West Indian Co., Ltd. v. Government of Virgin Islands
| Decision Date | 31 March 1988 |
| Docket Number | No. 87-3370,Nos. 87-3369,No. 87-3372,No. 87-,No. 87-3371,87-,87-3370,87-3371,87-3372,s. 87-3369 |
| Parties | The WEST INDIAN COMPANY, LTD. v. GOVERNMENT OF THE VIRGIN ISLANDS, Legislature of the Virgin Islands, Helen Gjessing, Leonard Reed, Kate Stull, Lucien Moolenaar and Ruth Moolenaar, Intervenors. Appeal of LEGISLATURE OF THE VIRGIN ISLANDS, intervenor above named, in3369. Appeal of Helen W. GJESSING, Individually and as President of the Save Long Bay Coalition, Inc., inAppeal of Kate STULL, Individually and as President of the League of Women Voters, Inc., and Ruth Moolenaar, Individually and as Director of the St. Thomas Historic Trust, Inc., inAppeal of Leonard REED, Individually and as President of the Virgin Islands Conservation Society, Inc., and Lucien Moolenaar, Individually and as President of the Virgin Islands 2000, Inc., into 87-3372. |
| Court | U.S. Court of Appeals — Third Circuit |
Rosalie Simmonds-Ballentine Sol. Gen., Richard O. Baker (argued), Asst. Atty. Gen., Gen. Litigation Services, Dept. of Justice, St. Thomas, V.I., for Government of the Virgin Islands.
Rhys S. Hodge (argued), St. Thomas, V.I., for Legislature of the Virgin Islands.
Brenda J. Hollar (argued), St. Thomas, V.I., for Helen W. Gjessing, Individually and as President of the Save Long Bay Coalition, Inc.
Edith L. Bornn, David A. Bornn (argued), Veronica J. Handy, Law Offices of Edith L. Bornn, St. Thomas, V.I., for Kate Stull, Individually and as President of the League of Women Voters, Inc., and Ruth Moolenaar, Individually and as Director of the St. Thomas Historic Trust, Inc.
Judith L. Bourne (argued), St. Thomas, V.I., for Leonard Reed, Individually and as President of the Virgin Islands Conservation Soc., Inc., and Lucien Moolenaar, Individually and as President of the Virgin Islands 2000, Inc.
Before GIBBONS, Chief Judge, and STAPLETON, and MANSMANN, Circuit Judges.
The intervenors in this action, including the present Virgin Islands legislature and the officers of various interested citizen groups, appeal from a summary judgment in favor of, and grant of a permanent injunction to, the West Indian Co., Ltd. (WICO). The central issue presented is whether a 1982 agreement between WICO and the Government of the Virgin Islands, ratified by the legislature then sitting, should be considered contractually binding on the present legislature. The district court held that it should; the intervenors contend that it should not. Because we agree with the district court's conclusions that the 1982 agreement is a contract and that the present legislature's attempt to cancel it by means of the Repeal Act is a violation of the contract clause of the United States Constitution, incorporated into Virgin Islands law by Sec. 3 of the Revised Organic Act, we will affirm.
WICO is a Danish-owned Virgin Islands corporation. In 1913, Denmark, then the sovereign of the Virgin Islands, granted WICO, then a Dutch entity, rights in certain parts of the Long Bay area of the St. Thomas harbor on Charlotte Amalie. This grant was evidenced by two letters to WICO from the Danish Ministry of Finance, dated January 18, 1913 and April 16, 1913. 1 Of these letters, the first was the more significant; it provided that when designated submerged areas of the harbor had been reclaimed by WICO, the company would acquire free and unrestricted ownership of the land. No time limitations restricted WICO's reclamation rights under this original grant.
In 1914, WICO built a dock and harbor basin in the area covered by the grant, leaving it with reclamation rights in 42 additional acres. Although it did business in the Virgin Islands continuously over the years, using its dock and harbor basin, WICO did not proceed with any further reclamation until 1986.
In 1917, Denmark ceded the Virgin Islands to the United States. WICO's rights were specifically preserved by Sec. 3 of the Convention of Cession, which read:
4) The United States will maintain the following grants, concessions and licenses, given by the Danish Government, in accordance with the terms on which they are given:
a. The concession granted to 'Det vestindiske Kompagni' Ltd. by the communications from the Ministry of Finance of January 18th 1913 and of April 16th 1913 relative to a license to embank, drain, deepen and utilize certain areas in St. Thomas Harbor, and preferential rights as to commercial, industrial or shipping establishments in the said Harbor.
