Source: https://www.law.cornell.edu/supremecourt/text/317/369
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UNITED STATES v. MILLER et al. | US Law | LII / Legal Information Institute
Supreme Court aboutsearch liibulletin subscribe previews UNITED STATES v. MILLER et al.
317 U.S. 369 (63 S.Ct. 276, 87 L.Ed. 336)
Argued: Nov. 16, 17, 1942.
[HTML] See 318 U.S. 798, 63 S.Ct. 557, 87 L.Ed. -.
This case presents important questions respecting standards for valuing property taken for public use. For this reason, and because of an apparent conflict with one of our decisions, we granted certiorari, 316 U.S. 657, 62 S.Ct. 1290, 86 L.Ed. 1736.
April 6, 1934, the Chief of Engineers of the Army recommended that the Government contribute twelve million dollars towards the project.
Congress authorized the appropriation in the following year.
December 22, 1935, the President approved construction of the entire improvement. In 1936 Congress appropriated $6,900,000 for it and in 1937 $12,500,000.
In August 1937 the project was again authorized by Congress.
December 14, 1938, the United States filed in the District Court for Northern California a complaint in eminent domain against the respondents and others whose lands were needed for the relocation of the railroad. On that day the Government also filed a declaration of taking.
In this declaration the estimate of just compensation to be paid for a tract belonging to three of the respondents as co-tenants was estimated at $2,550 and that sum was deposited in court. On the application of these owners the court directed the Clerk to pay each of them one-third of the deposit, or $850, on account of the compensation they were entitled to receive.
The three respondents who had received $850 each on account of compensation were awarded less than the total paid them. The court entered judgment that title to the lands was in the United States and judgment in favor of respondents respectively for the amounts awarded them. Judgment was entered against the three respondents and in favor of the United States for the amounts they had received in excess of the verdicts with interest. They moved to set aside the money judgments against them on the ground that the court had no jurisdiction to enter them. The motions were overruled. All of the respondents appealed, assigning error to the trial judge's ruling with respect to the questions to be asked the witnesses, to his charge which had instructed the jury that, in arriving at market value as of the date of taking, they should disregard increment of value due to the initiation of the project
and arising after August 26, 1937, and three of them to his entry of money judgments for the United States.
The Circuit Court of Appeals reversed the judgment holding, by a divided court, that the trial judge erred in his rulings and in his charge, and unanimously that the District Court was without jurisdiction to award the United States a judgment for amounts overpaid.
1. The Fifth Amendment of the Constitution provides that private property shall not be taken for public use without just compensation. Such compensation means the full and perfect equivalent in money of the property taken.
The owner is to be put in as good position pecuniarily as he would have occupied if his property had not been taken.
It is conceivable that an owner's indemnity should be measured in various ways depending upon the circumstances of each case and that no general formula should be used for the purpose. In an effort, however, to find some practical standard, the courts early adopted, and have retained, the concept of market value. The owner has been said to be entitled to the 'value',
the 'market value',
and the 'fair market value'
of what is taken. The term 'fair' hardly adds anything to the phrase 'market value', which denotes what 'it fairly may be believed that a purchaser in fair market conditions would have given',
or, more concisely, 'market value fairly determined'.
Respondents correctly say that value is to be ascertained as of the date of taking.
But they insist that no element which goes to make up value as at that moment is to be discarded or eliminated. We think the proposition is too broadly stated. Where, for any reason, property has no market resort must be had to other data to ascertain its value;
and, even in the ordinary case, assessment of market value involves the use of assumptions, which make it unlikely that the appraisal will reflect true value with nicety. It is usually said that market value is what a willing buyer would pay in cash to a willing seller. Where the property taken, and that in its vicinity, has not in fact been sold within recent times, or in significant amounts, the application of this concept involves, at best, a guess by informed persons.
Again, strict adherence to the criterion of market value may involve inclusion of elements which, though they affect such value, must in fairness by eliminated in a condemnation case, as where the formula is attempted to be applied as between an owner who may not want to part with his land because of its special adaptability to his own use, and a taker who needs the land because of its peculiar fitness for the taker's purposes. These elements must be disregarded by the fact finding body in arriving at 'fair' market value.
Since the owner is to receive no more than indemnity for his loss, his award cannot be enhanced by any gain to the taker.
Thus although the market value of the property is to be fixed with due consideration of all its available uses,
its special value to the condemnor as distinguished from others who may or may not possess the power to condemn, must be excluded as an element of market value.
The district judge so charged the jury and no question is made as to the correctness of the instruction.
