Court Opinion

ID: 9696976
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:02:46.517601+00
Date Added: 2024-06-11T18:20:28.277033
License: Public Domain

HUTCHINSON, Justice,
concurring and dissenting.
I agree with the majority that a landowner should no longer be considered in possession of his property when he has been fully deprived of the normal use of that property as a result of a declaration of taking. In such cases the condemnee may claim delay damages under Section 611 of the Eminent Domain Code.
I must disagree, however, with the majority’s conclusion that the General Assembly has unconstitutionally fixed the rate of interest at which these damages will be paid. Legislative action always carries a strong presumption of constitutional validity. Pennsylvania Federation of Teachers v. School District of Philadelphia, 506 Pa. 196, 484 A.2d 751 (1984); Martin v. Unemployment Compensation Board of Review, 502 Pa. 282, 466 A.2d 107 (1983), cert. denied, 466 U.S. 952, 104 S.Ct. 2156, 80 L.Ed.2d 541 (1984). Thus, we should not hold a legislative enactment unconstitutional *314except on the clearest showing of invalidity. Appellees do not make such a showing in the record before us. I would, therefore, uphold as constitutional the payment of delay damages to condemnees (appellees herein) at the rate of six percent as set forth at Section 611 of the Code. See 26 P.S. § 1-611 (Supp.1986), Majority op. at 304-306.
When a property owner has been fully deprived of the normal use of his land by an entity clothed with the power of eminent domain, our federal and state constitutions mandate the payment of just compensation. U.S. Const, amend. V; U.S. Const, amend. XIV; Pa. Const, art. I, § 10. Just compensation is comprised of two elements: the condemnation award and interest thereon.1 A condemnation award will be upheld unless the amount awarded is so low as to constitute a deprivation of the condemnee’s constitutional and statutory rights. See In re Condemnation of a Tract of Land Being Part of Hatfield Park, 23 Pa.Commonwealth Ct. 394, 352 A.2d 230 (1976). The same principle holds true for the interest paid on that award, called delay compensation under our Code. The record in this case establishes that the interest rate paid on passbook savings accounts at the County Trust Company (acquired by Pittsburgh National Bank in 1982) was five-and-one-quarter percent for the years 1979-1983 and five-and-one-half percent in 1984. R.R. at 111-112. The interest rate paid by the Citizens National Bank for the years 1979-1984 was four percent. R.R. at 129. A statutory interest rate of six percent, which is higher than the rate of interest paid on these passbook savings accounts, is not so low as to deprive appellees of their constitutional right to just compensation.
Even if the record in this case showed a deprivation of just compensation sufficient to overcome the presumption of constitutionality, I would be compelled to note my dis*315agreement with the majority’s use of the prevailing commercial loan rate as the measure of delay compensation in this case. Those courts which have approved the consideration of interest rates higher than the statutory rate in fixing delay damages generally disfavor or expressly reject the use of commercial loan rates. Instead they use the “reasonably prudent investor” standard. See, e.g., United States v. 429.59 Acres of Land, 612 F.2d 459 (9th Cir.1980); Leverty and Hurley Co. v. Commissioner of Transportation, 192 Conn. 377, 471 A.2d 958 (1984). This standard is based on the overall average interest rate a reasonably prudent investor could have obtained based on prevailing interest rates.2 It correctly focuses on the use to which the money lost through delay in compensation could have been put rather than on the costs the condemnee would incur in borrowing at commercial loan rates to replace the money lost as a result of the delay. The use of commercial loan rates is disfavored for two reasons: costs based on condemnees’ borrowing rates are highly speculative, and the cost method fails to ensure uniformity of treatment among condemnees. See Georgia-Pacific Corp. v. United States, 640 F.2d 328, 366-67 (Ct.Cl.1980).
I recognize that we approved the use of commercial rates to measure the cost of delay on the record in Whitcomb v. Philadelphia, 264 Pa. 277, 107 A. 765 (1919), a condemnation case arising before adoption of the 1964 Eminent Domain Code. However, in that Code our General Assembly has provided several alternate mechanisms for compensating condemnees for transitional costs incurred. See 26 *316P.S. § 1-610.1 (Payment on account of increased mortgage costs); 26 P.S. § 1-601A (Moving and related expenses of displaced persons); 26 P.S. § 1-602A (Replacement housing for homeowners); 26 P.S. § 1-603A (Replacement housing for tenants and others). Given the methods the Eminent Domain Code now provides for recompense of costs incurred by condemnees, I see no reason to follow Whit-comb’s pre-Code approval of the use of commercial loan rates. To the extent it is inconsistent with this opinion, I would overrule Whitcomb v. Philadelphia, supra. I would reject judicial imposition of commercial loan rates to measure delay compensation even if the statutory rate were so low as to create a conflict with the constitutional right to just compensation, a conflict I do not believe exists on this record.
I dissent and would uphold as constitutional payment of delay compensation at the rate of six percent, as set forth in Section 611. Accordingly, I would modify the order of the Court of Common Pleas of Somerset County, by vacating that part which awarded delay compensation to appellees at prevailing commercial loan rates, and would fix the rate at six percent in accordance with the statute.

. Payment of interest is required as part of just compensation only in cases when the condemnor takes possession of the property prior to payment therefor, or when, as here, the property owner is fully deprived of the normal use of his property prior to receipt of compensation. In other situations, it is an element of damages, additional to the just compensation required by the constitution and awarded as a matter of legislative grace.

. I would note here that depositors may get a better return with passbook savings accounts paying five-and-one-half percent than with some money market savings accounts because of the fees associated with those accounts. 50 Consumer Reports 669 (November 1985). Other forms of investment have minimum deposit amounts ranging from $1,000 (5-year Government issues) to $100,000 (Bankers Acceptance; 3 and 6 month Prime Bank CD’s). R.R. at 109-110. Early withdrawal of funds from six-month money market certificates at the County Trust Company incurs a penalty equal to loss of three months’ interest. R.R. at 110-111. The penalty for early withdrawal varies from bank to bank and ranges from loss of one month’s to one year’s interest. R.R. at 111.