Earl Warren: Number 573, United States, Petitioner, versus 93.970 Acres of Land, et al. Mr. Spritzer.
Ralph S. Spritzer: Mr. Chief Justice, Your Honors. This is a condemnation case here on writ of certiorari to the Seventh Circuit. Without attempting to state the facts in detail, let me sketch them very briefly in order to provide some background for a statement of the two questions which the case presents. The land involved some 90 acres located on the outskirts of Chicago, was used as a naval airfield during World War II. After the wars, the Court knows, much government property was disposed of as surplus. Certain property, however, was leased rather than sold. This was done and done pursuant to statutory authorization. When it was believed that property not immediately or contemporaneously required for public use should be retained in stand-by status because of the possibility or the likelihood that it might be desirable or necessary to reactivate the facility at a later date. This was such a case. And the airfield in question was leased accordingly in 1947 for a five-year term with an option to renew to the respondent here, the Illinois Aircraft Company which proposed to operate a flying school at the field. The field under the lease was to be maintained according to certain specifications. And the lease was revocable by the Government on conditions to which I shall refer more specifically later on 60-day notice. Respondent also could terminate on such notice. Some seven years later, in July of 1954, when the lease as then renewed for a second term had about three years to run, the Government delivered a notice of revocation. This notice as the note itself recited had been prompted by a military decision that the deal should be used as a NIKE missile base. Respondent at this point took the position that the notice of revocation was invalid contending that the use planned by the Government was not the kind of use contemplated by the revocation provision in the lease. In respondent's view, the Government was entitled to revoke only if it decided to restore the field to its former use as a conventional naval airfield.
Charles E. Whittaker: May I ask you, Mr. Spritzer (Inaudible) or merely in the preamble preceding the (Inaudible)
Ralph S. Spritzer: The reference to naval aviation upon which respondent relies is in the preamble. The revocation provision which is paragraph 14 of the lease uses simply the word “essential” that the Government may revoke on a determination that it's essential.
Charles E. Whittaker: As I understand the respondents (Inaudible) in connection with Naval Aviation activities.
Ralph S. Spritzer: That's right, it's the --
Charles E. Whittaker: Is that the basis upon which they claimed?
Ralph S. Spritzer: Their principle reliance so far as the provisions of the language in the lease is concerned is on the paragraph to which Your Honors just referred which is the next to the last paragraph at record 12. That is correct. And on this basis, respondent refused to turn over the premises.As a result of the insistence by respondent that it had a right to remain, the Government some several months after it sent the notice of revocation to it in October of 1954, instituted a condemnation proceeding. And it obtained on the same day that it filed its condemnation complaint and order for delivery of possession a few days after construction of the missile base began. Now the Government's condemnation complaint stated in paragraph 4, which is at record 10, that the interest in the property to be acquired is all remaining outstanding right to title and interest if any, of the Illinois Company. The answer asserted and I refer now to record 31 and 32, reading from the bottom of 31, “By filing the complaint in condemnation in the instant case, the United States elected to pursue a remedy which is inconsistent with the theory that the defendant has no possessory rights and therefore implicitly recognizes the existence of a leasehold interest and is precluded as a matter of law from asserting that the lease has been terminated.” The Government proceeded to challenge this position, this doctrine of estoppel, it could be that. Both in a motion to strike and in a motion for summary judgment they were denied. The case went on for trial before the District Court, and the District Court throughout the trial accepted the defendant's theory and ruled throughout the trial over government objection that the Government could make no reference to the matter of cancellation, whatever. And the Court consistently, with that view charged the jury that it must create the lease as continuing in effect and valuate for the five remainder rather of the five-year term. The Court of Appeals with one judge dissenting, likewise accepted this theory. And it affirm the jury's award though it struck down as unauthorized, an increase in that award which had been made by the trial judge on his own, that point is -- is not here. The Court of Appeals said that the Government had made an election of remedies, that is to say proceeding by way of condemnation rather than by bringing a preliminary suit in ejectment or to try title. And that it was thereby estopped from denying that respondent had the property interest which it claimed.
Speaker: With the full term?
Ralph S. Spritzer: That's right.
Speaker: Irrespective of whether the respondent's view has accepted as to the limitation of the cancellation? In other words, the -- the Government cancelled for Naval Aviation -- Naval Aviation purposes during the remaining -- remainders of the term that was excluded as a -- in your --
Ralph S. Spritzer: The Court said as soon as the Government elected to proceed by way of condemnation, it forced war --
Speaker: (Voice Overlap) --
Ralph S. Spritzer: -- any opportunity to say that the respondent did not have a subsisting leasehold interest in the property.
Charles E. Whittaker: To the end of the term?
Ralph S. Spritzer: To the end of the term, yes, indeed. And the Court said that this was so whether federal or state law applies. As perhaps, my statement already indicates the first question which we raised and we think the more important question is whether the Government by bringing an action in condemnation, which is of course an in rem proceeding, thereby admits that they are valid outstanding interests as claimed by the private parties. And it is our position in a word that the District Court proceeding in a condemnation case must determine a dispute existing two matters. First, the nature and the scope of the outstanding interests and having established that, their worth. The Court of Appeals' ruling, as we see it, has no support in any decided federal case and it is also a ruling which it seems to us has far-reaching implications. In varying many condemnation cases, the Government does not know the identity of all of the interested parties and certainly does not know what the scope of the interest to the various private parties may be. Now, this occurs most often, of course, where there are competing private claims to the same property. But it may also occur, as it does here, where the dispute over right or title is between the Government and the private claimant. And we simply urge that the Government forfeits no right by undertaking to condemn such interest as may be outstanding. Let me state briefly the second question, the question as to which the Court of Appeals perhaps failed to make a full disposition because of its ruling on the first issue. And that is simply whether the Government's revocation here was a valid revocation. We argue that so far as the lease is concerned, it conferred a right to revoke whatever the precise nature of the military need and that it's immaterial whether the lease was revoked in order to operate a navy base or an army base in order to service manned aircraft or unmanned missiles. But more fundamentally, we rely as to this point on the proposition that an act of Congress, the very military leasing statute under which this lease was authorized and executed in terms provided that such leases are to be revocable at any time. I shall return later to this revocation point, but I'd like to get on first with the broader issue which involves the nature and the scope of condemnation, the issue whether the Government could assert its right to the property or respondent's lack of right in resistance to respondent's claim for just compensation. Now, the court below has said that the Government had an election. We say that the -- that the decision below really gives us a Hobson's choice because assuming that the revocation was valid, assuming that, the Government, according to the courts below, had a choice, one, of paying for that which already belonged to the Government, or two, foregoing prompt possession, which here was urgently required. Otherwise stated, the Government had to abandon the constitutional power of eminent domain designed to enable the United States to acquire immediately and unreservedly property needed for a public purpose or it had to forgo its claim of pre-existing right to the property and pay the respondent for all the windfall in order to get him out of that. Certainly, as the court below says --
Potter Stewart: How about the seizure? Don't -- doesn't the Government have power to seize and then relegate the alleged donor to a claim of the Court of Claims?