Courts have to adopt working rules in order to do substantial justice in eminent domain proceedings. One of these is that a parcel of land which has been used and treated as an entity shall be so considered in assessing compensation for the taking of part or all of it.
This has begotten subsidiary rules. If only a portion of a single tract is taken the owner's compensation for that taking includes any element of value arising out of the relation of the part taken to the entire tract.
Such damage is often, though somewhat loosely, spoken of as severance damage. On the other hand, if the taking has in fact benefited the remainder the benefit may be set off against the value of the land taken.
As respect other property of the owner consisting of separate tracts adjoining that affected by the taking, the Constitution has never been construed as requiring payment of consequential damages;
and unless the legislature so provides, as it may,
benefits are not assessed against such neighboring tracts for increase in their value.
In which category do the lands in question fall? The project, from the date of its final and definite authorization in August 1937, included the relocation of the railroad right-of-way, and one probable route was marked out over the respondents' lands. This being so, it was proper to tell the jury that the respondents were entitled to no increase in value arising after August 1937 because of the likelihood of the taking of their property. If their lands were probably to be taken for public use, in order to complete the project in its entirety, any increase in value due to that fact could only arise from speculation by them, or by possible purchasers from then, as to what the Government would be compelled to pay as compensation.
Shoemaker v. United States, 147 U.S. 282, 13 S.Ct. 361, 392, 37 L.Ed. 170, is directly in point and supports this view notwithstanding respondents' efforts to distinguish the case. There Congress, in 1890, authorized commissioners to establish a park along Rock Creek in the District of Columbia and, for that purpose, to select not exceeding two thousand acres of land. In 1891 the commissioners prepared a map of the lands to be acquired, which was approved by the President as required by the statute. Proceedings were brought to condemn certain tracts lying within the mapped area. The Supreme Court of the District instructed the appraisers, whom the Act made the triers of fact, that they 'shall receive no evidence tending to prove the prices actually paid on sales of property similar to that included in said park, and so situated as to adjoin it or to be within its immediate vicinity, when such sales have taken place since the passage of the act * * * authorizing said park. * * *' The instruction was approved by this court.
The majority of the court below thought the case distinguishable in the view that the boundaries of the park were fixed by the Act of Congress authorizing the project and, therefore, it was known what land would lie inside, and what outside, the park from the beginning, and that land taken for the park should not have the benefit of an increase in value which adjoining land might enjoy through its proximity to the improvement. This, of course, would be true if the lines of the park had, in the beginning, been fixed, because property lying outside the boundaries of the park, and not intended to be taken, would be dissimilar from that lying within it, the one gaining value by proximity and the other gaining nothing from the fact that it was to be taken from its owner. Such was the ruling of the court in Kerr v. South Park Commissioners, 117 U.S. 379, 387, 6 S.Ct. 801, 805, 29 L.Ed. 924. From the citation of that case in the Shoemaker opinion the majority below inferred that the two presented like facts. But, in the Kerr case, the lines of the park had been determined, whereas, in the Shoemaker case, the Act authorized the appropriation of a fixed acreage within a larger area. Consequently any land lying within that area was likely to be taken. If a tract happened not to be taken, because not within the limits finally fixed, it might show an increase in readily realizable market value by reason of proximity to the improvement. In the Shoemaker case the court excluded any increment of value arising out of the fact that Congress had authorized the location and condemnation of land for the park, for the very reason that Shoemaker's property lay in the area within which the park was to be laid out. If, in the instant case, the respondents' lands were, at the date of the authorizing Act, clearly within the confines of the project, the respondents were entitled to no enhancement in value due to the fact that their lands would be taken. If they were within the area where they were likely to be taken for the project, but might not be, the owners were not entitled, if they were ultimately taken, to an increment of value calculated on the theory that if they had not been taken they would have been more valuable by reason of their proximity to the land taken. In so charging the jury the trial court was correct.
The respondents assert that a different rule should have been applied in respect of severance damage even if the court's rulings were correct as to the valuation of land taken. In the light of what has already been said, we find no merit in the contention.
The respondents also say that, whatever the criterion of value adopted by the federal courts, Congress has adopted the local rule followed in the state where the federal court sits; and they claim that the California rule is settled that fair market value at the date of taking is the standard of value, without elimination of any increment attributable to the action of the taker. We need not determine what is the local law, for the federal statutes
upon which reliance is placed require only that, in condemnation proceedings, a federal court shall adopt the forms and methods of procedure afforded by the law of the State in which the court sits. They do not, and could not, affect questions of substantive right,such as the measure of compensation,grounded upon the Constitution of the United States.
