United States v. 2,175.86 ACRES OF LAND, ETC., Civ. A. No. B-78-598-CA.

• Decision Date: 27 July 1981
• Docket Number: Civ. A. No. B-78-598-CA.
• Citation: 520 F. Supp. 75
• Parties: UNITED STATES of America v. 2,175.86 ACRES OF LAND, MORE OR LESS, SITUATED IN HARDIN AND JEFFERSON COUNTIES, STATE OF TEXAS, and Kirby Forest Industries, Inc., et al., and Unknown Heirs.
• Court: U.S. District Court — Eastern District of Texas

520 F. Supp. 75

UNITED STATES of America v. 2,175.86 ACRES OF LAND, MORE OR LESS, SITUATED IN HARDIN AND JEFFERSON COUNTIES, STATE OF TEXAS, and Kirby Forest Industries, Inc., et al., and Unknown Heirs.

Civ. A. No. B-78-598-CA.

United States District Court, E. D. Texas, Beaumont Division.

July 27, 1981.

Harry W. (Pete) McKee, Asst. U. S. Atty., Beaumont, Tex., for plaintiff.

Joyce Cox and Robin Dawson, Sheinfeld, Maley & Kay, Houston, Tex., for defendant.

MEMORANDUM OPINION

ROBERT M. PARKER, District Judge.

This is a land condemnation case. According to the Report and Findings filed March 3, 1980, the Land Condemnation Commission found that the "highest and best" use is varied as portions of the land are best used for rural subdivision, waterfront housing and recreational use, timber growing and sand pit operations. The Commission found that the 2,175.86 acres of land subject to condemnation has a value of $2,331,202.00. Objections to the Commission's Report were filed by both the government and Defendant Kirby Forest Industries (K.F.I.). Pursuant to Rule 53(e)(2) and Rule 71A of the Federal Rules of Civil Procedure, the Court held a hearing to consider the Commission's Report and the objections made thereto.

The scope of review is limited. "The Court, after hearing, may adopt the report or may modify it or may reject it in whole or in part or may receive further evidence or may recommit it with instructions"; however, "in an action to be tried without a jury, the Court shall accept the master's findings of fact unless clearly erroneous." Fed.R.Civ.P. 53(e)(2) & 71A(h); United States v. Merz, 376 U.S. 192, 198, 84 S.Ct. 639, 643, 11 L.Ed.2d 629 (1964); Livas v. Teledyne Movible Offshore, Inc., 607 F.2d 118, 119 (5th Cir. 1979). The findings of the Commission, to the extent that the Court adopts them, shall be considered as the findings of the Court. Fed.R.Civ.P. 52(a) & 71A(h). It is the opinion of the Court that the findings of the Commission are sufficient and are reviewable by the "clearly erroneous" standard prescribed by the Federal Rules of Civil Procedure and in accordance with United States v. Merz, supra. Upon review of the Commission's Report and Findings and the objections thereto, the Court finds that the Commission's findings are not clearly erroneous as asserted by the parties, adopts such findings as its own, and overrules the objections of the parties except as to the issue of pre-judgment interest which was not discussed in the Report and Findings of the Land Condemnation Commission.

CONDEMNATION PROCEEDINGS GENERALLY:

The government employs two general types of condemnation proceedings: 1) declaration of taking and 2) straight condemnation. Under the Declaration of Taking Act, 40 U.S.C. §§ 258a-258e, a taking occurs and the government obtains title to the land immediately upon filing a declaration of taking and depositing into the court the estimated amount of just compensation. If just compensation, as judicially determined, is found to be greater than the deposit, the statute requires the government to deposit the difference with interest from the date of taking. The deposit of an amount estimated to be just compensation relieves the government of the burden of paying interest on that amount. United States v. Dow, 357 U.S. 17, 23, 78 S.Ct. 1039, 1045, 2 L.Ed.2d 1109 (1958).

Should the government proceed with a straight condemnation proceeding, as in the instant case, a complaint in condemnation will be filed pursuant to 40 U.S.C. § 257 and Federal Rule of Civil Procedure 71A. Where that method is utilized, the landowner retains possession and use of the land until after a trial and the payment of the award. Unless a taking has previously occurred, title does not pass and the taking does not occur until the award is paid; consequently, no interest is due upon the award. Danforth v. United States, 308 U.S. 271, 284-85, 60 S.Ct. 231, 236, 84 L.Ed. 240 (1939).

CONTENTIONS OF THE PARTIES:

Defendant K.F.I. admits that no declaration of taking was filed, however, K.F.I. contends that it is entitled to prejudgment interest because 1) the parties stipulated that the date of taking was March 6, 1979 and, therefore, prejudgment interest should be calculated from that date; and 2) just compensation requires that K.F.I. be compensated for all injury occasioned by the taking. K.F.I. claims that, despite the absence of a declaration of taking, K.F.I. has been deprived of the enjoyment of any benefits of ownership and has borne all the burdens of ownership, including taxation, from the inception of these proceedings until the present. K.F.I. argues that no purchaser would, on or after March 6, 1979, pay value with the prospect only of having to defend a condemnation suit, running its hazards and incurring its costs.

