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WALLER, Circuit Judge. The only question involved in this case is whether or not the landowners in condemnation proceedings by the United States are entitled to compensation for the increased value to the lands caused by dredging, filling, and leveling of same by the United States while the lands were under lease to it or its agents, pripr to the institution of condemnation proceedings.
On February 15, and on April 15, 1941, the lands involved in this suit were leased by the owners to the Houston Shipbuilding Corporation at a stipulated yearly rental. In the leases it was contemplated that some dredging would be done and consent was given to deposit the spoil on the lands. In consequence of this dredging the filling and leveling of the lands were largely incidental. The Shipbuilding Corporation was an agency of the United States and for the purposes of this discussion it will be treated as if it were the United States, since the improvement of the lands, the building of the facilities and improvements, the operation of the shipyard, and the building of ships were all for the United States and at its expense.
The leases were each for a five-year period, with the right of renewal in the lessee for an additional five years, and each provided that at the expiration or termination the United States would be entitled to remove the facilities and improvements which it had placed upon the lands. No one questions the right of the United States to remove structural improvements and facilities, and no attempt is made to obtain payment for such improvements or facilities.
*76 . After the execution of the leases the United, States went into possession, dredged out an adjacent channel, filled in ■portions of the lands, and operated a shipyard upon some of the lands embraced in the leases. .On the 14th of November, 1942, or some 21 months after the execution of the leases, the United States instituted condemnation proceedings for. all of the leased lands, and obtained an order of the Court for immediate possession of the lands of which it was already in possession under the leases. Two years later, or on the 21st of October, 1944,. the United States filed a declaration of taking and deposited into the registry of the Court the amount which it deemed to be just compensation and thus obtained the fee simple title to the lands.
When a report of commissioners undertaking to fix just compensation was unsatisfactory to the United States the case was brought on for trial. There were submitted to the jury the following special issues that are pertinent to our consideration of the case: (1) the reasonable cash market value of the lands at the time of the making of the lease agreement by the Government ; (2) the reasonable cash market value of the lands at the time of the filing of the condemnation suit, excluding all improvements placed on the lands by the Government ;
1 (3) the reasonable cash market value of the lands on November 14, 1942, the date of taking, excluding all improvements placed or constructed on the lands by the Government, except improvements resulting from the dredging, filling, and leveling done by the Government. The jury fixed the value as to Parcel No. 1, or the 86.636 acres belonging to the Harris County-Houston Ship Channel Navigation District, and the State of Texas, in answer to the first two questions, at $850 per acre, and fixed the value, in answer to the last question, at $3,000 an acre, and made similar answers, but with different values, as to the other parcels owned by the other defendant. It is not necessary to set out the particular amounts so fixed as to all tracts but only to state that the value found after the dredging, filling, and leveling was considerably above the value as found prior thereto.Judgments were entered, based upon the value of the land determined by the jury at the time of the taking, excluding facilities and improvements constructed or erected, but including improvements resulting from dredging, filling, and leveling.
The Goverment insists that the Court erred in requiring the Government to pay for the increase in value of the lands caused by expenditures which it had made by dredging, filling, and leveling the land. Although it admits that the dredging, filling, and leveling were permissible under the leases and that such work was done solely for the purpose for which the lands were leased, and although it cannot be disputed that the land upon reversion at the termination of the lease would belong to the landowners in the improved condition, or, that is, with the dredging, filling, and leveling added, and although it did not own the fee simple title at the time of the filing of the condemnation suit, nevertheless, it insists 'that the landowners should not be paid anything for any fruits of the leases other than the annual rentals. The Government undertakes to support this contention by citing the rule, announced in a number of cases where the condemnor had leased lands with the right to remove any improvements placed by it thereon, that it did not have to pay, upon subsequent condemnation, for such improvements which, concededly, already belonged to it.
We know of no departure, in the decisions, from the rule thus asserted, in all cases where there were stipulations in the leases conferring upon the condemnor the right of removal of such improvements or where the condemnor had in good faith gone upon the lands and erected improvements in the bona fide belief that it had the right so to do, or where the circumstances were such that equity ought to hold that the
*77 condemnor, who owned the improvements, had the right to remove same.Appellant also seeks to invoice the doctrine announced in United States v. Miller, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336, 147 A.L.R. 55, that where persons acquire land within the area of a project to be undertaken by the United States, with foreknowledge that the land was in the project area to be acquired by purchase or condemnation for the use of the United States, such persons were not entitled to any increase in the value of the land occasioned by virtue •of the establishment of the project.
However, we have neither of these conditions here. -The United States was not authorized to take back the fill or to undo the leveling or to fill up the dredging. The dredging, filling, and leveling were done in furtherance of the purpose for which it had leased the lands, and were normal, incidental, and contemplated fruits of the leases which rightfully inured to the landowners and reverted to them at the end of the leases. The landowners had the right to receive the land back at the termination of the lease with the structures and facilities removed. But the leveling and filling of the land were not removable improvements within the contemplation and meaning of the provisions in the leases allowing removal by the lessee of facilities or improvements constructed on the lands.
The landowners had the fee title at all times. The United States had title to a leasehold interest or estate for a term of years, which leasehold estate was in the nature of an encumbrance or burden upon the fee simple title of the landowners, and which may or may not have affected its market value.
2 The United States already had possession and the right to retain same for a period of approximately nine years upon the payment of the stipulated annual rental, but the title to the land and the right to receive it back at the end of the leases belonged to the landowners.That the United States would improve landowners’ property by dredging, filling, and leveling was within the intent, purpose, and contemplation of the parties to the leases; that the United States would spend large sums of the taxpayers’ money to dis-improve, or unfill, or unlevel the lands upon the termination of the lease is fantastic and unthinkable, and not within the intent of the parties to the leases. The right to receive the lands back with the improvements to the lands as distinguished from improvements on the lands was a right implied in the leases that inhered in the landowners. This, together wdth the fee title, the Government condemned and took, and under the Fifth Amendment the landowners are entitled to receive just compensation therefor.
The landowners did not buy into a projected public improvement as in the Miller case. Instead, they owned property that the Government leased as a part of a project under leases that called for the privilege of occupancy of the lands for a term of years- — not for the fee simple ownership. The leases were valid contracts and by virtue of which the Government improved and increased the value of the lands in question —not by virtue of the establishment of a project. These contracts being valid and binding, the Government cannot, by determining that it wants to take entire title, abrogate, annul, or set at naught the lawful rights, privileges, and property of its lessees acquired under these contracts.
The judgment is affirmed.
. On each of these first two issues the jury found that there was no difference in the market value of the land between the' date of the making of the leases and the date of tbe filing of the condemnation suit, excluding tbe value of tbe improvemeñts placed thereon before tbe latter date. '
. The parties do not argue that the encumbrance on the title created by the lease exceeds the value of the rentals receivable under the lease which are eliminated by the condemnation.
Document Info
Docket Number: 12572
Citation Numbers: 180 F.2d 75, 1950 U.S. App. LEXIS 2366
Judges: McCord, Waller, Rice
Filed Date: 2/16/1950
Precedential Status: Precedential
Modified Date: 11/4/2024