Court Opinion

ID: 8906405
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:53:16.502616+00
Date Added: 2024-06-11T17:08:14.335026
License: Public Domain

STERN, District Judge
(concurring).
There is much in Judge Rosenn’s dissent with which I agree, but I am compelled to vote for reversal because we are bound by 564.54 Acres I. I fully concur in the implication in Judge Rosenn’s dissent that the standards announced in this Court’s interlocutory opinion were impossible for the district court to apply, and I am filled with admiration for the late, distinguished trial judge who handled this matter. If the question before this Court were whether the district judge did a good job or a bad one, I would vote for affirmance. Judge Sheridan did the very best he could given the inherent difficulties of this case and the ambiguous directions he was given in this Court’s interlocutory opinion. But the trial judge is not a party to the lawsuit and the object of an appeal is not to vindicate him, but to insure that the rights of the litigating parties have been fairly adjudicated. Thus, while I reach a different conclusion than does Judge Rosenn, my reasons for doing so are largely in accord with his view that it was impossible for the trial judge and jury to apply the vague standards forced on them by the interlocutory opinion.
It is regrettable that the parties will have to return to the district court a third time, but no other result is possible under the rules of the United States Court of Appeals for the Third Circuit. Only one member of this panel has authority to vote for rehearing en banc and without such a rehearing, 564.54 Acres I is the rule of the Circuit. Under the rule of the case, neither the government nor the Synod received a fair trial, and it is difficult to see how they could have received one.
As Judge Rosenn points out, the definitions of the elements required to establish entitlement to compensation measured by the cost of substitute facilities are so blurry that no one knows what they are. I also think that Judge Van Dusen has done a masterful job of cleaning up the debris.
I agree with Judge Van Dusen that the instructions given to the jury were confusing, contradictory, and, in some measure, erroneous. I have no doubt that there was a faithful attempt to apply the standards set down in the interlocutory opinion, but those standards were themselves confusing and contradictory where they existed at all. And I believe that the errors that were committed were so fundamental that the litigants’ failure to object will not bar review.
The 564.54 Acres I opinion states variously that the cost of substitute facilities may be the measure of compensation (1) where there exists no ready market; (2) where the condemned facilities have no market value; (3) where, although there is a market value, it is not commensurate with the government’s obligation to indemnify; and (4) where the facilities are single purpose and/or unique. It is evident upon reading the trial court’s instructions to the jury that the melding of these distinct concepts leads to nothing but confusion.
*997No greater clarity exists with respect to the requirement that the condemned facility, or, more precisely, a replacement for the condemned facility be “reasonably necessary.” To my mind, it is not at all clear that the interlocutory opinion even addressed this issue. The interlocutory opinion begins with broad reference to facilities operated “for a religious or charitable purpose.” It uses, on numerous occasions, the language “community use”. At only one point does it arguably narrow the application of the doctrine it espouses by approval of the approach of the Second Circuit “which recognizes that the decision to replace a facility may involve discretionary determinations as to community need, and that fair compensation for a structure reasonably necessary to public welfare means ‘compensation . . . measured not in terms of “value” but by the loss to the community occasioned by the condemnation.’ ” This section of the opinion serves to refute the government’s position on the interlocutory appeal that only a governmental entity under a legal obligation to replace the condemned facility should be entitled to the substitute facilities measure of just compensation. The interlocutory opinion thus rejects the legal necessity test but I do not think that it goes so far as to adopt the Second Circuit’s theory of “reasonable necessity”. That question is thus open for this Court to decide.
I believe that the views expressed by Judge Van Dusen are more consistent with the flavor, although not compelled by the holding, of the interlocutory appeal. Judge Rosenn’s approach would make the doctrine virtually unavailable to the private condemnee who would rarely, if ever, be able to prove that its facilities were “factually” necessary or “reasonably necessary” in a strict sense. In fact, Judge Rosenn seems to go even further. He suggests that the appropriate test is that set forth in United States v. Streets, Alleys & Public Ways, 531 F.2d 882, 886 (8th Cir. 1976): that there be a legal or factual obligation to provide the facilities. This test resurrects the doctrine expressly rejected by the interlocutory opinion; no private condemnee is under a factual obligation (whatever that means) to provide its facilities any more than it is under a legal obligation to do so.
Judge Van Dusen’s view that a private, non-profit condemnee may be entitled to the cost of substitute facilities if such facilities serve to “make the community a better community” is consistent with the interlocutory opinion. It is the only test that will in any real degree make this measure of compensation available to the private, nonprofit owner. However, I think that application of this standard illuminates the basic flaw in the interlocutory appeal’s holding that private, non-profit owners are entitled to the cost of substitute facilities measure of compensation.
