United States v. Playa De Flor Land & Improvement Co.

• Decision Date: 24 May 1947
• Docket Number: No. 11496.,11496.
• Citation: 160 F.2d 131
• Parties: UNITED STATES v. PLAYA DE FLOR LAND & IMPROVEMENT CO.
• Court: U.S. Court of Appeals — Fifth Circuit

160 F.2d 131 (1947)

UNITED STATES v. PLAYA DE FLOR LAND & IMPROVEMENT CO.

No. 11496.

Circuit Court of Appeals, Fifth Circuit.

January 21, 1947.

Rehearing Denied May 24, 1947.

COPYRIGHT MATERIAL OMITTED

John F. Sonnett, Asst. Atty. Gen., Claims Division, Dept. of Justice, Brice Toole, Principal Atty., Dept. of Justice, of Washington, D. C., and Daniel E. McGrath, U. S. Dist. Atty., of Ancon, Canal Zone, for appellant.

George R. Shields, of Washington, D. C., and Chauncey P. Fairman, of Cristobal, Canal Zone, for appellee.

Before SIBLEY, HUTCHESON, and McCORD, Circuit Judges.

SIBLEY, Circuit Judge.

This suit in the District Court of the Canal Zone was brought against the United States in the name of Playa de Flor Land and Improvement Company to fix the just compensation to be paid for the taking by executive order under Congressional authority of lands in the Canal Zone for purposes connected with the Panama Canal. The authority for the suit, and for this appeal from the award of a value of $164,490 in 1912, increased by interest to $491,002, is Private Act No. 165, 48 Stat. p. 1361, approved May 21, 1934, which reads: "Be it enacted by the Senate and House of Representatives * * *, That jurisdiction is hereby conferred upon the District Court of the Canal Zone to hear and determine, but subject to the provisions for appeal as in other cases * * *, the claim of the Playa de Flor Land and Improvement Company against the United States on account of property taken by the United States in the Canal Zone."

A prior suit to this was filed under the Act and some evidence was taken, but many witnesses were dead and the suit was dismissed. On August 10, 1939, 53 Stat. p. 1532, the Private Act was amended by adding: "Sec. 2. All competent testimony, exhibits, or other evidence heretofore admitted in evidence in any proceeding heretofore had under authority of this Act and all competent testimony, exhibits, or other evidence heretofore admitted in evidence in the cases docketed in said court as numbers 1 and 3, and, respectively, entitled `Playa de Flor Land and Improvement Company, a joint-stock corporation, Plaintiff vs. Eusebia Diaz, et al., and The Panama Railroad Company, a corporation, defendants', and `The Panama Railroad Company, a corporation, Plaintiff vs. J. H. Stilson, W. Andrews, and C. P. Fairman, as the successors in interest and estate to Eufracis C. De Villalobos, et al., defendants,' shall be received in evidence for the same purpose as heretofore admitted, in any suit brought or to be brought under this Act, as amended: Provided, That such evidence shall be subject, however, to any objection that the United States may interpose as to relevancy, materiality, or competency other than the objection of the witnesses not being produced in person." The named suits Nos. 1 and 3 involved portions of the land in controversy, but the United States was not a party.

The record before us includes unabridged not only the proceedings in this case, but the entire record in the former suit brought under the Private Act, and in suits Nos. 1 and 3, with all exhibits so far as they could be recovered; and in addition the record and proceedings in the predecessor court in the Canal Zone in a litigation brought in 1908 about some of the land, in which the United States intervened, which is asserted by the United States to be res judicata as to that land. On this large and complicated record the district judge rendered an opinion and findings and conclusions which themselves cover over 250 pages. It is impractical to make a detailed statement of the entire case. We will state and decide only the principal questions argued here.

1. The Private Act does not create the Playa de Flor Land and Improvement Company a corporation, or joint stock company, capable of suing in its own name. It does not intend to confine relief to such an artificial person, but intends that the claim known and referred to as the claim of that Company shall be heard and determined, whether the Company be an artificial person or an association of natural persons. The Act intends that the hearing and determination shall be had in the way that courts usually try cases, except that proper evidence theretofore received in the cases which it mentions should be admitted, notwithstanding the witnesses involved are not produced. The witnesses in fact are nearly all dead. Otherwise the usual rules of evidence apply.