Ralph S. Spritzer: Certainly. Respondent with -- however be no better off.
Potter Stewart: No better off but there's no question of that power, is there?
Ralph S. Spritzer: No, and I think there's no question of the power to seize by, if you will, by way of judicial proceeding. I suppose the respondent did see (Voice Overlap) --
Potter Stewart: I guess you're misdirecting my question. Do your --
Ralph S. Spritzer: Yes.
Potter Stewart: -- I thought that you had a Hobson's choice, I'm suggesting that there was (Voice Overlap) --
Ralph S. Spritzer: Well, I suppose we might be met in the Court of Claims with quite -- with exactly the same argument that having elected to exercise the eminent domain powered by seizure that we had admitted that the property wasn't ours. We didn't proceed by ejectment. So, I suppose the same argument would -- would or might been an aid in -- in the context of the Court of Claims. Putting aside for the moment whether -- of any positive virtue and having two lawsuits here rather than one, a preliminary action and ejectment followed by evaluation proceeding, I'd like to point out the practical consequence of proceeding by way of ejectment. If we've been fortunate, I suppose we might have obtained a lower court decision within a few months. And then I suppose an appeal on the question of title might have been taken and that might mean another six months to a year. Of course, if we prevail in that, there'd be an opportunity to apply 90 days for a writ from this Court. And I think with any kind of good fortune, a resourceful opposing counsel might have been able to spin out the ejectment proceeding for most or all of the balance of the lease term. In the meantime, of course, the United States in lieu of having a -- an operating missile base would have a going lawsuit. I'd also like to stress that the Government's condemnation complaint which tendered the question, what if anything is respondent entitled to by way of just compensation, deprived respondent of no right, whatever. Certainly, the Government had the indisputable authority to take this land for a public use regardless of the identity of the persons who held the adverse interests regardless of the distribution of those interests. And the only possible unfairness, it seems to us, flows from respondent's theory, which means if it is accepted that in a case where the Government feels it's urgent to take over the property, it may have to pay what may -- for what may already belong to it. The only opinions which are cited by the court below, which seemed to us to furnish any support at all for the result reached, are Illinois State Court decisions.At record 469, the Court will note several references to state court decisions made by the Court of Appeals. Now, it's true that the state courts in Illinois have held that a corporation possessing eminent domain powers under the law of that State, that such corporations have the duty to determine in advance of condemnation the outstanding title that they have the duty to make that determination at their peril and that they cannot try any issues as to title in the condemnation proceeding. We have no dispute that under Illinois procedures, you apparently cannot try a title or a question of title and a question of valuation in the same case. And certainly, Illinois may circumscribe the powers of eminent domain exercised by Illinois corporations as it chooses. Now, our point is simply that Illinois law cannot control the exercise by the United States of its eminent domain power. If this so-called doctrine of election of remedies, which was applied here, goes to substance as respondent argues at page 8 of its brief, then we think it follows necessarily that federal law controls. As this Court has often stated notably in United States against Miller in 317 U.S., a case incidentally decided when there was still conformity with local procedure, state rules, and I quote from the opinion, “do not and could not effect questions of substantive right grounded upon the federal eminent domain power”.
Felix Frankfurter: Just as a matter of curiosity, Mr. Spritzer, can the Government begin condemnation proceedings, Government of the United States, in a state court of the (Inaudible) It's not relevant, I'm just curious. And it might be that if they sought the Illinois courts for that purpose, they would have to go through their equal laws.
Ralph S. Spritzer: Maybe because in some States, the state condemnation courts have very limited jurisdiction. And some jurisdictions, as a matter of fact, we have a -- the States have appraisal commissions which can't try a title under their jurisdictional grant under limited value of questions.
Felix Frankfurter: And -- and they -- their jurisdiction couldn't be extended because the Government (Voice Overlap) --
Ralph S. Spritzer: Exactly. As a matter of fact, the Illinois decisions themselves in holding -- making the holding to which I've just referred, state that in Illinois, condemnation is special and statutory and the Court has statutory jurisdiction, limited jurisdiction. Now, if this question of election of remedy so-called is one of procedure, the result, we think, is the same for since 1951, when Rule 71A was promulgated, the federal rules have governed and governed exclusively condemnation by the United States. Now, Rule 71A does not contemplate, does not require an independent proceeding for purposes of ascertaining or defining the respective interests of those whose property is taken rather it provides that the Government shall proceed in rem and then declares that the Government shall join, as defendants, those persons whose names are then known, “Having or claiming,” this is the exact language of rule, “Having or claiming an interest in the property.” Then there's further provision of the rule for designating other persons as unknown owners. Respondent makes an argument, which we don't think is substantial, that state rules may be applied notwithstanding the enactment of Rule 71A. And this is an argument which takes several steps, and perhaps I'd better go briefly through it. There is a federal statute, 50 U.S.C. 171 which dates back to 1890, which declares that the Secretary of the Army may cause condemnation proceedings to be instituted in the name of the United States for various designated purposes. And that statute, in keeping with the old conformity provisions, declared that such proceedings were to be instituted in accordance with the procedures of the State wherein the proceeding was instituted. Now, Rule 71A, of course, was designed to do away with conformity to state procedures and indeed, the advisory note to the rule cited this 50 U.S.C. 171 as one of the statutes which occasioned the need for the rule. But we come now to a minor complication. In 1956, Congress adopted a recodification of the various previously scattered statutes relating to the armed forces and it put them all in Title 10. 50 U.S.C. 171 was incorporated and became 10 U.S.C. 2663. When that recodification took place, the old language in 50 U.S.C. 71 relating to conformity with state procedures was not deleted. So, the provision remained until 1958 when Congress making various directions in the Code made -- enacted a provision retroactively deleting this sentence relating to conformity from 10 U.S.C. 2663. And then the relevant reports accompanying that 1958 Act, Congress declared that the earlier failure to delete that particular language at the time the recodification took place had been an oversight. We failed to see, though the respondent seeks comfort from this history, how it aides respondent. In the first place, Rule 71A became effective in 1951. This condemnation was brought in 1954. That was the only time the Government could possibly be charged on any theory with having made an election. The recodification taking place in 1956 but thus have no bearing on this case. But more than that, we don't think the recodification in 1956 can have any proper bearing on any case because at the time of the recodification, Congress made clear in the statute which put the recodification into effect that no change in existing law was either made or intended thereby. This was purely a formal revision and of course, the earlier 1951 adoption of the federal rule relating condemnation proceedings must govern.