The respondents urge, further, that the reversal by the Circuit Court of Appeals is justified by the District Court's disregard of the practice of the California courts with respect to the production of opinion evidence as to market value, even though it was right as to the elements which must be excluded. They allege that, in California courts, an opinion witness must state his valuation as at the date of taking and the opposing party is at liberty, upon cross examination, to elicit the facts on which the witness relied in arriving at that value. Counsel insist that if the Government was entitled to have the witnesses disregard any increment of value due to the Government's intention to construct the project it could have developed, on cross examination, how far the inclusion of any such element had affected the value stated. We think that probably under California procedure this would have been the better and more appropriate way to develop the basis of the witnesses' opinions. We do not feel, however, that if there was a disregard of the local practice in this aspect the error is substantial or worked injury to the respondents.
Examination of the Act of February 26, 1931,
discloses that the declaration of taking is to be filed in the proceeding for condemnation at its inception or at any later time. When the declaration is filed the amount of estimated compensation is to be deposited with the court to be paid as the court may order 'for or on account' of the just compensation to be awarded the owners. Thus the acquisition by the Government of title and immediate right to possession, and the deposit of the estimated compensation, occur as steps in the main proceeding.
The purpose of the statute is twofold. First, to give the Government immediate possession of the property and to relieve it of the burden of interest accruing on the sum deposited from the date of taking to the date of judgment in the eminent domain proceeding. Secondly, to give the former owner, if his title is clear, immediate cash compensation to the extent of the Government's estimate of the value of the property. The Act recognizes that there may be an error in the estimate and appropriately provides that, if the judgment ultimately awarded shall be in excess of the amount deposited, the owner shall recover the excess with interest. But there is no correlative provision for repayment of any excess by the owner to the United States. The necessary result is, so the respondents say, that any sum paid them in excess of the jury's award is their property, which the United States may not recover.
All the provisions of the Act taken together require a contrary conclusion.
The payment is of estimated compensation; it is intended as a provisional and not a final settlement with the owner; it is a payment 'on account of' compensation and not a final settlement of the amount due. To hold otherwise would defeat the policy of the statute and work injustice; would be to encourage federal officials to underestimate the value of the property with the result that the Government would be saddled with interest on a larger sum from date of taking to final award, and would be to deny the owner the immediate use of cash approximating the value of his land.
Denial of notice and hearing is asserted. But, while it is true that the court included the judgment of restitution in its general judgment in the condemnation proceedings without notice to the parties or hearing, the respondents made motions to set aside the judgment against them, and the court heard and acted on the motions. The respondents had full opportunity to urge any meritorious reasons why judgment of restitution should not be entered against them.
We think they were entitled to no more.
State courts have proceeded as did the court below, under analogous statutes,
and our decisions justify the District Court's action.
Pursuant to Act of Feb. 26, 1931, 46 Stat. 1421, 40 U.S.C. 258a258e, 40 U.S.C.A. §§ 258a258e.
The majority of the court below were in error in characterizing the ruling of the trial judge. They said: 'To put it simply, the Court ruled that no evidence could come in as to sales of similar properties after August 26, 1937, and that qualified witnesses testifying as to the value of the land on the date of the taking must subtract from this valuation any increment in value after August 26, 1937.' 9 Cir., 125 F.2d 78.
9 Cir., 125 F.2d 75.
Seaboard Air Line Ry. v. United States, 261 U.S. 299, 304, 43 S.Ct. 354, 355, 67 L.Ed. 664; United States v. New River Collieries Co., 262 U.S. 341, 343, 43 S.Ct. 565, 566, 67 L.Ed. 1014.
Bauman v. Ross, 167 U.S. 548, 574, 17 S.Ct. 966, 976, 42 L.Ed. 270.
Boom Co. v. Patterson, 98 U.S. 403, 408, 25 L.Ed. 206; United States v. New River Collieries Co., supra, 262 U.S. 344, 43 S.Ct. 567, 67 L.Ed. 1014.
Orgel, 'Valuation under Eminent Domain' (p. 56): 'The owner must be compensated for what is taken from him, but that is done when he is paid its fair market value for all available uses and purposes.' United States v. Chandler-Dunbar Co., 229 U.S. 53, 81, 33 S.Ct. 667, 678, 57 L.Ed. 1063.
New York v. Sage, 239 U.S. 57, 61, 36 S.Ct. 25, 26, 60 L.Ed. 143.
