United States v. CERTAIN PARCELS OF LAND, ETC.

• Citation: 61 F. Supp. 164
• Decision Date: 16 June 1945
• Docket Number: No. 2113.,2113.
• Parties: UNITED STATES v. CERTAIN PARCELS OF LAND IN CITY OF BALTIMORE, MD., et al.
• Court: U.S. District Court — District of Maryland

61 F. Supp. 164

UNITED STATES v. CERTAIN PARCELS OF LAND IN CITY OF BALTIMORE, MD., et al.

No. 2113.

District Court, D. Maryland.

June 16, 1945.

Wilmer H. Driver, Sp. Asst. to Atty. Gen., for the United States.

Mason P. Morfit, Charles G. Page, and Edwin Harlan, all of Baltimore, Md., for Pullman-Standard Car Mfg. Co.

Simon E. Sobeloff, City Sol., and A. A. Davis, Asst. City Sol., both of Baltimore, Md., for Mayor and City Council of Baltimore.

CHESNUT, District Judge.

This is a federal condemnation case involving the land, buildings and personal property in Baltimore City of the Pullman-Standard Car Manufacturing Company, a corporation, which had been leased to the Bethlehem-Fairfield Shipyards, Inc. The only question in the case remaining for disposition is the disputed right of the Mayor and City Council of Baltimore to be paid its claim for State and City real estate taxes on the property for the year 1945 in the amount of $30,596.36, from the balance of the fund now in court deposited on May 25, 1945 by the United States Government in payment of the full and absolute title to the property free of liens. The City asserts that this amount of City and State taxes became a lien on the property on January 1, 1945. The former owner of the property, Pullman-Standard Car Manufacturing Company (hereinafter sometimes referred to as Pullman) disputes this contention. The answer to the question must be based on a correct understanding of the tax laws of the State and City and the precise nature and effect of the condemnation procedure in this particular case.

First, as to the procedure. On December 2, 1943, the United States filed its petition for condemnation of the property which was then under lease from the owner, the Pullman Company, to the Bethlehem-Fairfield Shipyards, Inc. (hereinafter sometimes referred to as Bethlehem). The latter was operating the plant for shipbuilding purposes under a "government owned facilities contract". The lease between Pullman and Bethlehem was dated March 18, 1941, to end on March 31, 1943, with the option to the lessee to renew from year to year for a stated period thereafter. When the condemnation suit was first filed the lease had been renewed to expire March 31, 1944. The yearly rental was $260,000, and in addition the lessee was required to pay the taxes and water charges.

In its petition to condemn the government limited the interest or estate to be taken to a leasehold estate and not the fee. The interest sought to be taken was described as "the exclusive use and occupation of the hereinafter described lands, together with all buildings and structures located thereon, etc., * * * for a period ending one year from the date of institution of this condemnation proceeding, and at the election of the United States Maritime Commission, for additional yearly periods thereafter during the present state of war and one year thereafter. * * *." Contemporaneously with the filing of the petition for condemnation, the Maritime Commission, acting for the United States, instructed the then lessee, Bethlehem, that it should continue to operate the property not as lessee from Pullman but as agent for the government. The authority for this action was based on the Second War Powers Act, 50 U.S.C.A.Appendix § 632.

It is quite important in this case to note that the petition for condemnation was filed under authority of 40 U.S.C.A. §§ 257, 258, which made applicable the Maryland statutory procedure in condemnation cases. Md.Code, 1939, Art. 33A. It is also very important to note that the government made no deposit with the court under the provisions of 40 U.S.C.A. § 258a. The new federal civil procedure rules are not applicable to federal condemnation cases except on appeal. Rule 81(a) (7), 28 U.S.C.A. following section 723c. Under the Maryland condemnation procedure title to the property sought to be condemned does not pass to the condemnor until just compensation is paid or secured. Md.Code 1939, Art. 33A, § 13; Dunne v. State, 162 Md. 274, 284, 159 A. 751, certiorari denied 287 U.S. 564, 53 S. Ct. 23, 77 L.Ed. 497; Record B. & L. A. v. Safe Deposit & Trust Co. Trustee, 166 Md. 348, 351, 171 A. 43; 29 C.J.S., Eminent Domain, § 192, p. 1092. In the absence of a controlling statute to the contrary, the federal rule is the same. Danforth v. United States, 308 U.S. 271, 284, 60 S.Ct. 231, 84 L.Ed. 240.

