292 U.S. 246 (1934), 580, Olson v. United States

Docket Nº:No. 580
Citation:292 U.S. 246, 54 S.Ct. 704, 78 L.Ed. 1236
Party Name:Olson v. United States
Case Date:April 30, 1934
Court:United States Supreme Court

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292 U.S. 246 (1934)

54 S.Ct. 704, 78 L.Ed. 1236



United States

No. 580

United States Supreme Court

April 30, 1934

Argued March 9, 1934




1. By the Fifth and Fourteenth Amendments of the Federal Constitution, as also under Art. I, § 13 of the Constitution of Minnesota, appropriation of private property for a public use is forbidden unless a full and exact equivalent be returned to the owner. P. 254.

2. That equivalent is the market value of the property at the time of the taking contemporaneously paid in money. P. 255.

3. The sum required to be paid the owner of land does not depend upon the uses to which he has devoted it, but is to be ascertained upon just consideration of all the uses for which it is suitable. P. 255.

4. The fact that the most profitable use of a parcel can be made only in combination with other lands does not necessarily exclude that use from consideration if the possibility of combination is reasonably sufficient to affect market value. Nor does the fact that it may be or is being acquired by eminent domain negative consideration of availability for use in the public service. P. 256.

5. But the value to be ascertained does not include, and the owner is not entitled to compensation for, any element resulting subsequently to or because of the taking. Considerations that may not reasonably be held to affect market value are excluded. P. 256.

6. Elements affecting value that depend upon events or combinations of occurrences which, while within the realm of possibility, are not fairly shown to be reasonably probable should be excluded from consideration. P. 257.

7. Dams constructed for power and other purposes at the outlet of the Lake of the Woods in Canada had raised the water level on the shore lands, situate in Canada and Minnesota. Arrangement was made by treaty for maintaining the level, under control of both Governments, to a designated contour in the interests of navigation, as well as power production and other uses. For the costs of acquiring the easement of flowage within its territory, the United

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States assumed all liability to private landowners. In a suit to condemn such rights in Minnesota, brought under the Act of May 22, 1926, as amended, to carry out the treaty, held:

(1) That the use of Minnesota shorelands for reservoir purposes, as the result of the trespass committed by means of the dams, showed merely their physical adaptability to such purposes, but did not affect their market value. P. 256.

(2) Having regard to the fact that the lands bordering the Lake and its islands, upon which flowage easements must be acquired to make lawful the raising of the level, are situate in two countries, and are held by very numerous private owners, by Indian Tribes, and by sovereign proprietors, there is no legal and practical possibility that any person -- other than the expropriating authority -- could acquire those easements. Therefore, there was no element of value belonging to the landowners that could legitimately be attributed to use and adaptability of their lands for reservoir purposes, and evidence of competition between power companies for purchase of flowage rights from private owners, and of prices paid, and of estimates or opinions based, upon the assumption that value to owners includes elements arising from the prospect of the Government's acquiring the flowage rights was properly rejected. Boom Co. v. Patterson, 98 U.S. 403, distinguished. Pp. 557, 560.

8. A point not made in the specification of errors or in the reasons given in the petition for certiorari is not properly before the Court. P. 262.

9. Under the Act of May 22, 1926, providing for acquisition of flowage easements on lands in Minnesota bordering upon the Lake of the Woods in Minnesota, claims for damages caused by unlawful floodings prior to the taking are not included in the condemnation proceedings, but are to be dealt with by the Secretary of War under § 3 of the statute. P. 262.

67 F.2d 24 affirmed.

Certiorari, 290 U.S. 623, to review the affirmance of judgments in three condemnation cases which were tried together before a jury.

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BUTLER, J., lead opinion

MR. JUSTICE BUTLER delivered the opinion of the Court.

These cases arise in a condemnation proceeding instituted by the United States in the federal District Court for Minnesota to acquire easements of flowage upon lands bordering upon the Lake of the Woods in that state. The only substantial question is whether, on the facts disclosed by the record and others of which judicial notice may be taken, the actual use and special adaptability of petitioners' shorelands for the flowage and storage of water, that, inter alia, will be available for the generation of power, may be taken into consideration in ascertaining the just compensation to which petitioners are entitled.