Olson v. United States, 292 U.S. 246, 255, 54 S.Ct. 704, 708, 78 L.Ed. 1236.
2 Lewis, Eminent Domain, 3d Ed., § 705; Kerr v. South Park Commissioners, 117 U.S. 379, 386, 6 S.Ct. 801, 804, 29 L.Ed. 924; Shoemaker v. United States, 147 U.S. 282, 304, 13 S.Ct. 361, 392, 37 L.Ed. 170.
See Monongahela Navigation Co. v. United States, supra, 148 U.S. 312, 328, 329, 337, 338, 13 S.Ct. 622, 627, 630, 631, 37 L.Ed. 463; Hanson Lumber Co. v. United States, 261 U.S. 581, 589, 43 S.Ct. 442, 445, 67 L.Ed. 809.
Bauman v. Ross, 167 U.S. 548, 574, 17 S.Ct. 966, 976, 42 L.Ed. 270; Boston Chamber of Commerce v. Boston, 217 U.S. 189, 195, 30 S.Ct. 459, 460, 54 L.Ed. 725; Olson v. United States, supra, 292 U.S. 256, 54 S.Ct. 709, 78 L.Ed. 1236.
Boom Co. v. Patterson, 98 U.S. 403, 408, 25 L.Ed. 206; United States v. Chandler-Dunbar W.P. Co., 229 U.S. 53, 81, 33 S.Ct. 667, 678, 57 L.Ed. 1063.
United States v. Chandler-Dunbar W.P. Co., supra, 229 U.S. page 76, 33 S.Ct. 677, 57 L.Ed. 1063.
Lewis, Eminent Domain, 3d Ed. 686; Nichols, Eminent Domain, 2d Ed. § 236; Bauman v. Ross, supra, 167 U.S. 574, 17 S.Ct. 976, 42 L.Ed. 270; Sharp v. United States, 191 U.S. 341, 351, 352, 354, 24 S.Ct. 114, 116, 117, 48 L.Ed. 211; cf. United States v. Welch, 217 U.S. 333, 30 S.Ct. 527, 54 L.Ed. 787, 28 L.R.A.,N.S., 385, 19 Ann.Cas. 680; United States v. Grizzard, 219 U.S. 180, 31 S.Ct. 162, 55 L.Ed. 165, 31 L.R.A.,N.S., 1135; Campbell v. United States, 266 U.S. 368, 45 S.Ct. 115, 69 L.Ed. 328.
Bauman v. Ross, loc. cit. Congress has provided that in takings such as that here involved benefits to the remainder of the tract shall be considered by way of reducing the compensation for what is taken. Act July 18, 1918, c. 155, § 6, 40 Stat. 911, 33 U.S.C. 595, 33 U.S.C.A. § 595.
Sharp v. United States, supra; Campbell v. United States, supra, 266 U.S. 371, 372, 45 S.Ct. 116, 69 L.Ed. 328.
Shoemaker v. United States, supra, 147 U.S. 302, 13 S.Ct. 391, 37 L.Ed. 170.
Act of Aug. 1, 1888, c. 728, 25 Stat. 357, §§ 1 and 2, 40 U.S.C. 257, 258, 40 U.S.C.A. §§ 257, 258; Act of Apr. 24, 1888, c. 194, 25 Stat. 94, 33 U.S.C. 591, 33 U.S.C.A. § 591.
Chappell v. United States, 160 U.S. 499, 512, 513, 16 S.Ct. 397, 401, 40 L.Ed. 510; Brown v. United States, 263 U.S. 78, 86, 44 S.Ct. 92, 95, 68 L.Ed. 171.
See Garrow v. United States, 5 Cir., 131 F.2d 724, decided November 25, 1942.
In the judgment originally entered the court added interest from the date of payment of the moneys to the respondents. After hearing on the motions, the court modified the judgment to impose interest only from the date of the judgment in the eminent domain proceeding.
Compare Baltimore & Ohio R.R. Co. v. United States, 279 U.S. 781, 49 S.Ct. 492, 73 L.Ed. 954; Northwestern Fuel Co. v. Brock, 139 U.S. 216, 11 S.Ct. 523, 35 L.Ed. 151.
NORFOLK REDEVELOPMENT AND HOUSING AUTHORITY, Etc. v. CHESAPEAKE AND POTOMAC TELEPHONE COMPANY OF VIRGINIA et al.
UNITED STATES, Petitioner, v. 93.970 ACRES OF LAND et al.