The rationale of the interlocutory ruling is as follows. The Fifth Amendment taking clause imposes an obligation upon the federal government not to take “private property” without just compensation. The public property of the state or its subdivisions is “private property” under the Fifth Amendment insofar as the federal obligation to make compensation is concerned. Jefferson County v. TVA, 146 F.2d 564 (6th Cir.), cert. denied, 324 U.S. 891, 65 S.Ct. *9981024, 89 L.Ed. 1438 (1945); Town of Bed-ford v. United States, 23 F.2d 453 (1st Cir. 1927); Town of Nahant v. United States, 136 F. 273 (1st Cir. 1905). It has been held that just compensation upon condemnation of a community facility owned by a governmental entity may, in appropriate cases, be the cost of constructing substitute facilities. To disallow this measure of compensation to a private owner would distinguish irrationally between public and private owners of community facilities. Moreover, it would encourage the government to make discriminatory decision as to which property it will condemn, and could, thus, under certain circumstances, raise serious First Amendment problems.
If I were writing on a clean slate, I am not certain that I would hold that a governmental entity is entitled to the cost of substitute facilities as a measure of just compensation, at least where the condemning authority imposes no legal obligation on the condemnee to replace the condemned facilities. But even accepting that the cost of substitute facilities may be appropriate where the condemnee is a governmental unit,1 to distinguish between a governmental owner and a private, non-profit owner seems to me no more invidious than the discrimination which results when the doctrine is applied to a private, non-profit owner but not applied, for instance, to a private individual whose property is not held for resale and who, because of any number of reasons, will not be able to replace the condemned property on the market for a price equivalent to its fair market value.
The distinction between the private owner who holds property for his own use and the private owner who devotes his property to a community purpose might be said to lie in the fact that condemnation of the former’s property, even if the owner cannot replace it, injures only the private property owner whereas condemnation of the latter injures a larger community. But such a distinction is not valid. A privately owned factory enriches the community by providing jobs for its residents and monies for its tax coffers. A privately owned home benefits the community by sheltering some of its residents. A community may well be a better place in which to live if its residents have jobs, or shelter, just as it may be a better place to live if there are museums or summer camps open to its children or legitimate theatres run for profit. But attempts to compensate anyone but the property owner for loss lead to questions of value which are impossible to resolve.
Moreover, attempts to compensate the larger community through a condemnation award to a private entity are fraught with dangers. Putting aside, for the moment, the First Amendment’s strictures, the courts are simply in no position to insure that the compensation award will continue to be devoted to serving a community purpose or the particular community purpose which the jury has found makes the community a better place in which to live. It is not simply a question of insuring that the condemnee does not divert the funds; community needs and desires may change and may render the facility wholly superfluous. In that event, even if it were possible, it would serve no purpose to require that the condemnee continue to operate the facility and if it ceases operation the condemnee may well reap a windfall.
In fact, with or without misuse by the condemnee of the award or a change of circumstances as described above, a windfall necessarily occurs upon application of *999the doctrine of the cost of substitute facilities. Under the rule of 564.54 Acres I, the condemnor is required to pay enough so that the condemnee can replace ancient, even dilapidated, facilities with brand new ones. The finder of fact is not permitted to consider the benefit which accrues to the condemnee when new facilities replace those with expired useful lives. No deduction can be made for depreciation.2
Where church-owned property is involved, constitutional obstacles present themselves no matter which narrow path we choose to follow. Attempts to supervise the use of the condemnation award will run afoul of the First Amendment’s entanglement proscription. Thus, there is no way to insure that an award premised on use for substitute facilities will not be pocketed. Yet, in addition to offending our sense of fairness, any system of compensation which results in a windfall to the property owner may well violate the constitutional command that the government not aid religion.
But more fundamentally, when the condemned facility belongs to a religious organization, it is the inquiry which is as the very heart of the determination that the condemnee is entitled to the cost of substitute facilities which is obnoxious under our constitutional framework. The judge or jury has no right to pass on the “benefit” or the “necessity” to the community of such installations.
Both Judge Rosenn and Judge Van Du-sen apparently agree on the impropriety of the government’s comments in summation with respect to possible spiritual profit which accrued to the Synod through operation of its summer camps. I fully agree. They were improper, first, because they may have caused the jury to conclude that the Synod was not entitled to more than fair market value because it had failed to satisfy the not-for-profit aspect of the test. More important, however, they were improper because they must have caused the jury to speculate on the desirability of Lutheran-run summer camps.