[54 S.Ct. 706] The superficial area of the Lake of the Woods is between fourteen and fifteen hundred square miles; it lies in Minnesota, Ontario, and Manitoba. Many streams flow into it. The Rainy River and Warroad River are the largest of those touching Minnesota. The former, coming from the east along the international boundary, drains a very large territory lying on both sides of the line. The latter, not so large, coming from the south, drains a considerable area within Minnesota and empties into the southwesterly part of the lake. The outlets of the lake are in Canada; they combine to make the Winnipeg, a great river, flowing northwesterly to Lake Winnipeg. In 1898, a Canadian corporation, by agreement with the

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Crown, put in operation the Norman dam for the control of outflow down the Winnipeg. Since the construction of this dam, and in consequence of it and other dams in the outlets, shorelands, in disregard of the rights of owners, have been intermittently flooded for the impounding of water used in Canada for the generation of power and other purposes.

In 1909, the United States and Great Britain made a treaty which (Art. VIII) created an international joint commission and conferred upon it jurisdiction in terms broad enough to include cases involving the elevation of the Lake of the Woods as the result of these dams. 36 Stat. 2451. In 1912, questions arising out of the raising of the lake were referred to the commission, and, after hearings and extensive studies, it made its final report in 1917. The United States and Great Britain then consummated the treaty of 1925, which provides (Article VIII):

A flowage easement shall be permitted up to elevation 1064 sea level datum upon all lands bordering on Lake of the Woods in the United States, and the United States assumes all liability to the owners of such lands for the costs of such easement.1

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By an act to carry into effect the provisions of the last-mentioned treaty (Act of May 22, 1926, 44 Stat. 617, as amended April 18, 1928, 45 Stat. 431), Congress directed the Secretary of War to acquire by purchase or condemnation flowage easements up to the specified elevation upon all lands in Minnesota bordering upon the Lake of the Woods, the Warroad River, and the Rainy River, and that compensation should be made in accordance with the Constitution of Minnesota, which declares (Article I, § 13): "Private property shall not be taken, destroyed, or damaged for public use, without just compensation therefor first paid or secured." Commissioners appointed to ascertain the damages sustained by the several owners by reason of such taking made their awards. The United States and these petitioners appealed. The cases were tried together, the jury returned verdicts for the amounts to which petitioners were found severally entitled, and judgments were entered accordingly.2 Petitioners appealed.

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The Circuit Court of Appeals affirmed. 67 F.2d 24.

[54 S.Ct. 707] At the trial, petitioners sought to have just compensation ascertained on the theory that the flooding of their lands (for brevity, called "use for reservoir purposes"), the circumstances which make them specially adaptable for that use, and the fact that, prior to condemnation, such adaptability had increased their market value should be considered by the jury in determining just compensation. And, in order to establish a basis on which to rest that submission, petitioners offered to prove the following facts:

There are valuable power sites at the outlets and in the Winnipeg River which cannot be fully developed without flooding the shorelands. The industries using these waters to produce power are well established and financially responsible. Demand for electricity there produced will increase. The raising of the lake level creates a storage reservoir, of which petitioners' lands form a part, that serves to increase potential capacity by about 200,000 continuous horsepower, which is worth more than $1,000,000 annually. Competition exists for the right to develop and control that capacity, the value of which is so great that one or another of the competitors would have acquired the flowage rights if the United States had not done so. It is entirely practicable for private enterprises to acquire flowage easements. Publicity, long given to the great value of the lake as a storage reservoir, created a demand and affected the market value of shorelands needed for that purpose. And, in connection with the facts above stated, petitioners offered to prove the fair market values of their lands before and after the imposition of the flowage easement, taking into consideration all the facts and circumstances affecting market prices.

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Respondent, having obtained leave to establish foundation for...

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