Surfside of Brevard, Inc. v. United States

Decision Date11 August 1969
Docket NumberNo. 26292.,26292.
Citation414 F.2d 915
PartiesSURFSIDE OF BREVARD, INC., et al., Appellants, v. UNITED STATES of America, Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

William D. Jones, Jr., David W. Foerster, James E. Hodge, Jones, Foerster & Hodge, Jacksonville, Fla., J. Russell Hornsby, Orlando, Fla., for appellants.

Francis G. Rearick, Department of Justice, Land Division, Orlando, Fla., Edward F. Boardman, U. S. Atty., Tampa, Fla., Frank B. Friedman, Raymond N. Zagone, Attys., Dept. of Justice, Washington, D. C., Clyde O. Martz, Asst. Atty. Gen., Dept. of Justice, Washington, D. C., for appellee.

Before JOHN R. BROWN, Chief Judge, and GEWIN and GOLDBERG, Circuit Judges.

GEWIN, Circuit Judge:

The appellants are thirteen corporations and an individual. The corporations owned, subject to purchase money mortgages, certain lands condemned by the United States in August 1961 for establishment of the National Aeronautics and Space Administration's manned lunar landing facility at Cape Canaveral, Florida, now Cape Kennedy. The individual, Reading, held the unsatisfied purchase money mortgages. A jury in the United States District Court for the Middle District of Florida fixed the sum of $1,694,713 as just compensation for the taking.

The single issue on this appeal is whether the district court erred in excluding from jury consideration evidence relating to the appellant corporations' acquisition of the land from appellant Reading for a purchase price in excess of three million dollars. We hold that this evidentiary exclusion was error and that the judgment must be reversed.

In May 1960, the land in question was owned by Reading. He desired to sell the property and listed it with a real estate brokerage firm for that purpose. The property remained unsold in November 1960, at which time Reading proposed that that the brokerage firm buy and develop the land. Negotiations followed and Reading entered into a contract of sale with one of the corporate appellants, Surfside of Brevard, which was created by officers of the brokerage firm to take title to the property. The contract of sale described the land in terms of fourteen separate tracts. Prior to the consummation of the sale, thirteen corporations, in addition to Surfside, were created, each to take title to one tract of the Reading property. In March 1961, the sale was consummated between Reading and the fourteen corporations for a total purchase price of $3,496,500. There is evidence that $5,000 cash was paid by Surfside at the time the sales contract was executed. The contract provided that an additional cash payment of $53,000 would be made when the sale was consummated; there is no evidence that this payment was in fact made. The balance of the purchase price was evidenced by fourteen promissory notes, each executed by one of the corporations and secured by a purchase money mortgage encumbering the tract held by the corporation. Prior to the valuation proceeding below, a third party showed superior title to the tract held by one of the fourteen corporations and, therefore, that tract, which was encumbered by a purchase money mortgage for $8,400, and the corporation which claimed title to the tract are not involved in this litigation.

The district court ruled that the transaction between appellant Reading and the appellant corporations did not constitute a sale for cash or its equivalent and that, therefore, evidence of the transaction was inadmissible.1 There was no determination by the court that the sale was not an arms-length transaction or that it was merely a contrivance to inflate the award in the condemnation suit. The record contains evidence that arrangements of the kind here involved are not uncommon in Florida real estate transactions.

The fifth amendment to the Constitution guarantees that just compensation shall be paid for the public taking of private property. Market value is the standard employed to measure just compensation2 and it is generally recognized that an important element in determining market value is evidence of a prior recent sale of the property.3 A respected treatise on eminent domain states:

When a parcel of land is taken by eminent domain, the price which the owner paid for it when he acquired it is one of the most important pieces of evidence in determining its present value, provided the sale was recent, and was a voluntary transaction between parties each of whom was capable and desirous of protecting his own interests, and no change in conditions or marked fluctuation in value has occurred since the sale.4

Also qualifying the admissibility of a prior sale is the requirement that the sale be transacted for cash or its equivalent.5 The ruling by the district court that the credit transaction in the case sub judice did not possess this characteristic is vigorously challenged by the appellants who contend that the promissory notes and mortgages given and received in consideration of the sale constituted terms equivalent to cash.

There is, indeed, authority to support the proposition that a credit sale involving notes and mortgages may constitute a sale on terms equivalent to cash. The District of Columbia Circuit has held that a sale made in consideration of deferred purchase money notes which can be turned into cash is a sale on terms equivalent to cash and constitutes probative evidence of market value.6 Other courts, both state and federal, as well as commentators, have approved a similar rule.7 The interest to be promoted by a rule which excludes evidence of a prior sale merely because it was a credit transaction is relatively insubstantial when balanced against the interest served by allowing the evidence. While an exclusionary rule would save the jury from the task of discounting the credit price to its present cash equivalent, the rule would sacrifice important evidence needed in reaching a determination of market value.8 In view of prevailing business practices, a rule excluding credit sales would substantially reduce the instances when prior sales could be introduced. For these reasons, we refuse to adopt a rule which would systematically exclude prior credit sales.

We, nevertheless, must consider the Government's contention that the peculiar character of the credit transaction involved in this case supports the district court's conclusion that the sale was not for cash or its equivalent. The...

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3 cases
  • United States v. 5.00 ACRES OF LAND, ETC., Civ. A. No. B-78-170-CA-1547-3
    • United States
    • U.S. District Court — Eastern District of Texas
    • January 29, 1981 usually prior sales of the same property, reasonably close in time to the taking and not forced. Surfside of Brevard, Inc. v. United States, 414 F.2d 915, 917 & n. 3 (5th Cir. 1969). In the present case, the Plaintiff condemned a fifty-foot wide strip of land across the Defendants' prope......
  • Traditions Senior Mgmt., Inc. v. United Health Adm'rs, Inc.
    • United States
    • U.S. District Court — Middle District of Florida
    • June 27, 2013
  • U.S. v. 428.02 Acres of Land, More or Less, Situate in Newton and Searcy Counties, Ark., 49-115
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • September 3, 1982 condemnation proceedings. Id. at 630. Thus, it was ruled that the evidence was admissible. See also Surfside of Brevard, Inc. v. United States, 414 F.2d 915 (5th Cir. 1969). We note that in the instant case, the government was given unrestrained latitude in the presentation of its case, ......

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