United States v. Merchants Matrix Cut Syndicate, Inc.
Opinion of the Court
Condemnation proceedings
Prior to any proceedings, now under scrutiny, Clark-Congress acquired five ground leases
RAND-MeNALLY —Lessor CLARK-CONGRESS CORP. — Lessor Area Period Period Defendant Floor Sq. feet Lease Dated Commencing Ending Lease Dated Commencing Ending Merchants Advertising:’ Intertype: 8th 10,000 May 19, 1949 Room 844 8th 20,000 June 16, 1949 10th 10,500 Nov. 19, Jan. 1, 1948 1949 Aug. 31, 1953 Dec. 31 1958 Apr. 27, 1951 Feb. 10, 1950 May 1, 1951 May 1, 1950 Aug. 31 1953 Apr. 30, 1955
By its agreement dated June 22, 1951, Clark-Congress, leased the entire Rand McNally Building to the United States of America, commencing January 1, 1952, and ending December 31, 1956, subject to extension and earlier termination. Clause 25 of that lease contains, inter alia, this wording: “This lease has been entered into by the parties in lieu of condemnation proceedings or an award therein, the Government having indicated that it was considering condemnation proceedings to acquire the rights herein granted to the Government.”
At this juncture it is pertinent to parenthetically note that Rule 71A, and the amendment to Rule 81(a), Federal Rules of Civil Procedure, 28 U.S.C.A. became effective August 1, 1951, 341 U.S. 959, 962.
Under its declaration
By exercising its sovereign power, Kohl v. United States, 1875, 91 U.S. 367
After the government moved for an order directing delivery of possession, defendants Merchants and Advertising each filed answers containing cross-claims against their landlord, co-defendant, Clark-Congress; Intertype also answered, but counterclaimed against that co-defendant landlord.
Since appeals numbered 11018, 11019 and 11020 contain a core issue common to all three, stemming from an interpretation of Rule 71A, Fed.R.Civ.Proc., 28 U.S.C.A. § 2072, we will consider that problem first.
The trial court denied motions to strike the cross-claims and counterclaims interposed by the Government and Clark-Congress Corporation, their challenges to these pleadings being bottomed on a theory of non-conformity with subdivision (e) of Rule 71A. Subsequently, Clark-Congress answered both cross-claims and counterclaim and, after a trial on the merits the judgment already mentioned was entered against Clark-Congress. Without a specific interdiction in Rule 71A against cross-claims or counterclaims we must decide if such pleadings may be presented, and claims asserted against co-party defendant Clark-Congress, in this condemnation case.
Rule 71A adopted pursuant to the Supreme Court’s order,
This is a rule built upon an area formerly wanting in uniformity (Report of the Advisory Committee on Federal Rules of Civil Procedure Recommending Amendments, 5 F.R.D. 339, 357) and for which no specific provision had been promulgated in the first set
On June 10, 1947, the Advisory Committee, appointed by the Supreme Court, reported 7 F.R.D. 503 a preliminary draft
Simply as indicative of their approach and perspective, we quote several passages from the Advisory Committee’s commentary on Rule 71A, contained in their Report and transmitted with that Rule by Chief Justice Vinson to Congress :
“The purpose of Rule 71A is to provide a uniform procedure for condemnation in the federal district courts, including the District of Columbia. To achieve this purpose Rule 71A prescribes such specialized procedure as is required by condemnation proceedings, otherwise it utilizes the general framework of the Federal Rules where specific detail is unnecessary. The adoption of Rule 71A, of course, renders paragraph (7) of Rule 81(a) unnecessary, * * * ” 11 F.R.D. 213, 238, 239. (Emphasis supplied.)
“Since the general standards of pleading are stated in other rules, paragraph (2) [Rule 71A] prescribes only the necessary detail for condemnation proceedings * * Id., 11 F.R.D. 240.
“ * * * Departing from the scheme of Rule 12, subdivision (e) [Rule 71A] requires all defenses and objections to be presented in an answer and does not authorize a preliminary motion. There is little need for the latter in condemnation proceedings. The general standard of pleading is governed by other rules, particularly Rule 8, and this subdivision (e) merely prescribes what matters the answer should set forth. * * * ” Id., 11 F.R.D. 241.
“ * * * A condemnation action is a proceeding in rem. Commencement of the action as against a defendant by virtue of his joinder pursuant to subdivision (c) (2) is the point of cut off * * Id., 11 F.R.D. 242.
