United States v. Silver Queen Mining Company, 6413.

• Decision Date: 20 December 1960
• Docket Number: No. 6413.,6413.
• Citation: 285 F.2d 506
• Parties: UNITED STATES of America, Appellant, v. SILVER QUEEN MINING COMPANY, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

285 F.2d 506 (1960)

UNITED STATES of America, Appellant, v. SILVER QUEEN MINING COMPANY, Appellee.

No. 6413.

United States Court of Appeals Tenth Circuit.

December 20, 1960.

Harold S. Harrison, Attorney, Department of Justice, Washington, D. C. (Perry W. Morton, Asst. Atty. Gen., A. Pratt Kesler, U. S. Atty., Salt Lake City, Utah, and Roger P. Marquis, Attorney, Department of Justice, Washington, D. C., on the brief), for appellant.

George M. McMillan, Salt Lake City, Utah (Dan B. Shields, Salt Lake City, Utah, on the brief), for appellee.

Before MURRAH, Chief Judge, LEWIS, Circuit Judge, and RICE, District Judge.

LEWIS, Circuit Judge.

The United States initiated this action in the District Court for the District of Utah to condemn some 69 acres of land contained in four patented mining claims owned by the appellee mining corporation. Prior to the instant action the government had had the exclusive surface possession of the properties for eighteen years under both negotiated and condemned use rights in connection with bombing, chemical and bacterial research by the Air Force. This suit condemned the fee and brings for review the method of determination and measure of compensation awarded for the seizure. The amount set by jury verdict, and upon which judgment was entered, was $50,000. The acquiring authority had estimated the value at $2,000. The United States appeals, not questioning the amount as such but contending that the value was set after a trial at which the whole question of just compensation was misconceived in law and that no competent evidence was offered by appellee which can support the judgment under familiar and established rules guiding the compulsion of the Fifth Amendment.¹ Other specific assignments of error are made by the United States but are presented by counsel as additional support for the basic claim that the case was wrongly tried throughout in the sense that requires reversal as in United States v. Certain Parcels of Land, 5 Cir., 149 F.2d 81.

It has long since been established that just compensation in federal eminent domain cases means the full equivalent in money for the property taken so that as the end result the owner will be left in the same pecuniary position as, but no better than, he was in before the taking. United States v. Miller, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336. Such value is to be determined as of the time of taking, United States v. Klamath and Moadoc Tribes of Indians, 304 U.S. 119, 58 S.Ct. 799, 82 L.Ed. 1219, and is the equivalent of the fair market value of the property measured by what a willing buyer would pay to a willing seller when neither is acting under compulsion. United States v. Miller, supra. These principles were properly and clearly set out in the court's instructions² and cannot be the basis of any successful claim that either court or jury acted under a misconception of the law in such regard. But correct instructions cannot support a judgment based entirely upon incompetent evidence nor can a correct understanding of applicable legal principles change the nature and effect of proof. United States v. Cox, 10 Cir., 190 F.2d 293. It becomes necessary therefore to examine the proof of value submitted by both the government and the appellee in relation to the subject mining claims.

To sustain its burden the appellee relied primarily upon the expert testimony of mining engineers, geologists, and metallurgists. These witnesses, in effect, expressed their several opinions that the lands were potentially valuable as mining properties although largely undeveloped and unproven;³ that surface showings and samples taken from a shaft sunk years before indicated the presence of an ore body containing some silver and copper and definitely valuable as a deposit of calcium fluoride (fluorspar); that the claims were worthy of development and would in their opinion prove successful; that they would recommend the expenditure of development money.

Appellee's witnesses also testified that unproven claims such as these were not sold outright for cash upon the open market; that when disposition of such properties was made in the mining industry it was under a lease-option arrangement negotiated by the owner and person providing development money; that such contractual custom usually required the "lessee" to expend a sum certain for development of the property during a time certain; that the owner was guaranteed a percentage of all receipts from ores produced and sold, regardless of actual profit to the lessee, and when and if such percentage payments reached an agreed total the properties became the exclusive properties of the developer. In the event the lessee chose to abandon the project after making the original guaranteed development expenditure, he could do so, and the property then reverted to the owner with any benefit obtained from the development. Appellee's witnesses expressed their opinions that such a lease-option arrangement could be successfully negotiated and obtained for the subject properties and that the total purchase price under the agreement would be $200,000 payable entirely out of potential ore shipments and without any down payment in cash.⁴ Various estimates of the cost of proper exploration and development were expressed up to the sum of $50,000.

The testimony of government experts, similarly qualified, was in direct conflict. These experts expressed their professional opinions to the effect that the value of the lands was nil as mining properties; that the mineral showings were such as to negative the existence of ore in commercial quantities; that development was not justified. They indicated the value of the properties to be nominal ($1,500-$2,000) and set such figures only because of such intangibles as "pride of ownership" and love of "desert scenery."

From this evidentiary background springs the government's contention that there is no probative evidence from which the jury could determine just compensation. Emphasis is placed upon the complete absence of an expert opinion upon cash market value and upon the speculative nature of the opinions of...