Opinion
12-16-1958
BELLFLOWER CITY SCHOOL DISTRICT OF LOS ANGELES COUNTY, Plaintiff and Appellant, v. Carl E. SKAGGS et al., Defendants and Respondents. * Civ. 23257.
Harold W. Kennedy, County Counsel of Los Angeles County, Richard A. Del Guercio, Deputy County Counsel, Los Angeles, for appellant. Holbrook Tarr & O'Neill, W. Sumner Holbrook, Jr., Leslie R. Tarr, Richard L. Huxtable, Los Angeles, for respondents.
BELLFLOWER CITY SCHOOL DISTRICT OF LOS ANGELES COUNTY, Plaintiff and Appellant,
v.
Carl E. SKAGGS et al., Defendants and Respondents.
Dec. 16, 1958.
Hearing Granted Feb. 11, 1959.
Harold W. Kennedy, County Counsel of Los Angeles County, Richard A. Del Guercio, Deputy County Counsel, Los Angeles, for appellant.
Holbrook Tarr & O'Neill, W. Sumner Holbrook, Jr., Leslie R. Tarr, Richard L. Huxtable, Los Angeles, for respondents.
FOURT, Justice.
This is an appeal from an order allowing interest upon an award from the date of entry of the interlocutory judgment in a condemnation proceeding.
The School District filed an action to condemn portions of thirteen one-half acre residential lots for the expansion of an existing school site. After a jury trial an interlocutory judgment in condemnation was entered on February 18, 1957. The plaintiff made no motion for a new trial, did not appeal, and took no steps to vacate or modify the judgment. At various times thereafter the plaintiff tendered its warrants for the principal amounts awarded for each parcel, together with costs, but without interest. The time lapse ran all of the way from one month and two days to six months and five days, with varying times in between. There is set forth in a footnote hereto a general itemization showing the respective parcel numbers, the defendant's amount of award or judgment, the day of payment, the time which elapsed from the entry of judgment to the date of payment, the interest which the trial court granted and which respondents contend is the correct amount, the interest which the appellant contended was th right amount due when it argued against the granting of the motion for a supplementary judgment for interest, and the interest which the appellant now contends is the proper amount to be paid.
The tenders were refused because of the failure to include interest upon the principal awards. Apparently an agreement was then reached between the parties whereby the amount of the warrants was accepted conditionally and without waiver of the respondents' rights to the accrued interest, if any, to the date of tender and conditional acceptance.
In the latter part of November, 1957, the respondents made a motion for a supplemental order fixing liability for interest on the judgment in condemnation, and the court granted such motion and decreed that the amounts demanded by the respondents, as set forth in the footnote, were proper. The order, in effect, decreed that interest was due from the date of entry of the judgment in condemnation until the date of payment. A final judgment of condemnation was made and filed on February 14, 1958. The appellant has appealed from the supplemental order.
Each side asserts that the sole question involved is: When does interest commence to accrue upon a judgment in condemnation, when the condemner has not sought nor obtained possession of the property prior to the vesting of title in the condemner? The appellant contends that interest does not accrue on a judgment in condemnation until thirty days after all possibility of direct attack thereon has been exhausted whether by way of appeal, motion for new trial, or motion to vacate; and that in the present case the appellant should not be liable for any interest until the judgment was final. The appellant relies almost entirely upon the case of County of Los Angeles v. Lorbeer, 1958, 158 Cal.App.2d 804, 323 P.2d 542.
The respondents assert that they are entitled to interest on the amount of the condemnation award from the date of entry of judgment to the date of payment to the property owner, and they rely mainly upon the rulings set forth in the case of People v. Superior Court, 145 Cal.App.2d 683, 303 P.2d 628.
We are of the opinion that the respondents are correct in their contentions.
The right to interest in this state in a controversy such as is before us does not depend exclusively upon statutory enactments. The Constitution provides, in Article I, section 14, in part as follows:
'Private property shall not be taken or damaged for public use without just compensation having first been made to, or paid into court for, the owner * * *.' (Emphasis added.)
And Article XX, section 22, of the Constitution, in part, is as follows:
'The rate of interest upon the loan or forebearance of any money, goods or things in action, or on accounts after demand or judgment rendered in any court of the State, shall be 7 percent per annum * * *.' (Emphasis added.)
