United States v. CERTAIN LANDS, ETC.

• Decision Date: 05 May 1945
• Docket Number: 766,793,789,786,813,819.,No. 763,783,806,803,790,779,763
• Citation: 60 F. Supp. 741
• Parties: UNITED STATES v. CERTAIN LANDS IN ST. CHARLES COUNTY, MO., KNOWN AS WELDON SPRING AREA.
• Court: U.S. District Court — Eastern District of Missouri

60 F. Supp. 741

UNITED STATES v. CERTAIN LANDS IN ST. CHARLES COUNTY, MO., KNOWN AS WELDON SPRING AREA.

Nos. 763, 766, 779, 783, 786, 789, 790, 793, 803, 806, 813, 819.

District Court, E. D. Missouri, E. D.

May 5, 1945.

Harry C. Blanton, U. S. Atty., of Sikeston, Mo., M. Walker Cooper, Sp. Asst. U. S. Atty., of St. Louis, Mo., Russell Vandivort, Asst. U. S. Atty., of St. Louis, Mo. (J. Edward Williams, Acting Head, Lands Division, and Victor C. McCrea, Atty., Department of Justice, both of Washington, D. C., of counsel), for plaintiff.

William R. Gentry, Samuel M. Watson, and Oliver T. Johnson, all of St. Louis, Mo., Webster Karrenbrock, of St. Charles, Mo., William H. Allen, Cox & Blair, and Redick O'Bryan, all of St. Louis, Mo., William Waye, Jr., of St. Charles, Mo., Roscoe Anderson, W. R. Gilbert, Harry Richards, and Igoe, Carroll, Keefe & Coburn, all of St. Louis, Mo., William J. Becker, and E. Evan Hughes, both of Clayton, Mo., and Richard D. Shewmaker, of St. Louis, Mo., for various landowners defendants.

Walter R. Brown, of St. Louis, Mo., for Federal Farm Mortgage Corporation, C. S. Hale, trustee, intervening defendant.

Blatchford Downing and Caldwell, Downing, Noble & Garrity, all of Kansas City, Mo., for R. Newton McDowell, amicus curiæ.

HULEN, District Judge.

These cases are now before this Court on the question whether the defendant land-owners shall be paid interest, raised by motion on the part of plaintiff for judgment in condemnation of defendants' land, and judgment for the defendants for the sum agreed to in option contracts between plaintiff and defendants, but without interest, and counter motions by defendants substantially like plaintiff's motion, but asking for interest on the sum remaining undeposited on the contract price, since date of taking by the plaintiff. Like motions appear in each case and are now ruled.

The above numbered cases are part of many cases growing out of the acquiring by the Government of land at Weldon Springs for war purposes. Without going into details of the history of the acquiring of the land by the Government, suffice it for the purpose of the present question to recite that in the cases now before this Court, the landowners and the Government entered into individual, but like, option contracts, for the sale of the land to the Government in 1940. The option contracts were accepted by the Government and possession of the lands thereby taken by the Government. Subsequently the Government charged that the option contracts were illegal and sought to repudiate the contracts which had not been closed and to acquire the land by the usual condemnation proceedings. In such cases, including those now before the Court, the plaintiff filed a declaration of taking in conventional form and deposited a sum with the Clerk of the Court, based upon an estimate of value. This estimate was less than the contract prices. It is interest on this deficit that is here involved. This move by plaintiff was opposed by the landowners. There seems to have been acquiescence if not agreement that the issue thus created would be tried out in three cases, one before each Court of this division. After success for the position of each party in the lower courts, a decision of the Supreme Court settled the controversy in favor of the landowners, and sustained the validity of the option agreements. Muschany et al. v. United States, 65 S.Ct. 442, 445, 89 L. Ed. —.

The litigants are not now in accord in their interpretation of the decision of the Supreme Court. Learned counsel for the landowners insist that the opinion of the Supreme Court supports their claim for interest, and equally learned counsel for the Government insist with equal earnestness that the decision of the Supreme Court supports their position that no interest shall be paid. The question of interest was not directly before the Supreme Court, but it may serve some purpose in determining what effect that decision has on the present question, to examine the issues.

