176 Ct. Cl. 815 | Ct. Cl. | 1966
delivered the opinion of the court:
In this case the Nez Perce Tribe of Indians appeals from a decision of the Indian Claims Commission
Appellant claims additional compensation for the reservation lands which it ceded to the United States by the Agreement of May 1, 1893, ratified August 15, 1894, 28 Stat. 286, 326-332. Prior to the Agreement, appellant owned a treaty reservation
By way of background, the Nez Perce Tribe in 1855 ceded to the United States a tremendous area in the Territory of Washington which then included what is now part of the present State of Washington and northern Idaho. This agreement or treaty was ratified in 1859. 12 Stat. 957. In its Article II, the agreement provided for a large reservation, a portion of which was later ceded in 1894 and is involved here. The relevant portion of the 1859 reservation was located in northern Idaho just east of Lewiston. The area consisted mainly of a high and gently undulating plateau cut into blocks by canyons. The rainfall, climate, and soils, were generally favorable for the raising of cereal crops, especially wheat. The area was an extension of the Palouse
By 1894, the Lewiston area was fairly well-settled and growing. The city itself was founded in 1861 at the confluence of the Snake and 'Clearwater Rivers, the latter running through the northern part of the reservation. It was the first capital of the Idaho territory and by 1861 was the population center of the Walla Walla Valley.
In 1890, the neighboring counties to the reservation had substantial amounts of acreage under cultivation. Thus, Nez Perce, Shoshone, and Idaho counties reported 48,339 cultivated acres; the figure for Whitman, Garfield, Columbia, and Asotin counties was 237,558 acres. This indicates that both the market (presumably in Lewiston) and transportation facilities adequately served the area. The Clear-water River was navigable for river transportation for a short distance into the subject area. Rail transportation was available a short distance outside, to the north. There were also wagon trails across the reservation.
The 1893 Agreement gave the Indians first choice through the allotment provision. These allotments, totaling 180,657 acres, were generally scattered throughout the reservation excepting some concentration around the existing Indian settlements in the northwest section of the ceded area. The soil and topographical maps suggest that the Indians chose wisely. About two-thirds of the lands selected by them were in the most favorable land classification. Their selection of the lands in the northwest section might be explained by their proximity to Lewiston and better river transportation. Their selection of the most northwestern plateau lands above the Clearwater River is probably best explained by the fact that the Palouse soil area (apparently the best wheat-growing area) continues south to this plateau and the railroad is closest to this area.
The picture we get, in summary, is that of a large tract of virgin land (about 850 square miles) adaptable to varied uses, the 1894 market value of which was necessarily lowered by its sheer size, the necessity of substantial development expenditures, and its lesser degree of accessibility to markets than other nearby areas. In addition to these negatives, there was the supply and demand factor as such; that is to say, the northern Idaho area, although no doubt relatively populous for a new territory, simply did not have the kind of population growth that exerts a real inflationary bias on land values. Whatever pressure there was to settle new land, and there obviously was some pressure as the very fact of the Nez Perce cession suggests, it was probably deferrable. It is significant to note in this connection that the 1894 valuation date falls at the low point of the so-called “Cleveland Depression.” Farm product prices were markedly affected during this period, so it is reasonable to assume that land values were diminished as well. Such generalities, of course, do not give the answer to the question of fact we must resolve; they are at best common sense guidelines, useful in viewing the evidence to determine whether the value of the
The principal evidence on valuation is contained in the two appraisal reports and the testimony of the parties’ expert witnesses. Appellant relies on the testimony of William C. Brown, appellee on the testimony of Homer Hoyt. Both appraisers arrived at their ultimate value figures ($11.89 per acre for Brown; $1.29 per acre for Hoyt) primarily by looking to so-called “comparable sales.” In addition, they looked to the topography, soil conditions, transportation availability — to name a few other factors — and have supplied us with a substantial record of maps, photographs, and charts to buttress their conclusions. In evaluating this volume of material, the Commission concentrated on the “comparable sales” in areas proximate to the reservation, and struck a balance between what it considered to' be the extreme positions of the experts. Thus, the Commission observed that appellant’s expert Brown looked to many land transactions with prices exceeding $20' per acre which occurred in well-settled areas where the land was frequently of better quality, transportation was superior, and rainfall was more plentiful. In addition, it noted that many of the sales were of farms which were improved — with fences, buildings, watering facilities — and which had been settled for some years before the valuation date. So it concluded, as did Brown, that these sales would have to be discounted to make them “comparable” to the reservation land. Brown used a 20 percent discount; the Commission obviously used something greater. On the other hand, the Commission observed that appellee’s expert, Hoyt, considered many less sales in his analysis and in many instances looked to distant lands not in any way comparable to the ceded lands. The Commission, in effect, concluded that Hoyt over-discounted the value of the lands which both he and Brown considered, and improperly considered lands beyond the zone of even bare comparability.
