United States v. Ham, 14165.

• Decision Date: 06 February 1951
• Docket Number: No. 14165.,14165.
• Parties: UNITED STATES v. HAM et al.
• Court: U.S. Court of Appeals — Eighth Circuit

187 F.2d 265 (1951)

UNITED STATES v. HAM et al.

No. 14165.

United States Court of Appeals Eighth Circuit.

February 6, 1951.

Harold S. Harrison, Department of Justice, Washington, D. C. (A. Devitt Vanech, Asst. Atty. Gen., Leo P. Flynn, U. S. Atty., Sious Falls S. D., and Roger P. Marquis, Department of Justice, Washington, D. C., were with him on the brief), for appellant.

Julius Skaug, Mobridge, S. D. (H. F. Fellows, Rapid City, S. D., and Pat Morrison, Mobridge, S. D., were with him on the brief), for appellees.

Before GARDNER, Chief Judge, and WOODROUGH and THOMAS, Circuit Judges.

WOODROUGH, Circuit Judge.

This appeal is taken by the United States to reverse a judgment rendered pursuant to jury verdict fixing the amount of compensation for the taking of land in condemnation proceedings instituted under 40 U.S.C.A. § 258a. The appellant asserts errors committed in receiving and in excluding evidence and in the instructions to the jury. It also contends that by reason of the court's erroneous declarations, rulings, and conduct of the trial, the appellant was denied a fair and impartial jury trial on the issue of the amount of compensation.

The appeal brings up for review that part of the judgment which awards $35,100, or $45 an acre, for 780 acres of farm land in Perkins County, South Dakota, taken for use in connection with the Missouri River Basin Project, Grand Division, Shadehill Unit, on April 20, 1949. The land was good, level land used for farming and the improvements on it were of small value. The market value of it at the time of the taking was the only issue for the jury.

The government's estimate and deposit made at the time of the taking was $21,140, or at the rate of about $27 an acre, for the 780 acres. The owner claimed for it a value of from $60 to $65 an acre. The qualified expert witnesses for the government based their estimate in large part upon prevailing sales prices of the same and comparable farm lands in the area. The owner relied heavily on his showing that in certain years the land had produced large crops that brought high prices and resulted in large net income to the owner. The government did not dispute that the land had produced large income as claimed nor did it deny that such productivity or use value of the land was competent to be considered by the jury in determining the amount of compensation. But its position was that the valuation at which the same land and comparable lands in the area were freely sold was also an element that had to be considered in order to fix fairly the amount of compensation. The land lies on the northernmost edge of the western part of South Dakota and though it might at times be made to produce as much as a like-sized farm in the best of Iowa its market value might still be less than that of the Iowa farm.

Though the procedure in the condemnation did not include an exact definition of issues by pleadings, it was apparent from the inception of the trial that the dispute between the government and the landowner turned upon the weight which should be given by the jury to the several elements which must be considered together to establish the market value, particularly the element of use value and the element of sales value. On the government side greater weight and importance was claimed for the element of sales value and on the owner's side the stress was on the probative force of the use value. To fairly try the issue and determine just compensation in this case it was necessary for the jury to consider both sides of the dispute and to weigh the evidence of use value which tended to enhance compensation for the taking against the evidence of the sales value which tended to diminish it, and the duty rested on the court to conduct the proceedings of the trial so as to obtain fair and impartial consideration of both sides. As stated in 29 C.J.S., Eminent Domain, § 286, "The remarks and conduct of the judge presiding in the trial or assessment of damages before a jury in condemnation cases should be such as will promote a fair and impartial trial." Or as stated in 29 C.J.S., Eminent Domain, § 273, "Subject to this limitation competent under the general rules of evidence, no evidence should be excluded which an ordinarily prudent man would take into account before forming a judgment as to the market value of property which he is about to purchase."