In its plea or answer to the petition for condemnation the Pullman Company denied the right of the government to take the property for the indeterminate period described in the petition. In replying the government in effect demurred to the property owner's answer. As a result of extended argument of counsel on the pleadings the court reached the conclusion that as tested by the rules of Maryland pleading which are here applicable, the government's petition was insufficient in definiteness and certainty for the particular reason indicated in the opinion which made an extended review of the case up to that point. 55 F.Supp. 257. The then order of the court was to sustain the owner's objections to the petition as a sufficient pleading but leave to amend within thirty days was given. An amended petition was filed on June 8, 1944, and Pullman's demurrer thereto was overruled. On September 30, 1944, the government filed a second amendment to the petition for condemnation in which it then for the first time asked for a condemnation of the absolute interest in the property. Leave to file this second amendment was opposed by Pullman and on December 29, 1944, after a hearing the court refused permission to make the amendment because it attempted to have retroactive effect with respect to the desired taking of the absolute fee interest back to December 2, 1943, when the original petition had been filed. However, permission to further amend the government's petition of September 30, 1944 was given, and on January 8, 1945, amendment was made which abandoned the retrospective effect of the proposed amendment and made it prospective only. On March 8, 1945 a memorandum opinion was filed stating the reasons for the allowance of the amended petition of September 30, 1944 as further modified. The Pullman Company continued to resist and oppose the government's condemnation petition. It demurred to the amended petition and when this was overruled it answered on March 29, 1945.

Finally, on May 15, 1945, Pullman and the United States, and Bethlehem as lessee, made an agreement of settlement and filed a stipulation that the government pay into court $1,500,000 for the full and absolute title to the property, in consequence of which on the same date an order of court, approved by counsel for the government, for Pullman and for Bethlehem, was entered which read in part:

"And it is further ordered, adjudged and decreed that upon deposit in the registry of this court by the United States of America of the said sum of $1,500,000, the indefeasible fee simple title absolute to said real property and the absolute title to said personal property and the right to the use and occupancy of the hereinabove described property, free and clear of all liens, encumbrances and charges of whatsoever nature, and free and clear of all servitudes and easements excepting the easements and restrictions mentioned in the description of said land in the petition for condemnation filed herein, shall vest in the United States of America." (Italics supplied.)

The deposit of $1,500,000 was made on May 25, 1945. Baltimore City had throughout been made a party to the case and had given notice of its tax claim. On May 25, 1945, a further stipulation was filed signed by counsel for all the parties, which provided —

"that the proper sum to be retained in the registry of the District Court of the United States for the District of Maryland pending the final determination of the disputed claim of the Mayor and City Council of Baltimore for State and City taxes for the year 1945 and for water charges on property condemned in the above entitled proceeding is the sum of thirty-three thousand nine hundred and seventy-one dollars and seventy-nine cents ($33,971.79)."

Thereupon on petition of counsel for Pullman the sum of $1,500,000 less the reserved amount of $33,971.79, was paid to Pullman by the clerk of the court under order of court. During the pendency of the litigation the State and City taxes for 1944 had been paid by Pullman and very recently the water charges in the amount of $3,375.43 have been paid by Bethlehem. This latter amount is now presumably payable to Pullman; but the item in dispute is the State and City taxes for 1945 in the amount of $30,596.36.

Briefly summarized, the procedure in the case was this. From December 2, 1943 until May 25, 1945 the case was an ordinary condemnation case in which the government first sought to condemn only a leasehold interest; and then on September 30, 1944 proposed to convert the extent of the desired taking into an absolute fee. Throughout this period the right of the government to condemn the property was uniformly and consistently opposed by the property owner. The possession of the property by the government throughout this period was under the authority of the Second War Powers Act. No deposit was made by the government until May 25, 1945 and then only as a result of the agreement for settlement fixing the amount of damages to be paid for the property free of liens. The petition of the government for amendment of the extent of the taking, from a leasehold interest to an absolute fee, first filed on September 30, 1944, was not allowed actually until March 8, 1945, and after its further amendment on January 8, 1945.

Now, as to the local tax system. This has been outlined in at least two prior decisions of this court. In re Wells, D.C., 4 F.Supp. 329; Supplee v. Magruder, Collector, D.C., 36 F.Supp. 722, affirmed 4 Cir. 123 F.2d 399, but reversed on other grounds 316 U.S. 394, 62 S.Ct....