United States v. CERTAIN LAND, ETC.

• Decision Date: 06 July 1942
• Docket Number: No. 807.,807.
• Parties: UNITED STATES v. CERTAIN LAND SITUATE IN ST. CHARLES COUNTY, MO., et al.
• Court: U.S. District Court — Eastern District of Missouri

46 F. Supp. 921

UNITED STATES v. CERTAIN LAND SITUATE IN ST. CHARLES COUNTY, MO., et al.

No. 807.

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

July 6, 1942.

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COPYRIGHT MATERIAL OMITTED

Harry C. Blanton, U. S. Atty., of Sikeston, Mo., and Russell Vandivort and Drake Watson, both of St. Louis, Mo., Asst. U. S. Attys., for plaintiff.

William R. Gentry, of St. Louis, Mo., for defendants James Karl Muschany and Vera Muschany.

James E. Carroll and Richmond C. Coburn, both of St. Louis, Mo., Robert V. Niedner, of St. Charles, Mo., and R. D. Fitzgibbon, of St. Louis, Mo., amici curiae.

DAVIS, District Judge.

This is an action by the Government to condemn 33 acres of land for use as a part of the Weldon Springs Ordnance Plant in St. Charles County.

The answer of defendants James K. Muschany and Vera Muschany alleged that the plaintiff entered into an option agreement for the purchase of the land on December 3, 1940, that the plaintiff immediately thereafter entered into possession; and that judgment herein should be for the amount stated in the option contract in lieu of an award by Commissioners.

The reply attacks the validity of the option contract for various reasons hereafter mentioned.

Defendant's motion to strike out the reply was submitted with the case on the merits.

The sole question is whether the landowners' compensation should be an amount to be determined by Commissioners, or the sale price stated in the option contract.

The issue was tried to the Court.

Findings of Fact.

The President, in a letter to the Secretary of War dated October 17, 1940, approved the construction of the plant at Weldon Springs, Missouri, upon the recommendation of the Council of National Defense, and under the provisions of the Act of September 9, 1940, Public No. 781, 76th Congress, 54 Stat. 872.

At the time in question, 1940, Col. R. D. Valliant, Quartermaster Corps, was authorized by the Quartermaster General to sign contracts on behalf of the United States pertaining to the purchase of real estate for the War Department, and agreements for personal services in connection with real estate activities for the Department.

Col. Valliant, on October 23, 1940, entered into a contract with R. Newton McDowell whereby said McDowell became the purchasing agent for the War Department to secure options and proposals of property owners within the Weldon Springs area, to sell land and property to the United States for the purpose of the construction of the said plant; said contract provided that McDowell's compensation should be five percent of the gross sales price of any property for which he obtained an acceptable option, which compensation was to be paid to the said McDowell by the party who was selling the property to the United States.

The option contracts were drafted by the War Department and with the approval of the land section. The Quartermaster sought the advice of his legal staff and was informed that the option contracts were consistent with the Act of July 2, 1940.

On November 29, 1940, McDowell, acting through his agents and employes, obtained an option from defendants J. Karl Muschany and Vera Muschany to sell to the Government a tract of 33 acres of land in St. Charles County, known as Tract No. 24/233, for the sum of four thousand five hundred dollars. ($4,500).

This option further provided that the landowners would pay McDowell a commission of 5% of the gross sales price for his services in procuring the sale, preparing the deeds and arranging for settlement and closing the transaction; and that the landowners would also furnish at their cost a certificate of title of the Kansas City Title Insurance Company showing a good title. The option also provided that if the title was not approved by the Attorney-General that a condemnation suit should be instituted and a consent verdict fixing the award at the price stated in the option entered.

This option was accepted by and on behalf of the United States on December 3, 1940, by Col. R. D. Valliant, Quartermaster Corps, United States Army.

Thereafter, on February 20, 1941, defendants J. Karl Muschany and Vera Muschany executed a warranty deed to the said property and delivered it to the Kansas City Title Insurance Company, which for that purpose was the agent of the plaintiff.

The said defendants in December, 1940, surrendered possession of the said land to plaintiff.

The plaintiff on April 9, 1941, filed in this Court this suit to condemn the property in question.