Felix Frankfurter: There were scores of such oversights.
Ralph S. Spritzer: Yes.
Felix Frankfurter: It's subsequently corrected.
Ralph S. Spritzer: The very 58 statute which corrected this one corrected scores of others, Your Honor, apply. And getting back to the mainstream, I have already stated that Rule 71A, as we view it, contemplates the joining of defendants who claim to have an interest in the property. And this, we think, necessarily implies that the condemnation court is to determine both the validity of the claim and the value of any interest which may be established. And I think it's pertinent to add, though there are certainly no need to labor the point in this Court, that the basic scheme of the federal rules is to provide a single form of action and to avoid unnecessary multiplicity. Considers, if the Court please, the -- the common situation where the Government is condemning land as to which the private parties may have competing claims or overlapping interests. Suppose the Government names, as it -- as it is supposed to do, all persons claiming an interest, names these persons with overlapping claims, would it be contended then that by naming both, we recognize both claims and we're stopped to deny them and we're required to take of the same thing twice over?Well, obviously not, we'd say for it's the burden of the claimant to establish his right to compensation. And the first step in his proof, as we see it, is that he has an interest in the property which is to be recompensed. Another common situation is where the Government contracts to buy land at an agreed price and then condemns that same land in order to remove any possible infirmities in the title, a procedure incidentally which has explicit congressional authorization. We refer to the relevant statute at page 29 of our brief. Now, the case we have here is not materially different nor is it a unique case. There are at least two Courts of Appeals which have dealt expressly with the contention which respondent made to the Seventh Circuit in this case. The First and the Fifth Circuits, we refer to those cases at pages 25 to 27 of our brief. In the Fifth Circuit Turner case, the Court will note the Fifth Circuit held that the United States does not waive any right or title that it may have by proceeding in condemnation. In the First Circuit, San Geronimo case, which is rather closely analogous on its facts to this one, Judge Magruder pointed out that the Government there was asserting a right to use the premises in question under the terms of a lease, and that it sought alternatively, if that position were denied, to condemn an interest in the fact. And he said that the pursuit of these alternatives in a single proceeding was characterized by much good sense. We agree, of course. We say that claims to property interests and claims of title are regularly adjudicated in federal condemnation cases as they are in many of the States where the condemnation court has general jurisdiction and where it is proceeding under a court with code which provides a single form of action. Respondent is not prejudiced in this case because his claim to compensation may be defeated here by the Government's claim of right, whereas in the more common situation, his claimed compensation might be defeated by a competing claim of right asserted by another private party. I come then, and I shall attempt to treat it more briefly to the second question, whether the Government's revocation of the lease was valid. This was the issue, of course, that we weren't permitted to try before the District Court, the issue as to which it was said we were foreclosed. Now, as I've said, we --
Felix Frankfurter: We would have to determine this originally, is that right?
Ralph S. Spritzer: I -- I think that is so. I don't think there has been a definitive determination by the Court of Appeals. However, I think it is not merely a matter of reading the lease because in our view, irrespective of there being in a provision for revocation in the lease, the statute would require the conclusion that the lease was revocable.
Felix Frankfurter: And it's your position that in this situation, there's no reason why we should not determine it.
Ralph S. Spritzer: That is right and --
Felix Frankfurter: As a matter of statutory construction, you say?
Ralph S. Spritzer: Yes. The Court of Appeals adverted to the statute and it said that it couldn't really believe that Congress meant it when it said that the Government was have -- was to have the authority to revoke these leases at anytime and that we --
Felix Frankfurter: Skepticism about congressional legislation isn't restricted to that.
Ralph S. Spritzer: [Laughs] Now, in this case, we -- we think the language of the statute is -- is mandatory language and that we find no cause for skepticism because our reading of the reports indicates that Congress meant to do what it was in turn is doing. Now, the military leasing statutes, two of them, one enacted in 1916 and the other in 1947 are set out at pages 2 and 3 of our main brief. Both, whichever one applies, both provide for revocation at any time. We think that the 1947 Act is probably the one that controls here. And I -- I therefore concentrate on it. And I say that we think it controls because, as the Court may recall, the renewal of this lease five years after the original lease was in 1952. And it seems to us that the renewal must probably be deemed innovation, a new contract. And that would seem to be so because leases in excess of five years were prohibited by the 1916 Act and also because the Secretary, under the lease, had very broad powers to refuse the extension. Turning then to the 1947 Act, that Act, after providing generally for the leasing of military properties not contemporaneously required by the Government, goes on to state in the last two sentences which appear at page 3 of our brief, “Each such lease shall contain a provision permitting the Secretary concerned to revoke the lease at any time, unless the Secretary shall determine that the omission of such provision from the lease will promote the national defense or will be in the public interest,” and then this, “In any event, in any event such lease shall be revocable by the Secretary of the Department concerned during a national emergency declared by the President.” I don't see how that can be said to the language which requires or permits interpretation, its mandatory language. And of course, there's no question in this case that in 1950, the President had declared a national emergency. And thus, in our view, the lease was revocable in 1954, whether or not, whether or not the lease itself provided for revocation. Now, since the Seventh Circuit seemed doubtful that Congress really meant this provision, let me take a moment to read a single sentence from the accompanying House Report and that's House Report 623, which we've cited in the brief. And that report states, “Regardless of whether the Secretary does insert such a clause in references to a revocation clause, each lease made under this law shall be revocable by the Secretary during a national emergency declared by the President.” Let me observe finally that the lease --
Hugo L. Black: Was there a national emergency at the time it was revoked?
