Ozark Real Estate Company v. United States

• Decision Date: 16 May 1967
• Docket Number: No. 18484.,18484.
• Citation: 377 F.2d 88
• Parties: OZARK REAL ESTATE COMPANY, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

377 F.2d 88 (1967)

OZARK REAL ESTATE COMPANY, Appellant, v. UNITED STATES of America, Appellee.

No. 18484.

United States Court of Appeals Eighth Circuit.

May 16, 1967.

Sam Sexton, Jr., Sexton & Robinson, Fort Smith, Ark., for appellant, H. Clay Robinson, Sexton & Robinson, Fort Smith, Ark., on the brief.

Edmund B. Clark, Atty., Dept. of Justice, Washington, D. C., for appellee, Edwin L. Weisl, Jr., Asst. Atty. Gen., Roger P. Marquis, Atty., Dept of Justice, Washington, D. C., Charles M. Conway, U. S. Atty., and Max E. Findley, Sp. Asst. to the U. S. Atty., Fort Smith, Ark., on the brief.

Before VAN OOSTERHOUT, BLACKMUN and MEHAFFY, Circuit Judges.

MEHAFFY, Circuit Judge.

This appeal is from a judgment of the United States District Court for the Western District of Arkansas approving the report of a condemnation commission appointed under Fed.R.Civ.P. 71A (h). The report fixed compensation for the Government's taking of certain lands and flowage easements for the Dardanelle Lock and Dam Project on the Arkansas River. The Government condemned fee title exclusive of mineral rights to certain designated portions and flowage easements to other portions of the area. The total area condemned approximated 1613 acres. Coal deposits and possibly natural gas underlie the lands involved. The mining activity and the character of the coal in this area are described in the opinion of this court in the recent case of Mills v. United States, 363 F.2d 78, 79 (8th Cir. 1966).¹

This case is unique in that at trial the parties agreed that the valuation of the taking should be considered by treating separately four distinct elements: (1) surface estate; (2) oil and gas estate; (3) strippable coal estate; and (4) deep coal estate. After pretrial conferences and the commissioners' viewing of the property, a hearing was held wherein seventeen witnesses testified and thirty-three exhibits were introduced. The commission found as just compensation for the total taking the sum of $240,600.00. It allocated the awards as follows: $25,000.00 for the strippable coal; $15,600.00 for the oil and gas interests; $150,000.00 for the surface estate; and $50,000.00 for the deep coal estate and severance damage. This appeal is only from that part of the total award involving the deep coal estate.

Ozark asserts as error the commission's failure to report the method by which the award was determined, thereby violating the teachings of United States v. Merz, 376 U.S. 192, 84 S.Ct. 639, 11 L.Ed.2d 629 (1964), or, in the alternative, if compliance with Merz is found, the commission used an incorrect measure of just compensation in arriving at the award.

We find no merit in either argument. Recently we had occasion to carefully consider and analyze the Merz decision in United States v. Bell, 363 F.2d 94 (8th Cir. 1966); Mills v. United States, supra; and Morgan v. United States, 356 F.2d 17 (8th Cir. 1966). In Morgan, supra, Judge Blackmun writing for this court stated:

"We, however, read Merz as requiring not meticulous compliance with every particular therein mentioned, but as suggesting standards which assure fairness to both condemnor and condemnee and provide safeguards against a commission\'s natural tendency, when not controlled, to use its own assumed expertise." 356 F.2d at 23.

Mr. Justice Douglas in Merz, supra, after stating that the commission should be instructed in certain details and that "conclusory findings are alone not sufficient" as they do not reflect the path taken by the commissioners through the maze of conflicting evidence, set forth as additional guidelines:

"The commissioners need not make detailed findings such as judges do who try a case without a jury. Commissioners, we assume, will normally be laymen, inexperienced in the law. But laymen can be instructed to reveal the reasoning they use in deciding on a particular award, what standard they try to follow, which line of testimony they adopt, what measure of severance damages they use, and so on. We do not say that every contested issue raised on the record before the commission must be resolved by a separate finding of fact. We do not say that there must be an array of findings of subsidiary facts to demonstrate that the ultimate finding of value is soundly and legally based. The path followed by the commissioners in reaching the amount of the award can, however, be distinctly marked. Such a requirement is within the competence of laymen; and laymen, like judges, will give more careful consideration to the problem if they are required to state not only the end result of their inquiry, but the process by which they reached it." 376 U.S. at 198-199, 84 S.Ct. at 643.

Judge John E. Miller, an able judge with much expertise in the field of eminent domain, meticulously instructed the commissioners in the instant case. Ozark makes no complaint concerning the court's charge. Its complaint is directed solely at the text of the report of the commission. This report, however, was much more than a conclusory finding. It clearly and distinctly revealed the path taken by the commissioners in reaching the amount of the award. The report, after describing the tracts involved and the issues as agreed to by the parties, the parties' connotation of "deep coal," the present mining activity on the property, the annual volume of production, the present market, and the lack of market for this type coal for fuel, then proceeded to set forth the substance of and analyze the expert witnesses' evidence of both parties. It made clear its rejection of the testimony of Ozark's expert witness, Mr. Robinson, who envisaged a hypothetical plant that could only operate profitably by capturing the entire market, thereby forcing competition out of business and at the same time greatly enlarging the future market for this type coal.²

The Government's expert witness, Mr. Weir, testified that the valuation of the deep coal property was $20.00 per acre — thus by simple multiplication, one could arrive at the value of the taking of approximately $32,000.00. The report, however, reflected the commissioners' finding that Mr. Weir failed to take into account the severance damage, the admitted possibility of some expansion of the market for this type coal and the loss of access to other coal.³

This evidence makes it abundantly clear what path the commissioners took in determining its valuation. The commissioners properly disregarded the speculative aspects of Ozark's expert witness and also noted that the Government's expert witness failed to take into consideration the severance damage. The District Court characterized the conflict in the evidence as primarily one of weight and credibility of the witnesses, rather than the substantiality of the testimony, and was convinced that the findings were not only fair but supported by substantial evidence. In a concluding paragraph of a nine page unpublished opinion, the District Court stated:

"In the

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