The allowance of interest, under proper circumstances, is an essential element in 'just compensation.' As said in Heimann v. City of Los Angeles, 30 Cal.2d 746, at pages 758-759, 185 P.2d 597, at page 604:
'In most jurisdictions interest is allowable in condemnation cases on the same theory that supports the award of costs in those cases, that is, interest is allowable as part of the just compensation required by the Constitution to be paid to the owner for property taken. 96 A.L.R., cases collected in note pp. 150-206; 111 A.L.R. 1304. In this state there is not only a recognition of the majority rule and of the reasoning which supports it (citing cases), but there is also a provision by statute that if the condemnor is put in possession by court order prior to the conclusion of the litigation, the compensation and damages awarded shall draw lawful interest from the date of the order. Code Civ.Proc., sec. 1249. (Citing case and authority.)
'In the Metropolitan Water District case, Metropolitan Water Dist. v. Adams, supra, 16 Cal.2d 676, at page 681, 107 P.2d 618, it is said, quoting from Seaboard Air Line R. Co. v. United States, supra, 261 U.S. 299, at page 306, 43 S.Ct. 354, 67 L.Ed. 664: 'It is obvious that the owner's right to just compensation cannot be made to depend upon state statutory provisions. * * * The requirement that 'just compensation' shall be paid is comprehensive and includes all elements and no specific command to include interest is necessary when interest or its equivalent is a part of such compensation. * * *' See also Shoshone Tribe v. United States, 299 U.S. 476, 496, 57 S.Ct. 244, 81 L.Ed. 360, and cases there cited.'
In the Heimann case, supra, where the political subdivision had already damaged the property, the court further said (30 Cal.2d at page 759, 185 P.2d at page 605):
'The authorities are by no means uniform in their holdings with regard to the time from which interest should be computed. See 18 Am.Jur., sec. 272, et seq., pp. 912 et seq.; 29 C.J.S. Eminent Domain § 176, pages 1056-1059; 96 A.L.R., supra, pp. 150-206; 111 A.L.R. 1304; 2 Lewis on Eminent Domain, sec. 742, pp. 1319-1326. But if the property owner is to be compensated in the full amount to which he is justly entitled, it seems apparent that as to a taking of property the same rule should obtain as in condemnation cases, and as to a damaging of property, interest should run from the date the damage is inflicted or at least from the commencement of suit. As said in Taylor v. Bay City St. Ry. Co., 101 Mich. 140, 59 N.W. 447, 449: 'Complaint is made of the instruction to the jury to add interest from the date of the commencement of suit. The authorities are not uniform upon this subject. The old rule undoubtedly was that interest could not be allowed upon unliquidated damages, and, in actions of tort, damages are of course unliquidated. The tendency of courts has been, however, to set this rule aside, and adopt the more reasonable one, in cases of injury to property, that the jury must first determine the actual damage sustained, and allow interest upon that sum from its date. (Citing cases.)''
It would seem clear that whatever is an essential element of 'just compensation' cannot be excluded by legislative enactments, and should not be excluded by the interpretation of legislative enactments which do not, on their face, purport to determine when or what interest shall be allowed.
In the case of People v. Superior Court, supra, 145 Cal.App.2d 683, 303 P.2d 628 (petition for re-hearing denied; petition for hearing before the Supreme Court denied), the Department of Public Works prosecuted a condemnation action in which judgment of condemnation was entered on or about February 7, 1955. As to one of the parcels involved, the condemner took an appeal. People ex rel. Dept. of Public Works v. S. & E. Homebuilders, Inc., 142 Cal.App.2d 105, 298 P.2d 53. The judgment was affirmed, and a petition for a rehearing was denied, and a petition for a hearing by the Supreme Court was denied. When the remittitur was received by the Superior Court the condemner deposited the principal sum of the condemnation judgment, but without any interest. There was no taking of the physical possession of the property by the condemner at the time of the entry of judgment.
There was a notice and demand by the owner for payment of interest on the principal sum of the award from and after thirty days after entry of the original judgment under the provisions of Article XX, section 22 of the Constitution. It may be noted here that the real party in interest in that case did not demand interest from the date of entry of the judgment, but from thirty days after the entry of the judgment. The condemner refused to pay the interest upon the judgment. The trial court refused to sign the final judgment, apparently prepared by the condemner, solely upon the ground that the amount deposited was insufficient inasmuch as it did not include interest upon the amount awarded in the judgment. Proceedings were then instituted in this Court by the Department of Public Works for a writ of mandate to compel the trial court to sign the final order of condemnation which did not provide for interest.
The arguments of the condemner in that case were summarized by this Court on page 686 of 145 Cal.App.2d at page 630, of 303 P.2d of the opinion, wherein it is said:
'While petitioner states its reason for the contention that the judgment does not bear interest in several different ways, the gist of its argument is that the judgmen in condemnation is not a personal judgment for the payment of money but only a judgment fixing a price at which the condemner may acquire the property, and therefore fixes no principal sum to which interest can be an incident. Petitioner grounds its contention on sections 1251, 1255a, and 1264.7 of the Code of Civil Procedure.'