Plainly, Rule 71A simply blueprints uniform procedure
We have no precise authoritative indication that the Supreme Court, exercising its rule-making power, wished to countenance a determination of such claims, as are now before us, in eminent domain cases, unless it be said that the solution lies in the introductory paragraph (a) to Rule 71A. Cross-claims against co-defendants are so rare in condemnation cases we doubt if such matters were even considered in preparing Rule 71 A. Yet, we are confronted with an express direction, in paragraph (a), seemingly giving full play to other Rules of Civil Procedure, “except as otherwise provided” in Rule 71A. Silence of this latter Rule makes it necessary to examine Rule 13 under which Merchants, Advertising and Intertype seek shelter.
At the threshold we record our further awareness that Rule 13 would prevent circuity of actions and multiplicity of suits, indeed these were among the prime reasons stimulating its adoption; practicality, however, is the true taproot of Rule 13. We are cited to Collier v. Harvey, 10 Cir., 1949, 179 F.2d 664, where Chief Judge Phillips discussed the broad sweep of Rule 13(g), but not in relation to Rule 71A. Moore v. N. Y. Cotton Exchange, 1926, 270 U.S. 593, 46
By resolving contentions raised against applying Rule 13 to condemnation cases we come to the contents of these three claims and evidence introduced in support of them. Merchants, Intertype and Advertising postulate theories of conspiracy among and between, the Government, General Services Administration and Clark-Congress, as an apparatus for the condemnor to prematurely terminate those three tenancies derived from Clark-Congress, lessor. Cohesive substance for this plot, they allege, is supplied by the June 1951 lease between Clark-Congress and the Government, despite a clause, therein reciting that this lease was in lieu of condemnation. In short, these three claimants are unablé to envisage consensual transactions in connection with condemnation proceedings. See: U. S. v. Certain Parcels of Land, etc., 1953, 345 U.S. 344, 348, 73 S.Ct. 693, 97 L.Ed. 1061; See also: U. S. v. Carmack, 1946, 329 U.S. 230, 243, 67 S.Ct. 252, 91 L.Ed. 209. But all titles to, and interests in, lands are held subject to the sovereign power of eminent domain. Goodyear Shoe Machinery v. Boston Terminal Co., 1900, 176 Mass. 115, 57 N.E. 214. Certainly, the Government’s need for quarters shaped itself in obedience to currents other than those flowing from a plot with Clark-Congress. Indeed, these claimants do not go so far behind this taking, by urging a conspiracy to activate the Government power of eminent domain. What they describe equates to an arrangement whereby Clark-Congress leased their spaces, in the Rand-McNally Building, to the Government, so that when the sovereign thus became a co-tenant, with them, it could embark on “a course of harassment, pressure and threats” looking toward compelling these three tenants to abandon or surrender possession. Relying on that pattern, sketched in their pleadings, each claimant urges breaches and violations of covenants of quiet enjoyment and peaceable possession because Clark-Congress, allegedly, ratified, sanctioned and acquiesced in the Governmental acts culminating with instituting this condemnation case. Regardless of how it is articulated each such pleading reverts to, and each is bottomed, on, claiming damages because these three tenants had to find quarters elsewhere, and move. Whether the ultimate theory of recovery against Clark-Congress is conveniently blurred in the pleadings or evidence is now beside the mark, since a declaration of taking was filed and processed. Merchants, Intertype and Clark-Congress were entitled to just compensation
Their landlord, Clark-Congress, moved for a new trial pursuant to Rule 59, Fed.R.Civ.Proc., 28 U.S.C.A. and by appropriate motion under Rule 52(b), Fed.R.Civ.Proc. 28 U.S.C.A., sought to have the trial judge amend his findings of fact; at the same time stating objections to the recorded findings. Both motions were overruled. While the challenged findings are detailed, they are estranged from significant items of evidence disclosed by this record. Of course, we are not now retrying issues of fact nor trenching upon the province allotted a trier of facts below. But we do think that the findings, inter alia, which exhibit computations of damages predicated upon the “cost of moving out” of the premises in question, flow from errors of law impairing the three judgments against Clark-Congress. Moving expenses are so inextricably woven into the termination of these leases upon the taking of the Government [U. S. v. Advertising Checking Bureau, 7 Cir., 1953, 204 F.2d 770, 772] that they cannot be recovered indirectly, or on the side.
