People of Puerto Rico v. Eastern Sugar Associates, 4112.
| Decision Date | 28 June 1946 |
| Docket Number | No. 4112.,4112. |
| Citation | 156 F.2d 316 |
| Parties | PEOPLE OF PUERTO RICO v. EASTERN SUGAR ASSOCIATES et al. |
| Court | U.S. Court of Appeals — First Circuit |
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David Lloyd Kreeger, Sp. Asst. to the Atty. Gen. (John F. Sonnett, Asst. Atty. Gen., Jerome H. Simonds, Bonnell Phillips, Jane Agnes Parker, Attys., Department of Justice, Warner Gardner, Sol., Irwin W. Silverman, Chief Counsel, Division of Territories and Island Possessions, and Shirley Ecker Boskey, Atty., Department of the Interior, all of Washington, D. C., on the brief), for appellant.
E. T. Fiddler, of San Juan, Puerto Rico, for appellees.
Before MAGRUDER, MAHONEY, and WOODBURY, Circuit Judges.
This appeal is from an order of the District Court of the United States for Puerto Rico dismissing a petition to condemn approximately 3,100 acres of land situated on the Island of Vieques owned by the appellee, Eastern Sugar Associates, subject to a mortgage held by the appellee, National City Bank of New York, on the ground that the petition fails "to state a public use or purpose for which private property may be acquired by eminent domain."
By Act No. 26 approved April 12, 1941, (Laws of Puerto Rico 1941, p. 388 et seq.) called the "Land Law of Puerto Rico," the insular Legislature launched a far-reaching program of agrarian reform. This law is long and rather complicated. At the moment it will suffice to say that after a lengthy "Statement of Motives" the Act creates a board in the "nature of a governmental agency or instrumentality of The People of Puerto Rico" in the Department of Agriculture and Commerce, to be called the "Land Authority of Puerto Rico", "for the purpose of carrying out the agricultural policy of The People of Puerto Rico as determined by this Act, and to take the necessary action to put an end to the existing corporative latifundia in this Island, block its reappearance in the future, insure to individuals the conservation of their land, assist in the creation of new landowners, facilitate the utilization of land for the best public benefit under efficient and economic production plans; provide the means for the agregados1 and slum dwellers to acquire parcels of land on which to build their homes, and to take all action leading to the most scientific, economic and efficient enjoyment of land by the people of Puerto Rico." Then the Act goes on to make detailed provisions with respect to the organization, powers, and duties of the Land Authority, and to authorize it both to expropriate lands held in violation of the so called 500 acre provision of the Organic Act (39 Stat. 964, 48 U.S.C.A. § 752) and also to request the Insular Government to acquire on its behalf by eminent domain "title to any real property or estate thereon (sic) which might be necessary or advisable for the purposes of the Authority." The act fully establishes the procedure to be followed in condemnation proceedings and provides, apparently adequately, for payment of "just compensation" for property so taken.
As this Land Law stood, after amendment, at the time the present condemnation proceedings were instituted, the Land Authority was authorized to dispose of lands which it acquired for three purposes; (1) in small parcels to individual agregados for the erection of their dwellings, (2) in somewhat larger parcels to individual farmers for subsistence farms, and (3) in large parcels by lease to expert farmers, agronomists, or other qualified persons with experience in agricultural management, for the operation of "proportional-profit" farms as described in detail in §§ 64-73 of the Act.
Following enactment of the Land Law, the Insular Legislature by Act No. 90, approved May 11, 1944, popularly called the "Vieques Act", made specific provisions for the relief of economic distress which it said existed on the small outlying islands of Vieques and Culebra, both municipalities of Puerto Rico. In its "Statement of Motives" this statute refers to the condemnation of some 20,000 acres of land on Vieques by the United States for Naval purposes (see Baetjer et al. v. United States, 1 Cir., 143 F.2d 391), which it said paralyzed the sugar industry on that island and caused acute economic distress to its inhabitants which could only be relieved by a renewal of that industry there, and the establishment thereon of a distillery, and then it provides:
With this brief outline of the most pertinent statutory provisions, we turn to the proceedings in the case at bar.
In accordance with the provisions of Act No. 26 of 1941, (The Land Law) the Governor of Puerto Rico on March 20, 1945, "representing The People of Puerto Rico, in the name and on order of the Land Authority," filed a petition in the District Court of the Judicial District of Humacao (an Insular Court) for the condemnation of the lands on the Island of Vieques here in litigation. In this petition it is alleged:
Then the petition goes on to characterize the above purposes as "of public utility" and to aver that the acquisition of the property "is also a public necessity"; that $270,326.33 "is the just and reasonable compensation which the plaintiff should pay for the acquisition of the said properties, with all their plantations, improvements, uses, servitudes and appurtenances, as well as the buildings" thereon, and that the above sum has been deposited in the office of the Secretary of the Court for the use of the persons entitled thereto.
On the same day that this petition was filed, and also in accordance with the provisions of Act No. 26, supra, the Governor filed in the same court a Declaration of Taking in which it is recited that "the People of Puerto Rico have been requested to condemn" the properties owned by Eastern Sugar Associates on the Island of Vieques here involved; that condemnation is sought "under the authority of, and in conformity with" the Land Law, the Vieques Act, and the Insular Condemnation Act of March 12, 1903, Laws Puerto Rico 1903, p. 50, and that acquisition of the property "is for the purpose of executing the * * * works and projects for the public use and public utility" as set out in Section 3, paragraphs (a), (b) and (c) of the petition which we have quoted above. On the day the petition and declaration were filed, the Humacao District Court entered a judgment vesting title to the lands in fee simple absolute in the Land Authority and giving it the right to immediate possession.
Following this action of the insular District Court the appellees on March 24, 1945, petitioned that court for removal of the cause to the District Court of the United States for Puerto Rico — Eastern Sugar Associates on the ground of diversity of citizenship and amount in controversy, 48 U.S.C.A. §§ 863, 864; National City Bank on the ground that it is a national banking association and the suit, so far as it was concerned, arose out of a transaction involving banking in an insular possession of the United States. 48 Stat. 184, 12 U.S.C.A. § 632. Two days later an order was entered removing the cause in accordance with the bank's petition and on March 28, 1945, on motion of the Eastern Sugar Associates, the court below issued an ex parte order temporarily restraining the Land Authority from interfering with the Associates' possession and title. Then on April 3, 1945, after hearing, this temporary injunction was continued until further order of the court.
On April 16, 1945, Eastern Sugar Associates filed a motion to dismiss and an answer, the motion based upon the ground, among others, that it appeared on the face of the complaint that the taking was not for a public use and purpose and thus violated rights guaranteed by the Fifth and Fourteenth Amendments to the Constitution of the United States and § 2 of the Organic Act of Puerto Rico, 48 U.S.C.A. § 737. On April 21, 1945, the National City Bank of New York answered with a general denial of the material allegations in the complaint and a request that its mortgage lien be transferred to the compensation awarded in the event that judgment should be entered in favor of The People of Puerto Rico. After hearing arguments of counsel...
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