This court then discussed the effect of each of the sections mentioned, and as to section 1264.7, said in 145 Cal.App.2d at page 687, 303 P.2d at page 630, 'Section 1264.7 defines the words judgment and final judgment. It defines judgment as meaning the judgment determining the right to condemn and fixing the amount of compensation to be paid; and the term final judgment as 'such judgment when all possibility of direct attack thereon by way of appeal, motion for a new trial, or motion to vacate the judgment has been exhausted.''
The court further stated in 145 Cal.App.2d at pages 687-688, 303 P.2d at page 630, after referring to Southern Pacific Utility Dist. v. Silva, 47 Cal.2d 163, 301 P.2d 841: 'It does not follow, however, that the judgment does not have the characteristics of a money judgment to which the right to interest will attach. A judgment in condemnation is a final judgment within the meaning of section 963, Code of Civil Procedure, from which either party may take an appeal. (Citing cases.) It lacks finality, however, in the sense that when an appeal is taken the action remains pending, Code Civ.Proc., sec. 1049, and its effect as a judgment suspended until the appeal is disposed of by the filing of the remittitur from the Appellate Court. When it is affirmed on appeal it is the judgment as entered in the trial court which fixes and determines the rights of the parties.
'The provisions of section 1251, Code of Civil Procedure, do not affect the finality of the judgment. The effect of its provisions are merely to grant a statutory stay of execution, for upon the expiration of the periods of time fixed by the section the defendant may have execution. Code Civ.Proc., sec. 1252; citing cases. The obligation on the part of the condemner to pay the amount of the award is fixed by the judgment and 'is not subject to diminution or modification by the lapse of time,' whether that period of time be the 30-day period or the one-year period mentioned in the section, Southern Public Utility Dist. v. Silva, supra, 47 Cal.2d at page , 301 P.2d 841.
'When the judgment entered on February 7, 1955, was affirmed and the remittitur of the Appellate Court filed, that judgment finally determined the rights of the parties to the subject action. It was by the provisions of that judgment that petitioner attained the right to take the property in question, and it was by that judgment that the Bank had the right to receive its compensation for the property taken. It is true that the defendant's right to receive its fruits from the judgment were subject to be defeated by the occurrence of a condition subsequent--that is, the exercise by the plaintiff of its right to abandon the proceeding under the provisions of section 1255a. But when the time within which that privilege might be exercised elapsed, or the right to exercise the privilege was waived by the plaintiff's asserting the rights granted it by the judgment, the defendant's right became absolute and sprang not from the failure of the plaintiff to exercise its privilege but from the judgment. In other words, the judgment from its inception gave the defendant the right to receive the amount awarded to it and the plaintiff in the action the right to take the property, and to this judgment the right to receive interest and the obligation to pay interest attacked as it would attach to any other money judgment; and it was the obligation of this judgment--that is, the obligation to pay principal plus interest--that the plaintiff, petitioner here, was given the right to avoid and to assume a new and different obligation, by section 1255a of the Code of Civil Procedure. When petitioner waived the right or privilege granted to it by section 1255a, that section ceased to have any effect and the situation then was no different than if the right or privilege had never existed.' (Emphasis added.)
It was appropriately pointed out in Southern Public Utility Dist. v. Silva, supra, 47 Cal.2d at pages 165-166, 301 P.2d at page 842:
'Plaintiff's main argument is that sections 1251 and 1255a are to be read together, with the result, it claims, that extension of the time within which to pay (by filing the affidavit sanctioned by § 1251) extends the time within which to abandon (by filing the affidavit prescribed by § 1255a).
There is no such interlacing of the provisions of these two sections. They deal with different subjects (payment and abandonment, respectively) and have different purposes and objectives. Section 1251 has been in the code ever since 1872 Originally, it prescribed 30 days after final judgment as the period of time within which the condemnor must pay the sum of money assessed, without any provision for extension of that period. Commencing in 1911 (Stats.1911, ch. 80, p. 92) the section has been amended from time to time to provide, as it now does, that this 30-day period may be extended to enable the raising of money by issuing bonds if the state or a public corporation is the condemnor.'
Even though People v. Superior Court, supra, did not actually hold or state that interest was due and owing from the date of entry of judgment (for the reason that the real party in interest did not ask for it from such date) it is clear and unquestioned that the decision does provide that interest shall be payable upon the award during the entire time of the delay in making payment, to and including the time consumed in taking an appeal.