The tract in question is highly fertile Missouri River bottom agricultural land, all cleared except about three acres, with no buildings thereon, subject to occasional over-flow.

The defendants purchased the land in 1939, when it was about to be sold for taxes, for one thousand dollars, and made some slight improvements.

There is no evidence that the option price of forty-five hundred dollars included the amount the defendants asked for the land plus McDowell's fee of 5% of sale price, the Kansas City Title Insurance Company's fee of 1½% for examining title, the stamp tax or the recording fee.

Eight witnesses on value for the Government testified that the land was worth from $1,250 to $2,500, their average valuation being $1,972.

Seven witnesses on value for the defendants testified that the land was worth from $3,500 to $5,000, their average valuation being $4,546.

The evidence showed that bottom land similar in character to the tract in question, in the same vicinity, had sold about the time in question at from $135 to $200 per acre. Construction of the Daniel Boone Bridge on Highway 40 in 1937 shortened the distance to St. Louis by about fifteen miles, made a four-lane highway accessible, and substantially increased land values in the Ordnance Plant area. The option price of $4,500 is not an unreasonably excessive valuation of the land in question.

The defense program made the necessity for acquiring the land imminent, and the Quartermaster was directed in October, 1940, to secure the options within forty-five days.

At the same time, the Quartermaster had the burden of acquiring 108 tracts of land in various parts of the United States involving the expenditure of approximately fifty-eight million dollars. This task exhausted the capacity of the Quartermaster Corps, and the assistance of other agencies of the Government, the Soil Conservation Service, the Forestry Service and the Home Owners Loan Corporation, was obtained and resort was had to other methods of acquiring land, including that used at Weldon Springs.

The plan of the Government to quickly acquire the land for this project created great concern among the property owners of that area; public meetings were held and letters were sent to landowners. The agricultural and loan agencies, both state and Federal, were likewise interested in the landowners' welfare. The plan carried out by the Government contemplated that the price for which options would be taken should not only include the value of the land, but also the fee of the Government's soliciting agent, the fee of the title examiner, the cost of revenue stamps, the fee for recording the conveyances, and other incidental expenses.

There is no evidence that this plan was followed, or that it in any wise affected the amount of the sale price in the option contract in question.

The Government approved this course of procedure to the end that its over-burdened facilities would be relieved, the land essential to the project would be expeditiously made available, and its soliciting agent would become responsible for the delivery of the property to the Government with a guaranteed title "equivalent to an insurance policy", and the several transactions closed with the issuance of one, instead of several vouchers, for each tract.

Comment.

The Secretary of War was authorized by a statute enacted in 1917 to acquire land for military purposes. 50 U.S.C.A. § 171. This could be done by condemnation, the acceptance of a gift or by private negotiation. The Act said in part:

"That when the owner of such land, interest, or rights pertaining thereto shall fix a price for the same, which in the opinion of the Secretary of War shall be reasonable, he may purchase or enter into a contract for the use of the same at such price without further delay."

This statute vests the Secretary with a discretion which is not subject to review by the Courts. However, the plaintiff contends that the option entered into was contrary to Public Law No. 703, Act of July 2, 1940, 41 U.S.C.A. preceding section 1, which provided in part:

"That the cost-plus-a-percentage-of-cost system of contracting shall not be used under this section; but this proviso shall not be construed to prohibit the use of the cost-plus-a-fixed-fee form of contract when such use is deemed necessary by the Secretary of War."

This was a temporary act, expiring by its terms June 30, 1942, and was enacted to build up the national defense, and to that end removed restrictions then imposed by law upon the Secretary of War. The provision against cost-plus-a-percentage contracts is not of the general tenor of the Act (as it enlarged rather than restricted the authority of the Secretary of War), but was an amendment, deliberately inserted, and imposes a restriction that must be observed. It must be noticed, however, that the Act of July 2, 1940, merely provided what the Secretary might do, but it does not provide the manner and means of doing it. It does not mention condemnation, hence it can in no sense be regarded as providing an exclusive method of acquiring land for defense purposes. This suit is not based upon that statute, but upon the older statute. The two acts should be read together, and both given effect, as neither is inconsistent with the other.

The first and probably the principal point urged against the validity of the option is that it violated the prohibition against the "cost-plus-a-percentage"...