Ralph S. Spritzer: Yes, sir. The emergency had been declared in December of 1950, four years before the revocation and it was in effect at the time of the revocation.
Speaker: (Voice Overlap) --
Ralph S. Spritzer: Excuse me.
Speaker: Assuming that.
Ralph S. Spritzer: Yes, sir. I wanted to observe finally that this revocation could not by -- in any event be deemed a surprise by the respondent for the lease in this case did itself put the respondent unnoticed that it might be revoked at any time upon the 60-day notification. The lease, appears in the record beginning at page 12 as Justice Whittaker indicated in his question earlier in the argument, there is a paragraph in the preamble. It's the next to the last paragraph on page 12 upon which respondent relies. They rely on the fact that the whereas clause refers to Naval Aviation. “Whereas” because of its strategic value, it is considered essential that the airfield be retained in standby status proposed for use in connection with Naval Aviation activities. And of course, the plain reason for the inclusion of this paragraph in the preamble is that the Secretary wasn't authorized to lease property unless he determines that it was necessary to keep it in standby status. If it were surplus and there was no need to keep it in standby status, he was required under the Surplus Property Act to dispose of it by outright sale.
Speaker: One thing that puzzles me in having decided that you elected, the consequence of your election was to make the lease run to maturity, the vested interest in maturity.What theory does the Court of Appeals then get into the revocability of the lease?
Ralph S. Spritzer: On the question of value.
Speaker: But I thought that have been crossed when they said that your election made the cancellation.
Ralph S. Spritzer: Well, having been thrown out of the front door, the issue got in the backdoor in this way. We could not plead cancellation but the trial court did instruct the jury that it could consider the revocation provision in deciding what the value of such a lease was, what the market value of it was. In other words, a lease which has some provision for revocation in it has a lesser market value than one which is on restriction. And so it came back into the case in that way and the trial court said in instructing the jury on this valuation act back, that it was revocable only for Naval Aviation purpose.
Speaker: Even though you couldn't rely on your right of revocation itself or so?
Ralph S. Spritzer: We couldn't contend that it had been revoked because we had proceeded in condemnation. But in valuing the leasehold interest, the jury could consider abstractly the value of the lease which had an unexercised provision for revocation in it and that tells that fact into the case.
Felix Frankfurter: How can you have a hole in it but you could prove that the hole made it relatively worthless?
Ralph S. Spritzer: Well, the Court --
Felix Frankfurter: (Inaudible)
Ralph S. Spritzer: Yes -- well, the Court said that it was revocable only for Naval Aviation purposes and that the jury could estimate the likelihood if it's being revoked for that purpose in arriving at a valuation figure, perhaps rather difficult task for the jury.
Potter Stewart: That likelihood is rather small particularly after it had been used for some other purpose, wasn't it?
Ralph S. Spritzer: Yes. I would say so though the jury was not told anything about the revocation for NIKE missile base. We weren't supposed to refer to that.
Potter Stewart: No, that was before the jury, was it?
Ralph S. Spritzer: Pardon.
Potter Stewart: No, that was before the jury --
Ralph S. Spritzer: No, no.
Potter Stewart: -- about the NIKE base.
Ralph S. Spritzer: Now, we weren't allowed to refer at the trial to the claim that we've cancelled the lease. We were stopped. We've given up our right to -- to cancel or to rely on cancellation when we fail to bring an action and eject the (Voice Overlap) --
Potter Stewart: The jury was told about the lease and was --
Ralph S. Spritzer: Yes.
Potter Stewart: -- and (Voice Overlap) --
Ralph S. Spritzer: They had the lease terms before it and that expert of course.
Potter Stewart: And the Court construed the meaning of the lease as a matter of law and --
Ralph S. Spritzer: Yes.
Potter Stewart: -- so instructed the jury.
Ralph S. Spritzer: Yes. The Court -- the District Court's construction was that the revocation power was only a power to revoke, as I have said, in order to use for Naval Aviation base. The Court of Appeals said our power to revoke was restricted to revoking for aviation purposes. I don't know whether the failure will include naval and was inadvertent or not in the Court of Appeals' opinion. I was about to say that we think when one is going to determine the power of revocation from the lease, one has to look at the operative provision, which is paragraph 14 not to the preamble. That paragraph appears at record 19, and you will note that the parties agree that it will -- that the lease will at all times be revocable at will by the Government upon presentation of 60 days notice in the event of default of any of the covenants of the lease or in event of a national emergency and the decision by the Secretary of the Navy that such revocation is essential, and essential is not there qualified by any reference to Naval Aviation.
Speaker: The Secretary of the Navy actually didn't do the revocation, did it?
Ralph S. Spritzer: It was -- the revocation was signed jointly by the Secretary of the Army and the Secretary of the Navy.
Speaker: The lease should pass into the hands of the Army?
Ralph S. Spritzer: Yes, the Navy had ceded jurisdiction over the property to the Army but both Secretaries acted in -- the notice of revocation shows.
Felix Frankfurter: Was there a suggestion that be included of the Secretary of War diluted the Secretary of the Navy power?
Ralph S. Spritzer: No. I think the defense establishment as a matter of caution had the both Secretaries on. I wanted to refer the Court for a moment to paragraph 1 of the lease also because this bears on the -- on the meaning of the word “essential” as it have used in the revocation provisions. Paragraph 1 is the provision for renewal. You will note that that paragraph gives the tenant the power to terminate on 60 days notice. Then going on to the matter of renewal, says, it may be renewed upon the same conditions with the original lease for another five years provided that in the opinion of the Secretary of the Navy, the premises are not essential for Governmental purposes only. And we suggest that the word “essential” in the renewal provision is to be given the same meaning as the word “essential” as it appears in the revocation provision. Accordingly, even if this lease stood alone, we think respondent would be in no position to complain that the revocation was prompted by a decision to use the field for a NIKE base rather than a conventional airfield. But it has already argued the lease does not stand alone. And we think that the leasing statute would control during a period of national emergency even if there were no provision whatever in the contract for revocation.
