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Matched Legal Cases: ['§ 25', '§ 25', '§ 831', '§ 25', '§ 25', '§ 25', '§ 25', '§ 71', '§ 73']

UNITED STATES EX REL. TVA V. POWELSON, 319 U. S. 266 (1943)
US Supreme Court Decisions On-Line> Volume 319 > UNITED STATES EX REL. TVA V. POWELSON, 319 U. S. 266 (1943)
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3. In a proceeding under § 25 of the Tennessee Valley Authority Act, the owner sought to establish a special value for the lands condemned chanrobles.com-red
Certiorari, 314 U.S. 594, to review a judgment of the Circuit Court of Appeals which affirmed with modifications a judgment of the District Court, 33 F.Supp. 519, in a condemnation case. chanrobles.com-red
On January 28, 1936, when the original declaration of taking was filed and these proceedings began, Southern States and Union Power owned a small hydroelectric generating plant on the Nottely River, a tributary of the Hiwassee. This was known as the Murphy plant. It had a distribution system which supplied the town of Murphy, North Carolina, and surrounding territory. These companies also owned about 22,000 acres of land on both sides of the Hiwassee and Nottely Rivers. These included lands at four dam sites which are known as the Powelson (site of the Hiwassee dam), Appalachia, Murphy, and Nottely sites, a large part of the land required for the Powelson and Appalachia projects, and some of the land required for the Murphy and Nottely projects. Powelson, an experienced hydroelectric engineer, began as early as 1913 and continued until 1931 to explore, survey, and acquire these lands and to develop and promote a plan for constructing an integrated four-dam hydroelectric plant on these rivers and at these sites. The actual cost chanrobles.com-red
The lands condemned by the Government in the present proceedings constitute a part of the site of its Hiwassee dam, a multiple-purpose project constructed by the Tennessee Valley Authority on the Hiwassee River as part of the development of the Tennessee River system for hydroelectric power production, navigation, and flood control. See Report to the Congress on the Unified Development chanrobles.com-red
The condemnation proceedings were conducted pursuant to § 25 of the Tennessee Valley Authority Act of 1933, c. 32, 48 Stat. 58, 70, 16 U.S.C. § 831x. [Footnote 5] Under the procedure therein specially prescribed for condemnations on behalf of the Tennessee Valley Authority, the District Court appointed three commissioners to take testimony and to determine the value of the property. The Government contends that the property was worth from $95,000 to $165,000. Respondent sought to establish a value of $7,500,000. Respondent's valuation was based on the theory that the property condemned, together with other property owned by respondent, could be united with numerous other tracts owned by strangers for the construction of an elaborate four-dam hydroelectric project. Only one of the four projected dams was to be located on the chanrobles.com-red
I. A preliminary question relates to the scope of review by the Circuit Court of Appeals under § 25 of the Act. chanrobles.com-red
The purpose of § 25 was to free the Circuit Court of Appeals from the strictures commonly applicable to its review of disputed questions of fact. Under § 25, it does not sit as a "court of errors." United States v. Reynolds, 115 F.2d 294, 296. Its duty is to dispose of the matter chanrobles.com-red
The burden of establishing the value of the lands sought to be condemned was on respondent. Ralph v. Hazen, chanrobles.com-red
93 F.2d 68, 70; Welch v. Tennessee Valley Authority, 108 F.2d 95, 101. Respondent endeavored to carry that burden by introducing evidence that the property condemned had a fair market value of $7,500,000. As we have said, the theory was that the lands condemned, together with other property owned by respondent, could be united with several hundred other tracts owned by strangers, and that a four-dam hydroelectric project could be constructed upon all those lands. [Footnote 7] As we have noted, only one of the four hypothetical dams was to be located on the lands condemned. That was at the Hiwassee dam site, which, considered alone, was not contended to be profitable for power development. Although respondent owned or controlled some of the other lands necessary for the four-dam project, about half of them were in adverse hands. It was practically conceded that the acquisition of all the property necessary for the four-dam development could not, in all reasonable probability, be accomplished without resort to the power of eminent domain. It was insisted, however, that, since that power had been conferred by North Carolina, the case should be viewed as if respondent owned every foot of land required for the hypothetical project. Respondent proceeded from that assumption to other assumptions: an estimated cost of $30,000,000 for the four-dam project; an annual output of 512,500,000 kwh of so-called reserve, or superprimary, or "Saluda-type" energy; [Footnote 8] a production cost of electricity chanrobles.com-red
An owner of lands sought to be condemned is entitled to their "market value fairly determined." United States v. Miller, 317 U. S. 369, 317 U. S. 374. That value may reflect not only the use to which the property is presently devoted, but also that use to which it may be readily converted. Boom Co. v. Patterson, 98 U. S. 403; McCandless v. United States, 298 U. S. 342. In that connection, the value may be determined in light of the special or higher use of the land when combined with other parcels; it need not be measured merely by the use to which the land is or can be put as a separate tract. McGovern v. New York, 229 U. S. 363. But, in order for that special adaptability to be considered, there must be a reasonable probability of the lands in question being combined with other tracts chanrobles.com-red
