Meyer v. United States, 108-56.

• Decision Date: 05 March 1958
• Docket Number: No. 108-56.,108-56.
• Citation: 159 F. Supp. 333
• Parties: Evelyn S. MEYER, as Trustee, v. UNITED STATES.
• Court: U.S. Claims Court

159 F. Supp. 333

Evelyn S. MEYER, as Trustee, v. UNITED STATES.

No. 108-56.

United States Court of Claims.

March 5, 1958.

Don Reuben, Chicago, Ill., for plaintiff. Perry S. Patterson, Herbert J. Miller, Jr., Washington, D. C., Kirkland, Fleming, Green, Martin & Ellis, Saul A. Epton, and Epton, Scott, McCarthy & Epton, Chicago, Ill., were on the briefs.

Thomas L. McKevitt, Washington, D. C., with whom was Asst. Atty. Gen. Perry W. Morton, for defendant.

LARAMORE, Judge.

This is an action brought by plaintiff for damages resulting from an alleged breach of a lease.

The facts as shown from the pleadings, affidavits, and exhibits attached thereto are as follows:

On June 22, 1951, the Clark-Congress Corporation leased to the United States a 10-story building in Chicago, Illinois, known as the "Rand-McNally Building." The United States agreed to pay for certain portions of the building (then available) at the rate of $1.33½ per square foot until January 1, 1952. Beginning with January 1, 1952, the United States was to lease or occupy the entire building, subject to existing leases, for a 5-year term, for a total rental of $2,500,000 or $500,000 per year, payable in monthly installments of $41,666.67. On or about December 24, 1951, the Clark-Congress Corporation assigned the lease to the plaintiff, as trustee for all the Clark-Congress stockholders. The corporation was then dissolved. The United States, either by negotiation or through condemnation proceedings, terminated the rights of the existing tenants and eventually went into possession of the entire building. The rental was paid when due until August 1955. No rentals have been paid since that date because of a Comptroller General's opinion dated August 12, 1955, declaring the lease invalid. The opinion of the Comptroller General dated August 12, 1955, recites that the lease referred to in the petition has been held invalid on the ground that the rental exceeded the 15 percent of fair market value limitation imposed by the Economy Act of June 30, 1932, 47 Stat. 382, 412, 40 U.S.C.A. § 278a. Accordingly, the General Services Administration was directed to terminate rental payments under that lease. The United States on December 28, 1951, filed condemnation proceedings in the U. S. District Court for the Northern District of Illinois against three of the tenants to acquire their outstanding leasehold interests.

The United States continued in possession and an amended complaint was filed in the condemnation case on December 28, 1955, naming the present plaintiff a defendant, as well as trustees listed in later trust agreements, to acquire (a) "the right to use and occupy the premises * * * from the date the same were first occupied by the United States until the date that title thereto shall vest in the United States by judicial process" and (b) "the full fee simple title to the building and improvements, together with the land upon which same are situated." On June 18, 1956 the United States filed a declaration of taking, from which date title vested in the United States. The present plaintiff has filed an answer in the Chicago condemnation proceedings attacking the Government's right to condemnation for the period covered by the lease. The United States has filed a motion to strike that answer as not responsive and as based on erroneous legal concepts. Later Evelyn S. Meyer, as trustee, filed an amended answer attacking the jurisdiction of the District Court, and, among other things, challenging the District Court's jurisdiction to award rent which had become due. The United States filed a motion to strike that portion of the amended answer. This motion was sustained and that part of the answer was ordered stricken.

Plaintiff filed this suit asking for the sum of $291,666.69 representing unpaid rentals under the lease from August 1, 1955 through February 1956, and for the sum of $41,666.67 for each month thereafter.

After the institution of this suit defendant filed a motion to dismiss the petition on the ground that pursuant to 28 U.S.C. § 1500 this court is without jurisdiction because the claim upon which plaintiff sues here is pending in the condemnation proceedings in the U. S. District Court for the Northern District of Illinois, Eastern Division.

On April 3, 1957, defendant's above motion was overruled by this court holding that this court had jurisdiction over the claim sued on and section 1500, supra, had no application. Meyer v. United States, Ct.Cl., 150 F.Supp. 314.

On June 24, 1957, the defendant filed answer to the petition setting forth the following defenses: (a) that the yearly rental of $500,000 payable under the lease exceeded 15 percent of the fair market value limitation required by the Economy Act of 1932, supra, and that in executing the lease defendant's employees exceeded their authority and the entire lease is null and void; (b) that the defendant filed a condemnation proceeding in the U. S. District Court for the Northern District of Illinois wherein the amount of compensation due the plaintiff for the period of time in question was presented for adjudication and that, since the U. S. District Court for the Northern District of Illinois has acquired jurisdiction over the identical rent issue, the plaintiff's claim should be abated;¹ (c) that plaintiff had instituted another action in the U. S. District Court for the Northern District of Illinois wherein the plaintiff sought adjudication that the lease should be declared terminated as of October 28, 1955, and that by reason of that action the present suit must be dismissed pursuant to the provisions of 28 U.S.C. § 1500, supra; and (d) that the beneficiaries of the trust agreement are necessary parties to the proceeding. The United States also filed a counterclaim for the sum of $149,236.45, representing the difference between the sum of $1,853,446.12 paid under the lease during the period August 1, 1951 through July 31, 1955, and the sum of $1,715.424.60, representing the highest rentals that could have lawfully been paid for the period from August 1, 1951 to June 18, 1956, by application of the 15 percent fair market value limitation required by the Economy Act.

The plaintiff has filed a motion to strike the second, third, and fourth defenses, together with a motion for partial summary judgment (a) declaring the lease valid, (b) granting judgment in the sum of $441,666.70, with interest, for the period running from August 1, 1955 to June 18, 1956, and (c) declaring that the defendant is not entitled to recover on its counterclaim.

The second defense points out that the United States filed an amended complaint in a pending condemnation proceeding in the U. S. District Court for the Northern District of Illinois to acquire "fee interest in the building, together with a temporary interest therein from the time the United States first went into possession." The present plaintiff filed answer attacking the jurisdiction of the District Court. The United States filed a motion to strike that portion of the answer and said motion was sustained by the District Court. The second defense then asserts that the plaintiff's claim for rent in this suit is therefore already the subject of litigation in the pending condemnation case, and since the U. S. District Court for the Northern District of Illinois first acquired jurisdiction over the identical issues, that part of plaintiff's claims presented here must be abated.

The above issue was clearly before this...