Earl Warren: Mr. Hartenfeld.
Leonard R. Hartenfeld: Thank you, Your Honor. Mr. Chief Justice and may it please the Court. The first issue in the case is what did the parties intend by the cancellation clause? Both the trial court and the majority of the Court of Appeals felt that there was no question whatsoever regarding the intention of the parties. And that was that the lease could be canceled only for Naval Aviation activities which did not include an army NIKE site. Now, this is an extremely interesting and fascinating legal interpretation of the lease. But it was arrived at through the exercise of elementary rules of construction such as one must not take out of context one sentence or paragraph of a lease even if you must construe the entire lease. Also, this lease was drafted by the Government and therefore, it must construe most strongly against the Government. Also, the Government is the lessor and therefore, the lease must be construed most strongly against the lessor. Also, the factual circumstances surrounding the execution of the lease and the action of the parties during the term of the lease showing their construction and understanding of the term of -- of the meaning of the lease was considered by the Court of Appeals and the trial court. And the inevitable conclusion was that the parties intended that this lease could be canceled only for Naval Aviation activities and for no other purpose. Now, this may be a very novel -- may be a very interesting lease interpretation problem, but it certainly is not a novel legal point or any novel national interest point which, in the opinion of respondent, should be of importance to this Court. We respectfully submit that there is ample justification for this Court to say that the Court of Appeals' experienced judges below have exhaustedly reviewed this record and found that this lease could be canceled only for the purposes desired by the parties which was the Naval Aviation activities. Now, I am talking strictly to the question of the intention of the parties which is the first question in the case. I'm not saying that this Court should not go into the question of a leasing statute and the authority of the parties to enter into this type of lease but to get into the question of what did the parties intend necessarily involves a very laborious test, and I will have to devote considerable part of my argument to explaining the details -- the detail arguments giving rise to this conclusion. Nevertheless, to give ample justice to both parties in this case, that laborious process must be followed unless this Court takes the position that the Court of Appeals or experienced judges and that this is very close to the type of cases in which this Court does not want to be burdened such as disputed matters of fact.
Hugo L. Black: Are you suggesting that we dismiss that it was (Inaudible) granted?
Leonard R. Hartenfeld: No, Your Honor. I'm sorry I didn't hear the last part of your sentence.
Hugo L. Black: I -- I said are you suggesting that we dismiss that it was (Inaudible) granted because it's trivial and it only involves a little money between (Inaudible)
Leonard R. Hartenfeld: Your Honor, the amount of money is trivial so far as the Government is concerned but not to the respondent who is financially modest circumstances.
Hugo L. Black: But I understood you to say that it was the kind of case that we should leave to the experienced judges below on determining that question of fact.
Leonard R. Hartenfeld: No.
Hugo L. Black: (Inaudible)
Leonard R. Hartenfeld: Yes, sir, on the -- on the question of what did the parties intend by this lease. That is the only question I say because in order to decide that question, as you will see, Your Honor, from my argument, it involves a very laborious construction problem which gets into factual situations in the weighing of facts. What did the parties mean by these things that they did during the term of the lease? What was the situation when the lease was executed? Those are really factual questions that have direct bearing upon the meaning of this lease as far as the intent of the parties are concerned.
Felix Frankfurter: That is not the only question in the case, is it?
Leonard R. Hartenfeld: Oh, no, Your Honor. No, Your Honor, because of the more important questions that I'm sure, Your Honor, that we are in this Court, United States Supreme Court only because of the doctrine of election of remedies problem.
Hugo L. Black: If we should adopt your viewpoint, would that dispose of the case?
Leonard R. Hartenfeld: No, Your Honor. They'll still open the question of the meaning of the Navy leasing statutes.
Hugo L. Black: Well, I say so far as the -- if we dispose of -- if we said that clear that the Court had decided as a matter of fact, if the parties intended.
Leonard R. Hartenfeld: Yes, sir.
Hugo L. Black: Therefore, all the contract did not authorize revocation for this record. Could that be in the case?
Leonard R. Hartenfeld: No, Your Honor, because we would still have to convince this Court that the parties were authorized by the Navy leasing statutes to enter into a lease which had this intention. In other words, do it -- does a Navy leasing statutes authorize the Secretary of the Navy to enter into a lease which is limited in cancellation scope to only Naval Aviation activities, which is a second issue in the case, and I would like to talk about that later, Your Honor, unless you desire me to talk about it now. All I am saying is that at this point, the intention of the parties is all that I am talking about. What did they intend by the lease? Now, if they intended that the lease should be canceled only for Naval Aviation activities, then it is my burden to establish and the Court of Appeals agreed with it that they have the power under the Navy leasing statutes to do so. Now, in the event the Court -- this Court does desire and conclude that it is necessary to construe the terms of this lease and all the circumstances surrounding its execution and the acts of the parties after the lease was executed, if it is necessary to do this, then the respondents suggest the following considerations. First, let us examine the background of the parties at the time this lease was executed back in 1947. The Navy had used this airport which was a small 96-acre piece of land with a hanger on it and one barracks building and the rest was all grass which was used for the landing and take off of aircraft. The Navy had no congressional appropriations to maintain this field as Navy property, it have the choice between selling it as surplus property or to retain it by keeping title in the United States Government and leasing to a private airport operators such as the respondent who would maintain the property during the term of the lease so that the Navy could have the property back in case of another international emergency. Now, it's very important, Your Honor, if the Court please, that the evidence is conclusive on this, there's no dispute between the parties at all on these -- of these -- these facts that I am stating. Now, the Navy had only one thing in mind at this time and that was if they have a Navy airport which they might want back in the case of another future national emergency or a war. The respondent was a small -- financially small company but it was vastly experienced the aviation and airport operations. And the parties were thinking of only one simple fact. There is an airport with aircraft flying off of it. We have it. The Navy says “We have the airport, we don't need it. Do you want to undertake the obligation of maintaining it and sharing the buildings,” which incidentally was a very expensive thing, “and giving in fact to us in case we need it again for Naval Aviation activities?” There could be no doubt from the record that this is what the parties thought. Now, they placed all this thinking in the preamble of the lease. And on page 12 of the record, we find that the preamble states, “Whereas, because of a strategic value, it is considered essential that the said airfield and the facilities thereon, comprising the United States Naval Outlying Airfield, be retained in a stand-by status for post-war use in connection with Naval Aviation activities.” There isn't any doubt in the world that this sentence expresses exactly what the parties wanted. In the next paragraph of the preamble states that -- that lessee desires to lease the airfield and the facilities thereon for use as an airport and for such other uses as may be necessary or incidental for this purpose. Now, the third -- on top of page 13, the preamble also states that this leasing -- that this lease is deemed to be in the best interest of the Government. Now, the important words are the following, appearing at the top of page 13 in the consideration clause, the parties then stated after