United States Tennessee Valley Authority v. Powelson

• Decision Date: 17 May 1943
• Docket Number: No. 3,3
• Parties: UNITED STATES ex rel and for Use of TENNESSEE VALLEY AUTHORITY v. POWELSON et al. Re
• Court: U.S. Supreme Court

319 U.S. 266

63 S.Ct. 1047

87 L.Ed. 1390

UNITED STATES ex rel and for Use of TENNESSEE VALLEY AUTHORITY

v POWELSON et al.

No. 3.

Reargued March 1, 2, 1943.

Decided May 17, 1943.

Mr. William C. Fitts, Jr., of Knoxville, Tenn., for petitioner.

Messrs. George H. Wright and George Lyle Jones, both of Asheville, N.C., for respondents.

[Argument of Counsel from page 267 intentionally omitted] Mr. Justice DOUGLAS delivered the opinion of the Court.

This case arises out of condemnation by the United States on behalf of the Tennessee Valley Authority of about 12,000 acres of land in North Carolina lying in and along the Hiwassee River, a major tributary of the Tennessee. The land involved in the case was owned by the respondent Southern States Power Company, a North Carolina corporation, and by its wholly owned subsidiary, the Union Power Company, a Georgia corporation. Since condemnation, the Southern States Power Company has assigned its property interest and rights arising out of these proceedings to the respondent W. V. N. Powelson, its sole stockholder. For convenience Powelson and Southern States will be referred to interchangeably as 'respondent'.

On January 28, 1936, when the original declaration of taking was filed and these proceedings began, Southern States and Union Power owned a small hydroelectric generating plant on the Nottely River, a tributary of the Hiwassee. This was known as the Murphy plant. It had a distribution system which supplied the town of Murphy, North Carolina, and surrounding territory. These companies also owned about 22,000 acres of land on both sides of the Hiwassee and Nottely Rivers. These included lands at four dam sites which are known as the Powelson (site of the Hiwassee dam), Appalachia, Murphy and Nottely sites, a large part of the land required for the Powelson and Appalachia projects, and some of the land required for the Murphy and Nottely projects. Powelson, an experienced hydroelectric engineer, began as early as 1913 and continued until 1931 to explore, survey, and acquire these lands and to develop and promote a plan for constructing an integrated four-dam hydroelectric plant on these rivers and at these sites. The actual cost of the lands involved in this case, as distinguished from the total investment in them,¹ was $277,821.56.

Southern States is successor to Carolina-Tennessee Power Co., created by a special act of the North Carolina legislature² in 1909. Carolina-Tennessee was granted broad powers and was authorized by the state to take by eminent domain riparian lands and water rights along any non-navigable stream of North Carolina.³

The lands condemned by the Government in the present proceedings constitute a part of the site of its Hiwassee dam, a multiple-purpose project constructed by the Tennessee Valley Authority on the Hiwassee River as part of the development of the Tennessee River system for hydroelectric power production, navigation, and flood control. See Report to the Congress on the Unified De- velopment of the Tennessee River System, Tennessee Valley Authority, March 1936, pp. 18—20, 96, 99. The dam itself is situated on land acquired from the respondent and known as the Powelson site. It was stipulated that the Hiwassee River is not navigable at the site of the Hiwassee dam or in any part of its course through respondent's land.⁴

The property condemned includes the Murphy dam and hydroelectric plant on the Nottely River and about 12,000 acres of land along the Hiwassee River in North Carolina. Of these, some 2,000 acres have been cleared and cultivated. The remaining area is rough and mountainous, consisting in large part of rock surface, mountain peaks and gorges. Much of the land was inaccessible at the time of the taking, there being practically no highways thereon, although there were some cartways.

The condemnation proceedings were conducted pursuant to § 25 of the Tennessee Valley Authority Act of 1933, c. 32, 48 Stat. 58, 70, 16 U.S.C. § 831x, 16 U.S.C.A. § 831x.⁵ Under the procedure therein specially prescribed for condemnations on behalf of the Tennessee Valley Authority, the District Court appointed three commissioners to take testimony and to determine the value of the property. The Government contends that the property was worth from $95,000 to $165,000. Respondent sought to establish a value of $7,500,000. Respondent's valuation was based on the theory that the property condemned, together with other property owned by respondent, could be united with numerous other tracts owned by strangers for the construction of an elaborate four-dam hydroelectric project. Only one of the four projected dams was to be located on the property condemned, viz. at the site of the Hiwassee dam, which, taken alone, was not considered commercially feasible for power development. The Commission found that the land condemned was suitable for use as the site of a hydroelectric power plant; that such use furnished the basis for its greatest inherent value; and that it had a value of $1,437,000,⁶ though its cost was only $277,821.56. The Commission awarded $253,000 in addition as severance damages in respect of lands not condemned but remaining in the ownership of Southern States and Union Power.

