United States v. Honolulu Plantation Co., No. 12023.

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtHEALY and BONE, Circuit , and FEE
PartiesUNITED STATES v. HONOLULU PLANTATION CO. HONOLULU PLANTATION CO. v. UNITED STATES.
Decision Date24 April 1950
Docket NumberNo. 12023.

182 F.2d 172 (1950)

UNITED STATES
v.
HONOLULU PLANTATION CO.
HONOLULU PLANTATION CO.
v.
UNITED STATES.

No. 12023.

United States Court of Appeals Ninth Circuit.

April 24, 1950.


182 F.2d 173
COPYRIGHT MATERIAL OMITTED
182 F.2d 174
A. Devitt Vanech, Asst. Atty. Gen., John F. Cotter, Atty. Dept. of Justice, Washington, D. C., Harry T. Dolan, Sp. Asst. to Atty. Gen., New York City, for appellant United States

C. Nils Tavares, Vernon O. Bortz, Honolulu, T. H. (Pratt, Tavares & Cassidy, Honolulu, T. H., of counsel), for appellant Honolulu Plantation Co.

Before HEALY and BONE, Circuit Judges, and FEE, District Judge.

JAMES ALGER FEE, District Judge.

The United States instituted thirteen actions, now consolidated, to condemn land in Hawaii. Honolulu Plantation Company had several claims for compensation, part of which have been paid. But Plantation claims "severance damages" because of loss of value of its properties as an operating concern by condemnation of property held in fee by third parties, resulting in an overcapacity of the sugar mill and refinery, since it was claimed there was failure to obtain the customary supply of cane from such fields.

All the relevant evidence as to the claim of "severance damage," which was heard by the learned Trial Judge, was produced by Plantation. The United States contended the claim was unsupported. The bulk of the testimony consisted of the opinions of experts as to valuation of the properties as a whole, including leases on other lands not taken, before and after condemnation. These values were ultimately based, generally speaking, on the invested capital necessary to produce refined sugar from certain areas, upon earnings of Plantation and its value as a going concern.

The record shows Plantation actually owned a comparatively small amount of land in fee upon which the structures enumerated above were in part placed. As the Trial Court says, this property consists of "scattered parcels which by good fortune from time to time it has been able to buy in fee." Long-term leases of lands

182 F.2d 175
owned by others made up the bulk of the holdings. Four hundred forty acres, so controlled for cane production, were condemned in these consolidated proceedings. The owners of these parcels had attempted by express clauses of the leases to reserve to themselves all compensation in case of condemnation. Plantation claimed to have an understanding amounting to an engagement to lease covering five hundred ninety-five acres in addition, which were owned by the Damon Estate in fee and had been also condemned, but there was no formal written document covering this transaction

The Trial Court awarded $440,175.00 damages inflicted upon the remaining properties by the condemnation of the four hundred forty acres. From this award, the United States appeals. The Court denied damages as to the five hundred ninety-five acres of Damon Estate, on the ground that Plantation had no legal interest therein. From this determination, Plantation appeals. This appeal will be first considered.

The proposition that Plantation, as a landowner, has a right to "severance damages"1 where the United States condemns fee simple title to other lands vested in third persons, even though Plantation had no legally recognizable interest in the lands condemned, if true, is demonstrably paradoxical. Yet this must be the basis of Plantation's appeal. There was no finding that the United States was taking the business. In fact, it was not. The Trial Judge found that the Damon Estate was the owner in fee simple of the five hundred ninety-five acres. The lease which Plantation held on this area expired in 1943. A renewal had never been executed. There had been understandings and negotiations, which indicated that Plantation could have cane from these fields for its mill so long as the positions remained constant. But the last correspondence in 1940, three years before the existing lease expired, looked toward the execution of a formal document. This gives Plantation no legal or equitable right in 1944.2 The inference is that the Damon Estate sensed the creeping shadow of condemnation and desired to retain all the just compensation for itself, and deliberately did not give Plantation a property interest. The Trial Court found and, upon consideration, we hold that Plantation had no interest in these lands recognized by local law. The question is: Where the United States takes land owned by third parties in fee simple and in which Plantation has no legal interest, can "severance damages" be awarded because, owing to previous business arrangements, Plantation had expected to receive a supply of cane for its mill and refinery therefrom for a long period in the future?