reciting their intention above, “Now, therefore in consideration of the foregoing,” now, that -- those words in consideration of the foregoing show that the parties had in mind the premise -- the premises or the preamble and intended to bring the preamble into the body of the lease just as much as if it had been set forth in full in the body of the lease. And the Supreme Court of Illinois in an identical case, not involving airport property of course, where the words were “Now, therefore in consideration of the premises,” which is even weaker than our case, which says, “Now, therefore, in consideration of the foregoing,” so there can be doubt what foregoing means, held that the preamble must be construed as an operative part of the lease where that those words appear in the consideration clause of the lease. Now, relying upon that case, which certainly is consistent with any state or federal law on the construction of contracts is a simple construction problem, so I think that the Illinois Supreme Court decision is certainly a good authority in the federal courts. I think the federal courts undoubtedly should reach and will reach that conclusion as the Seventh Circuit did. Relying upon that case, the Court then also took into consideration the following language of this lease. Paragraph 12 of the lease, on the record page 19, states that the lessee agrees, they will prevent any use of the premises and facilities herein demised to its possession including the construction, erection, alteration or growth of any structure or other object thereon which would be a hazard to the landing, taking off or maneuvering of aircraft at the airfield. This is a prohibition against the lessee respondent ever using that property in a way which would interfere with flying operations of aircraft.
Charles E. Whittaker: How -- I didn't understand --
Leonard R. Hartenfeld: Yes, Your Honor.
Charles E. Whittaker: -- you to say -- I don't understand how that rules or (Inaudible)
Leonard R. Hartenfeld: Your Honor, I'm sorry I should have -- may I answer that, Your Honor?
Charles E. Whittaker: Yes, indeed.
Leonard R. Hartenfeld: Paragraph 14 merely states that the Secretary of the Navy has the power to cancel the lease upon 60 days notice in case of a national emergency, national emergency is not in this case because we concede that it was an existence at the time, but the decision by the Secretary of the Navy that such revocation is essential. Now, the word “essential” must refer to something. And the Court of Appeals for the Seventh Circuit said that the word “essential” refers to the preamble which clearly expresses the desire on the part of the -- of the Government to keep this property only for Naval Aviation purposes. And that is why the --
Speaker: Supposing the Army had turned over its --
Leonard R. Hartenfeld: Pardon me.
Speaker: Supposing the Army had turned over its NIKE (Inaudible) in the Navy (Inaudible)
Leonard R. Hartenfeld: You mean turn them over so it became a naval NIKE operation? No, Your Honor, because, as I will later explain, under no conceivable interpretation as it's possible in this case to argue that NIKE is Naval -- is Naval Aviation. Number one, there is nothing in the record to prove that NIKE is aviation or an aviation activity. On the contrary, the only testimony on that point is in favor of the respondent where, at page 307 of the record, it appears from the testimony that NIKE is not aviation. Now, if NIKE is aviation, then I think it's up to the burden of this -- of the Government to approve in that fact in the Court. We proved it by having the only testimony in the case that it wasn't aviation. So we certainly did our burden but the Government never proved it and it's a little late for the Government to at this time make these arguments, Your Honor. But there is even a more fundamental point on that. And NIKE is a guided missile which is no more different than an army anti-aircraft gun. Now, an anti-aircraft gun is not aviation because the shell flies through the air neither is NIKE aviation because the missile flies through the air. If that is true, an arrow flying through the air would be aviation. And that is exactly what the Court of Appeals understood and the trial court understood when they held this way. So, the Government, in effect, has not proven that NIKE is aviation or it comes within the definition of Naval Aviation by failing to introduce any evidence whatsoever about it. But even if this Court were to take judicial notice of what NIKE is, they couldn't conceivably hold, we respectfully submit, that this is aviation, not within the meaning of the -- at least not within the meaning of the intention of parties as expressed in this lease because, as I mentioned before, certain paragraphs of this lease expressly prohibit the lessee from using the field in anyway to obstruct flying. Now, flying means aircraft. It doesn't need guided missiles. Now, this is very forcefully demonstrated by defendant's Exhibit 2B, appearing at page 433 of the record. Now, in our opinion, probably the best authority in the world to decide what is meant by Naval Aviation is the Bureau of Aeronautics of the Navy Department. They have cognizance of Naval Aviation. And at page -- I'm sorry, on page 433 of the record is a letter from the Bureau of Aeronautics to the Chief of the Yards and Docks via the Chief of Naval Operations dated 26th, June 1953, which was one year before our lease was -- which was one year before the Government attempted to revoke our lease. In this letter, the Bureau of Aeronautics states that it knows of no prior immobilization plans which are required the use of this property for aeronautical purposes. Consequently, it's recommended that the outlying Arlington Heights be declared as excess to the needs of Naval Aviation and unless needed by some other naval activity disposed of as surplus property. Now, the crucial part of this letter is the last paragraph, number two. “In as much as it is indicated that the area surrounding the field as being build up rapidly and hence holds no promise for future Naval Aviation usage, practically the same words of the lease.It is recommended that the field be disposed of without any conditions as to recapture or use.” Now, the importance of that paragraph is that the Navy recognized that because the field was being crowded by homes at that time, it became dangerous to use the field for Naval Aviation purposes which was applying of aircraft. Now, if the Navy -- if the Bureau of Aeronautics which has cognizance of what is Naval Aviation thought that guided missiles were part of this Naval Aviation, they would not be worrying about approach areas over homes such as airplanes have to do and airplanes can't fall down which is one of the big problems of the Navy with these airports around the country. In fact, the NIKE site that is there today is surrounded since that time strictly by homes because NIKE does not have to make an approach over the homes in order to be useful. So, on all points, Your Honor, as we respectively submit that the -- the Government's position is -- is incorrect on the interpretation of the lease. In addition, I'd like to mention just one more point because too much time is -- I'm forced to put too much time on this interpretation problem. But the record shows, at 208 of the record, that a year after this lease was executed in 1947, the lessee spent over $60,000 of its money in improving the barracks buildings and changing them into apartments for public housing and in building a trailer park on the premises adjacent to the barracks. The record also shows that the Navy, not only knew of this project, but approved of it in advance. They gave their approval to the lessee doing so. Now, it just doesn't stand through reason that any lessee would spend $60,000 not at least the lessee of this character about the circumstances. On the -- it would spend $60,000 of its own money on the assumption that it could be canceled out on 60 days notice for any governmental purpose at all as now contended for by the Government. It was relying upon the preamble of the lease and the intention of the parties right down the line that it could be canceled only for Naval Aviation activities. This was a calculated risk that the lessee, as an aviation expert, could understand and could take and use his own judgment on as a sensible businessman. But he could not possibly foresee of how -- what million and one chances the Government might have to revoke this lease for governmental purposes only. It's just as beyond belief to believe that the parties so intended in view of the language and their conduct. If the Navy thought that this could be canceled for governmental purposes, it would never, I am sure, have permitted the lessee to go ahead and spend $60,000 on the property on that basis of revocation.