We agree with the Commission that Brown was overly optimistic and Hoyt overly pessimistic. We are also in accord with the Commission’s apparent inclination toward Brown’s basic method. However, in concluding that the
In computing the average sales price figures in the first step above, Brown applied a 20 percent discount to the actual sales price. Stated differently, he discounted the $19.80 per acre average sales price of tract and comparable county agricultural land to $15.42. This discount he felt was necessary to reflect the fact that the $19.80 per acre average included improvements to the land and improvements on the land, e.g., the value of buildings and fixtures, plowing, watering facilities and fencing. In addition, he applied a scale of discounts to arrive at the $19.80, these discounts to take into account the purchasing power of the dollar in the area (i.e., the price index from 1890-1900). We have no quarrel with the latter discounts. We do think, however, that the 20 percent discount may be unrealistically low. Brown went to great effort to document his 20 percent figure, and perhaps so far as it goes it is accurate. We think it should be expanded to cover not just the value of the improvements to the “comparable” land, but also to cover the “real” cost of improving the ceded land. This broadens the concept of discount to make the comparison to the tract county and comparable county lands more meaningful. The topog
In addition to the improvement discount, we think the land values in other areas, if they are to be used as the guide here, should be further discounted to take account of the remoteness of the ceded land. Brown made no such discount. Granting that a railroad came within two miles of the northern boundary and that the Clearwater River was regularly navigable at least for a few miles in the northwest part, the topography was such that transportation of wheat, hay, or timber would have been readily accessible in a relatively limited part of the ceded area, and the allotment map suggests that the Indians chose the prime land in the most accessible areas. Accordingly, we feel that a purchaser of the ceded area would have expected to pay some percent less than the price he would have expected to pay for land on the Palouse plateau or near the Snake River, for example— both being areas considered as comparable by Brown. This might have been 20 to 25 percent.
Finally, we note regarding Brown’s method, that he made no discount for size. We think this is an extremely important feature entering into market value. A purchaser of over one-half million acres simply would not pay what 1,000 purchasers of 500 acres each would be willing to pay. Of course, the Indians were in a sense compelled to cede the land, while they might have preferred to sell it piecemeal over a number of years to the hypothetical 1,000 purchasers of 500 acres each. So we are loath to allow the government to get a bargain because it compelled the Indians to cede the land. It is simply the fact, however, that in buying such a large, undeveloped tract, the government undertook the project of dividing and selling the land. Cf. Miami Tribe of Oklahoma v. United States, 9 Ind. Cl. Comm. 1, 17 (1960),
By adding together a 25 percent discount for improvements, a 20-25 percent discount for remoteness and inaccessibility, a 20-25 percent discount for size, and applying this to Brown’s “comparable” sales, it is possible to come up with a figure fairly close to $4 — i.e., $20 per acre less 65 to 75 percent equals $5 to $7. This is, of course, the roughest form of estimating. We do not suggest that these discounts either were used by the Commission or should have been. We do not know how it arrived at the conclusion that “a figure as high as $4.00 per acre might be indicated * * * [,] [b]utin no event * * * could [it] have exceeded $4.00 per acre.” In our review of the opinion, findings of fact, and record to determine whether there is substantial evidence to support a $4 figure, we have had to consider what the Commission might have had in mind. We think the discounts, which of course can be conveniently altered to produce a wide spectrum of possible values, are a reasonable approximation of what the Commission did. It should be clear, however, that the discounts we have said might be within a range of reasonableness are in no sense absolutes; they are but steps in analyzing the reasonableness of the Commission’s conclusion in the light of the evidence. Property appraisal is an inexact science at best; this is particularly so when the valuation date is 70 years distant from the appraisal date. So any discounts other than those which can be documented (e.g., Brown’s 20 percent discount for improvements) will necessarily be left to conjecture — the reasonableness of which is largely a matter of common sense.
