United States v. 70.39 Acres of Land

• Decision Date: 10 July 1958
• Docket Number: Civ. No. 1506-SD.
• Citation: 164 F. Supp. 451
• Court: U.S. District Court — Southern District of California
• Parties: UNITED STATES of America, Plaintiff, v. 70.39 ACRES OF LAND, more or less, in the County of San Diego, State of California, et al., Defendants.

164 F. Supp. 451

UNITED STATES of America, Plaintiff, v. 70.39 ACRES OF LAND, more or less, in the County of San Diego, State of California, et al., Defendants.

Civ. No. 1506-SD.

United States District Court S. D. California, S. D.

July 10, 1958.

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Laughlin E. Waters, U. S. Atty., Joseph F. McPherson and Albert N. Minton, Asst. U. S. Attys., Los Angeles, Cal., for the United States.

Hill, Farrer & Burrill, Los Angeles, Cal., and Luce, Forward, Kunzel & Scripps, San Diego, Cal., for Charles W. Carlstrom.

Paul, Hastings & Janofsky, Los Angeles, Cal., for Southern Cal. Dist. Council of the Assemblies of God, Inc.

Procopio, Price, Cory & Schwartz, San Diego, Cal., Paul, Hastings & Janofsky, Los Angeles, Cal., for Southern Cal. Children's Aid Foundation.

Hill, Farrer & Burrill, Los Angeles, Cal., and Rubin & Seltzer, San Diego, Cal., for The Salvation Army, a N. Y. Corp.

Thomas P. Moran, San Diego, Cal., for General Dynamics Corp., a Delaware Corp.

Oakes & Horton, San Diego, Cal., for Business Properties Inc., a successor in interest to Gregory Electric Co.

James W. Archer, Ward W. Waddell, Jr., and Alfred Lord, San Diego, Cal., and Jones and Bednar, Los Angeles, Cal., for Lyon Van & Storage Co.

Robert W. Walker, John J. Balluff, Los Angeles, Cal., and Charles H. Forward, San Diego, Cal., for Atchison, Topeka and Santa Fe Ry., and Santa Fe Land Imp. Co.

JAMES M. CARTER, District Judge.

This condemnation case, involving industrial lands and buildings within the city of San Diego, was tried to a jury. The jury were selected on January 2nd and 3rd, and the trial continued to and actually commenced, on January 22, 1957. The trial proceeded continuously, except for a lapse of two weeks caused by the death of a leading member of the Bar, one of counsel in the case, and terminated in a verdict on May 27, 1957. At that time the transcript of the trial numbered 7,493 pages.

An industrial plant termed the "Plancor," had originally been assembled and constructed by the United States government for the use of Convair, a manufacturer of air planes during World War II. Following the conclusion of the war, there was public clamor for disposition of alleged surplus property.

There were several sales made of portions of the original assembly. A large area of land and several buildings were sold to the County of San Diego. Small segments were sold to the Veterans Administration and others, and a portion of the original assembly containing five to six buildings was never sold and still remains the property of the government.

The portion of the Plancor, consisting of three immense assembly buildings, the drop hammer building, and several smaller ones, and a large parking lot were offered for sale. The government had difficulty finding a buyer and finally on May 4, 1948, this portion of the original Plancor was sold to Charles W. Carlstrom for $1,050,000. This is the portion of the Plancor later condemned by the government and involved in this proceeding.

There followed the Korean incident and the increased activity of the Air Corps in connection with scientific advancements involving jets, guided missiles, etc. Convair required increasing space, and from time to time entered into leases with Carlstrom for portions of the property.

On April 29, 1953, the government, by declaration of taking, took a fourteen month's term with the right to renew from year to year until June 30, 1958. Prior to the expiration of the fourteen month term, which ended June 30, 1954, the government elected to extend the term, to and including June 30, 1955. In May of 1955, the government gave notice of its election to further extend the term to June 30, 1956, but before that extension began, and on June 16, 1955, the government filed in this proceeding a declaration of taking, with accompanying deposit, for the acquisition of the fee estate subject only to easements for highways, utilities, and pipelines.

Following the government's initial taking of the term for fourteen months, and before its fee taking, there were numerous transfers of portions of the fee of the property. The term taking and the fee taking were effected in the same proceeding, and during pretrial there were involved a vast number of legal problems which set the case apart as far more complex than the average condemnation case. These problems involved the effect of the government's takes, rights of lessors and lessees, the effect of the subsequent transfers of the fee, and a myriad of problems which only able counsel, spurred on by the prospect of a verdict running into the millions, could dredge up by detailed and efficient research.