The fact that the owner also has a power of eminent domain does not alter the situation. See Tacoma v. Nisqually Power Co., 57 Wash. 420, 433, 107 P. 199. The grant of the power of eminent domain is a mere revocable privilege for which a state cannot be required to make compensation. Adirondack Ry. Co. v. New York, 176 U. S. 335; Ramapo Water Co. v. New York, 236 U. S. 579; Western Union Tel. Co. v. Louisville & Nashville R. Co., 258 U. S. 13. A revocation of that privilege is but a recall chanrobles.com-red
of a part of its sovereign power for which no price may be exacted. North Carolina follows that view. Yadkin River Power Co. v. Whitney Co., 150 N.C. 31, 63 S.E. 188. Accordingly, it seems clear that, if North Carolina, rather than the United States, were constructing this public project and condemning the identical lands for the purpose, respondent need not be compensated for the loss of an opportunity to develop a power project through utilization of the right to condemn. In case this was North Carolina's project, respondent's chances of combining these numerous tracts into one ownership for a power project would be measured without reference to the power of eminent domain. The inclusion of eminent domain would be but an indirect method of making North Carolina pay for the destruction or impairment of the privilege. [Footnote 9] That the private company's privilege to use the power of eminent domain need not be reflected in the valuation if the property were taken by the state is indicated by those few cases which seem to have reached the point. See Tacoma v. Nisqually Power Co., supra. That result is the necessary import of this Court's ruling in Sears v. Akron, 246 U. S. 242. Suit was brought in that case by the trustee of the property of an Ohio corporation to enjoin the City of Akron from constructing a dam and reservoir on the Cuyahoga River. The corporation had received from the state of Ohio the right to construct and operate a power system on the river. And it was also given by the state chanrobles.com-red
This is a case of first impression. No precedent has been advanced which suggests that a different measure of compensation should be required where the United States, rather than the state, is the taker of the property for a public project. Nor has any reason been suggested why, as a matter of principle or policy, there should be a different measure of compensation in such a case. It has long been assumed that, in other respects, the national government was under "no greater limitation" by reason of the Fifth Amendment than were the states by virtue of the Fourteenth. Hamilton v. Kentucky Distilleries Co., 251 U. S. 146, 251 U. S. 156. That view is implicit in condemnation cases where the amount of just compensation required chanrobles.com-red
The right of the United States to exercise the power of eminent domain is "complete in itself," and "can neither be enlarged nor diminished by a State." Kohl v. United States, 91 U. S. 367, 91 U. S. 374. Though the meaning of "property," as used in § 25 of the Act and in the Fifth Amendment, is a federal question, it will normally obtain its content by reference to local law. Yet, when we look to local law in the present case, we find no indication that, for purposes of condemnation proceedings instituted by North Carolina, the value of the lands in question would be increased by reason of respondent's privilege to use the power of eminent domain. So far as constitutional compulsions are concerned, it is plain, as we have noted, that that factor need not be included in case the state were the condemner. Moreover, the result in the present case is not different if we assume with the District Court (33 F.Supp. p. 522) that respondent's "prior right" under North Carolina law "constituted a valuable right which is destroyed by this condemnation proceeding." It does chanrobles.com-red
The law of eminent domain is fashioned out of the conflict between the people's interest in public projects and the principle of indemnity to the landowner. We recently stated in United States v. Miller, supra, p. 317 U. S. 375, that "Courts have had to adopt working rules in order to do substantial justice in eminent domain proceedings." Equity and fair dealing do not require the payment by the United States to the landowner of the amount of a valuation of his lands based on the existence of his privilege to use the power of eminent domain. It is "private property" which the Fifth Amendment declares shall not be taken for public use without just compensation. The power of eminent domain can hardly be said to fall in that category. It is not a personal privilege; it is a special authority impressed with a public character, and to be utilized for a public end. [Footnote 11] An award based on the value of that privilege would be an appropriation of public authority to a wholly private end. The denial of such an award to the landowner does no injustice. It is true that respondent's possession of the power of eminent domain was, in part, the basis of an opportunity to unite the present lands with others into a power project. But he is not being deprived of values which result from his expenditures or activities. The fruits of the exercise of that power chanrobles.com-red
of eminent domain are not being appropriated. And there is no basis for raising an estoppel against the United States, as there was thought to be in Monongahela Navigation Co. v. United States, 148 U. S. 312. See Omnia Co. v. United States, supra, pp. 261 U. S. 513-514. The landowner is, to be sure, deprived of a preferential advantage which was an incidental attribute of the public authority with which the state endowed him. But that advantage had no higher dignity than a promise of a gratuity. It had not been availed of to develop an existing and going enterprise which the United States appropriated. Respondent's project was only a speculative venture -- a promotional scheme wholly in futuro. Thus, we conclude that respondent had no interest under his unexercised power of eminent domain which rises to the estate of "private property" within the meaning of the Fifth Amendment. @Cf. 55 U. S. 94.
