United States v. 1,557.28 ACRES OF LAND IN OSAGE CTY., KAN., 73-1334.

• Decision Date: 29 October 1973
• Docket Number: No. 73-1334.,73-1334.
• Citation: 486 F.2d 445
• Parties: UNITED STATES of America, Appellant, v. 1,557.28 ACRES OF LAND IN OSAGE COUNTY, KANSAS; and Wilbur C. Lewis et al., Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

486 F.2d 445 (1973)

UNITED STATES of America, Appellant, v. 1,557.28 ACRES OF LAND IN OSAGE COUNTY, KANSAS; and Wilbur C. Lewis et al., Appellees.

No. 73-1334.

United States Court of Appeals, Tenth Circuit.

October 29, 1973.

Terrence L. O'Brien, Atty., Dept. of Justice (Wallace H. Johnson, Asst. Atty. Gen., Robert J. Roth, U. S. Atty., Roger K. Weatherby, Asst. U. S. Atty., and Carl Strass, Atty., Dept. of Justice, with him on the brief), for appellant.

John R. Hamilton, Topeka, Kan. (Ward D. Martin, Arthur L. Claussen, Donald D. Barry, John C. Frieden, and Wesley A. Weathers, of Crane, Martin, Claussen, Hamilton & Barry, Topeka, Kan., with him on the brief), for appellees, Russell L. Booth and Elsie M. Booth.

Before PHILLIPS, SETH and McWILLIAMS, Circuit Judges.

SETH, Circuit Judge.

This is a condemnation action. The United States appeals from the judgment and order of the United States District Court for the District of Kansas awarding compensation to appellees, Russell L. Booth and Elsie M. Booth, in the amount of $272,350.00 for farm land taken for a reservoir project. A representative of the Corps of Engineers negotiated an offer of sale which the Government sought to use to establish the value of the land. The District Court voided the offer executed by appellees because of fraudulent misrepresentations made to them by agents of the Corps of Engineers which induced appellees to make the offer.

The material facts are these: Some time during the fall of 1969 the Booths were contacted by an appraiser for the Corps of Engineers, who advised them that their property would be taken for the project, and he suggested to the Booths that it would be to their advantage to negotiate a sale with the Government rather than litigate the amount of compensation. Some months later the Booths were again contacted, this time by Mr. Walter Kibler, a negotiator for the Corps of Engineers. In the interim they had contracted to purchase farm land to replace that being taken by the Government, and obligated themselves for substantial installment payments thereon due in March and June 1970.

Negotiations ensued between Mr. Kibler and the Booths. Mr. Kibler, in order to demonstrate his fairness and integrity to the Booths, related an incident in which he had offered an elderly couple more than their asking price for other lands acquired by the Corps. He then made an initial offer of $207,000.00 which the Booths rejected. The offer was raised to $230,500.00 which the Booths were willing to accept provided that they could be guaranteed payment within sixty days. Mr. Booth asked that a provision to that effect be included in the offer. He was advised by Mr. Kibler, however, that such a provision would be unnecessary, and that the Booths could expect payment within four to six weeks and in no case later than sixty days. The Booths then executed a form instrument captioned "Department of the Army Offer to Sell Real Property." Neither Mr. nor Mrs. Booth read the instrument carefully, but apparently relied on Mr. Kibler's representations as to its content. As is customary, the offer also provided that the consideration stated therein would be the full amount of just compensation should the United States elect to take the land by condemnation. The terms of the offer allowed the United States six months in which to accept it.

Approximately thirty-five days after executing the offer, the Booths were notified that the United States had accepted it, but that the Booths would have to obtain certain quitclaim deeds as well as a release of a rock and gravel lease in order to clear title. The Booths succeeded in obtaining the quitclaim deeds but were unable to procure the release from the lessee. As a result the sale was not completed within the sixty day period, and the United States initiated condemnation proceedings.

There was a hearing on the motion of the United States for summary judgment based on the offer as establishing just compensation for condemnation purposes at the offer price. The District Court held the offer instrument null and void because of the fraudulent representations by Mr. Kibler relating to the sixty day payment period, and the reliance by the Booths thereon.

At the outset we note that because the case involves a transaction to which the United States is a party, and arising from a governmental function, the validity, meaning, and effect of the offer instrument executed by the Booths are controlled by the laws of the United States. S.R.A., Inc. v. Minnesota, 327 U.S. 558, 66 S.Ct. 749, 90 L.Ed. 851; United States v. Allegheny County, 322 U.S. 174, 64 S.Ct. 908, 88 L.Ed. 1209; Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838. See also 1A Moore's Federal Practice, ¶¶ 0.321, 0.3237. There is however little difference in the elements of fraud as applied in the different courts. There are many descriptions of the essential elements of actionable fraud that can be found in opinions of the federal courts. Our decision in Pacific Royalty Co. v. Williams, 227 F.2d 49 (10th Cir.), considered the elements without reference to the rule of the state where the action originated. We there said: "The essential elements of actionable fraud are a false representation of a material fact, knowledge of its falsity when made, intent to deceive, and reliance thereon with resulting damages." The burden of proving fraud is of course on the party alleging it. Koscove v. Comm'r of Internal Revenue, 225 F.2d 85 (10th Cir.). Where a party can show that he has been fraudulently induced to enter into a transaction, he may then void that transaction. Restatement, Contracts, § 476.

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