United States v. 22.95 Acres of Land, Whitman Co., Wash., 24757.

• Decision Date: 09 December 1971
• Docket Number: No. 24757.,24757.
• Citation: 450 F.2d 125
• Parties: UNITED STATES of America, Appellant, v. 22.95 ACRES OF LAND, MORE OR LESS, Situate IN WHITMAN COUNTY, STATE OF WASHINGTON, Almota Farmers Elevator and Warehouse Company, a Washington Corporation, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

450 F.2d 125 (1971)

UNITED STATES of America, Appellant, v. 22.95 ACRES OF LAND, MORE OR LESS, Situate IN WHITMAN COUNTY, STATE OF WASHINGTON, Almota Farmers Elevator and Warehouse Company, a Washington Corporation, Appellees.

No. 24757.

United States Court of Appeals, Ninth Circuit.

September 23, 1971.

Rehearing Denied December 9, 1971.

Jacques B. Gelin (argued), S. Billingsley Hill, Dept. of Justice, Shiro Kashiwa, Asst. Atty. Gen., Washington, D. C., Dean C. Smith, U. S. Atty., Robert M. Sweeney, Asst. U. S. Atty., Spokane, Wash., for appellant.

Lawrence Hickman (argued), of Hickman & Faris, Colfax, Wash., for appellees.

Before MADDEN, Judge, United States Court of Claims,^* and KOELSCH and CHOY, Circuit Judges.

J. WARREN MADDEN, Judge, Court of Claims.

This is an appeal from a judgment rendered in the United States District Court in a condemnation action. This court's jurisdiction of the appeal rests on Title 28 U.S.Code, § 1291. The District Court rendered judgment for Almota Farmers Elevator and Warehouse Company, "Almota", in the amount of $274,625.00. The United States, the condemnor, appeals, urging that the judgment should have been in the amount of $130,000.00. These divergent figures were contained in a stipulation entered into by the parties in the District Court proceeding, in which the parties agreed that if Almota's theory of the nature of its compensable interest in the property taken should be adopted by the Court, the just compensation for that interest would be $274,625.00, but if the Government's theory should be adopted, the just compensation would be only $130,000.00

The condemnation action here under review was brought by the United States on behalf of its Department of the Army, to obtain all right, title and interest of Almota in certain land, which the Government took for the Little Goose Lock and Dam, a river improvement and navigational project on the Snake River below Lewiston, Idaho. The parcel of land in question consists of 0.75 of an acre, located in Whitman County, Washington. The fee title to the land was in the Oregon-Washington Railroad and Navigation Company (Railroad). The condemnee, Almota had a lease from the Railroad on the 0.75 acre tract and had built a 522,500 bushel grain elevator and a "flat house" also used for grain and other storage purposes, on the tract. On the date of the taking, May 26, 1967, a 20 year written lease was in force between the Railroad, as lessor, and Almota, as lessee. The expiration date of the lease was October 12, 1974, which meant that the lease had seven plus a fraction more years to run when the taking occurred on May 26, 1967. The lease contained no option giving the lessee a right of renewal of the lease.

Prior to the commencement of the condemnation action here under review, the United States had settled with the fee owner, the Railroad, for the Railroad's interest in the land here in question. We are not advised as to the terms of that settlement. Neither party to this case urges that those terms would be relevant in this case.

In the District Court the Government urged that Almota was entitled only to the fair market value of the use of the land and buildings for the seven year plus remainder of the term of its lease, less the agreed annual rent, plus the value of the buildings for removal or salvage purposes. The amount of the judgment, on this basis, was stipulated, as we have seen, to be $130,000.00. Almota, in the District Court, urged that it was entitled to receive as just compensation the full fair market value of the use of the land and of the buildings in place as they stood at the time of the taking on May 26, 1967, without limitation of such use to the remainder of the term of the existing lease. As stated above, the parties stipulated that if Almota's contention should be adopted, Almota's judgment should be in the amount of $274,625.00. The District Court adopted Almota's argument and rendered judgment for it in the amount of $274,625.00. The United States then brought the instant appeal.

