B-146180, AUGUST 10, 1961, 41 COMP. GEN. 103

B-146180: Aug 10, 1961

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TERMINATION - JUDGMENT FOR DAMAGES - REIMBURSEMENT TO STATE AGENCY - CONCLUSIVENESS EXPENDITURES MADE BY A STATE FLOOD CONTROL DISTRICT ACTING AS AGENT FOR THE FEDERAL GOVERNMENT IN CONNECTION WITH LITIGATION OF THE ACQUISITION OF RIGHTS-OF-WAY WHICH RESULTED IN A JUDGMENT FOR DAMAGES TO THE LANDOWNERS REGARDED BY THE GOVERNMENT AS EXCESSIVE AND UNREASONABLE IN COMPARISON WITH THE APPRAISED VALUE OF THE LANDS ARE EXPENDITURES MADE IN CONFORMITY WITH LOCAL CUSTOM OR LEGAL PROCEDURE AND MUST BE REGARDED AS THE REASONABLE VALUE OF THE LANDS TAKEN BY THE GOVERNMENT UNDER THE ACT OF APRIL 23. SO THAT REIMBURSEMENT IS PROPER. ALTHOUGH THE UNITED STATES WAS NOT A PARTY IN LITIGATION INCIDENT TO THE ACQUISITION OF RIGHTS-OF-WAY FOR A FLOOD CONTROL PROJECT.

B-146180, AUGUST 10, 1961, 41 COMP. GEN. 103

EASEMENTS, RIGHTS-OF-WAY, ETC. - CREATION, EXISTENCE, AND TERMINATION - JUDGMENT FOR DAMAGES - REIMBURSEMENT TO STATE AGENCY - CONCLUSIVENESS EXPENDITURES MADE BY A STATE FLOOD CONTROL DISTRICT ACTING AS AGENT FOR THE FEDERAL GOVERNMENT IN CONNECTION WITH LITIGATION OF THE ACQUISITION OF RIGHTS-OF-WAY WHICH RESULTED IN A JUDGMENT FOR DAMAGES TO THE LANDOWNERS REGARDED BY THE GOVERNMENT AS EXCESSIVE AND UNREASONABLE IN COMPARISON WITH THE APPRAISED VALUE OF THE LANDS ARE EXPENDITURES MADE IN CONFORMITY WITH LOCAL CUSTOM OR LEGAL PROCEDURE AND MUST BE REGARDED AS THE REASONABLE VALUE OF THE LANDS TAKEN BY THE GOVERNMENT UNDER THE ACT OF APRIL 23, 1934, 33 U.S.C. 702A, SO THAT REIMBURSEMENT IS PROPER. ALTHOUGH THE UNITED STATES WAS NOT A PARTY IN LITIGATION INCIDENT TO THE ACQUISITION OF RIGHTS-OF-WAY FOR A FLOOD CONTROL PROJECT, THE JUDGMENT BY THE HIGHEST COURT OF A STATE AGAINST A STATE FLOOD CONTROL DISTRICT, ACTING AS AGENT FOR THE UNITED STATES, EVEN THOUGH REGARDED AS EXCESSIVE AND UNREASONABLE BY THE FEDERAL GOVERNMENT, WAS RENDERED AFTER THE GOVERNMENT'S POSITION AS TO THE PROPER MEASURE OF DAMAGES WAS PRESENTED TO AND CONSIDERED BY THE COURT AND IS, THEREFORE, CONCLUSIVE ON THE PARTIES OF INTEREST AND THE ISSUES AND CANNOT BE RELITIGATED IN THE FEDERAL COURTS.

TO THE SECRETARY OF THE ARMY, AUGUST 10, 1961:

REFERENCE IS MADE TO LETTER OF JUNE 19, 1961, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY ( INSTALLATIONS AND LOGISTICS), CONCERNING THE PROPRIETY OF REIMBURSING THE ST. FRANCIS LEVEE DISTRICT OF ARKANSAS $378,523.24, REPRESENTING EXPENDITURES INCURRED IN ACQUIRING FOR THE UNITED STATES RIGHTS-OF-WAY FOR CONSTRUCTION OF A CUTOFF CHANNEL ON THE ST. FRANCIS RIVER, A TRIBUTARY OF THE MISSISSIPPI RIVER, IN CROSS AND ST. FRANCIS COUNTIES, ARKANSAS, DESIGNATED ITEM NO. 1, CLARKS CORNER, ARKANSAS SECTOR. THE PERTINENT FACTS RELATIVE TO THE MATTER ARE SUMMARIZED AS FOLLOWS.

