United States v. Certain Land in City of St. Louis, Mo.

• Decision Date: 22 October 1941
• Docket Number: No. 12260.,12260.
• Parties: UNITED STATES v. CERTAIN LAND IN CITY OF ST. LOUIS, MO., et al.
• Court: U.S. District Court — Eastern District of Missouri

41 F. Supp. 809

UNITED STATES v. CERTAIN LAND IN CITY OF ST. LOUIS, MO., et al.

No. 12260.

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

October 22, 1941.

Harry C. Blanton, U. S. Atty., of St. Louis, Mo., for plaintiff.

Harry Richards and Maurice P. Phillips, both of St. Louis, Mo., for defendants.

COLLET, District Judge.

The question presented is whether the owner of property condemned under authority of Section 258a, Title 40, U.S.C. A., is entitled to interest upon that part of the compensation finally awarded which had been previously paid into Court contemporaneously with the filing of the declaration of taking, but withheld from the owner by order of the Court made upon the request of the Government.

The facts are simple. The Government took the land for a proper purpose by proper proceedings. Barnidge v. United States, 8 Cir., 101 F.2d 295. A declaration of taking was filed pursuant to Section 258a, Title 40, U.S.C.A. With the declaration of taking the Government deposited in the registry of the Court the sum of $35,125 as the estimated fair value of the property taken. Thereupon the Court entered a judgment vesting the fee-simple title in the Government and fixing August 15, 1939, for delivery of possession to the Government. Later this date was extended to November 1, 1939. The Collector of Revenue for the City of St. Louis filed a motion asserting a lien upon the funds in the registry of the Court for taxes due. The owners filed their motion for distribution of all of the deposit to them. On September 7, 1939, the Collector's motion was sustained in part. United States v. Certain Lands in City of St. Louis, D.C., 29 F.Supp. 92. Thereafter, on September 11, 1939, the owners' motion was submitted. September 15, 1939, an order was entered directing that $25,369.38 be paid to the owners, $1,299.14 be retained for the payment of taxes pursuant to the memorandum opinion (29 F. Supp. 92), and the additional sum of $8,456.48 be retained in the registry of the Court. The parties in all of these cases accepted the judgment of the Court relative to taxes and stipulated that the taxes due, computed in accordance with the memorandum opinion, be paid to the Collector. Exceptions having been filed to the Commissioners' award, the cause was submitted to a jury with the result that a verdict was returned fixing the value of the property involved in this case at $37,900. Whereupon a judgment was entered upon the verdict for that amount. The judgment recited the previous payment into Court of $35,125 and awarded the owners a judgment for the deficiency of $2,775 with interest on the deficiency. The owners then filed the present motion seeking a modification of the judgment with respect to interest, claiming that the judgment should allow interest on the "additional" amount retained —$8,456.48, as well as on the deficiency of $2,775.

It will be observed that $8,456.48 is twenty-five per cent of $35,125 after the $1,299.14 retained for taxes is deducted. This twenty-five per cent was retained at the instance of the Government to protect the Government against the contingency of obtaining a verdict for less than $35,125 and being unable to collect back the difference between the judgment and the amount deposited.¹ Similar orders were made indiscriminately in all of the many cases of this character and was not the result of any suggested insolvency of the parties involved in the present action.

The Statute upon which these proceedings were maintained provides, sec. 258a, Title 40, U.S.C.A.:

"Upon the filing said declaration of taking and of the deposit in the court, to the use of the persons entitled thereto, of the amount of the estimated compensation stated in said declaration, title to the said lands in fee simple absolute, or such less estate or interest therein as is specified in said declaration, shall vest in the United States of America, and said lands shall be deemed to be condemned and taken for the use of the United States, and the right to just compensation for the same shall vest in the persons entitled thereto; and said compensation shall be ascertained and awarded in said proceeding and established by judgment therein, and the said judgment shall include, as part of the just compensation awarded, interest at the rate of 6 per centum per annum on the amount finally awarded as the value of the property as of the date of taking, from said date to the date of payment; but interest shall not be allowed on so much thereof as shall have been paid into the court. No sum so paid into the court shall be charged with commissions or poundage.

"Upon the application of the parties in interest, the court may order that the money deposited in the court, or any part thereof, be paid forthwith for or on account of the just compensation to be awarded in said proceeding. If the compensation finally awarded in respect of said lands, or any parcel thereof, shall exceed the amount of the money so received by any person entitled, the court shall enter judgment against the United States for the amount of the deficiency.

"Upon the filing of a declaration of taking, the court shall have power to fix the time within which and the terms upon which the parties in possession shall be required to surrender possession to the petitioner. The court shall have power to make such orders in respect of encumbrances, liens, rents, taxes, assessments, insurance, and other charges, if any, as shall be just and equitable."

The Fifth Amendment to the Federal Constitution guarantees to property owners full compensation for property taken for public use. That the full compensation guaranteed by the Constitution includes interest on the just compensation finally awarded when all or a portion thereof is withheld after the taking is no longer an open question. That full compensation includes the value of the use of the property after the taking and prior to payment therefor. Seaboard Air Line Railway Co. 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. 1; United States v. Creek Nation, 295 U.S. 103, loc. cit. 111, 55 S. Ct. 681, 79 L.Ed. 1331; Shoshone Tribe v. United States, 299 U.S. 476, loc. cit. 497, 57 S.Ct. 244, 81 L.Ed. 360. But interest as such is not added to value at the time of taking in order to arrive at just compensation subsequently ascertained and paid. Interest is merely the equivalent of the value of a portion of the property taken, in this instance the value of the use of the property at the time it was taken. United States v. Klamath & Moadoc Tribes of Indians, 304 U.S. 119, loc. cit. 123, 58 S.Ct. 799, 82 L.Ed. 1219. If the full value is paid at the time of taking, the owner has the use of the money in lieu of the property and no right to further compensation exists. But since interest is allowed, not as interest, but as the equivalent of the value of the use of the property or its money substitute, the interest allowed should be shown to be the equivalent of the value of that use.

Tacitly conceding the foregoing, the Government advances several arguments in support of the present judgment.

First, the Government contends that since no exception was taken to the order of the Court retaining in the registry of the Court twenty-five per cent of the amount deposited, it is now too late for the present complaint.

Assuming, without determining the question, that no exception was taken to the order denying the property owners' motion for distribution to them of $8,456.48 of the deposit and that a formal exception was necessary to a subsequent complaint concerning that order, still that omission will not prevent...