United States v. 25.406 ACRES OF LAND, ETC.

Decision Date21 February 1949
Docket NumberNo. 5830.,5830.
Citation172 F.2d 990
CourtU.S. Court of Appeals — Fourth Circuit

A. Carter Whitehead, Sp. Asst. U.S. Atty., of Richmond, Va., and Ralph J. Luttrell, Atty., Dept. of Justice, of Washington, D. C. (A. Devitt Vanech, Asst. Atty. Gen., George R. Humrickhouse, U.S. Atty., of Richmond, Va., and N. Antilotti Smith and D. Murnan Smith, Attys., Dept. of Justice, both of Washington, D. C., on the brief), for appellant.

Francis M. Shea, of Washington, D. C. (Warner W. Gardner, of Washington, D. C., Gardner L. Boothe, of Alexandria, Va., and Harry R. Thomas, of Arlington, Va., on the brief), for appellees.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

PARKER, Chief Judge.

This is an appeal by the United States from a judgment fixing compensation in a condemnation suit. The property involved is 25.406 acres of land, referred to as the Nevius tract, lying just across the Potomac River from Washington, opposite the Lincoln Memorial and near the terminus of the Memorial Bridge in Arlington County, Virginia. In June 1947, this property was taken as the site of a hospital for the Veterans Administration and the sum of $850,827 was deposited in the registry of the court below as estimated just compensation for the taking. The owners of the property declined to accept the sums so tendered, and the issue of the value of the property was tried before a jury, who returned a verdict of $1,600,000. From judgment on this verdict, the United States has appealed.

The facts are that the property in question is very valuable real estate lying within the metropolitan area of Washington. There is abundant evidence that the most profitable use that could be made of it would be as a site for high class multi-story apartments and that it is eminently suited for such use. It lies just across the Potomac from Washington, is well shaped, has an elevation of from 50 to 110 feet, is on the axis of the Mall, in line with the Capitol, Washington Monument and Lincoln Memorial, and commands a splendid view of the most beautiful part of the city. It is within a few minutes drive of the business section, the government offices, the railway station and the airfield. It is large enough to permit the creation of a high class neighborhood with eight elevator apartments, an apartment hotel, stores, shops, garages, etc.; and the evidence is to the effect that it is the only tract available within a reasonable distance of the center of Washington for development of this sort.

The testimony of the government was that the property was worth from 70 to 75 cents per square foot or a total of from $775,000 to $825,000; but this was from witnesses who considered it available only for the construction of two or three story "walk-up" type apartments, bringing a comparatively low rental, of the sort that had been constructed on other property in Arlington County. The lowest value placed upon the property by a witness for the owners was $2.50 per square foot. Others placed it at $2.50 to $3, $2.75, $3, $3.10 to $3.60, and one as high as from $5 to $6. The jury's verdict fixed it at $1.45, which was approximately double the value fixed by the government witnesses and half that of the median defense witnesses.

The questions raised by the appeal relate to the action of the court in permitting the witnesses Babcock and Davis to testify as experts on the question of valuation, and in permitting these witnesses and the witness Winston to testify to their estimate of the income to be derived from the property as the site for a high class apartment development, as one of the factors entering into their opinion of value. Also presented is the question of allowing these witnesses to testify as to sales of comparable property in the City of Washington, as an element entering into their opinion.

The most important of these questions is that relating to the estimate of income to be derived from the property. This testimony was excluded, however, until it was established, not only that the property was suited for development of this character, but also that such development had been definitely planned and agreed upon and would have been carried out but for the taking of the property by the government. There was evidence showing that an apartment hotel and eight apartment buildings had been completely planned, that arrangements had been made with the Equitable Life Assurance Society to finance the undertaking, and that one of the leading construction firms of the country had agreed to undertake the construction, which could have been commenced within thirty days of the time when the property was taken. The testimony in question, therefore, related not to the nebulous cost of constructing a vague hypothetical project and the estimated income to be derived therefrom, but to the cost and expected income of a project which, according to the evidence, was definitely in the process of achievement.

There can be no question but that it was proper for the witnesses to take into consideration in estimating market value the availability of the property as a site for high class multi-story apartments, which, according to the evidence, was the highest and most profitable use for which the property was adaptable. Boom Co. v. Patterson, 98 U.S. 403, 407, 25 L.Ed. 206; United States v. Miller, 317 U.S. 369, 373, 63 S.Ct. 276, 87 L.Ed. 336; Olson v. United States, 292 U.S. 246, 255, 257, 54 S.Ct. 704, 708, 78 L.Ed. 1236. As said in the case last cited, "The highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future is to be considered, not necessarily as the measure of value, but to the full extent that the prospect of demand for such use affects the market value while the property is privately held."

In the case of United States v. Powelson, 4 Cir., 138 F.2d 343, 345, we went fully into the question in connection with land which was suitable for water power development and held that the effect on market value of its availability for this purpose must be given consideration, saying: "Market value is nothing but a hypothetical concept based upon what, in the opinion of those who know, a willing buyer would have to pay a willing seller of property in order to purchase it. The question here is, not what wild mountain land was selling for in the community, but what would the portion of land owned by Powelson and available for this water power development have been reasonably worth on the market when sold by one who was willing but not compelled to sell and bought by one who was willing but not compelled to buy."

The rule laid down by us in the Powelson case was based upon the Miller case, supra 317 U.S. 369, 63 S.Ct. 280, where it was said that "the market value of the property is to be fixed with due consideration of all its available uses", and the rule as stated in Boom Co. v. Patterson, supra, where the Supreme Court used the following language:

"In determining the value of land appropriated for public purposes, the same considerations are to be regarded as in a sale of property between private parties. The inquiry in such cases must be what is the property worth in the market, viewed not merely with reference to the uses to which it is at the time applied, but with reference to the uses to which it is plainly adapted; that is to say, what it is worth from its availability for valuable uses. Property is not to be deemed worthless because the owner allows it to go to waste, or to be regarded as valueless because he is unable to put it to any use. Others may be able to use it, and make it subserve the necessities or conveniences of life. Its capability of being made thus available gives it a market value which can be readily estimated.

"So many and varied are the circumstances to be taken into account in determining the value of property condemned for public purposes, that it is perhaps impossible to formulate a rule to govern its appraisement in all cases. Exceptional circumstances will modify the most carefully guarded rule; but, as a general thing, we should say that the compensation to the owner is to be estimated by reference to the uses for which the property is suitable, having regard to the existing business or wants of the community, or such as may be reasonably excepted in the immediate future."

The testimony as to the estimated income from the property was admitted, not as evidence of value (and this was carefully explained in the charge to the jury, where market value was correctly defined), but as a matter considered by the witness in arriving at the estimate of value to which he had already testified. Testimony as to value would be worth little or nothing, if witnesses were not allowed to explain to the jury their qualifications as experts and the reasoning by which they have arrived at the expert opinion to which they testify; and the rule is that they may thus give the grounds of their opinions. Wigmore on Evidence 2d Ed. sec. 562; Lewis, Eminent Domain 3d Ed. sec. 654.

Of course an expert witness may not, under the guise of giving the basis of his opinion, lug in evidence which is incompetent or irrelevant, nor should he be permitted to go into the grounds of his opinion in such way as to confuse or mislead the jury; but the scope of such examination is a...

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