2. Much argument is expended on the question whether Playa de Flor Land and Improvement Company was a corporation de jure, de facto, a special partnership, or just an association of joint adventurers. The evidence is that certain persons in 1910 undertook in the Canal Zone by petition to the court to form a corporation, attempting to follow the law of the Republic of Panama. The United States insists that this law was not of force in the Canal Zone; and if it was, there was not the necessary executive consent to the incorporation; that there was indeed no law in force whereby a corporation could be formed, so that this could not be a corporation either de jure or de facto. The asserted conclusion is that there is no proper plaintiff and no suit, and dismissal is prayed.

We think it unimportant what the Playa de Flor Land and Improvement Company was in 1910 or in 1912 when the United States took the land. The evidence is uncontradicted that 13 persons who were associated under that name had certificates of shares showing their proportional interests, and elected officers and kept minutes after the manner of a corporation; that the sole business done was the acquisition and intended development of this land for residential and business purposes; when the land was taken the Company "collapsed", having no property except this claim against the United States; no further meetings were held, or officers elected, or business done. After many years we may treat any franchise or status as an artificial person to have been abandoned, and a de facto dissolution to have occurred. 19 C. J.S., Corporations, § 1638, Page 1412; 13 Am.Jur.,Corporations, § 1293; In re Hool Realty Co., 7 Cir., 2 F.2d 334; Hentschel v. Fidelity & Deposit Co., 8 Cir., 87 F.2d 833.

The surviving associates and the heirs or representatives of those deceased severally employed one Weigle as their attorney in fact in respect of this claim, and he for them obtained the passage of the Private Act and Amendment and employed the attorneys to file this suit. The petition as brought states: "The plaintiff Playa de Flor Land and Improvement Company is an unincorporated association of individuals (naming 13 persons) associated together in 1910 for the purchase and handling of certain lands * * * The parties above named became the joint owners of said lands, title thereto being taken in the name of Playa de Flor Land and Improvement Company"; and the percentage of ownership of each individual is set out. Throughout the petition the "joint owners" are referred to, and the prayer is for a recovery by "said joint owners under the name of Playa de Flor Land and Improvement Company". The petition is not that of a corporation, but of individual associates using a collective name.

The United States challenged the authority of the counsel for the plaintiffs to act as such and a hearing was had in which it appeared that eight of the 13 named individuals were dead, but that Weigle held powers of attorney from the living and the representatives of those deceased, but some of the representatives had since died, so that a question remained of the proper representation of those interests. The judge then ordered that the suit be amended so as to proceed as a class suit, there being difficulty in finding many scattered persons; the living co-owners to represent all for the purpose of trying the common issues. The amendment, however, took an awkward form in stating that the unincorporated association of individuals was suing "to the use of such individuals if living or their legal representatives, legatees, successors and heirs if dead". But the judge treated it as accomplishing what he had ordered, and the final decree provided that the recovery in behalf of all should be paid into court and not to the Company, to be distributed by supplemental decrees to those who should prove their several interests in it. Thus handled the suit is maintainable in spite of technical defects. It does not matter what the Company originally was; its sole asset now belongs to its shareholders and they and the United States will be protected by the result, and the object of the Private Act will be accomplished.

3. A suit was started in 1908 by the then occupants of one of the tracts of land, designated in the petition as No. 1, by the descendants of Feliciano Villalobos, Sr., to recover possession of certain portions of it from several alleged trespassers and to quiet title, in which the United States intervened to assert a paramount title under the then recent treaty with the Republic of Panama. It was won in the trial court by plaintiffs, the judgment taking no notice of the intervention of the United States. The defendants and the United States appealed to the Supreme Court of the Canal Zone and as it appears reported in Villalobos, et al., v. Foleston, et al., United States, Intervenor, 2 Canal Zone Reports, p. 34, the judgment was reversed, the opinion summing up the review of the evidence thus: "The Complainants failed to produce proof establishing title, or evidence of any act or acts justifying a decree of title, and having so failed it is immaterial as to other minor questions involved. Without title or evidence of a rightful claim to it there is no foundation upon which the court could adjudicate a decree, be the same legal or even equitable. * * * It is therefore ordered and adjudged and decreed that the decision of the trial court in overruling the motion to dismiss the action at the close of the evidence...