App. at 30, 32. Before signing the Convention, the United States asked Denmark whether the grant to WICO was in perpetuity; Denmark responded that it was, and that there was no limitation as to the time within which WICO had to exercise its rights. 2
No further developments of significance took place until 1968, when the United States Department of the Interior filed suit in federal district court in the Virgin Islands, seeking to quiet title to the area of WICO's Danish grant and secure a declaratory judgment that WICO's treaty rights had lapsed. WICO defended this action, arguing that its treaty rights to reclaim and take title were vested and in perpetuity. While this suit was pending, the Danish Government sent a formal diplomatic note, dated June 25, 1970, to the United States Government, stating that WICO's treaty rights had originally been granted by Denmark without condition as to time and requesting that those rights be respected.
WICO proposed a settlement of the suit to both the Department of the Interior and the Virgin Islands Government, although the latter was not formally a party, and negotiations began. The parties to the negotiations included the United States Government, the Virgin Islands Government, WICO, and other private parties with interests in the harbor. The negotiations were successfully concluded in 1972 with a settlement agreement, the substance of which was that WICO would surrender reclamation rights to 12 out of the 42 acres at issue and the United States and Virgin Islands Governments would recognize WICO's right to reclaim and obtain title to the remaining 30 acres. A number of other obligations were also assumed by WICO as conditions of the settlement; for example, WICO agreed to fill in an extra 2.5 acres for public parkland and transfer it to the Virgin Islands Government, and to fill certain waterfront land so as to enable the Government to widen the shoreline highway from two to four lanes. The conditions of the settlement agreement were embodied in a document called the Memorandum of Understanding. The parties included in the Memorandum a statement of reasons why they believed the conveyance to WICO would further the public interest, including not only the above benefits but also the expected increase in employment, improvement of facilities for tourism, and elimination of the "possible cloud over the future of St. Thomas Harbor" posed by WICO's Danish rights.
Because at that time the United States held title to the submerged lands surrounding the Virgin Islands, the parties to the settlement considered it necessary to arrange a two-step procedure for transferring title to the 30 acres to WICO after reclamation: the United States Government would convey to the Virgin Islands Government, and the Virgin Islands Government to WICO. The Memorandum was not particularly clear, however, on just when the transfer of title was to be accomplished. It provided that after specified conditions had been met, the parties would meet at a Closing to exchange various documents; after the Closing, further conditions would have to be met, mainly the completion of reclamation within specified time limits, before WICO would actually receive title. "Once reclaimed," Sec. 15(b) of the Memorandum states, "the areas filled shall belong to WICO in fee simple ... provided that WICO is then in compliance with Sections 2 and 8 of this Agreement requiring WICO to fill and provide land for the V.I. Government." Section 15(b) of the Memorandum also contains the following provision:
Except as otherwise specifically provided herein, this Agreement shall be binding upon and shall inure to the benefit of the parties, their successors and assigns.
When the settlement had been reached, public hearings were held. The agreement then went to the Virgin Islands legislature, the Ninth Legislature, for ratification, which was forthcoming in the form of Act No. 3326, passed on October 11, 1972 and formally approved by the Governor on October 30, 1972. Because the Virgin Islands Government was not a party to the underlying suit, its ratification of the settlement took the form of a recommendation to the United States Government to accept and implement the settlement. There is no evidence that the Ninth Legislature acted hastily or without full information and adequate opportunity for public comment in approving the settlement agreement. 3
The Memorandum of Understanding was signed on October 3, 1973 by the United States Government, the Virgin Islands Government, WICO, and the other interested private parties. The Memorandum was filed with the district court, and the Department of the Interior's action was stayed sine die pending completion of the various prerequisites to closing and ultimate transfer of title specified in the Memorandum.
The preconditions set by the Memorandum to transfer of title were never fulfilled; the order of events envisioned by the drafters of the Memorandum was altered in several respects. First, in October 5, 1974, the United States passed the 1974 Territorial Submerged Lands Act, 48 U.S.C. Secs. 1705-1708 (1982 & 1987 Supp.). Under this law,
[s]ubject to valid existing rights, all right, title, and interest of the United States in lands permanently or periodically covered by tidal waters ... and in artificially made, filled in, or reclaimed lands which were formerly permanently or periodically covered by...
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