United States v. BUILDING, ETC.

• Decision Date: 26 May 1944
• Docket Number: No. 22314-G.,22314-G.
• Citation: 55 F. Supp. 667
• Court: U.S. District Court — Northern District of California
• Parties: UNITED STATES v. BUILDING KNOWN AS 651 BRANNAN STREET, SAN FRANCISCO, CAL., et al.

55 F. Supp. 667

UNITED STATES v. BUILDING KNOWN AS 651 BRANNAN STREET, SAN FRANCISCO, CAL., et al.

No. 22314-G.

District Court, N. D. California, S. D.

May 26, 1944.

M. Mitchell Bourquin, Sp. Asst. to Atty. Gen., for plaintiff.

Corbet & Selby and John Selby, all of San Francisco, Cal., for defendant John Deere Plow Co. of Moline.

GOODMAN, District Judge.

On September 28, 1942, John Deere Plow Company of Moline, a corporation, was the owner of a four story and basement reinforced concrete building commonly known as 651 Brannan Street, located in the warehouse and storage district of San Francisco, and therein conducted the business of selling and repairing farm machines of various kinds, having at the time on hand a large stock of farm machine equipment, appurtenances and repair parts together with fixed machinery and equipment of a heavy nature used in assembling and repairing farm machinery. The United States filed its complaint in condemnation on September 28, 1942, pursuant to 26 Stat. 316, as amended by 40 Stat. 241, 40 Stat. 518, 50 U.S.C.A. § 171 and Pub.Law 507—77th Congress, 56 Stat. 176, 50 U.S.C.A.Appendix, § 632, and Pub. Law 441—77th Congress, 56 Stat. 53, whereby it took and condemned at the instance of the Secretary of the Navy, a leasehold interest in said premises for a term of years ending January 30, 1943, with the right to renew such leasehold interest annually for the duration of the war plus one year thereafter. Upon the filing of the complaint the court issued an order for immediate possession. Pub.Law 507—77th Congress—50 U.S.C.A.Appendix, § 632.

On February 26, 1943, pursuant to stipulation and by permission of court, the complaint was amended to provide for the taking of a leasehold interest for a term ending June 30, 1943 with the right to renew annually for the duration of the war and one year thereafter, upon giving notice to renew sixty days prior to the expiration of any term, together with the right to cancel such use and occupation on sixty days' written notice to the owner. A further and second amendment, also pursuant to stipulation and court permission, was filed on May 13, 1943, whereby the estate or interest taken was alleged to be the exclusive use and occupancy of the land and premises for a term ending June 30, 1944. Upon the issues raised by the complaint as amended by the second amendment and the answer thereto, the cause was tried to the court without a jury.

At the trial it was stipulated that the term actually commenced November 1, 1942.

Two issues require determination by the court:

1. The amount of compensation to be paid to the defendant John Deere Plow Company of Moline for the use and occupancy of the condemned land and premises for the term beginning November 1, 1942 and ending June 30, 1944.

2. Is the defendant entitled to receive compensation by way of reimbursement to it for the cost and expense of removing its stock of merchandise and equipment?

Compensation for Rental Value.

The building contained 171,875 square feet of floor space. Defendant contended, and presented testimony of real estate experts to the effect, that the fair market value of the use of the premises for the stated term was, on November 1, 1942, 3¢ per square foot, equal to $5,156.25 per month, or $61,875 per year. On behalf of the government, expert testimony was proffered and admitted, from which the government argued that the fair market value of the use of the condemned premises was 2¢ per square foot. One of the defendant's witnesses, who had testified to the 3¢ per square foot valuation, based his opinion in part upon the length of the term specified in the first amendment to the complaint rather than that alleged in the second and last amendment. Another of the experts for defendant conceded that his 3¢ per square foot valuation was to some extent predicated upon the cost involved to the defendant in equipping another plant and warehouse and moving its business and equipment thereto, when possession was taken by the government. It developed in the examination of the government's expert that going rentals of similar buildings in the district approximated 2¢ per square foot, although in one or two instances, in the case of somewhat similar buildings, rentals were in excess of 2¢ and reached 3¢. However, special factors were involved in the cases where the rentals reached the 3¢ rate.

I am not satisfied nor convinced by a preponderance of all the evidence, that the 3¢ rate is the proper standard of evaluation. I am also not convinced by the testimony that the rental value is 2¢ per square foot. I am of the opinion, from all of the evidence, that the fair market value of the use of this property is 2½¢ per square foot. Accordingly I fix the compensation to be paid to the defendant for the term November 1, 1942 to June 30, 1944 at the sum of $4,296.87 per month or the total sum of $85,937.40.

I have not arrived at this figure by striking a balance between the two opposing valuations, a nonjudicial process condemned in United States v. 711.15 Acres of Land in Eden Tp., D.C., 51 F.Supp. 30. Rather is the court's conclusion based on all of the factors disclosed in the evidence, upon which fair valuation must depend, namely, the character, type, capacity and location of the premises, the length of the leasehold term and also the opinions of the experts.

Some contention is made that in negotiations prior to the filing of the suit, the government actually offered or agreed to lease the property at 3¢ per square foot. However the evidence does not disclose any such agreement having been actually consummated. Furthermore it does not appear that appraisals or valuations, such as were subsequently made by government appraisers, were made or had at the time of such negotiations. Such offers or negotiations are neither conclusive nor persuasive evidence of fair market values. Hanson Lumber Co. v. United States, 261 U.S. 581, 43 S.Ct. 442, 67 L.Ed. 809...