THE PROJECT FOR FLOOD CONTROL AND IMPROVEMENT DESIGNATED ST. FRANCIS RIVER, MISSOURI AND ARKANSAS, OF WHICH CLARKS CORNER, ARKANSAS SECTOR IS A PART, IS SET OUT IN HOUSE DOCUMENT NO. 132, 81ST CONGRESS. THE IMPROVEMENT OF THE ST. FRANCIS RIVER BASIN IN THE STATES OF MISSOURI AND ARKANSAS WAS INITIALLY AUTHORIZED BY THE ACT OF JUNE 15, 1936, 19 STAT. 1508, 1509, 33 U.S.C. 702J-L, AND AMENDED BY SECTION 10 (Q) OF THE FLOOD CONTROL ACT OF 1946, 60 STAT. 646, AND MODIFIED AND EXPANDED BY SECTION 204 (B) OF THE FLOOD CONTROL ACT OF 1950, 64 STAT. 172, 33 U.S.C. 702A-12 (E). ACQUISITION OF RIGHTS-OF-WAY FOR CONSTRUCTION ON THE CLARKS CORNER SECTOR WAS INITIATED BY LETTERS OF THE MEMPHIS DISTRICT ENGINEER, CORPS OF ENGINEERS, UNITED STATES ARMY, TO THE LEVEE DISTRICT, DATED JUNE 29 AND AUGUST 17, 1955, REQUESTING THE LATTER TO ACQUIRE THE NECESSARY TITLE TO THE LANDS WITHIN THE RIGHTS-OF-WAY LIMITS SUBJECT TO REIMBURSEMENT OF FAIR AND REASONABLE PAYMENTS THEREFOR UNDER AUTHORITY OF THE ACT APPROVED APRIL 23, 1934, 48 STAT. 607, 33 U.S.C. 702N, AS FOLLOWS:

* * * THAT THE SECRETARY OF WAR IS AUTHORIZED, OUT OF ANY MONEY AVAILABLE FOR CARRYING OUT THE PROVISIONS OF THE ACT ENTITLED " AN ACT FOR THE CONTROL OF FLOODS ON THE MISSISSIPPI RIVER AND ITS TRIBUTARIES, AND FOR OTHER PURPOSES," APPROVED MAY 15, 1928, TO PURCHASE FROM, OR TO REIMBURSE STATES OR LOCAL LEVEE DISTRICTS FOR THE COST OF, ANY LEVEE RIGHTS-OF-WAY OR EASEMENTS FOR THE BUILDING OF LEVEES IN THE MISSISSIPPI VALLEY FOR WHICH THE UNITED STATES WAS OR IS UNDER OBLIGATION TO PAY UNDER THE PROVISIONS OF THE ACT OF MAY 15, 1928, REGARDLESS OF WHETHER SAID STATES OR LOCAL LEVEE DISTRICTS HAVE FURNISHED SUCH RIGHTS-OF-WAY IN THE PAST AND REGARDLESS OF THE CONDITIONS UNDER WHICH SUCH LEVEE RIGHTS-OF-WAY WERE FURNISHED, OR MAY BE FURNISHED IN THE FUTURE: PROVIDED, THAT AFTER CAREFUL INVESTIGATION THE PRICES ARE FOUND TO BE REASONABLE: AND PROVIDED FURTHER, THAT PAYMENTS OR REIMBURSEMENTS FOR LEVEE RIGHTS-OF-WAY OR EASEMENTS, CONVEYING THE PRIVILEGE OF BUILDING LEVEES MAY BE MADE AS SOON AS THEY HAVE BEEN ACQUIRED IN CONFORMITY WITH LOCAL CUSTOM OR LEGAL PROCEDURE IN SUCH MATTERS AND TO THE SATISFACTION OF THE CHIEF OF ENGINEERS.

