GIBSON PROPERTIES CO v. CITY OF OAKLAND (1938)

This appeal was taken from a judgment for the defendant in an action at law for damages claimed because of changes in the design and construction of a building made in anticipation that street–opening proceedings, later abandoned, would be carried through to completion.

In March of 1926 the appellant Gibson Properties Company had acquired title to an irregularly shaped piece of land in Oakland within the block bounded on the west by Franklin, on the south by Water, on the east by Webster, and on the north by First street, upon which it proposed to erect a three–story concrete warehouse for the appellant Lawrence Warehouse Company. On March 15, 1926, the Properties Company made a lease to the Warehouse Company of the proposed warehouse, according to plans and specifications then prepared, for a term ending October 15, 1946, for a total rental of $900,000. About this time the Properties Company was granted a building permit, and on April 2, 1926, it made a contract for the construction of the warehouse for $296,000, which was to cover the entire area owned by the Properties Company, the northerly line of which, extending for 100 feet, was the southerly line of First street. On April 15, 1926, a letter was written by the commissioner of public works, referring to the fact that a building permit had been issued, indicating that street–opening proceedings were going to be started and that the street to be opened would impinge upon the Properties Company lot, and suggesting “that before definite plans are made for any construction it would be advantageous to yourselves and the City if a conference could be arranged.” Work was, nevertheless, started on the warehouse. On June 17, 1926, the respondent, by ordinance, declared its intention to widen First street for the two blocks from Broadway to Webster street, under the Street Opening Act of 1903, St.1903, p. 376, as amended, which opening, the ordinance showed, would add to the width of First street by taking 20 feet off the northerly side of the two blocks in question. The Properties Company had designed on the northerly 20 feet of its lot and within the walls a spur track so depressed that the floor of a railroad car would be level with the floor of the warehouse. As soon as the ordinance of intention was passed, the respondent's commissioner of public works notified the Properties Company in writing of the passage, and ordered it to cease and desist from any building operations upon the 20–foot strip, which order was at once obeyed. Before the ordinance had been passed, the foundation of the north wall of the building had been laid along the south line of First street, forms for the pouring of the concrete for the entire height of the building's north wall had been made, the excavation for the depressed track had been dug, and certain other work had been done. Appellants then had their plans redrawn, setting the north wall back, or southerly, 20 feet from its original location, setting the elevator pit, likewise, 20 feet back, and eliminating the depressed track. The cost of these changes and the redesigning of the building was $5,696.60, which the court found was the reasonable value of that work. As reconstructed the building occupied 98.4 per cent. of the ground area and contained 95.35 per cent. of the floor space originally planned. On September 16, 1926, an ordinance was adopted ordering the widening of First street, in the manner already indicated, and directing condemnation proceedings. A condemnation suit was filed on October 29, 1926, and eventually went to trial, resulting in an interlocutory judgment on July 9, 1929, awarding the appellants $33,997.

On September 15, 1931, the respondent adopted an ordinance repealing the ordinance of intention and all proceedings thereunder, and on December 11, 1931, filed, in the condemnation proceedings a notice of abandonment and request for dismissal. On December 16, 1931, the court dismissed the condemnation suit.

May 12, 1933, the complaint was filed in the instant case alleging most of the facts just stated, and claiming general damages in the sum of $55,392 and special damages of $5,696.60 for the Properties Company and $24,608.93 for the Warehouse Company.

The court made findings, of which the foregoing is a fair resume, but it declined to award judgment in favor of appellants. It should be observed that the complaint alleged that the delay in the proceedings “was and is unreasonable and without cause,” but no bad faith in the commencement or prosecution of the proceedings was claimed. The court found that it was not true that the delay complained of was and is unreasonable and without cause, although it did find that the respondent could have completed the proceedings in a shorter time, but that the work proposed by the resolution of intention was commenced “in good faith, continued in good faith, and terminated in good faith.”

The fact that the court awarded no judgment for the $5,696.60 (expended by the Properties Company in anticipation that the proceedings would culminate in a taking of the 20–foot strip) indicates that it viewed this as a case of damnum absque injuria.

No question is raised on this appeal as to the right of a condemning party to abandon a project and the proceedings thereon without incurring liability to an owner to pay the judgment awarded. It was held in Pool v. Butler, 141 Cal. 46, 74 P. 444, that this could be done. After that decision the Legislature, Stats.1911, p. 377, codified this rule in section 1255a, Code of Civil Procedure, which prescribes the time within and the terms upon which the right may be exercised. In proceedings under the act of 1903, however, it has been held that the time limitation of section 1255a does not apply, but that section 14 of that act, Stats.1903, pp. 376, 379, as amended by St.1911, p. 894, does. Bank of America v. City of Glendale, 4 Cal.2d 477, 481, 50 P.2d 1035. That section provides that: “The city council may, at any time prior to the payment of the compensation awarded the defendants, abandon the proceedings, by ordinance, and cause the said action to be dismissed, without prejudice.”

Thus it will be seen that the Legislature wrote certain conditions into section 1255a, but it omitted all provision for the payment of damages arising from circumstances such as are here involved; and section 14 of the 1903 act, as amended, imposes no conditions at all. There was every opportunity for the Legislature to speak upon this subject, for the courts have commented upon the fact that section 1255a was enacted “to meet certain abuses arising out of resort to the action without seriously intending to prosecute it to a conclusion.” Pacific Gas & Electric Co. v. Chubb, 24 Cal.App. 265, 270, 141 P. 36, 38. See, also, dissenting opinion in Los Angeles v. Clay, 126 Cal.App. 465, 469, 14 P.2d 926.