Judge Peirson M. Hall had originally undertaken the case at a time when a second judge in the Southern Division (San Diego) was serving by rotation. Upon the assignment of Judge CARTER to the Southern Division as the second permanent judge, in April 1956, the case was transferred to him. At that stage of the proceedings, there had been prepared a series of questions of law to be submitted to the court for rulings prior to trial. They were as follows:—

1. What is the proper "unit" of value, i.e. should the entire tract be considered a unit for valuation purposes, or should separate fee parcels be separately valued?

2. Should value or compensation be determined before questions of ownership? (aside from the right of occupancy).

3. What rights or parking privileges, if any, do the respective defendants have in the so-called Parcel 10-A?

4. What is the proper measure of just compensation?

5. How is the value of the option to renew to be determined?

6. Do subsequent purchasers have the right to appear and present evidence?

7. Do lessees have the right to present evidence?

8. Does the lessee (Convair), which also became the lessee of the government after the taking, have the right to introduce evidence?

9. Should oral grants be shown on the map and should the holders of such grants be permitted to introduce evidence?

10. Can removal costs and loss of going concern value be proved where less than the unexpired lease term is taken?

11. Should rental compensation be reduced as to those who remained in possession after the taking? If so, when should this adjustment be made?

12. Were the leases terminated by the taking?

13. What is the proper forum for determining disputes as to the leases, etc.?

As a result of prior hearings before Judge Hall, there had been evolved a proposed pretrial order on the leasehold taking, and this proposed order had been served upon and studied by all counsel.

Upon taking over the case, extensive pretrial hearings were had. The court eventually wrote various memoranda of law and made various pretrial orders, disposing of most of the legal problems before trial. The court is indebted to Judge Hall for his efficient preliminary work in the matter.

Various legal memoranda have been grouped herein under the respective portions of the pretrial orders to which they pertain; and in addition to the four formal pretrial orders, there are included other pretrial rulings on matters of law.

The Verdicts

The court had ruled that the extended period of the term taking for the twelve months from July 1, 1954 to June 30, 1955, would not be submitted to the jury but would be computed at 12/14ths of the amount of the verdict for the period of fourteen months from May 1, 1953, to June 30, 1954. This ruling, hereafter discussed, was based on the ground that the option to renew must be separately valued and paid for and that therefore the term renewal was to be valued at the same rate as the original term.

The court therefore required the jury to return a verdict as to the value of the fourteen months' term take, another verdict as to the value of the option right and a third verdict as to the value of the fee taken.

There was a contention in the case by the defendants that the various parcels both on the term take and on the fee take were reasonably subject to unitization, and that as a unit the combined parcels had a greater fair market value than if appraised separately. The court therefore required the appraisers to be ready to testify as to the fair market value of the parcels, individually and to the fair market value of the parcels as unitized. But in order to determine which measure the jury used, the court submitted three special interrogatories or questions to the jury, which were answered as follows:

Questions

"As To Term Taking

"In the term and option taking, was there a reasonable probability of the unitization of all the parcels except parcel 1, as of the date of the taking on May 1, 1953, or in the reasonably near future thereafter?

"Yes ____ "As To The Fee Taking "No X

"(1) In the fee taking, was there a reasonable probability of the unitization of all the tracts in the fee taking except Tract A-100 at the date of taking on June 16, 1955, or in the reasonably near future thereafter?

"Yes X "No ____

"(2) In the fee taking, was there a reasonable probability of the unitization of all the tracts, including Tract A-100 on the date of taking on June 16, 1955, or in the reasonably near future thereafter?

"Yes X "No ____ "Dated May 27, 1957. Signed G. Campbell Janney Foreman of the jury."

A discriminating jury found that the parcels in the term taking were not subject to unitization, but that the parcels in the fee taking were subject to unitization, either excluding Tract A-100 or including Tract A-100. Separate counsel had represented the owners of Tract A-100. The drop hammer and drop hammer building were located on this Tract and the facility was a necessary and integral part of the metal fabrication carried on by Convair during its war time use of the Plancor. During the subsequent period of private ownership, the building had been converted to a storage warehouse, and at the time of taking,...