The Department of Public Works argued extensively in their petition for a hearing before the Supreme Court that 'this new concept represents a perilous extension of liability of public bodies, since if the filing of judgment is a damaging or taking because of an interference with the property owner's disposal power, then, the same reasoning should logically apply to every step in the condemnation proceeding.'
The Supreme Court apparently rejected any such argument.
In the present case the plaintiff asserted, "the rights granted it by the judgment,' the right to empower itself to take title by the payment of the award, and at that time, section 1255a 'ceased to have any effect and the situation then was no different than if the right or privilege had never existed.' The defendants here had a right to receive the payment of the judgment 'from its inception,' and it is to that 'judgment' that 'the right to receive interest and the obligation to pay interest attached as it would attach to any other money judgment."
Further in People v. Superior Court, supra, this Court set forth the background of the basis for interest on judgments, and said in 145 Cal.App.2d at page 690, 303 P.2d at page 632: 'Under the Practice Act and prior to the adoption of the codes, interest was allowed upon judgments although not allowed at common law. From 1874 until the adoption, through the initiative, of the Usury Act, Deering's General Laws, Act 3757, section 1290 of the Civil Code provided for the payment of interest on judgments at the rate of 7 per cent per annum. This section was repealed by the Usury Act, and the first section of that act provides that 'The rate of interest upon the loan or forbearance of any money * * * or judgments * * * shall be seven dollars upon the one hundred dollars for one year' but that the parties may contract for a rate not to exceed 12 per cent per annum. In 1934 section 22 of article XX was adopted. The effect of this section was not to repeal the Usury Act except insofar as that act was in conflict with the provisions of section 22. (Citing cases.) The first paragraph of this section deals with the same subject-matter as does section 1 of the Usury Act, and its only effect upon section 1 was to reduce the rate of interest that may be fixed by contract from 12 to 10 per cent. Otherwise the provisions of section 1 of the act and the first paragraph of the constitutional provision are wholly consistent (citing case.) The Bank's right to interest upon the judgment, therefore, is granted not only by the provisions of the Constitution but by those of the Usury Act.'
And continuing, 145 Cal.App.2d at pages 691-692, 303 P.2d at page 633:
'Petitioner was not entitled to take the defendant's property except upon the payment of just compensation.
'The judgment fixed the just compensation to which the Bank was entitled as of the time of the entry of judgment, and the amount awarded by it did not include compensation for any further damage that might be sustained. While the entry of the judgment did not, in and of itself, operate to vest title in petitioner or give it the right to immediate entry, it effectually took from the Bank many elements which gave value to the land. After the entry of the judgment the Bank could not rent or sell the land except subject to the right of petitioner to take it at will; it could not improve it without in effect dedicating the improvement made to petitioner. The result is that payment being delayed, the bank had neither use of the money to which it was entitled nor full use of the property which petitioner, under the judgment, had the right to take. To hold that petitioner would have the right, by an appeal, to delay the payment of the price fixed for the land and then exercise its right to take without compensating the bank for the damage suffered by it through the delay, would be to deprive the Bank of the right granted to it by article I, section 14 of the state Constitution. To paraphrase the language of Mr. Justice Frankfurter in United States v. Dickinson, 331 U.S. 745, 67 S.Ct. 1382, 91 L.Ed. 1789, 1794, section 14 of article I of our state Constitution, as well as the Fifth Amendment to the federal Constitution, express a principle of fairness and not a technical rule of procedure; yet if we support petitioner's contention here we deprive the Bank of just compensation by slavish adherence to technical rules of procedure.'
True it is that in the present case, as in People v. Superior Court, supra, the owner retained the possession of his land following the entry of the judgment, but possession, as heretofore pointed out, is only one of the elements of value in ownership. The owners here suffered a loss for which there was no 'just compensation.' The right to sell or rent the property was practically cut off. In the present case the owners apparently received no rents, their possession was precarious, to say the least, liable as it was to be terminated at any moment. They could not safely make any improvements or repairs or alterations. Certainly there was no evidence to demonstrate that the value of the legal right to possession was equivalent to interest on the award, and we should not make any such assumption. The loss of some of the rights of full ownership (as above mentioned) are not merely incidental rights, but in our opinion constitute the loss of valuable rights and constitute a distinct damage. If payment therefor is not made then the property owner has not received 'just compensation.'
