United States v. 27,223.21 Acres of Land

589 F. Supp. 1121, 1984 U.S. Dist. LEXIS 16666
CourtDistrict Court, D. Colorado
DecidedMay 15, 1984
DocketCiv. A. Nos. 83-A-849, 83-A-601, 82-A-2198, 83-A-600, 83-A-1075 and 83-A-1176
StatusPublished
Cited by10 cases

This text of 589 F. Supp. 1121 (United States v. 27,223.21 Acres of Land) is published on Counsel Stack Legal Research, covering District Court, D. Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. 27,223.21 Acres of Land, 589 F. Supp. 1121, 1984 U.S. Dist. LEXIS 16666 (D. Colo. 1984).

Opinion

MEMORANDUM OPINION AND ORDER

ARRAJ, District Judge.

This matter is before me on defendants’ motion in limine. In November 1982, the United States condemned thousands of acres of land in Las Animas County, Colorado for the Fort Carson Pinon Canyon Maneuver Site. That spawned numerous lawsuits, including the instant “leasehold cases”; they all involve condemned land that was owned by the State of Colorado, but leased to private individuals. In their motion in limine, defendants ask this Court to resolve now all common questions regarding the allocation of condemnation awards between lessors and lessees. These questions include: 1) how the compensable term of the lease is to be measured?; 2) whether the lessees are entitled to compensation for the taking of improvements on their leased land?; and 3) whether the lessees are entitled to severance damages? The parties have submitted exhaustive briefs on these issues and oral argument was heard April 16, 1984. I am now prepared to rule on the motion.,

1. Compensable Term of the Lease

Before a condemnation award can be divided between lessors and lessees, the respective interests of the parties must be determined. Those interests are often defined by the compensable term of the lease. At first glance, the compensable term would appear to be synonomous with the unexpired or remaining period of time under the agreement. For example, under a 10 year lease where 4 years had passed at the time of the taking, lessee would be entitled to compensation for the remaining 6 years. A closer look, however, reveals that this mechanical formula is deceptive and incomplete. Indeed, both parties argue that the language in the lease mandates the use of a different formula; but they disagree about what that formula should be. On one end of the spectrum, the State urges contraction of the remaining term to 30 or 90 days, based upon the sale and re-lease clauses in the contract. On the other end, lessees insist that the compensable term be expanded to include the possibility of renewal. These widely divergent interpretations underscore the need to look closely at the language of the leases when deriving a formula for these cases.

The condemned land in question was owned by the State of Colorado and leased by the State Board of Land Commissioners, as trustee of the State’s public lands, to private individuals. See Colo. Const, art. IX, §§ 9 and 10. The terms of these arrangements were governed by two similar [1124]*1124agreements: a “pre-1976” lease and a “post-1976” lease. In general, these contracts gave the lessees the right to use certain State property for grazing and agricultural purposes for a period of 10 years. Neither lease, however, contained a specific “condemnation clause”. But other lease provisions purportedly governed such an eventuality. They included several clauses which preserved the State’s right to cancel the leases under certain conditions: (1) if the lessor elected to sell all or any part of the premises and gave the lessee 30 days notice; (2) if the lessor received an application to lease all or any portion of the premises and it elected to do so and gave 90 days notice; or (3) if it appeared that the lessee had failed to take good care of the premises and lessor gave 10 days notice. The leases also reserved to the State Board “all rights and privileges of every ... kind or nature not herein specifically granted.”

In addition to these contractual provisions, the parties’ interests were governed by several State statutes. Colorado law requires the State to secure the “maximum possible revenue” and “optimum long-term revenue” from any lease of its property. Colo.Rev.Stat. §§ 36-1-114, 36-l-118(l)(a). Consequently, the Board could adjust rentals under any lease in order to maximize revenue. See Colo.Rev.Stat. § 36-1-114. The Board also had the power to sell any of its leased land “as though said lease had not been executed.” See Colo.Rev.Stat. § 36-1-118(4).

A.

With this general outline of the leases as background, I turn now to the parties’ respective positions regarding the compensable term of the lease. According to the State, the lease language circumscribes the lessees’ unexpired interests in the property. Because the Board could sell the leased land at any time with only 30 days notice to the tenant, lessees’ interests are thereby limited to 30 days. Alternatively, the State contends that lessees’ interests extend no longer than 90 days, or the notice period required prior to releasing it. During oral argument, the State of Colorado took this argument one step further and suggested that this interpretation is not based exclusively upon the “power to sell.” Rather, it is also grounded in the fact that an alleged “sale” did in fact take place, namely the condemnation; and since the leases expressly provide that upon the sale of the leasehold property the interest of the lessee terminates, defendants’ interests are limited to 30 days — or a nominal figure.

Under this analytical approach, the dis-positive question is whether the condemnation proceeding had the effect of a “sale” as the term is used in the lease agreement. Several courts have considered this question and have held that “condemnation sales and other sales pursuant to eminent domain are sales although involuntary.” Herskovitz v. Vespico, 238 Pa.Super. 529, 362 A.2d 394, 397 (Pa.1976); see also Jackson v. State, 213 N.Y. 34, 106 N.E. 758 (1914); American Creameries Co. v. Armour & Co., 149 Wash. 690, 271 P. 896 (1928); United States v. Certain Parcels of Land in Loyalsock T.P., Lycoming County, Pa., 51 F.Supp. 811, 812 (M.D.Pa.1943); People By and Through Dept. of Public Works v. County of Santa Clara, 275 Cal.App.2d 372, 79 Cal.Rptr. 787, 790 (1969). The fact that it is an enforced sale, where the government stands toward the owner as buyer toward seller, does not alter this conclusion.

[Wjhere the lessee has agreed to relinquish possession of the leasehold property in the event of a transfer of title, it makes no difference whether the transfer be effected through voluntary or involuntary sale. [T]he important factor is that the lessee has agreed to a termination of the lease, if the property be conveyed under any circumstances. United States v. 150.29 Acres of Land, 148 F.2d 33, 36 (7th Cir.1945).

Courts, however, do recognize one major exception to this rule. Where a lease contains both a “sale” clause and a “condemnation” clause, the parties can only mean a “voluntary sale” in the sale provision. Id. at 36. To interpret it otherwise would ren-

[1125]*1125der meaningless the separate clause for condemnation. Moreover, such a construction most accurately reflects the probable intention of the parties.

The leases in the cases at bar, which had only sale clauses1, provided that if the property were sold, then the lease terminated. A condemnation clause or an express limitation upon such a sale was conspicuously absent from the agreements. The lessees promised to relinquish possession in the event of its sale and the fact that the actual transfers were effected by involuntary sales had no impact on that promise.

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Bluebook (online)
589 F. Supp. 1121, 1984 U.S. Dist. LEXIS 16666, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-2722321-acres-of-land-cod-1984.