This public project, to be sure, has frustrated respondent's plan for the exploitation of its power of eminent domain. We may assume that that privilege was a thing of value, and that this frustration of the plan means a loss to respondent. But our denial of compensation for that loss does not make this an exceptional case in the law of eminent domain. There are numerous business losses which result from condemnation of properties but which are not compensable under the Fifth Amendment. The point is well illustrated by two other lines of cases in this field. It is a well settled rule that, while it is the owner's loss, not the taker's gain, which is the measure of compensation for the property taken (United States v. Miller, supra; United States v. Chandler-Dunbar Co., supra, p. 229 U. S. 81; Boston Chamber of Commerce v. Boston, 217 U. S. 189, 217 U. S. 195), not all losses suffered by the owner are compensable under the Fifth Amendment. In absence of a chanrobles.com-red
statutory mandate (United States v. Miller, supra, p. 317 U. S. 376) the sovereign must pay only for what it takes, not for opportunities which the owner may lose. See Orgel, Valuation Under Eminent Domain (1936) § 71, § 73. On the one hand are such cases as Monongahela Navigation Co. v. United States, [Footnote 12] supra, where it was held that the United States had appropriated a going enterprise to its own ends, and must make compensation accordingly. But it is well settled in this Court [Footnote 13] that "[f]rustration and appropriation are essentially different things." Omnia Co. v. United States, supra, p. 261 U. S. 513. Thus, in Mitchell v. United States, 267 U. S. 341, the owner was denied compensation for the destruction of his business which resulted from the taking of his land for a public project even though the business could not be reestablished elsewhere. This Court, after noting that "settled rules of law" precluded chanrobles.com-red
It is suggested that this result would mean that, in condemnation proceedings, the United States need not pay the value of the property at the time of the taking if the chanrobles.com-red
state where the property is located might destroy or diminish that value through an appropriate exercise of its police power. It is manifest that such is not the case. A state may, of course, destroy or diminish values by an assertion of its police power without the necessity of making compensation for the loss. Hamilton v. Kentucky Distilleries Co., supra; Block v. Hirsch, 256 U. S. 135, 256 U. S. 156. While such a change will not be presumed (United States v. River Rouge Imp. Co., 269 U. S. 411), the possibility or probability of such action, so far as it affects present values, is a proper subject for consideration in valuing property for purposes of a condemnation award. See Reichelderfer v. Quinn, 287 U. S. 315, 287 U. S. 323. We do not disturb those general principles. The United States no more than a state can be excused from paying just compensation measured by the value of the property at the time of the taking merely because it could destroy that value by appropriate legislation or regulation. But we have here a unique situation. The power of eminent domain which respondent seeks to have reflected in the valuation is largely unexercised, and need not be reflected in the measure of compensation if the state which conferred the privilege were the taker of the lands. If these numerous tracts had already been united by respondent through the power of eminent domain into a power project, distinct problems would be posed, as Sears v. Akron, supra, indicates. Then, the United States would be acquiring a business, not simply frustrating a promotional scheme. We merely hold that the United States, in absence of a specific statutory requirement, need not make compensation for the loss of a business opportunity based on the unexercised privilege to use the power of eminent domain where the state need not do so were it the sponsor of the public project and the taker of the lands. The constitutional obligation of the United States to make compensation does not extend so far. chanrobles.com-red
We hold only that profits, attributable to the enterprise which respondent hoped to launch, are inadmissible as evidence of the value of the lands which were taken. Respondent is, of course, entitled to the market value of the property fairly determined. And that value should be found in accordance with the established rules (United States v. Miller, supra) -- uninfluenced, so far as practicable, by the circumstance that he whose lands are condemned has the power of eminent domain. We do not reach the question, much discussed at the bar and in the briefs, whether evidence of the earnings of respondent's hypothetical four-dam project should have been excluded for the further reason that it was too speculative. [Footnote 14] chanrobles.com-red
See 44 U. S. 223; Boom Co. v. Patterson, 98 U. S. 403, 98 U. S. 406; United States v. Jones, 109 U. S. 513, 109 U. S. 518-519; Spencer v. Railroad Co., 137 N.C. 107, 121-122, 49 S.E. 96; Jeffress v. Greenville, 154 N.C. 490, 493, 494, 70 S.E. 919; Wissler v. Yadkin River Power Co.,@ 158 N.C. 465, 74 S.E. 460. In the latter case, the Supreme Court of North Carolina stated (pp. 466-467):
And see Long Island Water Supply Co. v. Brooklyn, 166 U. S. 685; Cincinnati v. Louisville & Nashville R. Co., 223 U. S. 390; Pennsylvania Hospital v. Philadelphia, 245 U. S. 20; Brooks-Scanlon Corp. v. United States, 265 U. S. 106; De Laval Steam Turbine Co. v. United States, 284 U. S. 61. In the Monongahela case, the United States condemned a lock and dam constructed at the invitation of the United States and operated by the owner under a franchise from Pennsylvania. This Court held that the special facts of the case required that the franchise or going concern value of the enterprise be included in the compensation payable to the owner. It was said, in the first place, that the franchise granted to the company by Pennsylvania was a valuable property right, since it was a contract under the rule of 17 U. S. 513-514, the [email protected] case "rested primarily upon the doctrine of estoppel, as this Court has in several cases since pointed out."