Following the act of the Government in serving notice of repudiation of the option agreements, it proceeded to initiate condemnation proceedings, wholly without any reference to the option agreements, by filing, in the early part of 1941, (1) motion for Leave to File Petition for Order of Summons, which was granted; (2) petition to Condemn and Fix Compensation; (3) declaration of Taking, under Section 171, 50 U.S.C.A. and 46 Stat. p. 1421, 40 U.S.C.A. § 258a. Summons was issued and served upon the landowners. Pleadings of the landowners are now substantially in agreement. They allege the execution of the option contract between the Government and the landowner; that the Government is bound by the option agreement; and therefore without power to proceed under the condemnation statutes independent of the terms of the option contract. The Supreme Court, in connection with the issues presented by the pleadings, stated:

"Thereafter the petitioners herein filed their answers in which they consented to the condemnation and demanded that the price which was fixed in the option, and accepted by the Government, be adopted by the trial court as just compensation." (Emphasis added)

Interpreting the contracts, under which the landowners now claim interest, the opinion states:

"The offer was to sell to the Government at a fixed, definite price. The Government when it accepted this offer agreed to pay this set amount and no more. The contract contains no provision allowing adjustment of price based on possible future indeterminate expenses. * * * The Government knew the total cost when it became bound on the contract. * * * Since the United States is the purchaser of the land at the option price, no one can receive cost plus anything. Neither the vendors nor McDowell agrees to buy from a third party and sell to the Government at an advance." (Emphasis added)

We understand the position of the landowners to be that if the Government resorts to condemnation proceedings under the contracts, the price of the lands agreed to in the option shall be accepted as the base, and "the Court should accept the agreed value as the verdict" and then proceed from that point on "under the provisions of Section 258a" 40 U.S.C.A. § 258a, 46 Stat. 1421. This the defendants assert is the proper interpretation of the option contract. Is the contract subject to such interpretation?

The option contract should be read as a whole and interpreted from its four corners.¹ The first paragraph fixes the consideration for which the owner agrees to sell and the Government agrees to buy the particular tract of land described. On acceptance of the option to purchase the land at the agreed price, the plaintiff may take possession. There is no provision for payment for the land at this time. It is provided that title may be acquired by the Government in either one of two ways: First, by warranty deed. If this procedure is followed, the contract provides that upon certificate of title "showing title to be vested in the United States of America" the agreed purchase price will be paid. The second method of vesting title under the agreement, namely by condemnation proceedings, is conditioned "if for any reason the title to the land is not approved by the Attorney General." Under this procedure, the time of payment is as follows: The Government is to institute condemnation proceedings "under a consent verdict, fixing the award at the agreed value and in accordance with all the terms and provisions" of the option. Upon the Government filing its condemnation petition, under the terms of the contract, the Government is to "deposit said agreed purchase price," with the Clerk. The contract does not provide any date or time for the institution of condemnation proceedings where they are instituted under the terms of the contract. The contract does not provide for deposit of any sum by the Government with the Clerk, when the condemnation proceedings are under the terms of the contract except "said agreed purchase price."

Comment has been made in this case, that after four years the Government says it is ready to comply with the terms of the contract. That position on the part of the Government was the result of the decision of the Supreme Court of the United States. There has been no claim made, and we know of no justification for its being made, of bad faith on the part of the Government in contesting the validity of the option contracts. Neither has there been any instance of purposeful delay called to our attention.

There are many landowners involved in these proceedings, represented by various counsel. Ingenious arguments have been advanced why interest should be allowed on the purchase prices remaining undeposited with the Clerk and due to various landowners under the option contracts. But the controlling question is, does the fact that the Government contested the validity of the option contract and that such contest proceedings entailed a considerable period of time, during which the landowners have been deprived of the use of part of the money, give to the landowners a legal claim for interest on the undeposited amount of the agreed purchase price? We have little doubt that had the Government initially recognized the option contracts by proceeding to perfect the title to the land by condemnation proceedings as provided for in the agreement, there would have been no claim made for interest during the period intervening between the taking of possession and the deposit of the agreed purchase price with the clerk. We are not here called upon to determine the equities of the landowners' claims. There may be arguments on both sides of that question. This Court can only allow the landowners interest on the sums involved if a legal basis therefor exists. The basis for such an allowance must be found either in the option contracts or in some statute providing for the payment of interest. Directly in point is the...