United States v. Virginia Electric and Power Company

• Decision Date: 03 April 1961
• Docket Number: No. 49,49
• Citation: 5 L.Ed.2d 838,365 U.S. 624,81 S.Ct. 784
• Parties: UNITED STATES, Petitioner, v. VIRGINIA ELECTRIC AND POWER COMPANY
• Court: U.S. Supreme Court

365 U.S. 624

81 S.Ct. 784

5 L.Ed.2d 838

UNITED STATES, Petitioner,

v VIRGINIA ELECTRIC AND POWER COMPANY.

No. 49.

Argued Nov. 10, 1960.

Decided April 3, 1961.

Mr. Perry W. Morton, Washington, D.C., for petitioner.

Mr. Ralph H. Ferrell, Jr., Richmond, Va., for respondent.

Mr. Justice STEWART delivered the opinion of the Court.

In 1944 Congress authorized the construction of a dam and reservoir on the Roanoke River in Virginia and North Carolina. For purposes of that project the Government acquired by condemnation a flowage easement over 1840 acres of fast lands adjacent to the Dan River, a navigable tributary of the Roanoke. This 1840-acre tract was part of a 7400-acre estate. The respondent owned a perpetual and exclusive flowage easement over 1540 acres within the easement taken by the Government. The only question presented by this case concerns the compensation awarded to the respondent for the destruction of its easement.

The respondent's easement had been purchased from the owner of the estate and had been conveyed to the respondent's predecessors in title by various deeds over a period of many years, beginning in 1907. Along with the easement the fee owner had also expressly granted by deed the release of all claims for damage to the residue of the estate resulting from the exercise of rights under the easement.

In 1951, after extended negotiations, the owner of the estate agreed to convey to the Government a flowage easement over the 1840-acre tract in return for the payment of one dollar.¹ This agreement was expressly made subject to 'such water, flowage, riparian and other rights, if any,' as the respondent owned in the tract. The agreement also provided that the Government could elect to acquire its easement by a condemnation proceeding, in which event the agreed consideration of one dollar would be 'the full amount of the award of just compensation inclusive of interest.' Exercising this election, the Government instituted condemnation proceedings in the District Court to acquire a flowage easement over the 1840 acres in question, depositing one dollar as the estimated just compensation for the property to be taken. The fee owner acknowledged the settlement contract previously made and agreed to the one dollar compensation. The respondent, whose easement was to be destroyed, intervened in the proceedings to contest 'the issue of just compensation.'

The District Court made a substantial award to the respondent as compensation for the taking of its flowage easement. The judgment was affirmed by the Court of Appeals for the Fourth Circuit, on the authority of that court's decision in United States v. Twin City Power Co., 215 F.2d 592. United States v. 2979.72 Acres of Land, More or Less, etc., 218 F.2d 524. After the judgment in the Twin City case was reversed by this Court, 350 U.S. 222, 76 S.Ct. 259, 100 L.Ed. 240, we vacated the judgment in this litigation and remanded the case to the Court of Appeals for further consideration in the light of our Twin City decision. 350 U.S. 956, 76 S.Ct. 345, 346, 100 L.Ed. 832. The Court of Appeals in turn remanded the case to the District Court with instructions that, in computing the amount of compensation to be awarded for the taking of the respondent's easement, there should be eliminated 'any element of value arising from the availability of the land for water power purposes due to its being situate on a navigable stream.' 4 Cir., 235 F.2d 327, 330, rehearing denied 237 F.2d 165.

On remand the District Court proceeded in accordance with these directions. Commissioners were appointed and given detailed instructions to follow in computing the compensation to be awarded the respondent. These instructions included an explicit direction to exclude from the computation any element of value arising from the availability of the land for water power purposes attributable to its location on a navigable stream.² The Commissioners found that, under the criteria imposed by the court, the value of the respondent's easement was $65,520. The district judge accepted these findings, and in accordance with them awarded the respondent that sum. On appeal the judgment was affirmed 270 F.2d 707.

We granted certiorari to consider the Government's claim that the respondent's easement had no compensable value when appropriated by the United States. United States v. Virginia Electric and Power Co., 362 U.S. 947, 80 S.Ct. 862, 4 L.Ed.2d 866. For the reasons that follow we reject that argument in the extreme form it has been presented, but we have concluded that the judgment must nonetheless be set aside for a redetermination of the compensation award.