The Government's computation, limiting Almota's right of recovery to its legally protected interest for the remainder of the term of its written lease, differs so greatly from Almota's computation based upon fair market value, i. e. what a willing buyer would pay to a willing seller, because, in transactions in the market place, traders give weight to facts and circumstances in addition to those recognized and enforced by law. If, for example, a person, A, at about a year previous to the date of taking in this case, had funds available and a desire to acquire a going business, he might have heard of Almota's grain elevator business. Investigation might have disclosed that it was a very profitable enterprise; that there was a large grain growing area which had become accustomed, over the years, to using Almota's elevator for storage and shipment; that the Railroad, the fee owner of the tract on which Almota's buildings were located was glad to have them there because most of the grain stored in the elevator would ultimately be shipped via the Railroad; that the Railroad, because of these circumstances, charged Almota only a nominal rent of $114.00 per year; that Almota had had, ever since 1919, an uninterrupted succession of leases on the land on which Almota's buildings stood.

A could well have concluded that if he bought Almota's current lease and buildings, so that he would be in possession of the land as the expiration of Almota's 20 year lease approached, and if he, A, was then operating the elevator business satisfactorily, the Railroad would, as it had always done for Almota, grant A a renewal of his lease, and would do the same in similar occasions in the future. Thus it might have seemed to A that the Almota elevator business was as permanent as the Railroad's business. If a title lawyer warned A that all that A could, with legal certainty, acquire from Almota was the right to occupy the land and use the buildings for the then remaining eight years plus, of the term of the lease, A might well have said that he realized that, but was sure that Almota, in the circumstances, would not sell its lease at a price determined by the lawyer's standard, which price he had computed to be $130,000.00; that if he did not offer more than that he would lose the opportunity to acquire this promising business; and that, all things considered, he had decided to offer Almota $274,625.00 for its interest in the property.

If what we have surmised above had occurred, and A had acquired Almota's interest in the land, and a year later the Government had "taken" that interest from A, A's hope and expectation of carrying on, far into the future, the profitable grain elevator business, would have been completely frustrated. It would be said that he had speculated, and lost, unless he could compel the Government to reimburse him for his loss.

The question which we must answer in the instant case is "Does the word `property' in the language of the Fifth Amendment of the Constitution of the United States, `* * * nor shall private property be taken for public use, without just compensation,' include hopes and expectations, even those so well grounded that they have a market value?" Lest it be thought that the answer to the question posed above is easy and obvious, we quote the language of the Supreme Court of the United States in Segal v. Rochelle, 382 U.S. 375, 379, 86 S.Ct. 511, 515, 15 L.Ed.2d 428 (1966).

it is impossible to give any categorical definition to the word "property", nor can we attach to it in certain relations the limitations which would be attached to it in others.

In Segal, the court interpreted the word "property" as used in Bankruptcy Act, 11 U.S.Code § 110(a)(5) "most generously," for the purpose of making available for creditors interests of the bankrupt, even if the enjoyment by him of those interests was to be postponed. In Lines v. Frederick, 400 U.S. 18, 91 S.Ct. 113, 27 L.Ed.2d 124 (1970), the Court held that $137.28 of "vacation pay" which had accrued but had not yet been paid to a workman, at the time he filed his petition in bankruptcy, was not "property", within the meaning of § 70a(5) of the Bankruptcy Act, supra. In so holding, the Supreme Court affirmed this Court's decision in Frederick v. Lines, 9 Cir., 425 F.2d 215. The Supreme Court in Lines, 400 U.S. at p. 19, 91 S.Ct. at p. 113 said:

The most important of the considerations limiting the breadth of the definition of "property" lies in the basic purpose of the Bankruptcy Act to give the debtor

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