Both parties sought review of the award before the three-judge District Court for which § 25 of the Tennessee Valley Authority Act makes provision. The District Court reduced the value of the land condemned to.$976,289.40 and severance damages to $211,791.23, $100,000 of which was for the Murphy distribution system. Interest was added from the filing of the initial declarations of taking. United States v. Southern States Power Co., D.C., 33 F.Supp. 519. The Circuit Court of Appeals excluded severance damages for the taking of the Murphy plant on the Nottely River; and also excluded the $18,907.02 awarded as severance damages with respect to land held by Union Power unless within thirty days after the mandate was filed in the District Court that corporation should be made a party so as to become bound by the judgment. With these modifications it affirmed the judgment of the District Court. United States v. Powelson, 4 Cir., 118 F.2d 79. The case is here on a petition for writ of certiorari which we granted because of the public importance of the issues raised.

I. A preliminary question relates to the scope of review by the Circuit Court of Appeals under § 25 of the Act. That section provides for the appointment of commissioners, who are 'to examine into the value of the lands sought to be condemned, to conduct hearings and receive evidence, and generally to take such appropriate steps as may be proper for the determination of the value' of the lands. The commissioners are required to report such value and make an award. Review of the action of the commissioners is by a three-judge district court, which 'shall pass de novo upon the proceedings had before the commissioners, may view the property, and may take additional evidence. Upon such hearings the said judges shall file their own award, fixing therein the value of the property sought to be condemned, regardless of the award previously made by the said commissioners.' There is an appeal from that court to the circuit court of appeals, which 'shall upon the hearing on said appeal dispose of the same upon the record, without regard to the awards or findings theretofore made by the commissioners or the district judges, and such circuit court of appeals shall thereupon fix the value of the said property sought to be condemned.'

It is contended that the Circuit Court of Appeals did not perform the functions which § 25 placed upon it. That court stated that § 25 permitted it to consider the findings under review 'in the light of the record'. 118 F.2d page 83. It gave weight to the opportunity of the commissioners and judges who took the testimony to see and hear the witnesses. But while it adverted to those circumstances and findings, and modified and 'affirmed' the judgment of the three-judge court, we cannot say that it did not perform the functions which Congress gave it under § 25.

The purpose of § 25 was to free the Circuit Court of Appeals from the strictures commonly applicable to its review of disputed questions of fact. Under § 25 it does not sit as a 'court of errors'. United States v. Reynolds, 5 Cir., 115 F.2d 294, 296. Its duty is to dispose of the matter 'on the record without regard to the awards or findings theretofore made' and to fix the value. But it need not blind itself to the special advantages of the tribunals below in evaluating the evidence. A trial de novo with the fresh taking of evidence is not required. An independent revaluation of the property condemned is contemplated. And that requirement was met here.

II. Sec. 25 of the Act authorizes awards covering 'the value of the lands sought to be condemned.' The storm center of this controversy is whether water power value may be included in respondent's award.

It is argued on behalf of petitioner that even though the Hiwassee River is non-navigable throughout this part of its course, compensation for the loss of any supposed power value is no more permissible than in case of a navigable stream. It is pointed out that United States v. Chandler-Dunbar Co., 229 U.S. 53, 33 S.Ct. 667, 57 L.Ed. 1063, held that there is 'no private property in the flow' of a navigable stream. United States v. Appalachian Power Co., 311 U.S. 377, 427, 61 S.Ct. 291, 309, 85 L.Ed. 243. And it is contended that although the Hiwassee River is non-navigable at the points in question, the flow at those places has such a direct and immediate effect upon the navigable portion of the river farther downstream as to give the United States the same plenary control over both the navigable and non-navigable portions of the river (United States v. Appalachian Power Co., supra; State of Oklahoma v. Atkinson Co., 313 U.S. 508, 61 S.Ct. 1050, 85 L.Ed. 1487), thereby...