Various elements itemized by the trial judge in his findings of “actual damage,” and underlying the three judgments he entered against Clark-Congress, bear striking resemblance to those which the respondent in United States v. General Motors Corp., 1945, 323 U.S. 373, 376, 65 S.Ct. 357, 89 L.Ed. 311, offered to prove on the issue of compensation from the Government. But such costs were not there tendered in support of a claim against a co-defendant landlord in Clark-Congress’ position here. Moreover, only Intertype’s lease, by its terms, extends beyond December 31, 1956; leases of Merchants and Advertising would have expired prior to that date. At this juncture we might well recall the Government pleading stating that its interest, acquired through condemnation was to be “ * * * extendible for an additional five-year term * * * ”, after December 31, 1956.
Speaking for the majority in United States v. Westinghouse Elec. & Mfg. Co., 1950, 339 U.S. 261, 263-264, 70 S.Ct. 644, 646, 94 L.Ed. 816, Mr. Justice Frankfurter carefully delimited the holding of United States v. General Motors Corp., 1945, 323 U.S. 373, 65 S.Ct. 357, 89 L.Ed. 311, and stated, inter alia:
*98 “When there is an entire taking of a condemnee’s property, whether that property represents the interest in a leasehold or a fee, the expenses of removal or of relocation are not to be included in valuing what is taken. That rule was found inapplicable to the new situation presented by the General Motors case — inapplicable, that is, where what was to be valued was ‘a right of temporary occupancy of a building equipped for the eondemnee’s business, filled with his commodities, and presumably to be reoccupied and used, as before, to the end of the lease term on the termination of the Government’s use’ * * *.
“Petty Motor (U. S. v. Petty Motor Co., 1946, 327 U.S. 372, 66 S.Ct. 596, 90 L.Ed. 729) made clear that the taking of the whole of a tenant’s lease does not fall within the General Motors doctrine * * *
Mirrored against these enunciations of basic principles, there emerges strong implications that Merchants, Intertype and Advertising were attempting to recover from Clark-Congress for items not compensable by the sovereign. Advertising was precluded from governmental compensation for the reasons we discussed in United States v. Advertising Cheeking Bureau, Inc., 7 Cir., 1953, 204 F.2d 770. And, Intertype argues (its brief, 46), as we just said, that such costs were not included in its award. Of course, Intertype’s reasoning may explain why it pursues Clark-Congress, but that is hardly legalistic support for such cross-claim. Furthermore, as between Intertype and the Government, “An award based on removal costs will of course be delayed until it is known whether the Government’s occupancy has exhausted the tenant’s leasehold.” United States v. Westinghouse Elec. & Mfg. Co., 1950, 339 U.S. 261, 268, 70 S.Ct. 644, 648, 94 L.Ed. 816.
All too frequently, profit seeking motives creep into condemnation cases. This observation, no doubt, will be distasteful to those who envisage the pub* lie treasury as fair game in such proceedings. Though competitive existence in our society may stimulate such desires, just compensation, only, remains the yardstick in eminent domain proceedings. Kimball Laundry Co. v. United States, 1949, 338 U.S. 1, 69 S.Ct. 1434, 93 L.Ed. 1765, 7 A.L.R.2d 1280. When the Treasurer disburses compensation in obedience to an order of award, based on condemnation proceedings, public dollars stand in lieu of land, premises or interests, so acquired, and thereafter devoted to public use. “The Constitution and the statutes”, Mr. Justice Reed noted, delivering the majority opinion in United States v. Petty Motor Co., 1946, 327 U.S. 372, 377, 66 S.Ct. 596, 599, 90 L.Ed. 729, “do not define the meaning of just compensation. But it has come to be recognized that just compensation is the value of the interest taken.”
A recital of various other pieces and portions of evidence disclosed by this record, is unnecessary to this opinion because we think United States v. Petty Motor Co., 1946, 327 U.S. 372, 66 S.Ct. 596, 90 L.Ed. 729; United States v. General Motors Corp., 1945, 323 U.S. 373, 65 S.Ct. 357, 89 L.Ed. 311; United States v. Westinghouse, 1950, 339 U.S. 261, 70 S.Ct. 644, 94 L.Ed. 816, contain the law applicable to, and determinative of, the major points raised by the Government’s appeal in case number 11017. We think those three cited cases are the benchmarks by which the trial court should be guided on this remand.
