Pennsylvania Gas and Water Company, Appellant, v. Pennsylvania Turnpike Commission.
Supreme Court of Pennsylvania
November 28, 1967
December 29, 1967
In view of the approach taken in some of the other opinions in this case indicating the result that would obtain if the exceptions were held to be void for vagueness, I would like to comment on that matter. I agree with the majority that the elimination of the exceptions would invalidate the entire section. They are so inextricably tied to the remainder of the statute that the statute is incomplete without them. However, this does not necessarily mean that all supermarkets could remain open on Sunday. It means that the validity of their opening must be tested under the provisions of the general Sunday closing law of June 24, 1939, P. L. 872, §699.4,
I dissent.
reargument refused December 29, 1967.
Joseph E. Gallagher, with him John W. Bour, Gomer W. Morgan, Carlon M. O‘Malley, Charles E. Thomas, and O‘Malley, Morgan, Bour & Gallagher, and Metzger, Haefner, Keefer, Thomas & Wood, for appellant.
John A. Morano, Local Counsel, with him Richard D. Holahan, Chief Counsel, and Henry E. Harner, General Counsel, for appellee.
The first question raised by this appeal is whether the plaintiff-appellant, the Pennsylvania Gas and Water Company, may show that the highest and best use for its condemned property is as a site for the construction of a reservoir, even though at the time of the condemnation no physical improvements had been made on the property. Finding as a matter of fact that the use of appellant‘s property as a reservoir was mere speculation and hence not provable as the highest and best use, see Rothman v. Commonwealth, 406 Pa. 376, 178 A. 2d 605 (1962); Spring City Gas Light Co. v. Pennsylvania Schuylkill Valley R.R. Co., 167 Pa. 6, 31 Atl. 368 (1895), the trial judge rejected much of the proferred evidence by which appellant sought to show 1) that the property was physically suited for a reservoir site; 2) that the appellant was going to construct a reservoir thereon; and 3) that there was a great need in the community for additional water supply.
Following an award of $72,000 (based upon the valuation of appellant‘s land for recreational and residential purposes), both the water company and the Turnpike Commission filed exceptions, all of which were subsequently dismissed by the Court of Common Pleas of Lackawanna County.1 Judgment was entered on the award as made by the trial judge, and this appeal followed.
Since before the turn of the century, appellant water company, and its predecessors in title, have owned several contiguous tracts of land totaling about 275 acres in South Abington Township, Lackawanna County. It is conceded by all concerned that this property
On June 8, 1954, pursuant to the provisions of the
It is well settled in Pennsylvania that condemnation damages need not be based upon the use currently being made of the condemnee‘s property if in fact its highest and best use is shown to be for some other, more valuable purpose.3 Gilleland v. New York State Natural Gas Corp., 399 Pa. 181, 159 A. 2d 673 (1960); Erie City v. Public Service Comm., 278 Pа. 512, 123 Atl. 471 (1924); Stone v. Delaware, Lackawanna & Western Railroad Co., 257 Pa. 456, 460, 101 Atl. 813,
The real problem here arises from the difficulties involved in ascertaining the precise meaning of the terms “speculative use” and “mere speculatiоn.” Both the lower court and the appellee have assumed that a use is speculative whenever the condemnee has made no physical change in his property pointing toward such a use. However, our case law indicates that such is not the rule. See Gilleland, Erie City, and Stone, supra. Nor is it true that to escape the label of “speculative,” the condemnee must show that there are plans to convert the property to the desired use immediately or in the very near future. As this Court said in North Shore Railroad Co. v. Pennsylvania Co., 251 Pa. 445, 449, 96 Atl. 990, 992 (1916): “The true rule is that any use for which the property is capable may be considered, and if the land has an adaptability for the purposes for which it is taken, the owner may have this considered in the estimate as well as any other use for which it is capable.”
