Whitford v. Engel

Mr. Justice Van Obsdel

delivered the opinion of the Court:

With the conclusion of the court below that there was a breach of the covenant by defendant, and that plaintiffs are entitled to recover therefor, we agree. The lease contemplated the erection of the building within a reasonable time, certainly within *456 five years, or else why the agreement as to the arbitration should the government determine to take the property within that period ? The covenant was a part of the consideration for the lease, and plaintiffs were entitled to a timely compliance with its terms, so that they would either, at the termination of the lease, have an established business, or, in the event of the taking of the property by the government, have the advantage of the enhanced value due to the erection of the buildings and the establishment of the business therein.

It is urged by defendant that, inasmuch as the value of the lease was considered in the condemnation proceedings, the rights of plaintiffs under this covenant must have constituted an element in the award. There is nothing in the record to support this deduction, and it is doubtful if the contemplated erection of this building would be a proper element to consider in arriving at the market value of the property at the date of the taking by the government. Besides, the lease by its express terms expired with the event of the taking; hence, it had no prospective value. But a complete answer to defendant’s contention is that any terms of settlement, however favorable to plaintiffs, which might have been made between plaintiffs and the government, cannot be invoked by defendant as a justification for his failure to comply with the terms of his agreement, or as a proper defense in this action.

The contention of defendant that the extinguishment of the lease by the act of condemnation relieved him from liability under the covenant is without merit. It is settled law, in line with the authorities cited by defendant, that, where a lease is extinguished by the taking of the demised premises under the right of eminent domain, further liability for the payment of rent ceases. But here the taking was anticipated by the parties, and the lease was conditioned upon the happening of that event. In that event, it contemplated two things,—adjustment for the improvements to he erected by defendant under the terms of the covenant in question, and the termination of the lease. Of course, no question could arise touching the liability of defendant for rent after the date of the taking by the government, for *457 the lease by its terms had expired; but this action is for an accrued indebtedness on that date, and not for a future liability.

A more difficult proposition is presented by the contention of defendant that the government determined to take the property within ten years from the execution of the lease, and, conceding his breach of the covenant, his liability, at most, could amount only to two thirds of the agreed cost of the building. By the act of Congress of June 25, 1910 (36 Stat. at L. 738, chap. 384), provision was made for the acquiring of land for the enlargement of the Capitol grounds. The property here in question was embraced in the land to be acquired. The act created a commission, which was “authorized and directed to acquire said premises by purchase, condemnation, or otherwise.” If they could not acquire the property by purchase, they were authorized to institute condemnation proceedings according to the provisions of the act of Congress of August 30, 1890 (26 Stat. at L. 412, chap. 837, Comp. Stat. 1913, § 6914). The commissioners failed to acquire this property by purchase, and, accordingly, instituted condemnation proceedings, which did not reach a final judgment and determination in the supreme court of the District until March 1, 1913, when the order was entered upon the mandate of this court, and payment was made by the government to plaintiffs in full.

It is well settled that the government of the United States in condemnation proceedings to acquire lands for public use may abandon the proceedings at any time up to the date of actual payment. Indeed, the act of 1890 expressly provides, after authorizing the payments to be made either directly to the owner or by deposit in the Treasury to the credit of the owner, that “when such payments are so made, or the amounts belonging to persons to whom payment shall not be made are so deposited, the said lands shall be deemed to be condemned and taken by the United States for the public use.” Thus, by the terms of the statute governing this case, the condemnation was not complete until payment was made on May 1, 1913.

But this is the established rule in this jurisdiction. As announced by Mr. Justice Kobb in District of Columbia v. Hess, *458 35 App. D. C. 38, 28 L.R.A.(N.S.) 91: “A proceeding to condemn property for public use is not in the nature of a contract between the owner and the condemning party, and until the property is actually taken and compensation is made or provided, the power of the condemning party over the matter is not exhausted. Garrison v. New York, 21 Wall. 196 , 22 L. ed. 612; District of Columbia v. Prospect Rill Cemetery, 5 App. D. C. 497; Boss v. United States, 8 App. D. C. 32. Accordingly it. is a rule of almost universal application that, in the absence of any statutory provision showing a legislative intent to the contrary, condemnation proceedings may be discontinued by the condemning party at anytime before the right of the property owner has become complete. Manion v. Louisville, St. L. & T. R. Co. 90 Ky. 491 , 14 S. W. 532 ; Simpson v. Kansas City, 111 Mo. 237 , 20 S. W. 38 ; O’Neill v. Rudson County, 41 N. J. L. 161; Nichols, Em. Dom. §§ 337, 338.”

In United States v. Oregon R. & Nav. Co. 9 Sawy. 61 , 16 Fed. 524 , it was held that, in the absence of a statute fixing the time within which a discontinuance may be had, the government, in the exercise of the right of eminent domain, could discontinue condemnation proceedings at any time before payment of compensation. The conclusion is, therefore, irresistible that in this ease the government did not finally determine to take the property until March 1, 1913, more than ten years after the expiration of the lease.

The third defense is based upon the following allegation in the plea , and affidavit of defense: “This affiant further says that in the spring and early summer of 1911 he did, in accordance with the terms and provisions of said lease, erect on said lot improvements costing the sum of $400, for which sum this affiant claims credit and allowance, * * * should the plaintiff herein be found entitled to recover anything from this affiant.” This is a mere conclusion of law, not supported by any allegations of fact which would enable the court to adjudge it a valid set-off against plaintiffs’ claim. It is not averred that plaintiffs’ testator agreed to pay for this improvement, or in what this improvement consisted, or the circum *459 stances under which defendant was authorized to make it. For aught that appears in this record, it may well have been, as the covenant in question, part of the consideration for the lease. In that event, defendant, in making the improvement, only did what he had agreed to do. Indeed, the meager averment seems to support this inference, since no claim is made against plaintiffs unless it be found that defendant is indebted to them. If the claim is a valid-one, it is not apparent why defendant should not assert it regardless of whether he is indebted to plaintiff's or not. Certain it is that there is nothing to indicate that this particular improvement was related to, or formed a part of, the work to be performed under the covenant. The contract is not before us, but the facts relating to the construction of the building embraced in the covenant are stated with particularity in the pleadings and conceded by both parties to be correct, but nowhere does it appear that the cost of the work performed by defendant should constitute a credit thereon. The minimum cost of the building was to be $3,500, and nowhere does it appear that this amount could be reduced by a partial construction at a cost of $400, or that it should be set off by work performed by defendant under a separate covenant in the lease.

The judgment is reversed, with costs against the defendant Engel, and the cause is remanded, with instruction to the court below to enter a judgment for plaintiff's in the sum of $3,500, with interest from March 1, 1913.

Reversed.