Opinion ID: 340009
Heading Depth: 1
Heading Rank: 3

Heading: Determining the Proper Rate.

Text: 15 We strongly suspect that in this case the use of 6 percent is barred by the Fifth Amendment. As already mentioned, the trial court had before it evidence pertaining to the commercial prime rate, the rate applicable to certificates of deposit issued by certain Oregon banks, and Treasury bills. From this it arrived at the 8.5 percent rate applicable to parcel 1 and the 8.0 percent rate applicable to parcel 3. 16 We are reluctant to disturb this finding and do so only because we are convinced that the proper interest rate applicable to an obligation of the United States may well be lower than that applicable to other borrowers. Moreover, this lower rate is particularly relevant here because the obligation to pay the deficiency is an obligation of the United States, a creditor whose obligation embodies no risk of default. Seizure of land under the Declaration of Taking Act is an act by the United States by which it substitutes for ownership of land, together with the risks attendant thereto, an obligation of the United States which is free of the risk of default. The maturity date of that obligation is the date at which the deficiency and the proper interest is deposited in the court. Thus, the obligation may be more equivalent to a two or three-year Treasury note or bond than a 90 or 180-day Treasury bill. 17 Therefore, we do not consider the trial court's use of such bills as adequate to counter the distorting effect of the other data it considered. Such other data involved obligations not as riskless as those of the Treasury. We believe that the trial court should have focused more on that type of marketable public debt security which constitutes a direct obligation of the United States Treasury having a duration approximating the period during which the deficiency was unpaid. Data of this type appears in the Treasury Bulletin 4 and the Federal Reserve Bulletin. 18 We acknowledge that our remand may lead to but little change in the 8.5 and 8.0 rates previously selected. On the other hand, we are not certain of this and moreover believe it important to establish the relevancy of the type of data described above. We also acknowledge that the marketability of a claim against the United States for a deficiency under the Declaration of Taking Act is considerably less than that of a marketable public debt security of the United States. Some allowance for this feature by the trier of fact is not unreasonable. 19 Finally, nothing in our remarks is intended to condemn those authorities which under their circumstances approved the use of a local legal rate of interest, or other rates not explicitly keyed to rates applicable to marketable Treasury bills, notes, and bonds, as an alternative measure of just compensation for delay in payment. E. g., United States v. A Certain Tract or Parcel of Land in Chatham County, Ga., 47 F.Supp. 30 (S.D.Ga.1942). Our purpose is to draw attention to the fact that such securities provide a source of data very useful in this type of case. 20 REVERSED and REMANDED. 21