Earl Warren: Would defense facilities for a -- an airfield be with in or without your lease?
Leonard R. Hartenfeld: A defense facility for an air --
Earl Warren: Yes.
Leonard R. Hartenfeld: -- if it's used for air -- airplanes landing and taking of airplanes, it would come within the definition of aviation, Your Honor.
Earl Warren: If the defense -- if --
Leonard R. Hartenfeld: And --
Earl Warren: -- defense facilities were the protecting airfield, they would -- they would be --
Leonard R. Hartenfeld: Well --
Earl Warren: -- aeronautical --
Leonard R. Hartenfeld: This -- this was never --
Earl Warren: (Voice Overlap) --
Leonard R. Hartenfeld: -- in the case, Your Honor. For --
Earl Warren: I know but I was going to ask another -- I was --
Leonard R. Hartenfeld: I'm sorry.
Earl Warren: -- going to ask another question.
Leonard R. Hartenfeld: I'm sorry.
Earl Warren: Would the use of -- of this field for NIKE be inconsistent with its future use as -- as an airport?
Leonard R. Hartenfeld: Absolutely, Your Honor. This field, they have completely built NIKE which is a very heavy structure extension --
Earl Warren: Yes.
Leonard R. Hartenfeld: -- of the ground. Throughout the landing area, it would be impossible today to land a plane there without spending more money than this property is worth to remove NIKE and this is an actual fact, and the juries thought, and this is one of the factors incidentally, Your Honor, that impressed the trial court and the jury on this question.
William O. Douglas: Did you say the jury sought?
Leonard R. Hartenfeld: Yes. We took the jury out with the permission of the Court to view the premises and they are very much impressed by the NIKE and the fact that it destroyed the field for aviation purposes.
Potter Stewart: Well, then, the statement that I have understood previously, I have understood previously that the jury -- that the -- that the trial judge kept in the jury any knowledge of this NIKE business.
Leonard R. Hartenfeld: Oh, no, Your Honor --
Potter Stewart: (Voice Overlap) --
Leonard R. Hartenfeld: -- they knew all about NIKE. The only thing that the jury did not know about was the fact that the lease had been canceled or that an attempt had been made whether by the Government to cancel the lease. Now, we got into some very peculiar trial procedures primarily and this is one reason --
William J. Brennan, Jr.: (Inaudible)
Leonard R. Hartenfeld: Yes, it was an incredible problem.
William J. Brennan, Jr.: (Inaudible) a big NIKE installation if they -- how could they have supposed? They've seen the NIKE installation, how could they (Inaudible) use of an airfield (Voice Overlap) --
Leonard R. Hartenfeld: Oh, there's no question about it. Everyone conceded the fact at the trial in oral argument and right down the line. Everybody knew that we're talking about the NIKE site.
Potter Stewart: And that the -- the trial judge instructed the jury that the -- going to the question of value of the property that the Government had power edge (Inaudible) who cancelled the lease only for use for Naval Aviation --
Leonard R. Hartenfeld: That is correct, Your Honor.
Potter Stewart: -- at a time when the jury was fully aware that the use was not going to be for Naval Aviation, isn't that true?
Leonard R. Hartenfeld: That's right. There's no question about that, Your Honor and I think the trial court was right because that is a construction placed upon the lease by not only of the trial court but the very experienced judges on the Court of Appeals.
Potter Stewart: So that --
Leonard R. Hartenfeld: There is --
Potter Stewart: -- really, there was no real purpose in giving that instruction as to evaluation of the trial court.
Leonard R. Hartenfeld: Well, it really got us -- no, actually, I think the trial judge was wrong in the sense of permitting the Government to use the theory before the jury that this lease has no value because it could be canceled for any reason whatsoever of governmental purpose. We, of course, testified to the jury that the lease could be canceled only for Naval Aviation purposes. Unfortunately, the trial court did not make up his or did not instruct the jury rather on this issue until after all the evidence was in. So, throughout this trial, the jury was hearing for all it can, the Government appraiser sells worth nothing, our appraisers test -- I mean our witnesses testified of a value close to $200,000. Based upon our theory, the Government saw this worth nothing. The jury was confused, that is why the Court granted an arbitrary in the case of an additional $50,000 with the Court of Appeals and this Court refused to consider the evident questions as a matter of dispute. But it's an interesting point, Your Honor, when we come to the question over the stuff over the election of remedies. This comes to a very major consideration. So much time has been spent on the interpretation of the lease. I would like to discuss the leasing statutes, if I may, at this point, rather hurriedly. Pardon me, I've lost the amount of time I have available.