The property owner was not placed in the position in which he found himself by any act of his own, that is, he was not a wrongdoer, nor was he under any contract relating to possession with a political subdivision, nor was he responsible for any delay in the payment of the judgment. He was simply in possession at the whim of the representatives of the condemner. In this case the record would seem to disclose that the condemner accepted the award and incidicated no desire to cogitate on whether to abandon or to go ahead or to appeal. The appellant simply delayed in making the payments.
Usually interest is allowed on judgments upon the theory, among others, that the successful litigant acquires an immediate right or claim to the award as soon as the judgment is entered. Some states hold that interest commences from the date of filing the report of the award (Minnesota--Warren v. First Div. St. Paul & Pacific R. R. Co., 21 Minn. 424); or from the date of trial (Ohio--Miami Conservancy Dist. v. Bowers, 100 Ohio St. 317, 125 N.E. 876); or from the date of the issuance of the summons (Brown v. United States, 263 U.S. 78, 44 S.Ct. 92, 68 L.Ed. 171; Idaho Code Ann., §§ 13-712), and in some instances, at the time condemnation proceedings are first ordered. Nichols, Eminent Domain, p. 105.
It has been stated, with reference to condemnation awards, that the 'ideal method would be to award the damages at the same moment that the taking was made, but the necessity of a judicial ascertainment of the amount of damages makes this impossible.' Nichols, Law of Eminent Domain, p. 108, § 863. Or as said in Parks v. Boston, 15 Pick., Mass., 198, at page 208:
'The true rule would be as in the case of other purchases, that the price is due and ought to be paid, at the moment the purchase is made, when credit is not specially agreed on. And if a pie-powder court could be called on the instant and on the spot, the true rule of justice for the public would be, to pay the compensation with one hand, whilst they apply the axe with the other; and this rule is departed from only because some time is necessary, by the forms of law, of conduct the inquiry; and this delay must be compensated by interest.'
When the amount of the award was determined, and the judgment entered and not paid, realism dictates that the blight of that judgment caused the owner damage for which he was not otherwise compensated. The amount was determined and fixed in the judgment, and practicality dictates that the money must, in effect, be regarded as due to him as of the date of the entry of that judgment, even though under our system of condemnation the condemner may think over whether it wants to abandon, or whether it wants to appeal or take some other course, and the judgment may not become final (in the sense that it is defined in section 1049 of the Code of Civil Procedure) for some time.
Under the circumstances of the instant case, we are of the opinion that it was neither unfair nor improper to award interest to the owner for the period of delay in paying the amounts of the various awards.
Furthermore, although it is not a reason for the determination at which we have arrived in this case, to so hold may have the wholesome effect of stimulating the condemner to prompt action in condemnation actions, and doing away with the anomalous situation of engrafting a suit for interest onto many condemnation actions.
The order of the trial court awarding interest is affirmed.
WHITE, P. J., and LILLIE, J., concur. --------------- * Opinion vacated 339 P.2d 848. 1 NOTE--Some parts of this form are wider than one screen. To view material that exceeds the width of this screen, use the right arrow key. To return to the original screen, use the left arrow key.
1. Judgment Date of Time lapse (Respondents' (Appellant's (Appellant's Parcel Payment from Contention) Contention Present No. (1957) entry of From date of at time of Contention) Judgment entry of Motion) From Liability Jdgmt date 30 days from date Interest following Jdgmt. accrued at 7% entry of became final Jdgmt. (90 days Interest at after entry 7% of Jdgmt. at 7%) ------------------------------------------------------------------------------------------ 1 $7500.00 3/20 1 mo. 2 $ 46.66 $ 2.91 None days 2 3985.00 6/4 3 ' 16 ' 82.13 58.89 17 days 3 7200.00 6/4 3 ' 16 ' 148.40 106.40 17 days 4 3360.00 6/4 3 ' 16 ' 69.25 49.65 17 days 5 6600.00 6/4 3 ' 16 ' 136.04 97.53 17 days 6 2800.00 6/4 3 ' 16 ' 57.71 41.38 17 days 8 5105.00 6/4 3 ' 16 ' 105.22 75.44 17 days 10 3640.00 6/24 4 ' 6 ' 89.18 67.95 37 days 12 4714.00 3/20 1 ' 2 ' 29.33 1.83 None 14 3500.00 6/24 4 ' 6 ' 85.78 65.33 37 days 15 3410.00 8/9 5 ' 21 ' 113.38 123.63 83 days 1000.00 3/23 6 ' 5 ' 35.97 97 ' 16 4760.00 6/4 3 ' 16 ' 98.11 70.34 17 days 17 4160.00 6/4 3 ' 16 ' 85.74 61.48 17 days