Judge Rosenn notes, at 1008, n.12, that the government now contends it could argue to the jury that a Lutheran camp was not providing a “public benefit” because it was operated solely for the benefit of the Lutheran church. Judge Rosenn suggests that this “line of argument is permissible”. I do not think it permissible. It is grotesque to find the United States Government making such an argument. Yet I am forced to recognize that this argument is justified — even compelled — by 564.54 Acres I which requires the court to determine and the government to litigate the reasonable community necessity of the thing condemned.
It is true, as Judge Van Dusen notes, that there is no direct evidence in the record to indicate that the Synod used the camps to proselytize. But there was evidence presented to the jury that the camps were run by a church organization as part of the church’s religious mission, and in accord with its Articles of Incorporation which provide that “the purpose of the corpora*1000tion is to promote the Christian religion according to the tenets of faith as set forth in the Laws of the Lutheran Church of America.” There was evidence that each of the three condemned campsites included a chapel and that cabin devotions were part of the camp day and that religion classes were part of the camping program. The camps were run by Lutheran clergymen. Although Lutheran and non-Lutheran children were welcome, Lutheran children were given a slight price advantage. With this evidence before it, it is difficult to see how a juror would decide the question of desirability without reference to his own religious predilections and prejudices. And the government’s argument was a direct appeal to those religious preferences. This is not an appropriate area of inquiry for a jury or for a judge, but it is unavoidable once the substitute facilities doctrine is made applicable to owners of church property. I do not believe that we can shut our eyes to these problems. It is just a matter of time until we see the case to which the panel on the interlocutory appeal refers in its hypothetical: condemnation of the ancient church edifice itself. The court will then be forced to address the issues I now perceive to arise in the instant ease.
In sum, I have grave reservations regarding the cost of substitute facilities doctrine generally. I do not believe it should apply even to a governmental unit, unless the condemnor itself requires the condemnee to replace the facility which it has taken. Where the doctrine does apply, however, I would require the government to pay only the cost of a new substitute facility, less the depreciated life value of the facility condemned. Further, if the doctrine does apply, the existence of a market for the condemned facility is irrelevant.
I further believe that the cost of substitute facilities measure should not be extended to the private sector, but, if it is, I am convinced it must be applied to all private condemnees for whom the cost of replacement less depreciation is more than what the government offers. The use of the “reasonably necessary” test to discriminate among private condemnees is, for me, impermissible.
However, because I am bound by the holding in 564.54 Acres I, and because under the holding of that case as elucidated by Judge Van Dusen, I do not believe the litigants got a fair trial, I join Judge Van Dusen in Parts I, II and III of his opinion and I vote to reverse.

. The Supreme Court has stated:
The guiding principle of just compensation is reimbursement to the owner for the property interest taken. “He is entitled to be put in as good a position pecuniarily as if his property had not been taken. He must be made whole but is not entitled to more.”
United States v. Virginia Elec. & Power Co., 365 U.S. 624, 633, 81 S.Ct. 784, 790, 5 L.Ed.2d 838 (1961) (emphasis added).
Perhaps it is not inappropriate to view the people or the community as the owner of a public facility and thus to seek to indemnify them for the taking of a public facility. But I can see no real sense in which the community can be viewed as the owner of a private, nonprofit facility and thus no reason to attempt to indemnify it for the taking.

. 564.54 Acres I states, at 799-800 (emphasis added):
Typical of facilities which simply cannot be valued in the marketplace, or by capitalized earnings, or by depreciated replacement cost, are those erected for common public purposes by states or their public subdivisions; roads for example. Fair indemnification in such circumstances requires compensation sufficient to provide a substitution for the unique facilities so that the functions carried out by or on behalf of members of the community may be continued. Depreciated replacement cost often will not permit continuation of such functions. To meet the requirement of fair indemnification for the taking of community facilities the courts have developed the “substitute facilities” measure of compensation.
The Second Circuit has approved a deduction for depreciation from the cost of substitute facilities in the very case whose approach the interlocutory opinion “prefers”. See United States v. Certain Property in Borough of Manhattan, 403 F.2d 800, 804 (2nd Cir. 1968). The commentators have endorsed a depreciation deduction to avoid the windfall which would otherwise result. See Note, Cost of Substitute Facilities as a Measure of Just Compensation When There is a Private Condemnee, 1975 Duke L.J. 1133, 1145-1146 (1975); Note, The Sovereign's Duty to Compensate for the Appropriation of Public Property, 67 Colum.L.Rev. 1083, 1118-1119 (1967).