Speaker: (Inaudible)
Leonard R. Hartenfeld: Thank you. Now, the Court of Appeals held that the statutes gave, and regardless of which of the statutes we talked about the 1916 Act or the 1947 Navy leasing statute, they read practically the same that if a national emergency occurs, the Navy has a right to cancel the lease, must retain the right to cancel the lease at anytime, and that is roughly or exactly the language of -- of both Acts. And the Government and the respondent both concede that it makes no difference under which Act we are discussing this case. The Court of Appeals held that the statute gave the Navy -- these both statutes gave the Navy the power to lease on a limited revocability basis, namely, Naval Aviation instead of limiting them for the Navy leases to those which be -- could be canceled for only governmental purposes. Now, this decision is a tremendous advantage to the Government, to the -- to the Navy, this decision of the Court of Appeals because by construing the statutes the way they did, the -- the Navy is given the power to use either one of these two methods. They can either put into the lease. The -- it must be canceled for any reason whatsoever, governmental purposes, or they can do what they do on our lease so that they can cancel for only Naval Aviation purposes or some other specific purpose which is the basic reason for the property being recaptured by the Navy. In other words, if the shipyard, then the revocation clause would be pinpointed to one who may be needed that shipyard again. Now, oddly enough, the Government in this case is challenging the grant to it a broad discretionary power is vested into it under the Seventh Circuit Court of Appeals' decision. Usually, the Government is always saying, “You're taking away our powers. We don't like it.” Here, the Government is getting an additional power by the construction of the Acts by the Seventh Circuit. Now, it's a strange thing that the Government is now asking this Court to deprive the Government of powers granted to it by the Court of Appeals. In other words, the Government is coming into this Court and saying, “Your Honors, we don't want these broad powers. We only want to be able to lease on the basis of a revocation where any governmental purpose is the basis for the revocation.” Now, this just doesn't sound like a federal agency. This is a futile and needless request being made by the Government in this case upon this Court because all the Navy has to do in the future in its leases is to put into the recaptured clause or the cancellation clause of its leases whichever provision it want if they want to put in broad powers so that it can be revoked only for governmental purposes, let them put it in. If they want to restrict it to shipyard purposes or any other purpose or in Naval Aviation purposes, let the Navy put it in. Now, this advantage is tremendous because here, we have the Secretary of Navy engaged in one of the largest, most comprehensive leasing programs in the United States. It's got shipyards, it's got airports, it's got practically everything. And the 1947 Act, I believe, if my memory is correct, also includes personal property as well as real estate. The vastness of this leasing program is tremendous.The statute in its own wording says that he shall have complete discretion as to what he does until we come to the one question that he -- one sentence that it must be cancelable at any time. Now, that word “at any time,” the Government is now adding the additional words for any governmental purpose. There's nothing in the statute saying any governmental purpose or isn't one word in there. All the statute say is that the lease must be canceled at any time during a national emergency. This is exactly what our lease does. Our lease says that it can be canceled for Naval Aviation activities at any time during the national emergency. This is the whole purpose of leasing to us in the first place. The Navy had an airport. The Navy wanted back in case of another war or national emergency and they reserve that right to have it back in case of another national emergency or war. And the Court of Appeals says it is absurd. It's ridiculous to construe a statute any other way. And a sensible reasonable businessman doing business with the Government, they have to -- you have to place the Secretary of the Navy in a position where he can negotiate contracts which will benefit the Navy in a sense that they will get solvent and financially responsible people to become lessees. Now, a sensible businessman will simply not expose himself to the hazards of a lease which can be cancelable for any reason whatsoever. And on that point, interestingly enough, the only case that has ever been decided to my knowledge on the very point we're talking about in the 1916 or the 1947 Act, there's a Hingham Management case which is cited by the Government in its brief. Now, interestingly first of all, that case has absolutely nothing to do with this one because the language is explicitly clear that -- that it followed -- that it can be -- release can be canceled at any time by the Secretary of the Navy for any purpose. There's no question the language is completely different. There is no preamble. There are no circumstances or anything else such as in this case. But it's an interesting case from this point of view. It was a case that involved lessees who turned into crooks and who stole the Navy's property. Now, that is the kind of an operator or a lessee the Navy is going to end up with if this Court is to hold that the leasing statutes must be construed to mean that they can be canceled for any governmental purpose whatsoever. It's just inconceivable as reasonable businessman or anyone to get into a venture like that. The only type of person that I can even think of who would get into a lease with the Government which said he could be canceled for any governmental purpose whatsoever is a sheepherder who has got maybe a thousand sheep and he has to run them over some grass that the Navy owns this practically revocable permit. They do this all the time in California. But a man who is leasing a shipyard and who has a payroll of thousands of people and who is putting in improvements on the property as we did just cannot take that type of a hazard. So the Court of Appeals says that it's unreasonable and absurd to construe the Navy leasing statutes in the manner which the Government is now contending the Board. Now, on page 38 of respondent's brief is an excerpt from the Senate Committee Report and the joint Army and Navy Department Letters to the Speaker of the House which tells the purpose of a 1947 statute and this is exactly the way I have been explaining it. This is what the Congress had in mind when they passed the statute.
Felix Frankfurter: What page is that?
Leonard R. Hartenfeld: 38, Your Honor. Well, the excerpt brief, while all of these plans and that would refer to airports or anything else, they have to be talking about plans, may not be adaptable to peacetime uses as many as possible will be leased to responsible companies which can operate them without making such changes as to prevent their being rapidly put back into operation in the event of an emergency. This is the purpose of the statute. The Navy gave us the lease and they wanted the property back exactly the way they gave it to us in 1947, and we're obligated as lessee to give it back to them exactly as this committee report says so that the Navy could rapidly put the airport back in the operation in the event of an emergency. It is conclusive, Your Honor, that Congress never intended the ridiculous construction of these -- of these leasing statutes that the Government is now contending for. It just doesn't make sense and the Court of Appeals said it didn't make sense and the trial court said it didn't make sense. On the election around this point, I think -- I -- I say this with all deference to the counsel for the Government. My -- our position, respondent's position on election of remedies was not stated exactly correctly. Number one, and I think the -- the guts of our argument might be summarized in two statements. By trying to contest title in condemnation, the Government wants to have its cake and also to eat it on the grounds of expediency. The doctrine of election of remedies will prevent this unconscionable result. And I would like to later describe how unconscionable it is to let this doctrine of election of remedies not apply to condemnation when it applies to every other field of law.
Earl Warren: We'll recess now, Mr. --