The Fifth Amendment requires that, if property be taken, just compensation be paid. If then Plantation had no property in the Damon lands, it had no compensable interest.3 If compensation were not limited to owners of interests in property condemned, the sovereign, in taking property for public use, would be subjected to limitless claims of inconvenience, business loss and damage to prospects yet unborn.

By adulteration, the experts for Plantation evolved a clever amalgam of two proper doctrines as a basis for compensation. It is a rule that, in condemnation of part of a tract owned in fee simple, just compensation is the market value of the tract as a whole, before condemnation, less the market value of the portion which remains after the taking of the part.4 The rule applies exclusively to condemnation of

182 F.2d 176
fee simple title of a tract in one ownership. It is a rule that, if market value cannot be established by sales of comparable property, consideration of other factors may be necessary to establish just compensation. But it must not be forgotten that the market value of real property is the criterion, and losses to a business are not for consideration

The value of real and personal property and even movables is lumped by the experts before and after the taking. In this aggregation are included even the leases of Plantation upon lands not taken and in other ownership. By these and other devices, the experts succeeded in deducing a value to Plantation of $1,000.00 per acre for each acre held by lease or otherwise. By a fantastic process, involving a non sequitur, this figure per acre was testified to be the loss in value of the property of Plantation. It is, of course, clear that the real property held by Plantation was never appraised, either before or after the taking. Frankly, the witnesses say that the putative loss of $1,000.00 is arrived at by a capitalization of the earnings of Plantation, including its refinery, during years of most abnormal conditions in the island empire, while the price of sugar was supported by the Government. The formula thus applied produces its bizarre results because of the use of a factor comparable to infinity in mathematical calculations, of which the action is unknown.

It can be thus demonstrated that these witnesses summoned by Plantation were stating loss to the business of growing cane, milling raw sugar and manufacturing refined sugar. A minor chord vibrates through all the score. If it were able to buy "raws" of the competing monopoly, as it was able to do in war time, Plantation might have been able to make its accustomed profit, notwithstanding the takings.

The Trial Court says: "* * * usable land in Hawaii is scarce and tightly held by a comparatively few large corporation, trust, and estate owners who buy but rarely sell."

In view of this statement, the only inference is that the fee properties of Plantation suffered no loss of value by the taking of surrounding lands, but were enhanced because of the increasing scarcity of such lands. These considerations constitute a conclusive refutation of the speculations of the "owners"5 and experts, and land's end!

The finding of the learned Trial Judge that there was no damage to the remaining properties of Plantation by condemnation of lands of the Damon Estate is then approved on two grounds: first, there was no less value proved as to the lands owned by Plantation in fee simple, and, second, as above noted, Plantation owned no interest whatsoever in realty of the Damon Estate. This holding is affirmed, and Plantation's appeal is dismissed.

By an inconsistent line of reasoning, the Trial Judge allowed "severance damages" because of the condemnation of the four hundred forty acres. The same question stated above is primarily involved here also. Plantation had no more legal interest in these tracts than in the Damon Estate. As to these individual parcels of land, fee title was vested respectively in other estates and individuals. Plantation had long leases on each parcel, and a clause of each lease divested any interest or estate of Plantation upon condemnation.6 This

182 F.2d 177
condition subsequent destroyed any property interest of Plantation therein. The landowner reserved all compensation for the property. Therefore, this situation falls squarely under the principle followed by the Trial Court as to the Oahu Sugar Company lease, and upon this ground alone this award must be reversed

The clause in the Oahu lease contains substantially the language emphasized in Note 6. If under the property law of Hawaii7 these words destroyed any compensable interest of Plantation in the realty condemned, as the Trial Court holds with regard to the Oahu lease, then the words have the same effect in the other leases. If Plantation owned no property in the realty taken, it was not entitled to just compensation by definition. Fifth Amendment. Since, by voluntary agreement upon condemnation, Plantation divested itself of any interest in property taken, the severance complained of was by its own act. To those consenting, there is no injury. The meaning of the contracting parties was made clear by emphatic words reserving all compensation in...

