Burkhart v. United States

• Decision Date: 28 June 1955
• Docket Number: No. 13425.,13425.
• Citation: 227 F.2d 659
• Parties: Andrew J. BURKHART and Lillie Burkhart, his wife; John H. O'Brien and Agnes O'Brien, his wife; and Andrew J. Burkhart and John H. O'Brien, a copartnership, doing business as Petroleum Products, Appellants, v. UNITED STATES of America and Irwin A. Falk and Vuelta C. Falk, his wife, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

227 F.2d 659 (1955)

Andrew J. BURKHART and Lillie Burkhart, his wife; John H. O'Brien and Agnes O'Brien, his wife; and Andrew J. Burkhart and John H. O'Brien, a copartnership, doing business as Petroleum Products, Appellants, v. UNITED STATES of America and Irwin A. Falk and Vuelta C. Falk, his wife, Appellees.

No. 13425.

United States Court of Appeals Ninth Circuit.

June 28, 1955.

T. C. Boyle, Seattle, Wash., for appellant.

Perry W. Morton, Asst. Atty. Gen., Hart Snyder, Special Atty., Dept. of Justice, Spokane, Wash., S. Billingsley Hill, Roger P. Marquis, John C. Harrington, Attys., Dept. of Justice, Washington, D. C., for the United States.

Charles L. Powell, Moulton, Powell, Gess & Loney, Kennewick, Wash., for appellee Falk.

Before STEPHENS, POPE and FEE, Circuit Judges.

JAMES ALGER FEE, Circuit Judge.

The present controversy arises in a condemnation proceeding instituted in January, 1951, to acquire fee simple title to lands for use in connection with McNary Dam on the Columbia River. Declaration of taking was filed, and the court ordered that possession of the parcel here involved be given to the United States on July 2, 1951. This tract, comprising about 12 acres, was owned by the Falks, who have filed an appeal. They had leased a lot 200 feet by 150 feet to Andrew J. Burkhart and Lillie Burkhart, John H. O'Brien and Agnes O'Brien, and a partnership consisting of Burkhart and O'Brien doing business as Petroleum Products in the fall of 1948 for a term of five years for operation of a gasoline service station, with option to extend the lease for another five years. The Burkharts and O'Briens and the partnership were named as parties in the condemnation proceeding. In January, 1952, the government filed a motion to dismiss these parties from the proceeding. This motion was denied at the time, but subsequently there was a hearing ostensibly on the interpretation of the lease. The lessees objected to the participation of the government in the hearing. The Falks objected that orderly procedure would be to determine just compensation and subsequently to settle the rights of the claimants to the amount so paid. Testimony was taken on the interpretation to be placed on the written lease, which contained the following clause:

"If all or any part of the subject property shall be taken by any public agency for public use or purpose the entire amount paid as compensation for the property taken and as severance damages resulting to the remaining property of lessors shall be paid to and shall be retained by lessors as their own property. Lessees shall then be entitled to remove all their property, including the service station structure from the premises and each party will look to the condemnor for compensation on account of any and all damages claimed or asserted by such party on account of or resulting from such taking."

On March 13, 1952, the court filed findings of fact and conclusions of law. It was decided that, if the lessees were still in possession of the improvements, there had been no taking thereof and the lessees were entitled to no part of the just compensation. Judgment was entered dismissing the lessees from the proceeding. A previous appeal was taken to this Court and dismissed.¹ Upon remand, the District Court entered an amended judgment vacating and cancelling the previous one, reciting that there was no just reason for delay, and "adjudicating the separate claim and interest of defendants Burkhart and O'Brien" finally. This instrument contains a judgment "that the service station equipment and improvements placed upon said Tract Q-1115 by the defendants Burkhart and O'Brien remain personal property; that there has been no taking of said personal property and that defendants Burkhart and O'Brien are entitled to no part of the just compensation payable * * * and said defendants Burkhart and O'Brien are hereby dismissed from this action." From this judgment, defendants Falk and defendants Burkhart and O'Brien appeal separately.

The appeal of the Falks must be dismissed. There is no final order as to them. In our previous opinion, this doubt was suggested. Burkhart v. United States, supra, 210 F.2d at page 605, note 4:

"Should that question arise, it would be necessary to consider whether, since only a portion of Falk\'s claim was disposed of, the order as to him could possibly be made appealable."

If, after a trial, the court should instruct the jury that between the government and the landowners the service station in operation is not to be considered as exemplifying the highest and best use of the parcel as a whole, or instructs that certain structures are personalty and not realty, then appeal by the landowners from the judgment may, of course, lie. Similarly, the government may appeal if the business of operating the service station is evaluated. The condemnation proceeding is brought for the purpose of compensating those interested for the fair full market value of the land, assuming a seller willing but not compelled to sell and a buyer able but not compelled to buy the particular tract.

Attention is now directed to the appeal of the lessees. Here a determination was made that the lessees had no interest in the case. The order is thus appealable.

The error of the court, which was pointed out above, is that there was an attempt made here to determine what part of the structures erected upon this land were realty and which were personalty merely by an inspection of the terms of the lease. It is perfectly true, at certain times the documents do control and establish the title so that a portion of the bundle of rights only is condemned. Cf. Boston Chamber of Commerce v. City of Boston, 217 U.S. 189, 30 S.Ct. 459, 54 L. Ed. 725. It is also clear that at times the character of structures upon land may be fixed by agreement so that it becomes binding upon third persons. But it is well settled that an agreement of landlord and tenant does not settle the character of structures upon the land as personalty or realty so far as a condemnor is concerned. The reason is hinted in what has heretofore been said.

"The inherent character of these structures is real estate; no agreement can change that character, though the landlord may waive the right which might otherwise accrue to him from the character of the structures placed upon his land. At the most, that is all that this agreement did." United States v. Seagren, 60 App.D.C. 183, 50 F.2d 333, 335, 75 A.L.R. 1491.

While it is true, as noted above, that the agreement of the parties may terminate all interest of a lessee upon initiation of condemnation proceedings, the lease in this case, when construed in the light of local law, clearly did not do so, but contained only clauses of dubious import. Therefore, the provisions of the declaration of taking should have had painstaking consideration. The sovereign takes all classes of property, real or personal, without distinction. If appropriate measures have been taken to establish acquisition of this property, a necessity in the public interest, the only question remaining is the amount of just compensation. Here the problem is simplified to a certain extent because, by the use of the procedure providing for a declaration of taking, the government limited its acquisition to interests in real property. The procedures specified in 40 U.S.C.A. § 258a were followed:

"Upon the filing said declaration of taking * * * title to the said lands in fee simple absolute, or such less estate or interest therein as is specified in said declaration, shall vest in the United States of America, and said lands shall be deemed to be condemned and taken for the use of the United States."

In view of the language of the statute, it was incumbent upon the government to designate expressly the interest less than fee simple title or the exceptions thereto by excluding the leasehold or fixtures and structures, if that were desired. Between condemnor and the parties interested in the parcel, the former acquires all the...