Court Opinion

ID: 6903726
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:57:37.211469+00
Date Added: 2024-06-11T16:06:15.691603
License: Public Domain

DENMAN, Chief Judge
(dissenting).
This decision violates (a) the federal condemnation law, (b) the law of the State of Washington, and (c) the Fifth Amendment’s prohibition against the taking of property without compensation.
The court’s opinion, by failing to state succinctly the principal fact and the principal authority relied upon by the government, contains pages of discussion of irrelevant matter concerning formulae of compensation to the former landowners of the district in separate condemnation proceedings, none of whom are parties to this proceeding.
A. No landowner in the district has title in the district properties serving his land. His interest in the district properties held by the district in a proprietary capacity is no more than that of a stockholder in the properties of a corporation serving him by its dividends. Hence no title in the district properties is acquired by a purchase from a prior landowner of land so served.
This is apparent from the decision of the Washington Supreme Court In re Horse Heaven Irrigation District, 11 Wash.2d 218, 227, 118 P.2d 972, 976, where that court held:
“An irrigation district is a corporation which * * * owns and uses its property in a strictly proprietary capacity for the primary benefit of the owners of land included within the district. With the acquisition as owner of land in an irrigation district that owner immediately acquires an interest in all property of that district. When the district ceases to be a district the interest of that owner is as definite and certain as is the interest of a shareholder in an ordinary corporation.” (Emphasis supplied.)
Of this quotation, the government states:
“Accordingly, the court held that the distribution should be confined to those who owned land in the District at the time it was dissolved.” (Emphasis supplied.)
B. Like the stockholder, the private landowner, when he sells his land, includes *534in its value his anticipated value on distribution of the corporation’s assets.
Such a factor in the sale or condemnation of private land served by the district or in the sale of stock does not convey any title in the properties of the corporation serving the private landowner or stockholder.
This is the fundamental error in the court’s opinion. It is elemental. that the government got no more in acquiring some of the land by condemnation than it acquired by direct purchase from the landowner. In condemnation the jury properly should consider, in valuing the land of the private owner, the anticipated value of the corporation’s properties on dissolution.
The value of this interest in the anticipated distribution is in all the corporation properties, both those directly serving the privately owned land and also, here, the plant producing power sold to a non-landowner.
If, in the condemnation proceedings against the private landowners, the jury was not allowed to include in the value of their land the anticipated value at dissolution of either the factor of the irrigation ditches and canals owned by the district or the factor of the power plant, that error could be cured only on appeal here by the individual wronged. It is admitted that none has appealed. Hence if the government acquired the privately held land for less than its real value, no private landowner can now complain. The government now owns all the land in the district, with its anticipated value upon distribution at the district’s dissolution of all the district properties.
It is elemental that, because the government now holds all the privately owned land, that mere ownership does not constitute the statutory dissolution of the corporation.
C. In federal condemnation proceedings, it is now the law of this circuit that the government acquiring the stock of a corporation at once acquires, pro tanto, title to the corporation’s assets.
This necessarily follows from the court’s opinion that the Horse Heaven case is controlling. There it is squarely held that the interest of the private landowner in the assets of corporate district is identical with that of the stockholder in his corporation’s assets.
That this is contrary to universally recognized corporate law is stated in Rhode Island Hospital Trust Co. v. Doughton, 270 U.S. 69, at page 81, 46 S.Ct. 256, at page 258, 70 L.Ed. 475, 43 A.L.R. 1374:
“The owner of the shares of stock in a company is not the owner of the corporation’s property. He has a right to share in the earnings of the corporation, as they may be declared in dividends, arising from the use of all its property. In the dissolution of the corporation he may take his proportionate share in what is left, after all the debts of the corporation have been paid and the assets are divided in accordance with the law of its creation. But he does not own the corporate property." (Emphasis supplied.)
D. The court’s decision violates the Fifth Amendment. It is now the federal condemnation law of this circuit that the condemning court need not pay the corporate owner of condemned properties the judgment for this amount, but that it may withhold it until the corporation is dissolved.
This court holds that the district corporation is entitled to an award of some $473,356 for its properties condemned to the government. It holds that the district may never be paid these moneys, but that they shall be paid into court to be held in the district court for distribution after the conclusion of a state court proceeding for the dissolution of the corporation holding such a judgment. Then, if the government still owns all the land, it will be repaid its deposit. It will never be paid to the successful litigant, though it well may need funds for the expenses of dissolution, if dissolved.
Nowhere does the condemnation legislation warrant such a withholding of the judgment awarded for taking the title of one’s properties. The government does not become merged into the corporation by reason of the ownership of all the privately held land, any more than it does when it acquires all the stock of a corporation.
*535In United States v. Strang, 254 U.S. 491, 41 S.Ct. 165, 65 L.Ed. 368, the court affirmed a sustaining of a demurrer to an indictment charging defendant with violating Section 41, Criminal Code [now 18 U.S.C.A. § 434], which made it a felony for an officer of a corporation or member of a firm to be employed as agent of the United States for the transaction of business with such firm. Defendant was an employee of the Fleet Corporation, all the stock of which was owned by the United States. He was also a member of a partnership, a :ship outfitting company. As agent for the .Fleet Corporation he signed three orders for the outfitting company to repair and alter a ship. The court said, 254 U.S. at page 493, 41 S.Ct. at page 166, 65 L.Ed. 368:
“Notwithstanding all its [Fleet Corporation’s] stock was owned by the United States it must be regarded as a separate entity * * *. Generally agents of a corporation are not agents of the stockholders and cannot contract for the latter. Apparently this was one reason why Congress authorized organization of the Fleet Corporation.”
From the above, it is apparent that this court is enabling the government to deprive the district of its properties without just compensation, in violation of the Fifth Amendment to the Constitution.
The judgment should be reversed.