UNITED STATES v. 50 ACRES OF LAND ET AL.
No. 83-1170
SUPREME COURT OF THE UNITED STATES
Argued October 2, 1984—Decided December 4, 1984
469 U.S. 24
Joshua I. Schwartz argued the cause for the United States. With him on the briefs were Solicitor General Lee, Assistant Attorney General Habicht, Deputy Solicitor General Claiborne, Deputy Assistant Attorney General Liotta, Raymond N. Zagone, Dirk D. Snel, and Thomas H. Pacheco.
H. Louis Nichols argued the cause for respondents.*
The Fifth Amendment requires that the United States pay “just compensation“—normally measured by fair market value1—whenever it takes private property for public
*Briefs of amici curiae urging affirmance were filed for the Council of State Governmеnts et al. by Lawrence R. Velvel and Elaine Kaplan; and for Open Lands Project et al. by Young Kim, Ruth E. Van Demark, George W. Overton, T. S. L. Perlman, and Adam Yarmolinsky.
I
In 1978, as part of a flood control project, the United States condemned approximately 50 acres of land owned by the city of Duncanville, Texas.3 The site had been used since 1969 as a sanitary landfill. In order to replace the condemned landfill, the city acquired a 113.7-acre site and developed it into a larger and better facility.4 In the condemnation proceedings, the city claimed that it was entitled to recover all of the costs incurred in acquiring the substitute site and developing it as a landfill, an amount in excess of $1,276,000. The United States, however, contended that just compensation should be determined by the fair market value of the
Before trial the Government filed a motion in limine to exclude any evidence of the cost of thе substitute facility, arguing that it was not relevant to the calculation of fair market value. Record, Doc. No. 62. The District Court denied the motion, noting that this Court had left open the question of the proper measure of compensation for the condemnation of public property. See United States v. 564.54 Acres of Land, 441 U. S. 506, 509, n. 3 (1979) (Lutheran Synod). The court concluded that “a complete factual record should be developed from which an independent determination of the appropriate meаsure of compensation can be made.” Record, Doc. No. 111.
At trial, both parties submitted evidence on the fair market value of the condemned property5 and on the cost of the substitute landfill facility.6 Responding to special interrogatories, the jury found that the fair market value of the
The Court of Appeals reversed and remanded for further proceedings. 706 F. 2d 1356 (CA5 1983). It reasoned that the city‘s loss attributable to the condemnation was “the amount of money reasonably spent... to create a functionally equivalent facility.” Id., at 1360. If the city was required, either as a matter оf law or as a matter of practical
II
The Court has repeatedly held that just compensation normally is to be measured by “the market value of the property at the time of the taking contemporaneously paid in money.” Olson v. United States, 292 U. S. 246, 255 (1934). “Considerations that may not reasonably be held to affect market value are excluded.” Id., at 256. Deviation from this measure of just compensation has been rеquired only “when market value has been too difficult to find, or when its application would result in manifest injustice to owner or public.” United States v. Commodities Trading Corp., 339 U. S. 121, 123 (1950); Kirby Forest Industries, Inc. v. United States, 467 U. S. 1, 10, n. 14 (1984).
The city contends that in this case an award of compensation measured by market value is fundamentally inconsistent with the basic principles of indemnity embodied in the Just Compensation Clause. If the city were a private party rather than a public entity, however, the possibility that the cost of a substitute facility exceeds the market value of the condemned parcel would not justify a departure from the market value measure. Lutheran Synod, 441 U. S., at 514-517. The question—which we expressly reserved in the Lutheran Synod case13—is whether a substitute-facilities measure of compensation is mandated by the Constitution14 when the condemnee is a local governmental entity that has a duty to replace the condemned facility.
The text of the Fifth Amendment certainly does not mandate a more favorable rule of compensation for public condemnees than for private parties. To the contrary, the language of the Amendment only refers to compensation for “private property,” and one might argue that the Framers intended to provide greater protection for the interests of private parties than for public condemnees. That argument would be supported by the observation that many public condemnees have the power of eminent domain, and thus, unlike private parties, need not rely on the availability of property on the market in acquiring substitute facilities.
When the United States condemns a local public facility, the loss to the public entity, to the persons served by it, and to the local taxpayers may be no less acute than the loss in a taking of private property. Therefore, it is most reasonable to construe the reference to “private property” in the Takings Clause of the Fifth Amendment as encompassing the property of state and local governments when it is condemned by the United States.15 Under this construction, the same principles of just compensation presumptively apply to both private and public cоndemnees.
IV
The Court of Appeals correctly identified a dictum in Brown v. United States, 263 U. S. 78 (1923), as the source
The facts of the Brown case were, in the Court‘s word, “peculiar.”17 The construction of a reservoir on the Snake River flooded approximately three-quarters of the town of Amеrican Falls, Idaho, an area of some 640 acres. To compensate both the public and private owners of the flooded acreage, the Government undertook to relocate most of the town to the other side of the river. The owners of a large tract to be included within the limits of the reconstructed town challenged the Government‘s power to condemn their property, contending that the transfer of their property to other private persons was not a “public use” as required by the Fifth Amendment. Cf. Hawaii Housing Authority v. Midkiff, 467 U. S. 229, 239-244 (1984).