The court recognized its duty in the abstract. It stated to the jury, "* * * you should consider all of those things which a prudent and reasonable buyer and seller would naturally consider, discuss and take into consideration in event of the sale of the property." This statement of the law is in accord with that of the Supreme Court in Olson v. United States, 292 U.S. 246, loc.cit. 257, 54 S.Ct. 704, 709, 78 L.Ed. 1236, where the court said, "In respect of each item of property that value may be deemed to be the sum which, considering all the circumstances, could have been obtained for it; that is, the amount that in all probability would have been arrived at by fair negotiations between an owner willing to sell and a purchaser desiring to buy. In making that estimate there should be taken into account all considerations that fairly might be brought forward and reasonably be given substantial weight in such bargaining. Brooks-Scanlon Corp. v. United States, 265 U.S. 106, 124, 44 S.Ct. 471, 68 L.Ed. 934. The determination is to be made in the light of all facts affecting the market value that are shown by the evidence taken in connection with those of such general notoriety as not to require proof."

But the record clearly shows that the trial court was of the opinion that the owner's showing of production and net income derived from the land in the period covered by his testimony, referred to by the court as the evidence of the "use value" furnished the true criterion of the value of the land and of the compensation that ought to be awarded by the jury. Throughout the course of the trial the court repeated and impressed this view upon the jury. The government contends that it was contrary to law and erroneous. It asserts error in respect to the following declaration of the court, as a typical one made during the trial: "The only value a farm has is the use value and the use value can only be determined by what the land produced." Appellant also complains of the court's rulings holding evidence of prior sales of the property involved and prior sales of comparable property in the area to be inadmissible.¹ Appellant also asserts error in respect to the court's instructions to the jury which were duly excepted to. It contends that the court's declarations, rulings and conduct of the trial resulting from the erroneous view of the law prevented fair consideration by the jury of the government's claims in the dispute on valuation. It contends that the expressions and rulings of the court unduly and unfairly magnified the effect of defendant's testimony as to the large production in certain years and disparaged and minimized the testimony concerning the prevalent low selling prices offered for the government.

The trial court's attitude led it so far as to exclude evidence offered by the government tending to show (as indicated by the government's offer of proof) that defendant, as a willing buyer, had purchased the land in question in three parcels from three different willing sellers in 1944 and 1946, along with a further showing as to the price then paid for the land. The owner's objections to the evidence and to the offer of proof were sustained.

The record shows the court did not exclude this evidence because it was too remote in time, or because the land had undergone great changes, but as it stated, because, "* * * the fact it was sold in 1946 hasn't any bearing on the real question in this case". The court gave no consideration to whether the evidence offered would have been relevant, competent, and helpful to the jury in presenting the proper elements of market value, but instead the evidence was excluded as being of no importance as compared with the evidence of earnings received from the land about the same time.

We think the opinion and conclusion of the trial court were erroneous and that by applying them in the case injustice was done to the government. Evidence of prior sales and of prevailing prices within the area has always been held to be probative and admissible as tending to show market value of farm lands taken in condemnation. See United States v. Becktold Co., 8 Cir., 129 F.2d 473, 479 (sale in 1925 held properly admitted when taking was in 1939); Love v. United States, 8 Cir., 141 F.2d 981, 983 (sale in 1933 held properly admitted when taking was in 1940); Dickinson v. United States, 4 Cir., 154 F.2d 642, 643 (sale in 1937 held properly admitted when taking was in 1943). All of these cases of course recognize the discretion vested in the trial court to hold the trial within reasonable limits and to exclude remote or nonprobative transactions. But here the trial court's refusal to let the jury consider evidence of the prior sale of the same property and proof of other sales reflecting market value did not result from exercise of such discretion. The court merely applied its conclusion and opinion that the fair market value of the land taken should be determined on its use value only.

The court presented its position clearly when it excluded proffered evidence of prior sales of comparable land. Such evidence is generally held admissible, particularly in the federal courts. Indeed, in Baetjer v. United States, 1 Cir., 143 F.2d 391, 397, the court said, "What comparable land changes hands for on the market at about the time of taking is usually the best evidence of market value available." Similarly, in Welch v. Tennessee Valley Authority, 6 Cir., 108 F.2d 95, 101, "Sales at arms length of similar property are the best evidence of market value." Of course the other sales...