Since condemnation juries are impaneled only for deciding compensation they commence deliberations in a positive awarding-state-of-mind. An especially delicate equilibrium, acutely sensitive to factors influencing the quantum of award, is present throughout such trials. Perhaps we are underscoring the obvious, but it is our opinion that the jurors critical and difficult function, here, should not be further complicated by blurred and insufficient instructions or by improper arguments. [See e. g.: United States v. Miller, 1943, 317 U.S. 369, 381,
The judgments in case number 11017, are reversed and remanded to the District Court for a new trial and proceedings consistent with the views expressed in this opinion.
Each judgment entered on the respective cross-claims of Merchants Matrix Cut Syndicate, Inc., and Advertising Checking Bureau, Inc., and on the counterclaim of Intertype Corporation, being appeals numbered 11018, 11019 and 11020, is hereby reversed and remanded to the District Court with directions to sustain
Reversed and remanded with directions.
. Authority for this taking was set forth in tiie complaint, viz.: Act of August 1, 1888, 25 Stat. 357 U.S.C.A. title 40, § 257; Act of August 27, 1935, 49 Stat. 886, U.S.C.A. title 40, § 304c, as amend-e<3 by the Act of June 14, 1946, 60 Stat. 257 and the Federal Property and Administrative Services Act of 1949, approved June 30, 1949, 63 Stat. 377, as amended.
. Clause 12, T.R. 980, in the lease between Clark-Congress Corporation and The United States of America describes these documents.
. For authority, Jess Larson, Administrator of General Services of the United States pleaded the: Act of August 1, 1888, 25 Stat. 357, U.S.C. Title 40, § 257; Act of February 26, 1931, 46 Stat. 1421, U.S.C. Title 40, §§ 258a to 258e; Act of August 27, 1935, 49 Stat. 886, U.S. C. Title 40, § 304c, as amended by the Act of June 14,1946, 60 Stat. 257, and the Federal Property and Administrative Services Act of 1949, approved June 30, 1949, 63 Stat. 377, as amended.
. Pursuant to the Act of August 27, 1935, as amended, U.S.C.A. title 40, § 304c.
. Cross-claimants exhibit No. 1 consists of various documents issued by the Secretary of State of Illinois, concerning the dissolution of this corporate defendant. On December 27, 1951, the Secretary issued a certificate of dissolution.
. Such rule-making power stems from the Enabling Act. Act of June 19, 1934, c. 651, §§ 1, 2, 48 Stat. 1064, 28 U.S.C. §§ 723b, 723c.
. Applicability of Federal Rules of Civil Procedure to condemnation proceedings, was foi’merly regulated by this portion of Rule 81, contained in its subparagraph (7): “In proceedings for condemnation of property under the power of eminent domain, these rules govern appeals but are not otherwise applicable.”
. “The Committee * * * drafted a Condemnation Rule which appeared for the first time as Rule 74 of the April 1937 Draft * * * ” For various reasons “ * * * the Advisory Committee in its Final Report to the Court in November 1937 proposed that all of Rule 74 be stricken and that the Federal Rules be made applicable only to appeals in condemnation cases * * * the Committee proposed a rule 71A, on the subject of condemnation in its Preliminary Draft of May 1944 * * * the amendments which the Court adopted in December 1946 did not deal with condemnation * * *.” 7 F.R.D. 503, 512. See also: Report of the Advisory Committee on Federal Rules of Civil Procedure Recommending Amendments, 5 F.R.D. 339, 357.
. “ * * * in 1931 it was said that there were 269 different methods of judicial procedure in different classes of condemnation cases * * 6 Nichols, Eminent Domain, 294 [§ 27.2(2)] citing the First Report of Judicial Council of Michigan (1931) § 46, pp. 55 ff. Rule 71A supersedes the Conformity Act, 40 Ü.S.C.A. § 258. That statute treated with “practice, pleadings, forms and proceedings and not with matters of substantive laws.” U. S. v. 243.22 Acres of Land, etc., 43 F.Supp. 561, 565; Id., 2 Cir., 1942, 129 F.2d 678.
. See e.g. Douglas v. Wisconsin Alumni Research Foundation, D.C.N.D.Ill. 1948, 81 F.Supp. 167 on the compulsory counterclaim aspect and Kauffman v. Kebert, D.C.W.D.Pa. 1954, 16 F.R.D. 225. Judge Lindley, of our court, discussed jurisdictional problems stemming from eounterclaims in Carter Oil Co. v. Wood, D. C.E.D.Ill. 1946, 30 F.Supp. 875; Lesnick v. Public Industrials Corp., 2 Cir., 1944, 144 F.2d 968.