IT IS STATED THAT THE UNITED STATES NET APPRAISAL FOR THE NECESSARY RIGHTS-OF-WAY WAS IN THE AMOUNT OF $67,667, THE ACQUISITION INVOLVING 14 TRACTS, 11 OWNERS AND 624.42 ACRES OF LAND. THE LEVEE DISTRICT NEGOTIATED PURCHASE OF LAND WITH SOME OF THE OWNERS, OBTAINED UNCONTESTED JUDGMENTS AS TO CERTAIN OTHER OWNERS AND FILED CONDEMNATION PROCEEDINGS IN THE CIRCUIT COURTS OF CROSS AND ST. FRANCIS COUNTIES ON MAY 12, 1956, AGAINST THE REMAINDER OF THE LANDS REQUIRED FOR CONSTRUCTION. AN ORDER OF POSSESSION WAS SECURED AND THE RIGHTS-OF WAY WERE MADE AVAILABLE TO THE UNITED STATES BY THE LEVEE DISTRICT ON MAY 28, 1956.

BECAUSE OF QUESTION RAISED BY CERTAIN LANDOWNERS AS TO THE RIGHT OF THE LEVEE DISTRICT TO EXERCISE THE POWER OF EMINENT DOMAIN THEIR CASES WERE TRANSFERRED, UNDER APPLICABLE STATE STATUTES, TO THE CHANCERY COURT OF THE 5TH CHANCERY DISTRICT OF ARKANSAS. THAT COURT RENDERED A FAVORABLE DECISION REGARDING THE RIGHT OF THE LEVEE DISTRICT TO CONDEMN AND ACQUIRE THE LANDS FOR LEVEE PURPOSES, AND RETAINED JURISDICTION TO DETERMINE THE ISSUE AS TO COMPENSATION AND DAMAGES DUE TO THE TAKING OF THE PROPERTY.

THE CHANCERY COURT ON DECEMBER 4, 1958, AWARDED DAMAGES TO THE LANDOWNERS FOR THE TAKING, PRESENT AND PROSPECTIVE. THE DAMAGES AMOUNTED TO A SUM GREATLY IN EXCESS OF THE UNITED STATES VALUATION OF THE RIGHTS-OF-WAY MAINLY DUE TO THE COURT'S INCLUSION OF FLOWAGE DAMAGES ON RESIDUAL LANDS WHICH WERE NOT REQUESTED BY THE LEVEE DISTRICT FOR PROJECT PURPOSES. THE LEVEE DISTRICT WITH THE CONSENT OF THE GOVERNMENT APPEALED THE DECISION TO THE SUPREME COURT OF ARKANSAS. ON MARCH 14, 1960, THE LATTER COURT RULED AFFIRMING THE DECISION OF THE CHANCERY COURT. IN THIS CONNECTION, WE INFORMALLY LEARNED THAT THE OFFICE OF THE SOLICITOR GENERAL, DEPARTMENT OF JUSTICE, AFTER EXAMINING THE TRANSCRIPT OF TESTIMONY, CONCLUDED NOT TO FILE A BRIEF OF "AMICUS CURIAE" IN THIS CASE.

IN EXPLANATION OF THE SUM OF $378,523.24 REQUESTED BY THE LEVEE DISTRICT IN REIMBURSEMENT FOR ITS EXPENDITURES, IT IS STATED THAT $274,029 PLUS INTEREST REPRESENTS THE CHANCERY COURT AWARD. THE COURT ORDERED THE LEVEE DISTRICT TO PAY INTEREST ON THE PRINCIPAL SUMS AT 6 PERCENT PER ANNUM FROM MAY 12, 1956, UNTIL PAID, RESULTING IN A TOTAL OF $337,625.56. UNCONTESTED JUDGMENTS WITH INTEREST AND DEEDS TOTAL $27,164.98. UNAPPRAISED ITEMS OF EXPENSE INCLUDING COURT COSTS ASSESSED BY THE COURT AMOUNT TO $13,732.70. THE AMOUNT FOR LANDS AND DAMAGES COMPARABLE TO THE APPRAISAL IS $364,790.54, WHICH SUM IS 539 PERCENT OF THE UNITED STATES NET APPRAISAL OF $67,667. THE DISTRICT ENGINEER, IT IS STATED, HAS BEEN AUTHORIZED TO REIMBURSE THE LEVEE DISTRICT ONLY IN THE AMOUNT OF THE NET APPRAISAL. ON THE BASIS OF THESE FACTS, OUR DECISION IS REQUESTED ON THE FOLLOWING QUESTIONS:

A. LEGALITY OF FURTHER PAYMENT OR REIMBURSEMENT OF COSTS UNDER AUTHORITY OF THE ACT OF 23 APRIL 1934 (33 U.S.C. 702N) TO THE ST. FRANCIS LEVEE DISTRICT WHERE SUCH COSTS REPRESENT AMOUNTS REQUIRED TO SATISFY COURT AWARDS FOR FLOWAGE RIGHTS.

B. WHETHER OR NOT THE STATE COURT AWARDS UNDER THE CIRCUMSTANCES INVOLVED MAY BE CONSIDERED A LEGAL AND FINAL DETERMINATION OF THE FAIR MARKET VALUE OF THE RIGHTS-OF-WAY AND EASEMENTS ACQUIRED, AND WHETHER OR NOT SUCH COURT AWARDS SHOULD BE REGARDED AS CONTROLLING WITH RESPECT TO THE QUESTION OF REASONABLENESS OF AMOUNTS EXPENDED BY THE LOCAL AGENCY IN FURNISHING RIGHTS-OF-WAY AND EASEMENTS REQUIRED FOR THE PROJECT.

THE AGREEMENT ENTERED INTO BETWEEN THE CORPS OF ENGINEERS AND THE ST. FRANCIS LEVEE DISTRICT OF ARKANSAS, UNDER AUTHORITY OF THE STATUTE QUOTED ABOVE, TO ACQUIRE TITLE TO CERTAIN LANDS INCIDENT TO THE ST. FRANCIS RIVER PROJECT SUBJECT TO REIMBURSEMENT OF FAIR AND REASONABLE PAYMENTS THEREFOR CONSTITUTED A VALID CONTRACT. WHILE THE MEASURE AND ELEMENTS OF DAMAGES AWARDED BY THE CHANCERY COURT FOR THE TAKING OF THE LANDOWNERS' PROPERTY MAY BE REGARDED BY THE GOVERNMENT TO BE EXCESSIVE AND UNREASONABLE, IT APPEARS THAT THE GOVERNMENT'S POSITION AS TO THE PROPER MEASURE OF DAMAGES IN THIS CASE WAS FAIRLY PRESENTED TO AND CONSIDERED BY THE COURT NOTWITHSTANDING THAT IT WAS NOT A PARTY TO THE PROCEEDINGS. THE HIGHEST COURT IN ARKANSAS HAVING ADJUDICATED THE CASE ON THE PARTICULAR ISSUE OF DAMAGES, ITS JUDGMENT, HAVING BECOME FINAL, IS CONCLUSIVE AS TO THE PARTIES OF INTEREST AND ISSUE DECIDED, AND CANNOT NOW BE RELITIGATED IN THE FEDERAL COURTS.

IN VIEW THEREOF AND SINCE THE GOVERNMENT TOOK POSSESSION OF AND DERIVED THE BENEFITS FROM THE RIGHTS-OF-WAY MADE AVAILABLE TO IT BY THE LEVEE DISTRICT ACTING AS AGENT FOR THE GOVERNMENT, PAYMENT THEREFOR MAY BE MADE TO THE LEVEE DISTRICT IN THE FULL AMOUNT OF THE ACTUAL EXPENDITURES IT INCURRED IN CONNECTION THEREWITH, SAID EXPENDITURES HAVING BEEN MADE IN CONFORMITY WITH LOCAL CUSTOM OR LEGAL PROCEDURE AND, CONSEQUENTLY, MAY BE REGARDED AS THE REASONABLE VALUE OF THE LANDS TAKEN AS PROVIDED FOR IN THE LAW.