United States v. Miller

• Decision Date: 04 January 1943
• Docket Number: No. 78,78
• Parties: UNITED STATES v. MILLER et al
• Court: U.S. Supreme Court

317 U.S. 369

63 S.Ct. 276

87 L.Ed. 336

UNITED STATES

v MILLER et al.

No. 78.

Argued Nov. 16, 17, 1942.

Decided Jan. 4, 1943.

Rehearing Denied Feb. 8, 1943.

See 318 U.S. 798, 63 S.Ct. 557, 87 L.Ed. —-.

Mr. Norman M. Littell, Asst. Atty. Gen., for petitioner.

Mr. Laurence J. Kennedy, of Redding, Cal., for respondents.

Mr. Justice ROBERTS delivered the opinion of the Court.

This case presents important questions respecting standards for valuing property taken for public use. For this reason, and because of an apparent conflict with one of our decisions, we granted certiorari, 316 U.S. 657, 62 S.Ct. 1290, 86 L.Ed. 1736.

The United States condemned a strip across the respondents' lands for tracks of the Central Pacific Railroad, relocation of which was necessary on account of the prospective flooding of the old right-of-way by waters to be impounded by the Central Valley Reclamation Project in California. For many years a proposal to initiate state reclamation works in this vicinity had been before the people of the State. In 1932 they voted approval and authorization of the project. It was, however, subsequently adopted by the United States as a federal project.

April 6, 1934, the Chief of Engineers of the Army recommended that the Government contribute twelve million dollars towards the project.¹ Congress authorized the appropriation in the following year.² December 22, 1935, the President approved construction of the entire improvement. In 1936 Congress appropriated $6,900,000 for it and in 1937 $12,500,000.³ In August 1937 the project was again authorized by Congress.⁴

In his report for the fiscal year ending June 30, 1937, the Secretary of the Interior stated that Shasta, California, had been selected for the site of the Sacramento River dam. Its construction involved relocation of some thirty miles of the line of the railroad.

Portions of respondents' lands were required for the relocated right-of-way. Alternate routes were surveyed by March 1936 and staked at intervals of 100 feet. Prior to the authorization of the project, the area of which respondents' tracts form a part was largely uncleared brush land. In the years 1936 and 1937 certain parcels were purchased with the intention of subdividing them and, in 1937, subdivisions were plotted and there grew up a settlement known as Boomtown, in which the respondents' lands lie. Two of the respondents were realtors interested in developing the neighborhood. By December 1938 the town had been built up for business and residential purposes.

December 14, 1938, the United States filed in the District Court for Northern California a complaint in eminent domain against the respondents and others whose lands were needed for the relocation of the railroad. On that day the Government also filed a declaration of taking.⁵ In this declaration the estimate of just compensation to be paid for a tract belonging to three of the respondents as co-tenants was estimated at $2,550 and that sum was deposited in court. On the application of these owners the court directed the Clerk to pay each of them one-third of the deposit, or $850, on account of the compensation they were entitled to receive.

The action in eminent domain was tried to a jury. The respondents offered opinion evidence as to the fair market value of the tracts involved and also as to severance damage to lots of which portions were taken. Each witness was asked to state his opinion as to market value of the land taken as at December 14, 1938, the date of the filing of the complaint. Government counsel objected to the form of the question on the ground that, as the United States was definitely committed to the project August 26, 1937, the respondents were not entitled to have included in an estimate of value, as of the date the lands were taken, any increment of value due to the Government's authorization of, and commitment to, the project. The trial court sustained the objection and required the question to be reframed so as to call for market value at the date of the taking, excluding therefrom any increment of value accruing after August 26, 1937, due to the authorization of the project. Under stress of the ruling, and over objection and exception, questions calling for opinion evidence were phrased to comply with the court's decision. The jury rendered verdicts in favor of various respondents.

