Keddie Resort, Inc. v. United States

125 F. Supp. 943, 130 Ct. Cl. 259, 1954 U.S. Ct. Cl. LEXIS 34
CourtUnited States Court of Claims
DecidedNovember 30, 1954
DocketCongressional No. 17874
StatusPublished
Cited by1 cases

This text of 125 F. Supp. 943 (Keddie Resort, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Keddie Resort, Inc. v. United States, 125 F. Supp. 943, 130 Ct. Cl. 259, 1954 U.S. Ct. Cl. LEXIS 34 (cc 1954).

Opinion

Madden, Judge,

delivered the opinion of the court:

This case is before us pursuant to a Resolution of the House of Representatives, which. Resolution is quoted in full in finding 3.

In 1931 the Western Pacific Railroad Company completed its line between Bieber and Keddie, California, in the mountains in Plumas County. Keddie was made a freight division point on the railroad, and arrangements were made for living quarters for the train crews. There were available an old hotel and three or four small cabins. Mr. Charles Rilim was brought to Keddie as general manager of the hotel. He and another person bought some of the townsite land. In 1933, two men who were contractors for the railroad bought out the interest of the other person and the plaintiff corporation was formed, Mr. Rihm owning 50 percent of the stock and the two contractors, who were made president and secretary of the corporation, owning the other 50 percent.

The plaintiff corporation built up the town of Keddie so that it had a large hotel, a store, a bar, a post office and some 40 housing units. The railroad owns some of the land and some of the houses, which it leases to the plaintiff company. In 1933 the plaintiff acquired a 160 acre tract of unimproved land known as Maxwell Ranch. The plaintiff built a building costing some $8,000 on the highway near the town. The building housed a gas station, a garage, a soda fountain, a showroom and living quarters.

By the year 1943 there was a shortage of housing for railroad employees in Keddie. The Federal Public Housing [261]*261Authority desired to erect a war housing project there. The San Francisco regional office of the Authority sent a crew of planners there. They told Mr. Kihm that it was planned to erect a 30-unit housing project. He showed the crew over the Maxwell Ranch land, and showed them a small stream and some springs. Mr. Rihm offered to give the Government the use of the land free, for the purpose indicated. But he said he wanted to tie into the water system. In later negotiations he said that he wanted the right to buy the improvements on the land when the Government was through with them, and wanted the lease to terminate at the end of the war.

A Mr. Bolla was the appraiser and negotiator on the Government crew that first went to Keddie. He told the plaintiff, in response to the plaintiff’s request for the right to connect into the water system that the Government wotdd build, that the plaintiff might do so. Whether they were talking about the plaintiff’s getting water only for the building which housed the gas station, garage, etc., or for a more extensive use, the evidence does not show. The plaintiff was told that he could not be given the right to buy the buildings at the end ,of the lease, but that the underground utility installations would be left in the ground.

When the lease was written, it provided for rent of one dollar a year, for its termination “one year after the termination of the existing national emergency”, and for the underground pipes, sewer facilities and other utilities to remain the property of the lessor. Mr. Bolla, in his report to his superiors on his visit to Keddie and his conversation with Mr. Rihm, did not mention the matter of the plaintiff’s connecting into the Government’s water system, and the lease did not mention it. It was submitted to the plaintiff’s president and secretary for signature. Mr. Rihm was not present, but he by telephone instructed the officers to sign it. It was in due course accepted by the Government.

The Government built a 30-unit housing project, consisting of seven buildings, containing 20 3-bedroom and 10 2-bed-room apartments, a community building, a sewage system with septic tanks and a drainage field, and a water system. The water system took water from a ravine containing a flowing stream fed by springs. The stream was dammed [262]*262and a 6,000 gallon reservoir was thereby created. A 2-inch pipe from the reservoir led to a 20,000 gallon redwood tank, from which the water was piped some 2,000 feet to the houses and fire hydrants.

Mr. Rihm asked the manager of the housing project for permission to connect into the water system and the manager told him that he had no authority to permit him to do so.

The housing project was fully occupied by the middle of 1944, and continued to be so until late in 1951, when a few vacancies developed. The manager of the project was diligent in trying not to compete with the plaintiff’s housing-accommodations.

In 1941 Mr. Rihm acquired all the stock of the plaintiff corporation, some of it being in his wife’s name. He began then to try to prevent the Government’s project from competing with his housing; to obtain the right to connect into the water system, and to terminate the lease and secure the buildings, in place, if possible. Because of Mr. Rihm’s demands for connection with the water system, the feasibility of doing so was investigated and it was rightly concluded that the water supply was insufficient.

On December 3,1948, at 4 o’clock in the morning the plaintiff’s gas station building was completely destroyed by fire. The people who lived in one end of the building were obliged to flee in their night clothes into the bitter cold night. The people in the other end of the building had time to dress themselves and save some of their possessions. We have made a finding that, at the time and in the circumstances, no substantial part of the building or its contents could have been saved if the plaintiff had been permitted to connect into the Government’s water system.

The Government spent $104,769.58 on the housing project and its furnishings. At the end of 1951, when the lease was terminated, the plaintiff bought the houses and furnishings, for $12,500.

The plaintiff urges that the Government was bound by contract (1) to permit the plaintiff to connect into the Government’s water system, (2) to so conduct its housing facilities that they would not compete with those of the plaintiff, and (3) to vacate the premises one year after the end of the [263]*263war, i. e., on December 31,1947, which was one year after the termination of hostilities was proclaimed by the President.

As to the first claim, relating to the water system, we have found that the loss of the plaintiff’s building was not caused by the lack of connection with the water system; that the fire which consumed the building would have done so regardless of the controverted connection.

The second claim is that the Government agreed not to compete with the plaintiff. Such an agreement could not have meant more than that the managers of the Government project would not accept tenants who desired to move out of the plaintiff’s houses, and would not purposely attempt to secure tenants for whom the plaintiff had appropriate facilities. When one who is in the housing business himself arranges for the Government to build and operate a housing project on land near his own houses, he does not expect that the Government’s tenants will be evicted whenever he has a vacancy in one of his houses. A certain amount of unintended competition was inevitable, and must have been contemplated by Mr. Eihm when he arranged for the lease. Then, too, several of the plaintiff’s apartments in which extensive vacancies occurred were one-bedroom apartments, of which there were none in the Government’s project. As to these, there could hardly be said to have been competition.

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Cite This Page — Counsel Stack

Bluebook (online)
125 F. Supp. 943, 130 Ct. Cl. 259, 1954 U.S. Ct. Cl. LEXIS 34, Counsel Stack Legal Research, https://law.counselstack.com/opinion/keddie-resort-inc-v-united-states-cc-1954.