In rejecting that contention, the Court held that the Government‘s method of compensating the owners of the flooded property was legitimate. Writing for the Court, Chief Justice Taft observed:
“The usual and ordinary method of condemnation of the lots in the old town, and of the streets and alleys as town property, would be ill adapted to the exigency.... A town is a business center. It is a unit. If three-
quarters of it is to be destroyed by appropriating it to an exclusive use like a reservoir, all property owners, both those ousted and those in the remaining quarter, as well as the State, whose subordinate agency of government is the municipality, are injured. A method of compensation by substitution would seem to be the best means of making the parties whole. The power of condemnation is necessary to such a substitution.” 263 U. S., at 82-83 (emphasis added).
Taken in context, the apparent endorsement of compensation by substitution is made in support of the Government‘s power to condemn the property in Brown and does not state the proper measure of compensation in another case. Lutheran Synod, 441 U. S., at 509, n. 3.
Brown merely indicates that it would have been constitutionally permissible for the Federal Government to provide the city with a substitute landfill site instead of compensating it in cash. Nothing in Brown implies that the Federal Government has a duty to provide the city with anything more than the fair market value of the condemned prоperty.
V
In this case, as in most, the market measure of compensation achieves a fair “balance between the public‘s need and the claimant‘s loss.” United States v. Toronto, Hamilton & Buffalo Navigation Co., 338 U. S. 396, 402 (1949). This view is consistent with our holding in Lutheran Synod that fair market value constitutes “just compensation” for those private citizens who must replace their condemned property with more expensive substitutes and with our prior holdings that the Fifth Amendment does not require any award for consequential damages arising from a condemnation.18
Of course, the decision in Lutheran Synod was based, in part, on a fear thаt a private condemnee might receive a “windfall” if its compensation were measured by the cost of a substitute facility and “substitute facilities were never acquired, or if acquired, were later sold or converted to another use.” 441 U. S., at 516. The Court of Appeals suggested that the city‘s obligation to replace the facility avoids this risk, 706 F. 2d, at 1360, but we do not agree. If the replacement facility is more costly than the condemned facility, it presumably is more valuable,21 and any increase in the quality
The Court of Appeals, however, believed that the risk of any windfall could be reduced by discounting the cost of the substitute facility to account for its superior quality. Id., at 1362-1363. This approach would add uncertainty and complexity to the valuation proceeding without any necessary improvement in the process. In order to implement the Court оf Appeals’ approach, the factfinder would have to make at least two determinations: (i) the reasonable (rather than the actual) replacement cost, which would require an inquiry into the fair market value of the second facility; and (ii) the extent to which the new facility is superior to the old, which would require an analysis of the qualitative differences between the new and the old. It would also be necessary to determine the fair market value of the old property in order to provide a basis for comparison. There is a practical risk that the entire added value will not be calculated correctly; moreover, if it is correctly estimated, the entire process may amount to nothing more than a roundabout method of arriving at the market value of the condemned facility.22
Finally, the substitute-facilities doctrine, as applied in this case, diverges from the principle that just compensation must be measurеd by an objective standard that disregards subjective values which are only of significance to an individual owner. As the Court wrote in Kimball Laundry Co. v. United States, 338 U. S. 1, 5 (1949):
“The value of property springs from subjective needs and attitudes; its value to the owner may therefore differ widely from its value to the taker. Most things, how-
ever, have a general demand which gives them a value transferable from one owner to another. As opposed to such personal and variant standards as value to the particular owner whose property has been taken, this transferable value has an external validity which makes it a fair measure of public obligation to compensate the loss incurred by an owner as a result of the taking of his property for public use. In view, however, of the liability of all property to condemnation for the common good, loss to the owner of nontransferable values deriving from his unique need for property or idiosyncratic attachment to it, like loss due to an exercise of the police power, is properly treated as part of the burden of common citizenship.”
The subjective elements in the formula for determining the cost of reasonable substitute facilities would enhance the risk of error and prejudice.23 Since the condemnation contest is between the local community and a National Government that may be thought to have unlimited resources, the open-ended character of the substitute-facilities standard increases the likelihood that the city would actually derive the windfall that concerned both the District Court and the Court of Appeals.24 “Particularly is this true where these issues are to be left for jury determination, for juries should not be given sophistical and abstruse formulas as the basis for their findings nor be left to apply even sensible formulas to factors that are too elusive.” Id., at 20.
The judgment of the Court of Appeals is reversed.
It is so ordered.
I concur in the Court‘s opinion and judgment that, on the facts of this case, the city of Duncanville is justly compensated by the payment of the market value for the sanitary landfill that was condemned by the Government. I write separately to note that I do not read the Court‘s opinion to preclude a municipality or other local governmental entity from establishing that payment of market value in a particular case is manifestly unjust and therefore inconsistent with the Just Compensation Clause. See ante, at 29. When a local governmental entity can рrove that the market value of its property deviates significantly from the make-whole remedy intended by the Just Compensation Clause and that a substitute facility must be acquired to continue to provide an essential service, limiting compensation to the fair market value in my view would be manifestly unjust. Because the city of Duncanville did not establish that the market value in this case deviated significantly from the indemnity principle, I agree that the decision of the Court of Appeаls should be reversed.