New York City (Frank Davis, Jr., Seiforde M. Stellwagen, William D. Harris, and William J. Neale, all of Washington, D. C., on the brief), for appellants.

William Cattron Rigby, of Washington, D. C. (John A. Smith, of Chicago, Ill., John L. Gay, U. S. Atty., of San Juan, Porto Rico, George C. Butte, Atty. Gen., of Porto Rico, John A. Hull, of Washington, D. C., J. A. Lopez Acosta, of San Juan, Porto Rico, and James R. Beverley, Asst. Atty. Gen., on the brief), for appellees.

Before BINGHAM and JOHNSON, Circuit Judges, and HALE, District Judge.

HALE, District Judge.

This suit in equity is before us on appeal from a decree of the United States District Court for Porto Rico, December 23, 1926, sustaining the complainant's bill of complaint and ordering a cancellation of the lease involved in the suit.

The bill of complaint states its case substantially as follows:

At all times mentioned in the bill the defendant Baker was an officer in the United States Navy, in active service in charge of the naval radio station at San Juan, Porto Rico, or a retired officer of the United States Navy residing in Porto Rico. On and prior to the 18th day of March, 1919, the United States was the owner of a tract of land within the military reservation of San Juan, at Porto Rico, then in the possession and under the control of the War Department, now known as the San Geronimo Naval Reservation. On the date last named, pursuant to a request of the Navy Department, and relying upon the representations of the defendant that permanent use of the reservation by the Navy Department was necessary for the purposes of the Navy Department, the Secretary of War leased the reservation to the Navy Department for 99 years for the operation thereon of a radio telegraph station and for other naval purposes. On December 15, 1919, this tract was formally transferred to the Navy Department. No use was made of this property so transferred to the Navy Department for any naval purposes, except as a residence for Virgil Baker, the defendant, and on the 26th day of August, 1919, upon his request, he being then in charge of the naval radio station at San Juan, Porto Rico, the acting Secretary of the Navy leased to him for a term of five years a portion of the reservation, describing same by metes and bounds. This lease was given to the defendant upon the consideration of his representation that the conduct of the radio station required him to live close by, and that his residence at San Geronimo was necessary for the proper administration of the station, and upon his guaranty immediately to erect a concrete residence upon the property, which would provide an additional set of officers' quarters, and for the purpose of improving the sanitary conditions of the site, and securing other improvements by him at a cost of over $12,000, and the erection of such improvements, and the payment of $1.

The residence has not been erected, the lease was procured by the defendant upon false representations, and the terms and conditions of the transfer thereafter prescribed by Congress have not been performed by either the defendant Baker or his wife, Stella May Baker, who is joined as a defendant in the suit.

On October 27, 1919, the defendant Baker requested authority from the Navy Department to obtain title to a site for a distant control radio station, which he advised could be had in exchange for a small part of the San Geronimo Naval Reservation, consisting of low marshy land not worth more than $2,400, and unsuited for naval use, and that complete title could be secured to 9 acres of land already selected as a site for the distant control station and for necessary perpetual easements. On November 6, 1919, acting in behalf of the Navy Department of the United States, and in reliance upon Baker's representation, and without disclosing any purpose to secure title to the property in his own name as a third party, the defendant entered into an option contract with the Loiza Sugar Company, securing for the Navy Department for a period of six months the right of purchase for $200 certain described parcels of land in the municipality of Loiza on the island of Porto Rico, describing said parcels No. 1 and No. 2. The option provided that the deed of conveyance should contain a stipulation that the said parcels and easements should be reconveyed to the sugar company for $200 whenever the wireless station to be constructed should be abandoned, as appears from a contract made a part of the bill of complaint.

On January 9, 1920, contrary to the option, and contrary to his instructions to acquire full title to the parcels, and in disregard of his obligations as an officer and of his duty as an agent of the United States, the defendant procured the transfer to himself of the two parcels of land, with certain conditions set forth in the bill of complaint; all the conditions, except the one requiring a transfer to the Navy Department, were unauthorized and contrary to law and public policy. In order to secure from the Navy Department a transfer of title to him of a part of the San Geronimo Military Reservation described in the lease of August 26, 1919, the defendant falsely reported to the Navy Department that he had obtained full title to two adjoining tracts of land containing a total of 9 acres, selected as a site for a distant control radio station, with easements covering an area necessary for laying the underground receiving system as contained in a circle with a radius of 2,000 feet from the center located on the radio station site, as described in the deed to the defendant of January 9, 1920, and falsely reporting that he had executed a deed transferring to the Navy Department full title to the radio station, with its easements, whereas the only title he had obtained was burdened with certain unlawful conditions. The defendant Baker represented to the Navy Department that the site of the distant control radio station was greatly needed, and was of great value to the government, and that the tract of land leased to him on August 26, 1919, was of no practical value to the government, notwithstanding his former report that the whole of the San Geronimo Reservation was necessary to the radio station at San Juan, and that it would be a benefit to the United States.

These statements were false and fraudulent, and known to him to be such when they were made, and were made with the intent of deceiving the Navy Department, and thereby transferring to him valuable property of the United States worth over $500,000 for easements on property of no value to the United States.

On June 7, 1920, the defendant Baker and his wife signed a deed to the United States purporting to convey the land described as parcels No. 1 and No. 2, contrary to the representation of the defendant Baker that he would obtain and convey full title to the property in question, and that he had executed a deed transferring full title, and contrary to the provisions of the option contract. The deed contained the following provision, inconsistent with the full and complete title, namely:

"Fourth. The present sale is carried out with the condition that the purchasing party, Lieutenant Commander Virgil Baker, U. S. Navy (retired), will transfer the parcels in question to the Navy Department of the United States within the term of one year, to the effect that the said department will utilize the said parcels in constructing and maintaining in operation therein a wireless station within a term of two years following the date of transfer; it being stipulated that, if the said wireless station should not be constructed within the said term of two years, then the purchasing party or his successor in title will return to the Loiza Sugar Company the parcels of land now sold for the same consideration of $200 which have now been paid for them, and it being equally agreed in the same manner and for the same price that, in the event of abandonment or transfer of the said station to any other place after its construction and operation, the improvements and structures of the said wireless station shall become the property of the Loiza Sugar Company, if they shall not have been removed within a period of three months following the date of the return of the property in each of the two cases above stated."

On January 22, 1920, the Navy Department reported to Congress that a suitable site had been located for the distant control radio station, in reliance upon the recommendations of the defendant, Baker; that the site was very valuable and greatly needed; that Baker had already procured full title, and had transferred full title to the government. On November 13, 1920, overlooking the fact that prior thereto the Navy Department had determined that the land was unsuitable and the construction of said station had been abandoned as not feasible, the Navy Department recommended the enactment by Congress of the Act of July 12, 1921, which had been urged by the defendant, and is as follows:

"That as consideration for a suitable site and requisite rights, privileges, and easements for a receiving and distant control radio station in Porto Rico, the Secretary of the Navy be, and he hereby is, authorized to exchange or lease for such period as he may deem proper any land under naval control in Porto Rico not otherwise required for naval purposes: Provided, that in time of war or national emergency, if necessary, the Navy Department shall have without cost free and unlimited use of any land so exchanged or leased." Comp. St. § 2804ee.

Before the act was passed, parcels No. 1 and No. 2 had been found unsuitable for a distant control radio station; the construction of such station was abandoned by the Navy Department on August 13, 1920; and the acquisition of a site became unnecessary. No...