The three respondents who had received $850 each on account of compensation were awarded less than the total paid them. The court entered judgment that title to the lands was in the United States and judgment in favor of respondents respectively for the amounts awarded them. Judgment was entered against the three respondents and in favor of the United States for the amounts they had received in excess of the verdicts with interest. They moved to set aside the money judgments against them on the ground that the court had no jurisdiction to enter them. The motions were overruled. All of the respondents appealed, assigning error to the trial judge's ruling with respect to the questions to be asked the witnesses, to his charge which had instructed the jury that, in arriving at market value as of the date of taking, they should disregard increment of value due to the initiation of the project⁶ and arising after August 26, 1937, and three of them to his entry of money judgments for the United States.

The Circuit Court of Appeals reversed the judgment holding, by a divided court, that the trial judge erred in his rulings and in his charge, and unanimously that the District Court was without jurisdiction to award the United States a judgment for amounts overpaid.⁷ A majority of the court were of opinion the witnesses should have been asked to state the fair market value of the lands as of the date of taking without qualification, and the judge should have charged that this value measured the compensation to which the respondents were entitled.

1. The Fifth Amendment of the Constitution provides that private property shall not be taken for public use without just compensation. Such compensation means the full and perfect equivalent in money of the property taken.⁸ The owner is to be put in as good position pecuniarily as he would have occupied if his property had not been taken.⁹

It is conceivable that an owner's indemnity should be measured in various ways depending upon the circum- stances of each case and that no general formula should be used for the purpose. In an effort, however, to find some practical standard, the courts early adopted, and have retained, the concept of market value. The owner has been said to be entitled to the 'value',¹⁰ the 'market value',¹¹ and the 'fair market value'¹² of what is taken. The term 'fair' hardly adds anything to the phrase 'market value', which denotes what 'it fairly may be believed that a purchaser in fair market conditions would have given',¹³ or, more concisely, 'market value fairly determined'. ¹⁴

Respondents correctly say that value is to be ascertained as of the date of taking.¹⁵ But they insist that no element which goes to make up value as at that moment is to be discarded or eliminated. We think the proposition is too broadly stated. Where, for any reason, property has no market resort must be had to other data to ascertain its value;¹⁶ and, even in the ordinary case, assessment of market value involves the use of assumptions, which make it unlikely that the appraisal will reflect true value with nicety. It is usually said that market value is what a willing buyer would pay in cash to a willing seller. Where the property taken, and that in its vicinity, has not in fact been sold within recent times, or in significant amounts, the application of this concept involves, at best, a guess by informed persons.

Again, strict adherence to the criterion of market value may involve inclusion of elements which, though they affect such value, must in fairness by eliminated in a condemnation case, as where the formula is attempted to be applied as between an owner who may not want to part with his land because of its special adaptability to his own use, and a taker who needs the land because of its peculiar fitness for the taker's purposes. These elements must be disregarded by the fact finding body in arriving at 'fair' market value.

Since the owner is to receive no more than indemnity for his loss, his award cannot be enhanced by any gain to the taker.¹⁷ Thus although the market value of the property is to be fixed with due consideration of all its available uses,¹⁸ its special value to the condemnor as distinguished from others who may or may not possess the power to condemn, must be excluded as an element of market value.¹⁹ The district judge so charged the jury and no question is made as to the correctness of the instruction.

There is, however, another possible element of market value, which is the bone of contention here. Should the owner have the benefit of any increment of value added to the property taken by the action of the public authority in previously condemning adjacent lands? If so, were the lands in question so situate as to entitle respondents to the benefit of this increment?

Courts have to adopt working rules in order to do substantial justice in eminent domain proceedings. One of these is that a parcel of land which has been used and treated as an entity shall be so considered in assessing compensation for the taking of part or all of it.

This has begotten subsidiary rules. If only a portion of a single tract is taken the owner's compensation for that taking includes any element of value arising out of the relation of the part taken to the entire tract.²⁰ Such damage is often, though somewhat loosely, spoken of as severance damage. On the other hand, if the taking has in fact benefited the remainder the benefit may be set off against the value of the land taken.²¹

As respect other property of the owner consisting of separate tracts adjoining...