Before ALBERT LEE STEPHENS, MARIS, and GOODRICH, Circuit Judges.
The United States is appealing from a judgment of the District Court of the United States for the Eastern District of Pennsylvania in a proceeding instituted by the government for the condemnation of the fee simple of 1.87 acres of improved, industrial real property lying in the City of Philadelphia, Pennsylvania.
Claims of error are presented to us in the form the three questions.
Question 1. "In submitting to the same jury at the same time the question as to amount of compensation payable by the United States for the entire property and the question of distribution of that award between the fee owner and the tenant; and whether, under the instructions given to the jury, confusion as to the process to be used probably resulted to the prejudice of the United States."
The property being taken by eminent domain proceedings was under lease by the owner, Baldwin Locomotive Works Company, to North American Warehousing Company (both corporations).
The court at the trial, and with one and the same jury, received evidence as to the over-all value of the property in question, that is, as to the fair market value of the fee simple, without encumbrance or other outstanding interest in it.The court then proceeded to take evidence as to the value of the unexpired portion of North American's lease. No objection was made prior to a motion for a new trial to this procedure.
When the value of North American's interest was being heard, counsel for the government properly indicated that this issue was between Baldwin and North American, since the government would pay for the full value, and the payment would be divided between the owner and the interest holder, the owner taking the whole amount to be paid less the value of the leasehold interest. United States v. Certain Lands in Mempstead, etc., 2 Cir., 1942, 129 F.2d 918. The government rightly states in its brief that it had no direct concern with division of the award between lessor and the lessee. United States v. Certain Lands in the Borough of Brooklyn, 2 Cir., 1942, 129 F.2d 577, 579.*fn1
The government, as it contended in its motion for a new trial which was denied, now contends that the procedure followed was erroneous, confusing and prejudicial to it and that "the two issues should have been separately submitted to the jury."
There is nothing in the record to the effect that the government objected to the taking of testimony of the leasehold value after testimony had been received as to the fee value. There is no showing in the record to the effect that the government informed the court that the fee-value issue should first be submitted to, and be decided by, the jury. At no time before the motion for a new trial was made was the court informed of the government's view that the issues should be submitted separately or that the Pennsylvania statute, requiring the fee and encumbrance values be tried together, should not be followed.*fn2 Notwithstanding, we treat of the merits.
The Pennsylvania statute requires simultaneous submission in one proceeding of the issue of fee value and interest value in property under eminent domain proceedings and is purely procedural. The trial court did not commit error in following it. See United States v. Miller, 1942, 317 U.S. 369, 63 S. Ct. 276, 87 L. Ed. 336, 147 A.L.R. 55.
The main complaint of the government is that by following such procedure, the jury was confused, that the instructions to the jury, referring to the different awards to be made, were confusing, and that a colloquy between the court and counsel in the jury's presence, immediately after conclusion of the court's charge, was cumulatively confusing to the jury.
In the course of delivering the charge to the jury, the court said:
"So you come, first, to the determination of the fair market value of that property in its entirely, and then your next approach is to evaluate the leasehold interest represented by Mr. McCracken and Mr. Gratz as counsel for the North American Warehousing Company. In evaluating that leasehold interest you are to determine the fair market value of the leasehold interest at the date of the taking, May 6, 1942. Taking into consideration those factors which are before you, you are to say what is the value of that leasehold interest as of May 6, 1942, and you subtract from that the rental reserved in the lease for a period of four years less the charges, and it is that ...