The government responds that, though the Commission's Report and Findings states that March 6, 1979 is stipulated as the date of taking, the Commission considered the terms "date of valuation" and the "date of taking" interchangeable. The government further responds that the United States exercised no control, dominion or possession of the property in question and, in fact, K.F.I. has been and is still in possession of such property. The government reminds the Court of Instruction 19 to the Commission entered on October 3, 1977, stating that the "date of taking" must be and is fixed as of the date the government took possession of the land and denied the landowner its use and benefit. However, the question remains as to whether the government has constructively possessed the land or effectively denied the landowner the use and benefit of the land so as to constitute a taking and to entitle K.F.I. to prejudgment interest.

PREJUDGMENT INTEREST:

The Fifth Amendment to the United States Constitution recognizes the authority of the government to appropriate private property for public use; however, it is specified that such property shall not be taken for public use without just compensation. Due to Public Law 93-439, October 11, 1974, 16 U.S.C.A. § 698, establishing the Big Thicket National Preserve, there is no question but that the land involved in this case is being taken for public use and that just compensation must be awarded to Defendant K.F.I.

"Just compensation" is the fair market value at the time of the taking plus interest from that date to the date of payment. Albrecht v. United States, 329 U.S. 599, 67 S.Ct. 606, 91 L.Ed. 532 (1946). To the extent that interest is an element of just compensation, eminent domain cases are an exception to the general rule of nonliability of the sovereign for interest. This award of interest is not mere payment for delay, Bishop v. United States, 288 F.2d 525 (5th Cir. 1961); nor is it interest as it is commonly known, but rather a part of the just compensation to which the owner is entitled. United States v. Thayer West Point Hotel Co., 329 U.S. 585, 67 S.Ct. 398, 91 L.Ed. 521 (1947); Shoshone Tribe v. United States, 299 U.S. 476, 57 S.Ct. 244, 81 L.Ed. 360 (1937). Thus, in defining just compensation, it is more accurate to say that where the taking precedes the payment of compensation, the owner is entitled to such addition to the value at the time of taking as will produce the full equivalent of such value paid contemporaneously. United States v. Klamath & Moadoc Tribes of Indians, 304 U.S. 119, 58 S.Ct. 799, 82 L.Ed. 1219 (1938); United States v. Playa de Flor Land & Improvement Co., 160 F.2d 131 (5th Cir. 1947). United States v. 5.00 Acres of Land, 507 F.Supp. 589, 598 (E.D.Tex.1981).

Where private property is appropriated, the right to interest or the fair equivalent attaches automatically to the right to an award of damages. Miller v. United States, 620 F.2d 812 (Ct.Cl.1980); Shoshone Tribe v. United States, supra. No specific demand to include interest is necessary, nor does an award of interest depend on the existence of a specific statutory provision or a special agreement of the parties. Seaboard Air Line Ry. Co. v. United States, 261 U.S. 299, 306, 43 S.Ct. 354, 356, 67 L.Ed. 664 (1923). It is clear from the case law that where the date of taking of the property precedes the date of payment of the award, the right to interest is directly derived from the Fifth Amendment. United States v. Alcea Band of Tillamooks, 341 U.S. 48, 71 S.Ct. 552, 95 L.Ed. 738 (1951); Bishop v. United States, supra; United States v. 59.29 Acres of Land, 495 F.Supp. 212, 214 (E.D.Tex.1980).

The purpose of awarding just compensation is to put the owner in as good a position pecuniarily as if the use of the owner's property had not been taken. Phelps v. United States, 274 U.S. 341, 344, 47 S.Ct. 611, 612, 71 L.Ed. 1083 (1927). This purpose is procedurally accomplished in a "declaration of taking" proceeding by filing a declaration of taking and depositing into the court the estimated amount of just compensation in accordance with the Declaration of Taking Act, 40 U.S.C. §§ 258a-258e. Such act allows 6% interest on the final award from the date of taking to the date of payment, but no interest on the amount previously deposited into the court. This provision minimizes the interest burden of the government in a condemnation proceeding and alleviates the hardship to the landowner and the occupant from immediate taking. U. S. v. Miller, 317 U.S. 369, 381, 63 S.Ct. 276, 283, 87 L.Ed. 336 (1943). However, where, as in the instant case, the government proceeds by "straight" condemnation, no deposit is required, the government's interest burden is not minimized, and the hardship to the land owner is not alleviated.

Though Federal Rule of Civil Procedure 71A governs the procedural aspects of this case, the rule does little to enlighten the Court as to the award of interest. It seems to be well-settled in the case law, however, that interest is generally allowed as part of the damages, or just compensation, to which the owner is entitled when property is...