Flood v. United States

• Decision Date: 25 January 1960
• Docket Number: No. 16224.,16224.
• Parties: James FLOOD and Mary Emma Stebbens, as Trustees of the Trust created by Paragraph III of the Last Will of James L. Flood, deceased, Appellants, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

274 F.2d 483 (1960)

James FLOOD and Mary Emma Stebbens, as Trustees of the Trust created by Paragraph III of the Last Will of James L. Flood, deceased, Appellants, v. UNITED STATES of America, Appellee.

No. 16224.

United States Court of Appeals Ninth Circuit.

January 25, 1960.

Chickering & Gregory, Frederick M. Fisk, John P. Macmeeken, Walter C. Fox, Jr., San Francisco, Cal., for appellants.

Perry W. Morton, Asst. Atty. Gen., S. Billingsley Hill, Roger P. Marquis, Attys., Dept. of Justice, Washington, D. C., Lynn J. Gillard, U. S. Atty., J. Harold Weise, Asst. U. S. Atty., San Francisco, Cal., for appellee.

Before STEPHENS, POPE and MAGRUDER, Circuit Judges.

MAGRUDER, Circuit Judge.

In this case we have to determine what is "just compensation" within the meaning of the Federal Constitution. Following its modern practice, the United States condemned here only a term for years. This practice has introduced many perplexities, some of which were dealt with by the Supreme Court in United States v. Westinghouse Electric & Mfg. Co., 1950, 339 U.S. 261, 70 S.Ct. 644, 94 L.Ed. 816. See the dissenting opinion in the court below, 1 Cir., 1948, 170 F.2d 752, 756.

It is worth while to observe that the obligation of the United States is imposed only by the general provision of Amendment V to the Constitution, "* * nor shall private property be taken for public use, without just compensation." The courts, and ultimately of course the Supreme Court of the United States, have to pour some specific meaning into this phrase "just compensation" as they pinprick out the cases one by one. The Constitution does not say that the United States must pay the reasonable "market value" of that which it takes. Sometimes market value, and no more, is not deemed to be a "just compensation". The Supreme Court, instead of reducing "just compensation" to a pat formula, has adopted practical standards and "has refused to make a fetish even of market value, since that may not be the best measure of value in some cases." United States v. Cors, 1949, 337 U.S. 325, 332, 69 S.Ct. 1086, 1090, 93 L.Ed. 1392. As Frankfurter, J., said, concurring, in United States v. Toronto, Hamilton & Buffalo Navigation Co., 1949, 338 U.S. 396, 408, 70 S.Ct. 217, 224, 94 L.Ed. 195, "experience counsels empiricism in dealing with these problems. And empiricism suggests sailing as close to the record of a particular case as possible. Only thus shall we avoid abstract pronouncements bound to distort or to be distorted by the case-by-case adjudicatory process especially appropriate in problems of this nature. Either lip-service will be paid such formulas while decisions are rooted in considerations outside them, or formulas not fitting practical circumstances will achieve impractical results."

Appellants herein are the owners of an office building, called the Flood Building, on Market Street in San Francisco, California. At one time the offices of the top floors had been rented almost exclusively to medical and dental tenants. The floors below contained many commercial tenants, including drug stores, laboratories, and other activities associated with the medical and dental professions. Appellants, however, had moved out the various tenants in the building prior to the effective date of a lease of the Flood Building to F. W. Woolworth Company. The lease contemplated the destruction of the building and the erection of a new one by the tenant.

At this point the United States decided that it needed the building for general office space. On January 29, 1951, it filed in the United States District Court for the Northern District of California, Southern Division, a complaint for condemnation of an interest in the upper floors of the building. What the United States condemned was "the right to use and occupy said premises for a term of years commencing July 1, 1951, and ending June 30, 1952, extendible for yearly periods thereafter until June 30, 1956, at the election of the United States, notice of which election shall be filed in the proceeding at least thirty (30) days prior to the end of the term taken or subsequent extensions thereof, together with the right to remove within a reasonable time after the expiration of the term or extension thereof any and all improvements and structures placed therein by or for the United States." The declared purpose of the taking was that the United States was proposing to use the premises "in connection with housing of Federal agencies in the City and County of San Francisco".

The United States, having been let into immediate possession, proceeded, properly enough, to make extensive alterations of the premises so as to render the same suitable for general office use. It removed certain partitions, sinks, workbenches, cabinets, etc. It terminated the exposed piping and electric wiring at the main walls, and it did necessary plastering and repainting and installed certain new fixtures such as radiators, electrical fixtures, and asphalt tiles. The net result of the government's alterations was to convert into large offices what formerly had been medical or dental suites.

Having twice exercised its option to renew the lease, the United States ultimately surrendered possession of the premises on June 30, 1954. It elected to return the building as it then was, without incurring the expense of restoring it to the condition in which it was at the time of taking. There is evidence in the record as to what it would have cost the government to restore the building so as to render it again suitable for rental to medical and dental tenants; also, how long such work would have taken. The district judge in the view he took of the case found it unnecessary to resolve the conflicting evidence on this score, D.C., 157 F.Supp. 438.

On October 21, 1954, the district court entered a so-called "Final Judgment" which decreed the rental the United States would have to pay, pursuant to its obligation to make "just compensation" from the date of the taking to the final relinquishment of the building on June 30, 1954. These amounts for annual rental have been accepted by the owners, and there is no present dispute about this feature of the case.

But the parties were unable to agree upon what the United States should pay, if anything, because of its...