It is indisputable, as the Government acknowledges, that a flowage easement is 'property' within the meaning of the Fifth Amendment. See United States v. Welch, 217 U.S. 333, 30 S.Ct. 527, 54 L.Ed. 787; Panhandle Eastern Pipe Line Co. v. State Highway Commission, 294 U.S. 613, 618, 55 S.Ct. 563, 565, 79 L.Ed. 1090; Western Union Tel. Co. v. Pennsylvania R. Co., 195 U.S. 540, 570, 25 S.Ct. 133, 141, 49 L.Ed. 312. Similarly, there can be no question that the Government's destruction of that easement would ordinarily constitute a taking of property within the meaning of the Fifth Amendment. See Pumpelly v. Green Bay Co., 13 Wall. 166, 181, 20 L.Ed. 557; United States v. Cress, 243 U.S. 316, 327—329, 37 S.Ct. 380, 384—385, 61 L.Ed. 746; United States v. Kansas City Life Ins. Co., 339 U.S. 799, 809—811, 70 S.Ct. 885, 890—892, 94 L.Ed. 1277. Nevertheless, it is argued that the Government cannot be required to pay compensation for the destruction of the easement in the present case because the easement was subject to the overriding navigational servitude of the United States.

This navigational servitude—sometimes referred to as a 'dominant servitude,' Federal Power Commission v. Niagara Mohawk Power Corp., 347 U.S. 239, 249, 74 S.Ct. 487, 493, 98 L.Ed. 686, or a 'superior navigation easement,' United States v. Grand River Dam Authority, 363 U.S. 229, 231, 80 S.Ct. 1134, 1136, 4 L.Ed.2d 1186—is the privilege to appropriate without compensation which attaches to the exercise of the 'power of the government to control and regulate navigable waters in the interest of commerce.' United States v. Commodore Park, 324 U.S. 386, 390, 65 S.Ct. 803, 805, 89 L.Ed. 1017. The power 'is a dominant one which can be asserted to the exclusion of any competing or conflicting one.' United States v. Twin City Power Co., 350 U.S. 222, 224—225, 76 S.Ct. 259, 260 261, 100 L.Ed. 240; United States v. Willow River Power Co., 324 U.S. 499, 510, 65 S.Ct. 761, 767, 89 L.Ed. 1101. A classic description of the scope of the power and of the privilege attending its exercise is to be found in the Court's opinion in United States v. Chicago, M., St. P. & P.R. Co.:

'The dominant power of the federal Government, as has been repeatedly held, extends to the entire bed of a stream, which includes the lands below ordinary high water mark. The exercise of the power within these limits is not an invasion of any private property right in such lands for which the United States must make compensation. (Citing cases.) The damage sustained results not from a taking of the riparian owner's property in the stream bed, but from the lawful exercise of a power to which that property has always been subject.' 312 U.S. 592, 596—597, 61 S.Ct. 772, 775, 85 L.Ed. 1064.

Since the privilege or servitude only encompasses the exercise of this federal power with respect to the stream itself and the lands beneath and within its high-water mark, the Government must compensate for any taking of fast lands which results from the exercise of the power. This was the rationale of United States v. Kansas City Life Ins. Co., 339 U.S. 799, 70 S.Ct. 885, 94 L.Ed. 1277, where the Court held that when a navigable stream was raised by the Government to its ordinary high-water mark and maintained continuously at that level in the interest of navigation, the Government was liable 'for the effects of that change (in the water level) upon private property beyond the bed of the stream.' 339 U.S. at pages 800—801, 70 S.Ct. at page 886. See also United States v. Willow River Power Co., 324 U.S. 499, 509, 65 S.Ct. 761, 767, 89 L.Ed. 1101.

But though the Government's navigational privilege does not extend to lands beyond the high-water mark of the stream, the privilege does affect the measure of damages when such land is taken. In United States v. Twin City Power Co., 350 U.S. 222, 76 S.Ct. 259, 100 L.Ed. 240, we held that the compensation awarded for the taking of fast lands should not include the value of the land as a site for hydroelectric power operations. It was pointed out that such value, derived from the location of the land, is attributable in the end to the flow of the stream—over which the Government has exclusive dominion. 350 U.S. at pages 225—227, 76 S.Ct. at pages 261—262. Thus, just as the navigational privilege permits the Government to reduce the value of riparian lands by denying the riparian owner access to the stream without compensation for his loss, United States v. Commodore Park, 324 U.S. 386, 390—391, 65 S.Ct. 803, 805, 89 L.Ed. 1017; Scranton v. Wheeler, 179 U.S. 141, 162—165, 21 S.Ct. 48, 56—58, 45 L.Ed. 126; Gibson v. United States, 166 U.S. 269, 276, 17 S.Ct. 578, 580, 41 L.Ed. 996, it also permits the Government to disregard the value arising from this same fact of riparian location in compensating the owner when fast lands are appropriated.

The Government's argument is that the rationale of Twin City makes payment of any compensation for the destruction of the respondent's easement unnecessary in the present case. This argument is based on the theory that the respondent's easement had no value save in conjunction with water power development. The respondent acknowledges that the courts below were correct in excluding any value of the easement derived from the availability of...