Moreover, in Marine Coal, supra, it was said at page 486, 92 Atl. at 690-91: “Clearly it [the condemned land] is of insignificant value for agricultural purposes, and there is neither a wharf, a factory, or a saw mill on it, and there may never be. But if its adaptability to these purposes or any one of them give
Finally, were it necessary for the condemnee to show that the land was actually being used for the purpose upon which he seeks to base condemnation damages, a suggestion frequently advanced below, there would be nothing left at all of the highest and best use principle; it would become merged with the current use.4
A careful study of cases involving the concept of speculative use reveals that the term is given a much more technical and restricted definition than that advanced below. Uses have been termed speculative, and hence not provable as the highest and best use, only in those instances where the condemnee sought a measure of damages that was in essence based on anticipated profits from a use not yet being made of the property. For example, in Laureldale Cemetery Co. v. Reading Co., 303 Pa. 315, 154 Atl. 372 (1931), relied upon both by the appellee and the court below, the plaintiff cemetery company unsuccessfully tried to show that its condemned land was being held for use as burial рlots and that the measure of damages should be based upon the profits plaintiff could have earned
This second argument, viz., the need for a reservoir, apparently underlies much of the confusion below regarding the speculative use problem. For even though the valuation of appellant‘s property as a reservoir does not fail on the basis of its being a speculative use, nevertheless, in order to establish a reservoir as the highest and best use, the water company must show that a reservoir is needed in the area. A. D. Graham & Co., Inc. v. Pennsylvania Turnpike Comm., 347 Pa. 622, 33 A. 2d 22 (1943). On its face this hurdle may
There are then two requirements, and only two, for proving highest and best use. First, the condemnee must show the physical adaptability of the land to such a use, and second it must be demonstrated that this use is needed in the area. This second test, however, does not require that the condemnee himself convert the land to its highest and best use. See, e.g., Wadsworth v. Manufacturer‘s Water Co., 256 Pa. 106, 100 Atl. 577 (1917); Brown v. Forest Water Co., 213 Pa. 440, 62 Atl. 1078 (1906); Gearhart v. Clear Spring Water Co., 202 Pa. 292, 51 Atl. 891 (1902). Unlike the water company here, in each of these cases the original land owner never intended to construct a reservoir. In fact, were it not for the condemnation there would probably never have been a reservoir at that spot. Nevertheless, in each case the landowner was
Having thus disposed of the speculative use issue, we now turn to the second problem posed by this appeal: the relief desired by appellant. For more than a century it has been consistently held by this Court that in condemnation cases the measure of damages is based upon fair market value. Rothman v. Commonwealth
However, in spite of this settled rule, appellant seeks a somewhat unusual form of relief. If possible, the water company would like to be able to purchase another tract suitable for reservoir purposes, or in the alternative, to erect a retaining wall on their existing tract which would enable them to construct a reservoir of the same size as that originally planned. In view of the somewhat unique circumstances of this case, we feel that appellant‘s prayеr is not without merit. The water company is a public utility with monopolistic privileges within its own territory. Because of this, there simply does not exist a market, in the classic sense, for reservoir property. It is not traded between water companies. Furthermore, as a public utility, appellant has not only the privilege, but the duty, to supply its area with an adequate amount of water. To do this requires that it replace or repair the property taken by the turnpike; and this simply cannot be done with $72,000. Finally, appellant offered to prove that in spite of thе fifty years during which the condemned tract remained unimproved, the water situation in Lackawanna County demands the construction of a new reservoir.
Admittedly, the use of a replacement value or repair test is a sharp departure from the traditional measure of damages in condemnation cases; but it is not a form of remedy foreclosed by decisions of this Court. In McSorley v. Avalon Borough School District, 291 Pa. 252, 254, 139 Atl. 848, 849 (1927) it was stated: “Evidence of the replacement value... should
We believe that the present case is precisely the type of situation envisioned by the McSorley court and that therefore appellant is entitled to repair or replacement value as the measure of damages. Nevertheless, we wish to make it quite clear that under normal circumstances fair market value remains the only available relief.9
Accordingly the judgment is reversed, a new trial granted and the case remanded to the trial court with instructions that the water company be permitted to introduce evidence on the issue of a reservoir as the highest and best use, as well as on the issue of replacement and repair costs.
Judgment reversed and record remanded with instructions.
Mr. Justice COHEN dissents.
DISSENTING OPINION BY MR. CHIEF JUSTICE BELL:
I strongly disagree with the Opinion of the Court. The property involved has been owned and held by the
The test of damages (i.e., just compensation) to which an owner is entitled has heretofore been, and should continue to be, the difference between the market value of the entire property before the taking (unaffected by the taking) and the market value of the property after the taking. By “market value” is meant the price a purchaser, willing but not obliged to buy, would pay an owner, willing but not obliged to sell, taking into consideration the present use and all uses to which the property is adapted and might in the reasonable future be applied. Ward v. Commonwealth, 390 Pa. 526, 136 A. 2d 309. See also Brooks Building Tax Assessment Case, 391 Pa. 94, 137 A. 2d 273; United States Steel Corporation v. Board of Assessment and Revision of Taxes, 422 Pa. 463, 223 A. 2d 92; Buhl Foundation v. Board of Property Assessment, supra.
