United States v. 344.85 Acres of Land, Perry County, Indiana

• Decision Date: 27 June 1967
• Docket Number: No. 15823.,15823.
• Citation: 384 F.2d 789
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. 344.85 ACRES OF LAND, MORE OR LESS, Situate IN PERRY COUNTY, STATE OF INDIANA (Roy H. Mullen and Charles L. Mogan, Jr.), Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

384 F.2d 789 (1967)

UNITED STATES of America, Plaintiff-Appellant, v. 344.85 ACRES OF LAND, MORE OR LESS, Situate IN PERRY COUNTY, STATE OF INDIANA (Roy H. Mullen and Charles L. Mogan, Jr.), Defendants-Appellees.

No. 15823.

United States Court of Appeals Seventh Circuit.

June 27, 1967.

Edmund B. Clark, Department of Justice, Washington, D. C., Richard P. Stein, U. S. Atty., Edwin L. Weisl, Jr., Asst. Atty. Gen., Joseph W. Annakin, Asst. U. S. Atty., Indianapolis, Ind., Roger P. Marquis, Atty., Department of Justice, Washington, D. C., for appellant.

William L. Mitchell, David M. Keck, Mitchell & Keck, Evansville, Ind., for defendants-appellees, Charles L. Mogan, Jr., and Bernita Mogan.

Before HASTINGS, Chief Judge, and KILEY and SWYGERT, Circuit Judges.

KILEY, Circuit Judge.

The government has appealed from judgments awarding compensation in condemnation proceedings to owners of farm land in Indiana taken for flowage easements in connection with the Cannelton Lock and Dam Project for control of Ohio River floods. We affirm the judgments.

The declarations of taking were filed on May 17, 1965, for the condemnation of the easements over 103.5 acres¹ of the 213.2 acre Mullen farm and 9.33 acres² of the 64 acre Mogan farm near Cannelton, Indiana. A jury decided on March 2, 1966, that just compensation was $13,000 for the Mullen easement and $4,500 for the Mogan easement. This appeal followed.

The government makes two contentions: that reversible error was committed by the district court in refusing to give the government's offered instruction No. 5; and that this ruling resulted in a departure from market value as the measure of just compensation.

There was testimony by expert witnesses for the land owners and the government on the market value of the easements taken, which was the sole issue for the jury. United States v. Ham, 187 F.2d 265, 266 (8th Cir. 1951). The government experts based their estimates of value of the Mullen easement upon recent "similar or comparable" sales, and of the Mogan easement primarily upon the price the Mogans paid for their farm in 1963. There was expert testimony for the landowners that no "similar or comparable" sales could be found for an indication of the market value of the Mullen land. The estimates of these experts with respect to both easements were based on factors other than sales: crop suitability, production capacity, and their experience in appraising farms in the area. The awards were within the range of the estimates and were obviously based upon the testimony of the landowners' experts.

That generally was the evidentiary frame in which instruction No. 5 was offered by the government and refused by the district court. The refusal to give that instruction is the principal basis of the government's claim of reversible error. The instruction reads:

A sale in the open market of the property in question reasonably near in time the date of taking is the best evidence of its fair market value. Lacking a free market sale of the property itself reasonably near the date of taking, sales on the open market of similar or comparable property reasonably near in time to the date of taking are the best evidence of the fair market value of the property being condemned. Of course, there will be differences in the size, shape, location and immediate surroundings of two pieces of property, and perhaps differences in other respects as well, and yet to the extent that they are similar or comparable, the price for which one sold on the open market is the best evidence of the fair market value of the other. "Similar" does not mean "identical," but having a resemblance. Obviously no two properties are exactly alike in every respect, but this does not prevent their being comparable. Sales constitute the market. You must reject them as lacking in comparability before you turn to other means of determining market value. (Emphasis added.)

The first sentence of instruction No. 5 tells the jury, categorically, that a sale of the property in the open market near in time is the best evidence of market value. The second sentence states categorically that, lacking a sale of the property in question, open market sales of "similar or comparable" property reasonably near in time are the best evidence. This is qualified somewhat in the next sentence which says that these sales are the best evidence to the extent they are comparable. But the instruction concludes: "Sales constitute the market. You must reject them as lacking in comparability before you turn to other means of determining market value." Thus if the jury found the other sales were at all comparable, it could not under this instruction consider evidence of productivity, return on investment, fertility or other evidence of market value presented by the landowners' experts.

We think the term "best evidence" as used in instruction No. 5 in referring to proof of market value is misleading and that the district court did not err in refusing to give that instruction. In this court the government contends for a "principle," not that recent sales are "best evidence" as the instruction states, but that such sales are the "best indication" of value. The landowners do not dispute that principle.

No case cited by the government compels the giving of this instruction. If given it could have destroyed the effect of cross-examination of government experts upon the sales they testified to, or compelled the jury to exclude testimony by the landowners' experts of other indications of value simply because of the existence of the sales.

There is language in decisions cited by the government which gives oblique support to instruction No. 5. But none of them approved an instruction in the substantial language of instruction No. 5. Most of the cases cited are concerned with rulings upon evidence. In United States v. Miller, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336 (1943), the questions were upon evidence and an instruction not relevant here; and in Olson v. United States, 292 U.S. 246, 54 S.Ct. 704, 78 L.Ed. 1236 (1934), the only question decided concerned exclusion of evidence of actual use of condemned property. In United States v. Lowrie, 246 F.2d 472, 474 (4th Cir. 1957), the court said that if evidence of sales is not admitted "one of the most persuasive indications of market values" is lost. (Emphasis added.) And in United States v. 5139.5 Acres of Land, 200 F.2d 659, 662-663 (4th Cir. 1952), the court said that an instruction to the effect that "generally speaking" recent sales furnish the most desirable basis of fixing market value "embodied sound rule as well as common sense," and that "some such instruction" would be proper on retrial.

In United States v. Ham, 187 F.2d at 270, the court quoted a rule that a comparable sale "is usually the best evidence of market value available" and quoted the rule from Welch v. TVA, 108 F.2d 95, 101 (6th Cir. 1939): "Sales at arm's length of similar property are the best evidence of market value." But the holding in Ham was that the exclusion of all evidence of comparable sales was reversible error. 187 F.2d at 269. And in Onego Corp. v. United States, 295 F.2d 461, 463 (10th Cir. 1961), the statement that the "best evidence" of market value was timely comparable sales was dictum, since there was no such evidence there.

The "quest" at the trial was for the fair market value of the property taken and property damaged. Kinter v. United States, 156 F.2d 5 (3d Cir. 1946). Market value is what a willing buyer would pay...