It seems to be settled by the weight of authority in the United States that upon the abandonment of a condemnation proceeding no cause of action accrues to an owner, in the absence of statute, for loss, damage, or inconvenience suffered by him in anticipation that the proceeding would eventuate in the taking, for compensation, of his property for public use, unless the proceedings were instituted or prosecuted in bad faith, or were unreasonably, deliberately, or willfully protracted. 20 C.J. 1086; 31 A.L.R. 352. Indeed, the appellants seem to concede this to be the general rule, but they claim that this case is exceptional. In their closing brief they sum up their position as follows: “Appellants admit that in general a municipality may institute and thereafter abandon a condemnation suit without liability for damages. But when the property owner is so situated that he must change position because of his contracts with third persons, is under a legal duty to change position in order to minimize damage, receives a mandate from the municipality directing that he change position, and he is assured by the City that he will have his day in court as to any damages he may suffer, and the City elects to avail itself of the drastic provisions of the 1903 Street Opening Act, and the owner does thereupon change position, to his monetary detriment, the City will not be permitted to deny liability.”

The following leading cases are all street opening cases which are parallel to the case at bar save as to the elements of claimed loss or damage: Carson v. Hartford, 48 Conn. 68 (action for delay in the sale of the property and loss of profitable use thereof); Feiten v. Milwaukee, 47 Wis. 494, 2 N.W. 1148, 1150 (action for loss of rent; unnecessary delay alleged); McRostie v. Owatonna, 152 Minn. 63, 188 N.W. 52, 53 (where a barn was razed in anticipation of ultimate condemnation, and where the charter gave the right to abandon “upon payment of all costs and disbursements of the adverse party”). All three cases are discussed in the annotation at 31 A.L.R. 352, 365–367, where many other cases are collected. In the Feiten Case, supra, one of the reasons for the rule is given as follows: “If there be injury without wrong, it is damnum absque injuria. Any other rule would render the institution of proceedings looking to the condemnation of property for public improvements exceedingly perilous to the municipality.” Howard v. Illinois Central R. Co., 7 Cir., 64 F.2d 267, was an action for damages for deprivation of the possession and free and unrestricted use of the owner's land over a period of ten years. A demurrer to the complaint was held to have been properly sustained. At page 271 the court says: “There may be a hardship in compelling an owner to hold his property in uncertainty awaiting the conclusion of a condemnation suit and the determination as to whether his property will be taken or not; but the inconvenience is the same kind which attends all proceedings in taking land for public improvements, and which is incident to the ownership of property in a community, and especially in a city. However, where such are the only facts relied upon, the law gives no cause of action to the owner for his incidental expenses and inconvenience. Stevens v. Borough of Danbury, 53 Conn. 9, 22 A. 1071; Carson v. City of Hartford, 48 Conn. 68. This rule seems to be the universal holding of the courts in all jurisdictions, in the absence of a local statute to the contrary. Winkelman v. Chicago, 213 Ill. 360, 72 N.E. 1066.” (Italics ours.)

James v. Toledo, 24 Ohio App. 268, 157 N.E. 309, has many features similar to the instant case. There the owner, intending to build, obtained from the city a building permit; construction work had started when the city instituted condemnation proceedings to open a street, and when it did so it revoked the building permit pursuant to which the owner had, in the best of faith, started work. The proceedings were abandoned, yet the owner was denied redress.

In support of their position that this is an exceptional case, the appellants rely upon the cases of Times–Mirror Company v. Superior Court, 3 Cal.2d 309, 44 P.2d 547; McGee v. City of Los Angeles, 6 Cal.2d 390, 57 P.2d 925, 926, and City of Los Angeles v. Cohn, 101 Cal. 373, 35 P. 1002, but a careful examination shows that the facts in none of them are at all comparable with those in the case at bar. The opinion in the Times–Mirror Case sets forth in detail the history of that litigation and shows clearly and convincingly why the conduct of the officials worked an estoppel against the city. In addition to that, the attempted abandonment came approximately one year and five months after the thirty–day period limited by section 1255a, Code of Civil Procedure. It would unduly prolong this opinion to herein summarize the facts of that case with a view to pointing out how aggravated was the situation there presented and how unlike the case at bar. At page 331 of 3 Cal.2d, page 557 of 44 P.2d the court says: “The unusual circumstances in this case would require the application of the doctrine announced in City of Los Angeles v. Cohn, supra, even though no such precedent existed,” and the opinion quotes extensively from the Cohn Case, a reading of which will show the dissimilarity between the Cohn Case and the case at bar. The McGee Case, likewise, is quite distinguishable. The decision of that case turned upon a stipulation which had been entered into by the condemning city and the property owner, and the Supreme Court simply held the city to the performance of its stipulated obligation, holding that the case presented “one of those exceptional situations” recognized in the Times–Mirror and Cohn Cases, “where justice and right require the invocation of the principle of estoppel in pais in favor of a citizen or private party and against a municipality.” Mr. Justice Garoutte characterizes the Cohn Case, 101 Cal. 373, 378, 35 P. 1002, as a “law unto itself.” We see nothing exceptional about the case at bar to bring it within the rule of the three cases last cited or without the general and prevailing rule heretofore discussed.

The judgment is affirmed.

GOODELL, Justice pro tem.

We concur: SPENCE, Acting P. J.; STURTEVANT, J.