Unless this decision overrules the law as stated by Mr. Justice Brandeis for a unanimous Court, flowing streams are natural resources owned and governed by the States, and the rights of their grantees and of riparian owners are settled by the local law which is conclusive on us. Port of Seattle v. Oregon & Washington R. Co., 255 U. S. 56; St. Anthony Falls Water-Power Co. v. St. Paul Water Comm'rs, 168 U. S. 349; Shively v. Bowlby, 152 U. S. 1; cf. United States v. Oregon, 295 U. S. 1, 295 U. S. 6-7. The States have assumed this to be their right and have written into their laws and constitutions various systems of control and development deemed suitable to their respective climates, industries, or economies. [Footnote 2/1] chanrobles.com-red
The Hiwassee River, therefore, is a resource of the North Carolina. To obtain the advantage of its latent energy, that State, by special act of its Legislature, created chanrobles.com-red
Under its paramount powers over navigation, the Federal Government has elected to take this resource out of the control of the State and away from the grantee corporation which is subject to State taxing and regulatory power. This it may do, but only upon making just compensation. But the Court holds that compensation must be computed as if the State had refused to grant what it has granted, or had withdrawn what it has given no indication of withdrawing. By thus cancelling for the purpose chanrobles.com-red
Few properties are so immune from the effects of governmental authority that some action may not be envisioned which would devalue them. One of the items taken by the Federal Government in this case from respondent and out of control of the State was a going concern, an electric generating plant and distributing system. Since both parties accepted the award made for chanrobles.com-red
this plant it is no longer an issue, but is illustrative of the legal problem raised by the Court's opinion. Doubtless, the State Government had power to make many innovations detrimental to its success and to impose burdens that would detract from its value, and perhaps had reserved powers to annul its corporate or special franchises. But we would not suppose that such hypothetical destruction of property values could be invoked to minimize compensation payable on a taking, any more than hypothetical accretions to its rights through state action, possible but never accomplished, could increase such compensation. In many cases, the beneficial use, and hence the value, of abutting property may be decreased if public authority closes or obstructs a public street or canal, or changes the grade of a street, or the location of a county seat. [Footnote 2/4] chanrobles.com-red
Even less relevant to the question now before us is Sears v. Akron, 246 U. S. 242. It was not a condemnation case at all, but a suit in equity to enjoin the City from construction of a dam and reservoir and diversion of river water. The City did not propose to take any property of the company through which plaintiff as a mortgage creditor derived any rights he asserted. In fact, the company did not own any property included in the project, although, shortly before commencement of the suit, but after the City's development was practically completed, it acquired two small parcels some distance below the City's dam. But the company's charter gave it a right of eminent domain and, although it had taken no step to do so, it claimed the right to expropriate the same property the City was taking. It sought to enjoin the City upon the ground that its unexercised right to take this property was an indefeasible property right which was being defeated and rendered valueless because the City was ahead of it in preempting properties which the company might want to acquire under its power. The State of Ohio had retained power to "revoke any such right to appropriate property until it had been acted upon by acquiring the property authorized to be taken." 246 U.S. at 246 U. S. 250. The State, of course, had revoked the power to the extent that it had authorized the City, its own instrumentality, to take the property. But Justice chanrobles.com-red
The Government and the Court have taken a contrary position to the one now announced when the shoe was on the other foot. In United States v. River Rouge Co., 269 U. S. 411, the Government sought to deduct from the value of property condemned the benefits conferred by the improvement upon the severed property. The owner denied that these benefits should be considered because his enjoyment of them would be terminable by the Government chanrobles.com-red
See 319 U. S. supra.