United States v. 531/4 ACRES OF LAND, ETC.

• Decision Date: 27 July 1949
• Docket Number: Docket 21255.,No. 264,264
• Citation: 176 F.2d 255
• Parties: UNITED STATES v. 53¼ ACRES OF LAND, MORE OR LESS IN BOROUGH OF BROOKLYN.
• Court: U.S. Court of Appeals — Second Circuit

176 F.2d 255 (1949)

UNITED STATES v. 53¼ ACRES OF LAND, MORE OR LESS IN BOROUGH OF BROOKLYN.

No. 264, Docket 21255.

United States Court of Appeals Second Circuit.

Argued May 13, 1949.

Decided July 27, 1949.

A. Devitt Vanech, Assistant Attorney General, Harry T. Dolan, Special Assistant to Attorney General, Roger P. Marquis, S. Billingsley Hill, Attorneys, Department of Justice, Washington, D. C., for U.S.

John P. McGrath, Corporation Counsel, New York City (Harry E. O'Donnell, Bernard H. Friedman, Benjamin Offner, Philip L. Wellens, New York City, of counsel), for appellee City of New York.

Skinner & Bermant, New York City (Bernard L. Berman George Bergen, New York City, of counsel), for appellees National City Bank of New York et al.

Ira L. Gluckstein, New York City, for claimants Hahn's Creameries, Inc., Damage Parcel No. 42, and David Glass and Sons, Wholesale Grocers, Inc., Damage Parcels Nos. 43 and 45.

Nathan L. & Samuel Goldstein, New York City (in dissolution), (Nathan L. Goldstein, New York City, of counsel), for appellees.

Charles Lamb, New York City (Loretta A. Conway, New York City, of counsel), for Stella Cheese Co. et al.

Parsons, Closson & McIlvaine, New York City (Clinton T. Roe, Charles P. Kramer, William M. Sperry, 2nd, Henry Herz, New York City, of counsel), for defendant-appellee Brooklyn Eastern Dist. Terminal.

Before CHASE, CLARK, and DOBIE, Circuit Judges.

CHASE, Circuit Judge.

This appeal is by the United States from that part of the final judgment of the district court which included certain awards of interest as part of the just compensation for property in Brooklyn, N. Y., taken by the government for public use as part of the Brooklyn Navy Yard, pursuant to the provisions of The Declaration of Taking Act, 40 U.S.C.A. § 258a-f. The property was commonly known as the "Wallabout Market" and consisted of fifty-three and one quarter acres of land owned in fee by The City of New York on which numerous improvements had been made. Moreover, there were many lessees of the fee owner who had compensable subordinate interests in the property taken. This situation made the condemnation proceedings exceedingly complex and considerable litigation has been the result.¹ The opinion below, reported at page 538 of 82 F.Supp. contains pertinent facts and information with which familiarity will be assumed.

The issues now presented are confined to the amount of that part of just compensation payable by the United States to certain claimants under the provisions of the Declaration of Taking Act, 40 U.S.C.A. § 258a which is to be computed like interest at six per cent on the amount finally awarded to make the total award the fair equivalent of payment at the time of the taking. And these issues are narrowed now to the proper effect to be given that part of the statute which provides that "interest shall not be allowed on so much of the amount finally awarded as shall have been paid into the court."

The United States filed its petition for condemnation on April 1, 1941 and on the same day filed a declaration of taking and deposited with the court the sum of $4,000,000, then estimated to be just compensation for the property. It thereby acquired title to the property and became liable to pay its fair value determined as provided by law. On May 11, 1945, it amended its declaration of taking and deposited the additional sum of $261,230.00 with the court. On June 3, 1948, it also deposited with the court an additional $1,660,687.48, which made the total of the deposits equal the amount of the final award, $5,387,816.00 plus $534,101.48 on account of estimated deficiency interest of $549,245.89. This deficiency interest was computed at six per cent on the difference between the original deposit of $4,000,000.00 from the date of that deposit on the day the property was taken to the date of the second deposit on May 11, 1945, and then on the difference between the sum of the first two deposits and the amount of the final award from May 11, 1945 to the date of the last deposit on June 3, 1948. That is all the deficiency interest the government is willing to pay.

Claimants insisted that the lump sum deposits made by the government would not serve to cut off interest on the awards from the date of taking to June 3, 1948, which all agree is to be treated as the date of final payment, except as to those portions of the deposits which were actually distributed ad interim and then only from the date of such distributions. They rely on the fact that the deposits were made without any allocation of definite amounts as offered compensation to designated claimants for specific interests in the property taken and on the contention that the government opposed applications for withdrawals and thereby prevented, pro tanto at least, payment from the fund.

The judgment below reflects the views of the court differing somewhat from those of the claimants but reaching practically the same result. Briefly they may be summarized from the opinion above cited as follows: These lump sum deposits did not relieve the government from obligation to pay interest, as part of just compensation, from the date of taking to the date of actual withdrawal when that preceded what is herein called the payment date, June 3, 1945, and when there was no previous withdrawal, to June 3, 1945.²

By an arrangement satisfactory to the parties the City has received awards which it became bound to distribute to certain claimants and a subsidiary dispute arose as to whether the City should pay interest to such claimants at the rate of 6% which it received under the deficiency award from the government or only at the rate of 4% at which under state law the City was chargeable with interest on its obligations. This was decided adversely to the City and it has not appealed. The only question raised on this part of the case therefore is as to the proper amount of the government's obligation for interest to the City.

Although these proceedings are very complicated because of the great number of diverse interests in the property and the corresponding number of claimants to the funds deposited, the applicable law seems to be fairly well settled. The validity and effectiveness of the taking of the property is unquestioned and so is the liability of the government to pay just compensation for it. Equally unquestioned is the liability of the government to pay some deficiency interest as a part of that just compensation, previous litigation and agreement having resolved all disputes relating to that part of the just compensation which is not included in the term deficiency interest. The purpose and effect of § 258a of Title 40 U.S.C.A. in a simple case of the taking of property to which a known owner has a clear title is to give the government possession at once and to give the owner immediate payment either in full or to the extent of the estimated value deposited. If the deposit turns out to be less than the actual value the owner is given the fair equivalent of immediate payment in full by additional compensation at the rate of six per cent of the difference between the amount deposited and the actual value. United States v. Miller, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336, 147 A.L.R. 55.

This is in accord with decisions under the earlier procedure holding that when possession of the condemned land is taken before payment interest for the interval is a part of the just compensation. Seaboard Air Line Ry. v. United States, 261 U.S. 299, 43 S.Ct. 354, 67 L.Ed. 664; Phelps v. United States, 274 U.S. 341, 47 S.Ct. 611, 71 L.Ed. 1083; Jacobs v. United States, 290 U.S. 13, 54 S.Ct. 26, 78 L.Ed. 142, 96 A.L.R....