Governmental Immunity From Counterclaims is treated by a note in 50 Col. L.Rev. 505 (1950); See also: Shulman and Jaegerman, Some Jurisdictional Limitations in Federal Procedure, 45 Yale L.J. 393, 410 (1936) ; A. M. Dobie, The Federal Rules of Civil Procedure, 25 Col. L.Rev. 261, 267 (1939).
. Motions to strike parts of the answers, and cross-claims of Merchants and Advertising, and Intertype’s counterclaim, were filed by the Government below.
. An interesting sidelight, here, is supplied by this colloquy during Proceedings of the Institute on Federal Rules, July 21, to 23, 1938, upon considerations of Rule 13:
“Mr. J. R. Keaton: * * * Does that mean that if A should sue B for tort, an automobile accident, we will say, that B might come back with a promissory note and adjust that in the same suit?
“Mr. Clark (then Dean, Yale University School of Daw, Reporter to the Supreme Court Advisory Committee): It certainly does.”
“Mr. Keaton: All of the claims, whether involving a contract or tort, can be settled in the same suit?
“Mr. Clark. Yes. * * * ”
Speaking of freely filing counterclaims, Dean Clark continued: “ * * * Why should you require, for example, that a party should pay $5000 on a promissory note when he is sued and is soon going to collect $5000 on a tort? Why shouldn’t you settle it all at one time and have it ended?” Regarding (g), Dean Clark remarked, inter alia, “ * * * one defendant may make a cross-claim against another defendant. Fed.Rule Civ.Proc. Proceedings of the A. B. A. Inst., Cleveland, 1938, pp. 248 if.
After Dean Clark’s appointment to the Second Circuit Court of Appeals he authored an article entitled Special Problems In Drafting And Interpreting Procedural Codes And Rules, 3 Vand.R.Rev. 493, 497 (1950) in which he ventilates some of the notions to which we refer.
. e. g. Chief Judge Biggs held that Rule 52 applied to federal condemnation cases in United States v. Certain Parcels of Land in Philadelphia, 3 Cir., 1954, 215 F.2d 140, 145.
. Verdicts of the jury were as follows: “For the taking of the leasehold estate of Intertype Corporation ■* * * $131,-500.00.” “For the taking of the leasehold estate of Merchants Matrix Cut
Our previous opinion, United States v. Advertising Checking Bureau, 7 Cir,, 1953, 204 F.2d 770, concerned the condemnation clause in Advertising’s lease with Clark-Congress and we then held the trial judges ruling, that Advertising was entitled to no award, was correct.
. This tenant, of course, covenanted away its right to compensation as we hereinafter point out.
. In his findings of fact, the trial judge, stated that “actual damages” suffered were as follows:
Merchants $44,027.91
Intertype 41,498.98
Advertising 96,949.78
These damages were awarded to each claimant respectively because “the un-contradicted evidence in this case shows that each claimant suffered the aforesaid actual damages by reason of the wrongful acts of Clark-Congress Corporation,” and three separate judgments entered accordingly.
. Intertype states, in the argument portion, of its brief (p. 17) in Case No. 11018: “In order to protect their rights in the event that the counterclaims and cross-claims should be disallowed in this case, and in order to avoid the running
The marginal note in the amicus curiae brief filed by the Government in Nos. 11018, 11019, 11020, follows: “Another possible basis for financial interest of the United States in these cases arises from the fact that similar claims have been asserted under the Federal Tort Claims Act and are now pending in the court below, (p. 14.)
Concurring Opinion
I concur in the result.
Reference
- Full Case Name
- United States v. MERCHANTS MATRIX CUT SYNDICATE, Inc., and Intertype Corporation, Cross-Claimants-Appellees INTERTYPE CORPORATION, Cross-Claimant-Appellee v. CLARK-CONGRESS CORPORATION, Cross-Defendant-Appellant MERCHANTS MATRIX CUT SYNDICATE, Inc., Cross-Claimant-Appellee v. CLARK-CONGRESS CORPORATION, Cross-Defendant-Appellant THE ADVERTISING CHECKING BUREAU, Inc., Cross-Claimant-Appellee v. CLARK-CONGRESS CORPORATION, Cross-Defendant-Appellant
- Cited By
- 2 cases
- Status
- Published