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  • McKenna v. Permanente Med. Grp., Inc., Case No. CV F 12–0849 LJO GSA.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • August 13, 2012
    ...bargaining contract as a third party beneficiary to enforce the provisions in the contract which have been made for his benefit.MacKay, 182 F.2d at 172 (bold added). Ms. McKenna responds that the CBA was made for the benefit of Kaiser employees and requires safe working conditions and equit......
  • McKenna v. Permanente Med. Grp., Inc., CASE NO. CV F 12-0849 LJO GSA
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • August 9, 2012
    ...bargaining contract as a third party beneficiary to enforce the provisions in the contract which have been made for his benefit.MacKay, 182 F.2d at 172 (bold added). Ms. McKenna responds that the CBA was made for the benefit of Kaiser employees and requires safe working conditions and equit......
  • Miller v. United States, No. 296-74.
    • United States
    • Court of Federal Claims
    • April 16, 1980
    ...plaintiffs herein strict proof of loss in market value of the remainder property is obligatory. United States v. Honolulu Plantation Co., 182 F.2d 172, 179 (9th Cir.), cert. denied, 340 U.S. 820, 71 S.Ct. 51, 95 L.Ed. 602 It is to be noted that none of the lands or property of the corporate......
  • Tektronix, Inc. v. United States, No. 79-61.
    • United States
    • Court of Federal Claims
    • March 23, 1977
    ...Fire & Water Proofing Co. v. United States, 261 U.S. 179, 43 S.Ct. 299, 67 L.Ed. 602 (1923); United States v. Honolulu Plantation Co., 182 F.2d 172 (9th Cir.), cert. denied, 340 U.S. 820, 71 S.Ct. 51, 95 L.Ed. 602 (1950); 4 Nichols, Eminent Domain (3d ed. rev. 1976), § 12.31211, 3 See Heari......
  • Request a trial to view additional results
60 cases
  • McKenna v. Permanente Med. Grp., Inc., Case No. CV F 12–0849 LJO GSA.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • August 13, 2012
    ...bargaining contract as a third party beneficiary to enforce the provisions in the contract which have been made for his benefit.MacKay, 182 F.2d at 172 (bold added). Ms. McKenna responds that the CBA was made for the benefit of Kaiser employees and requires safe working conditions and equit......
  • McKenna v. Permanente Med. Grp., Inc., CASE NO. CV F 12-0849 LJO GSA
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • August 9, 2012
    ...bargaining contract as a third party beneficiary to enforce the provisions in the contract which have been made for his benefit.MacKay, 182 F.2d at 172 (bold added). Ms. McKenna responds that the CBA was made for the benefit of Kaiser employees and requires safe working conditions and equit......
  • Miller v. United States, No. 296-74.
    • United States
    • Court of Federal Claims
    • April 16, 1980
    ...plaintiffs herein strict proof of loss in market value of the remainder property is obligatory. United States v. Honolulu Plantation Co., 182 F.2d 172, 179 (9th Cir.), cert. denied, 340 U.S. 820, 71 S.Ct. 51, 95 L.Ed. 602 It is to be noted that none of the lands or property of the corporate......
  • Tektronix, Inc. v. United States, No. 79-61.
    • United States
    • Court of Federal Claims
    • March 23, 1977
    ...Fire & Water Proofing Co. v. United States, 261 U.S. 179, 43 S.Ct. 299, 67 L.Ed. 602 (1923); United States v. Honolulu Plantation Co., 182 F.2d 172 (9th Cir.), cert. denied, 340 U.S. 820, 71 S.Ct. 51, 95 L.Ed. 602 (1950); 4 Nichols, Eminent Domain (3d ed. rev. 1976), § 12.31211, 3 See Heari......
  • Request a trial to view additional results

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