To reiterate, we think that the $4 per acre figure is supported by substantial evidence. It is, however, at the thresh
The question then arises as to whether the difference between the $2.97 per acre paid to the Indians and the $4 per acre minimum value is sufficiently large as to be unconscionable under section 2 of the Indian Claims Commission Act. 60 Stat. 1049,1050. In Osage Nation v. United States, 1 Ind. Cl. Comm. 43 (1948), the Commission was called upon to define “unconscionable consideration” as used in the Act. It concluded that the dividing line between what is grossly inadequate consideration and what is merely inadequate was a peculiarly factual question. In affirming the Commission’s approach, this court wrote:
Appellants urge that no showing of actual fraud is required for relief on the grounds of unconscionable consideration. There are cases which seem to support both views, but it appears that only where the inequality of the bargain is very gross, does disparity of price alone justify a conclusion that the consideration was unconscionable. As to what is “very gross,” the courts have provided no exact formula and each case must Toe carefully considered on its own particular facts and circumstances. [Emphasis added.] [119 Ct. Cl. 592, 666, 97 F. Supp. 381, 421, cert. denied, 342 U.S. 896 (1951).]
In the present case, inquiry into all the “facts and circumstances” puts the situation in a somewhat different light. Specifically, it is significant to us that the ceded area was comprised of 549,559 acres. The $1.03 difference between the amount paid and the market value multiplied by this acreage totals $566,045.77. Granting that this represents the same 33% percent discrepancy, it has a different taste. Half a million dollars in 1894 was a very substantial sum. When we consider that the Agreement provided that $1,000,-000 of the total $1,626,222 consideration was to be put in trust to earn five percent interest and that it is likely that the $566,045.77 discrepancy would have similarly been put in trust at interest, the discrepancy becomes still more sig
For purposes of judging whether the consideration was unconscionable, it is also significant that the $4 per acre figure which produces the $566,045.77 discrepancy is a bare minimum. It should be clear from our discussion on the valuation aspect that we think the evidence would support a higher value. Accordingly, although we do not remand the case to the Commission with express instructions to find a higher value, we do feel that it is appropriate to look to some higher, unstated value in resolving the “unconscionable consideration” issue. No doubt the reason for the Commission’s view that the percentage discrepancy is of cardinal importance is that it is impossible to determine a “true” value for land. It is just common sense that some discrepancy, very possibly up to 33% percent, can be expected to result simply from differences in opinion. However, the present case is not the usual situation because we have eliminated one aspect that is typically present in situations in which there are legitimate differences of opinion. This point may be developed by reference to the facts in the present case. The Indians received $2.97 per acre and the land was worth $4 at the very least. Were this a normal real property transaction between a willing buyer and seller, this discrepancy could be explained as resulting from a legitimate difference of opinion or as a good bargain for the buyer and a bad bargain for the seller, but in no sense as an unfair bargain. By concluding that the $4 per acre figure is a bare minimum,
At the risk of being repetitious, we stress that the percentage discrepancy between what the Indians were paid and what the land was worth is not the sole measure of unconscionable consideration. We also stress that we do not depart from our prior position that the price disparity must be “very gross.” We think we are giving effect to both the percentage test and the “very gross” test (which should be substantially identical) in looking to the total discrepancy, to the interest factor, and most importantly to the fact that the $4 per acre value is a bare minimum.
There remains the question of whether the appellant is entitled to interest on its recovery.
Accordingly, the decision of the Indian Claims Commission is reversed, and the case is remanded for further proceedings in conformity with this opinion.
Reversed and remanded.
13 Ind. Cl. Comm. 184 (April 7, 1964).
60 Stat. 1049, 1050 (1946). Clauses (S) and (5) of section 2 provide: “The Commission shall hear and determine the following claims against the United States on behalf of any Indian tribe * * *: (3) claims which would result if the treaties, contracts, and agreements between the claimant and the United States were revised on the ground of fraud, duress, [orj unconscionable consideration * * *; (5) claims based upon fair and honorable dealings that are not recognized by any existing rule of law or equity.”
In a treaty dated June 11, 1855 and ratified on March 8, 1859, a reservation of roughly seven million acres was set aside for the Nez Perce Tribe. 12 Stat. 957-962. The lands in controversy are part of that original reservation.
13 Ind. Cl. Comm., at 264.
E.g., Otoe and Missouria Tribe of Indians v. United States, 131 Ct. Cl. 593, 131 F. Supp. 265, cert. denied, 350 U.S. 848 (1955) ; Osage Nation of Indians v. United States, 119 Ct. Cl. 592, 97 F. Supp. 381, cert. denied, 342 U.S. 896 (1951).
When the decision was appealed, this court found that the Commission had erred in determining the amount of the consideration which the Miami Tribe received for its lands and that this figure amounted to only 38 percent of the true value. 150 Ct Cl. 725 (1960), cert. denied, 366 U.S. 924 (1961). Thus, the court did not reach the question whether payment of 63 percent of value was adequate per se.
No mention was made of interest in the petition before the Indian Claims Commission. Appellant says, however, that it did assert the claim at the beginning of trial, and all parties have been fully aware of the issue since then.