DISSENTING OPINION BY MR. JUSTICE EAGEN:
The condemnee involved herein is an excellent public utility. Its officers and directors are the highest
It is well established that the owner of land taken through eminent domain is entitled to recover the difference between the market value of the whole tract before the taking, unaffected by the taking, and the market value of the land remaining after the taking, as affected by the taking. Market value is the price that a willing buyer with general needs would pay, or that a willing seller with general needs would accept for the property. Although a buyer with an extraordinary need might pay more than the market value, and although the owner thereof, because of its unique value to him, would not have sold for the same amount as an ordinary owner, the value for the purpose of justly compensating the condemnee for the taking is not the value which is placed thereon by these unique individuals, but rather the price that the property wоuld bring at a sale in the open market. In short, the measure of relief in a condemnation case is not the “value” to the taker or to the owner, but the value to the average buyer in the market place.
Uses other than those to which the condemned property was devoted at the time of condemnation are relevant because they influence the market price of the property. See Sav. & Trust Co. v. Pa. R.R. Co., 229 Pa. 484, 488, 78 Atl. 1039, 1039-1040 (1911); Boom Co. v. Patterson, 98 U.S. 403 (1878). For example, the market value of a private home in a thriving commercial district reflects the possibility of convеrting it from residential to commercial use. Since the owner prior to condemnation might have sold the house at a price representing its value for commercial use, he is permitted to show that use so that he will be indemnified
Since the franchised water utility in this case has a monopoly on public water service, the adaptability of the condemned site to public reservoir use does not affect the price that an average buyer will pay for the site. The market value of the site depends on its adaptability to commercial, residential and recreational use. Consequently, the lower court properly disregarded the adaptability of the site to public reservoir use and based its assessment of damages on the value of the property for commercial, residential and recreational uses.
The majority here, however, would allow public reservoir use to be the “highest and best” use of the property in spite of the fact that the adaptability of the condemned site to this use is not an element of its market value. How, then, is a court to decide that, at the particular time and place involved in this case, a reservoir was more vаluable than a housing project, a shopping center, or an alternative public use? What criteria can be used to judge whether a particular use is “highest and best” when its value compared to alternative uses is not appraised by the market? Where a decision on what is the “highest and best” use is un-
The majority‘s endorsement of replacement or restoration damages if a reservoir was needed at the time of condemnation and is determined to be the “highest and best” use of the property, is likewise an unreasoned and a dangerous departure from well settled law. The majority recognizes that the measure of relief in condemnation cases has consistently been based upon market value. Moreover, it concedes, as it must, that if the situation were reversed and the same land was condemned by the water utility, the private owner or condemnee could not collect on the basis that the land was adaptable to reservoir use unless he could also establish that a demand for private reservoirs exists to give the land market value for that use.1 Why, then, is a different rule applied in this case?
The only reason suggested by the majority is that the utility has a duty to supply adequate water service in the area. It seems apparent, however, that the duty is part of the price that the utility pays for its exclusive franchise. It is a duty assumed in return for a monopoly on public water services at rates designed to give the utility a fair return on its investment. Why, then, should a public utility be entitled to more on condemnation than anyone else because of a duty it is otherwise paid to perform.2
Eminent domain cannot be exercised except upon condition that just compensation be paid to the owner. The compensation paid, however, must be just not only to the person whose property is taken but also to the taker (which generally is the public) who must pay for it. Garrison v. City of New York, 88 U.S. (21 Wall.) 196 (1874). This is the reason for the adoption of the market-value measure of condemnation damages. As this Court explained many years ago in Searle v. The Lackawanna and Bloomsburg Railroad Company, 33 Pa. 57, 63-64 (1859): “When the state takes private property for public use or authorizes it
I see no legal or moral justification for treating this case as an exception from the law as it has been formulated and followed for over a century. Since the majority opinion offers no reasons for its departure from well-settled law, it appears to me to invite favoritism toward utility owners, with a resulting unjust burden on those who pay condemnation damages.
I dissent.