State of Nebraska v. United States

• Decision Date: 23 December 1947
• Docket Number: No. 13578.,13578.
• Citation: 164 F.2d 866
• Parties: STATE OF NEBRASKA v. UNITED STATES et al.
• Court: U.S. Court of Appeals — Eighth Circuit

164 F.2d 866 (1947)

STATE OF NEBRASKA v. UNITED STATES et al.

No. 13578.

Circuit Court of Appeals, Eighth Circuit.

December 23, 1947.

Robert A. Nelson, Asst. Atty. Gen. of Nebraska (Walter R. Johnson, Atty. Gen. of Nebraska and C. S. Beck, Deputy Atty. Gen., on the brief), for appellant.

S. Billingsley Hill, of Washington, D. C., Atty., Department of Justice (A. Devitt Vanech, Asst. Atty. Gen., Roger P. Marquis and Jason D. Lee, both of Washington, D. C., Attys., Department of Justice, and Joseph T. Votava, U. S. Atty., of Omaha, Neb., on the brief), for appellee United States of America.

R. H. Beatty, of North Platte, Neb., and Lowell C. Davis, of Sidney, Neb. (R. P. Kepler and Paul L. Martin, both of Sidney, Neb., and M. C. Murphy, of North Platte, Neb., on the brief), for appellees Clara H. McNish, T. C. Spiker and Rush C. Clarke, special administrator of estate of Olive E. Jones, deceased.

Before GARDNER, THOMAS and JOHNSEN, Circuit Judges.

JOHNSEN, Circuit Judge.

The United States instituted condemnation to acquire some 19,500 acres of land in Cheyenne County, Nebraska, in fee simple, as a site for an ammunition storage depot. Two sections in the tract were lands which had been granted to the State of Nebraska under its enabling act, 13 Stat. 47, 49, § 7, "for the support of common schools". At the time of the condemnation, these sections had been leased by the State to private individuals for agricultural purposes for unexpired terms of years.

On a trial of the issue of just compensation, the court instructed the jury to determine the fair market value of each of the two sections at the time of the taking (the matter of interest being deferred until the entry of judgment) as the measure of the Government's obligation for their condemnation,¹ This value was required to be set out in the verdict. The jury was further instructed to find the fair market value of the lease on each section; to return a verdict for this amount as the compensation due the lessee; to subtract this amount from the market value found for the land; and to return a verdict for the difference as the compensation due the State.² From the judgment entered on the verdicts, so returned, the State has appealed.

Because the two sections were school lands, which the courts of Nebraska have held that the State received as a trust for its common school system,³ the State contends that the United States should have been required to pay it as just compensation an amount equal to the full value of the fee without any deduction for the outstanding leaseholds. It does not deny that the unexpired leases (each of which in the present case had more than 8 years left to run) constitute property or have value, for which the United States must pay compensation to the leases, and under its own statutes and court decisions it would hardly have been possible for it to have taken such a position.⁴ It merely argues that the United States should pay the State the value of the full fee simple estate and the lessee the value of his leasehold interest as separate and additional compensation.

The rule which the State seeks to have applied is the Nebraska rule in any condemnation of state school lands made under a power of eminent domain granted by the State. See State v. Platte Valley Public Power & Irrigation Dist., 147 Neb. 289, 23 N.W.2d 300, 166 A.L.R. 1196. The basis and effect of the cited case are that the State has accepted and holds title to these lands as a trust for its common school system and has no right to breach the trust; that the legislature of the State therefore may not authorize an alienation or other disposition of the fee (such as a taking of the title under a grant of the power of eminent domain would accomplish) unless there is paid to the State the full fee value of the property; and that hence any leasehold interest created by the State in such lands, while constituting property for whose value the lessee on a condemnation is entitled to compensation under the Constitution and statutes of the State, must be evalued separately and paid for by the condemnor beyond the value of the fee.

But these considerations and concepts are not controlling in this proceeding. What constitutes property and what is just compensation for it in a condemnation by the United States are not questions of state law but of federal law. United States v. Miller, 317 U.S. 369, 379, 380, 63 S.Ct. 276, 283, 87 L.Ed. 336, 147 A.L.R. 55. Of course, the term "property" in such a situation normally will be given the same content as in state law. United States v. Powelson, 319 U.S. 266, 279, 63 S.Ct. 1047, 1054, 87 L.Ed. 1390; and also cf. United States v. Petty Motor Co., 327 U.S. 372, 380, 381, 66 S.Ct. 596, 601, 90 L.Ed. 729. This does not mean, however, that every local idiosyncracy or artificiality in a state's concepts, or the incidents thereof, necessarily will be accepted. Thus, the United States could hardly be expected to recognize for condemnation purposes any such local artificiality in property concept as that a leasehold is not in any sense a dilution of fee rights but in point of law and regardless of fact adds body and value to the property.

We need not, however, deal with the question here as one of unacceptable property concept, and there is no occasion therefore for us to consider whether the Nebraska rule on school lands is intended to be in the nature of a special rule of property. The situation can be sufficiently disposed of as one of simply determining just compensation. In state concept as well as under general law, the rights of the State and the rights of the lessees in the school lands each constituted a property interest, and in this concurrence of concepts there manifestly would be no occasion to regard either of them otherwise in federal law for purposes of compensation in condemnation. But, as we have suggested, the question of what is just compensation under the Fifth Amendment for such rights does not turn in any manner upon the compensation standards or prescriptions of state law. If it did, the State of Nebraska in the present situation would have had as much right to argue that the United States should be bound by some artificial provision in its Constitution⁵ (e. g. that in any condemnation of its school lands the State should be paid a value of $1,000 per acre) as by the rule of compensation which it has judicially adopted for such lands in the Platte Valley Public Power & Irrigation District case.

The general federal rule of compensation for condemnation of a fee is well settled. The measure of "just compensation" under the Fifth Amendment for the taking of property in fee simple ordinarily is the fair market value (or, as sometimes expressed, "market value fairly determined") of the property in fee ownership as of the time of taking⁶ irrespective of the number and kind of interests existing in it. Cf. United States v. Miller, 317 U.S. 369, 374, 63 S.Ct. 276, 280, 87 L.Ed. 336, 147 A.L.R. 55; Olson v. United States, 292 U.S. 246, 255, 54 S.Ct. 704, 78 L.Ed. 1236; A. W. Duckett & Co. v. United States, 266 U.S. 149, 151, 45 S.Ct. 38, 69 L.Ed. 216; City of New York v. Sage, 239 U.S. 57, 61, 36 S.Ct. 25, 60 L.Ed. 143; United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 81, 33 S.Ct. 667, 57 L.Ed. 1063.

The rule manifestly is not without hardships in practical operation, but nevertheless the guarantee of the Fifth Amendment is regarded as being satisfied generally where the cash value of property taken in fee is substituted for it and the cash is allocated or apportioned among the respective estates or interests on the basis of their relative values.⁷ Cf. United States v. Dunnington, 146 U.S. 338, 351, 352, 353, 13 S.Ct. 79, 36 L.Ed. 996; Meadows v. United States, 4 Cir., 144 F.2d 751, 753; United States v. Sunset Cemetery Co., 7 Cir., 132 F.2d 163, 165.

Of course, like any other, the rule is not one that is autocratically absolute. "Exceptional circumstances will modify the most carefully...