Court Opinion

ID: 9442347
Source: CourtListenerOpinion
Date Created: 2023-08-03 18:44:30.723509+00
Date Added: 2024-06-11T17:29:04.112213
License: Public Domain

McCORD, Circuit Judge,
(dissenting).
The verities involved in this case, as 1 see them, are whether the obligation of the government to pay “just compensation” to a landowner under the Fifth Amendment for private property condemned to public use, requires the government to compensate the landowner for an addition to the value of the property created solely by improvements made thereon by the government at government expense.
It is without dispute that solely by reason of money spent by the government in im*78proving the condemned property and building a shipyard thereon for the prosecution of the war, the value of the property was increased by $332,297.15, or from $387,800.-60 to $720,097.15. Thus, in .requiring the government to pay these property owners for this increase in the value of the property broughf about solely by the government and at its expense, the court has unjustly penalized the government by awarding more than the “just compensation” guaranteed by the Fifth Amendment. Searl v. School-District No. 2, of Lake County, 133 U.S. 553, 10 S.Ct. 374, 33 L.Ed. 740; Consolidated Turnpike Co. v. Norfolk & O. V. Ry. Co., 228 U.S. 596, 602, 33 S.Ct. 605, 57 L.Ed. 982; United States v. Miller, 317 U.S. 369, 377, 63 S.Ct. 276, 87 L.Ed. 336, 147 A.L.R. 55.
The conclusion of the majority to the effect that the parties did not intend that the government would have the right to nullify the improvements it had made in the dredging, filling, and leveling of the land is not supported by a fair interpretation of the lease contract. The lease clearly reveals that all parties contemplated the government was authorized thereunder to make whatever changes or improvements to the land it found necessary to effectuate and promote -the object for which the lands were initially leased and later condemned— the construction of a shipyard to build ships with which to wage war. Moreover, the government had an absolute right under the leases, during the ten year term in which they were supposed to run, to change, nullify, or completely destroy these dredging, filling, and leveling improvements to the land, if it considered such action necessary in the national interest for the more efficient prosecution of the war. It is quite conceivable that some urgent war necessity during the term of government occupancy under these lease agreements, such as an enlargement of the shipyard facilities or otherwise, might have rendered the destruction of the improvements for which compensation is now sought absolutely necessary. How can this court then hold, as a matter of law, that the exercise by the government in its discretion of its undoubted right under the lease to nullify, these improvements to the land, during the term of the lease agreement, would have been “fantastic and unthinkable”. The majority decision, in effect, penalizes the government not because this right did not exist, but merely for its failure to exercise this right before seeking to condemn the land.
The government could have condemned these lands at the time the leases were executed, and the lease agreements contain nothing to show that, in order to hold on to its large investment, the government would not later exercise its right of condemnation. Old Dominion Land Co. v. U. S., 269 U.S. 55, 65-66, 46 S.Ct. 39, 70 L.Ed. 162; U. S. v. 674 Acres of Land, 5 Cir., 148 F.2d 618, 620. Manifestly, this case falls within the orbit of the rule enunciated by our Court of Last Resort in the case of Searl v. School-District No. 2, of Lake County, 133 U.S. 553, 10 S.Ct. 374, 377, wherein it was held: “ * * * The occupancy here was in no respect for a private purpose or pecuniary gain, but strictly and wholly for the public use. There could be no presumption that this public agent intended to confer public property upon a private individual * *
The equitable doctrine that a condemnor is not obliged to compensate a property owner for an enhancement in the value of property which he has created has long been established. Lyon v. Green Bay & Minnesota Ry. Co., 42 Wis. 538, 544-545; Morgan’s Appeal, 39 Mich. 675, 679-680; Greve v. First Div. St. Paul & Pac. R. Co., 26 Minn. 66, 70, 1 N.W. 816; Jones v. New Orleans & S. R. Co., 70 Ala. 227, 233-234; Louisville, N. O. & T. R. Co. v. Dickson, 63 Miss. 380, 385, 56 Am.Rep. 809; Preston v. Sabine & E. T. Ry. Co., 70 Tex. 375, 7 S.W. 825; Jacksonville, T. & K. W. R. Co. v. Adams, 28 Fla. 631, 638, 10 So. 465, 14 L.R.A. 533; Charleston & W. C. Ry. Co. v. Hughes, 105 Ga. 1, 15-18, 30 S.E. 972, 70 Am.St.Rep. 17; U. S. v. Smith, D. C., 110 F. 338, 340; Bear Gulch Placer Mining Co. v. Walsh, D.C., 198 F. 351, 355.
The improvements to these lands were made by the government at government expense solely for public purposes to aid in winning the war, and without any intention *79of conferring a financial windfall upon the landowners, if and when the leases were terminated or the lands condemned, by requiring the government to “compensate” these landowners for improvements which cost them nothing and which they had never made. The majority decision holds that the government, having already fulfilled its obligation under the lease by paying substantial annual rentals for the property and the heavy cost of all improvements made thereon, must nevertheless be subjected to the double expense of paying the landowners for the value of government improvements which, under the lease agreement and on the clearest equitable principles, they were never entitled to receive. I cannot subscribe to any such doctrine, which seems to require not only “just compensation”, but unjust enrichment of private landowners at the expense of the taxpayer and the public purse. In so holding, the majority decision has violated an early mandate of our Supreme Court “to see that it (compensation) is just, not merely to the individual whose property is taken, but to the public which is to pay for it." (Italics mine.) Searl v. School-District No. 2, of Lake County, 133 U.S. 553, 562, 10 S.Ct. 374, 377.
I respectfully dissent.