The United States instituted thirteen actions, now consolidated, to condemn land in Hawaii. Honolulu Plantation Company had several claims for compensation, part of which have been paid. But Plantation claims “severance damages” because of loss of value of its properties as an operating concern by condemnation of property held in fee by third parties, resulting in an overcapacity of the sugar mill and refinery,, since it was claimed there was failure to obtain the customary supply of cane from such fields.
All the relevant evidence as to the claim of “severance damage,” which was heard by the learned Trial Judge, was produced by Plantation. The United States contended the claim was unsupported. The bulk of the testimony consisted of the opinions of experts as to valuation of the properties as a whole, including leases on other lands not taken, before and after condemnation. These values were ultimately based, generally speaking, on the invested capital necessary to produce refined sugar from certain areas, upon earnings of Plantation and its value as a going concern.
The record shows Plantation actually owned a comparatively small amount of land in fee upon which the structures enumerated above were in part placed. As the Trial Court says, this property consists of “scattered parcels which by good-fortune from time to time it has been able to buy in fee.” Long-term leases of lands
The Trial Court awarded $440,175.00 damages inflicted upon the remaining properties by the condemnation of the four hundred forty acres. From this award, the United States appeals. The Court denied damages as to the five hundred ninety-five acres of Damon Estate, on the ground that Plantation had no legal interest therein. From this determination, Plantation appeals. This appeal will be first considered.
The proposition that Plantation, as a landowner, has a right to “severance damages ” 1 where the United States condemns fee simple title to other lands vested in third persons, even though Plantation had no legally recognizable interest in the lands condemned, if true, is demonstrably paradoxical. Yet this must be the basis of Plantation’s appeal. There was no finding that the United States was taking the business. In fact, it was not. The Trial Judge found that the Damon Estate was the owner in fee simple of the five hundred ninety-five acres. The lease which Plantation held on this area expired in 1943. A renewal had never been executed. There had been understandings and negotiations, which indicated that Plantation could have cane from these fields for its mill so long as the positions remained constant. But the last correspondence in 1940, three years before the existing lease expired, looked toward the execution of a formal document. This gives Plantation no legal or equitable right in 1944. 2 The inference is that the Damon Estate sensed the, creeping shadow of condemnation and desired to retain all the just compensation for itself, and deliberately did not give Plantation a property interest. The Trial Court found and, upon consideration, we hold that Plantation had no interest in these lands recognized by local law. The question is: Where the United States takes land owned by third parties in fee simple and in which Plantation has no legal interest, can “severance damages” be awarded because, owing to previous business arrangements, Plantation had expected to receive a supply of cane for its mill and refinery therefrom for a long period in the future?
The Fifth Amendment requires that, if property be taken, just compensation be paid. If then Plantation had no property in the Damon lands, it had no compensable interest. 3 If compensation were not limited to owners of interests in property condemned, the sovereign, in taking property for public use, would be subjected to limitless claims of inconvenience, business loss and damage to prospects yet unborn.
By adulteration, the experts for Plantation evolved a clever amalgam of two proper doctrines as a basis for compensation. It is a rule that, in condemnation of part of a tract owned in fee simple, just compensation is the market value of the tract as a whole, before condemnation, less the market value of the portion which remains after the taking of the part.
4
The rule applies exclusively to condemnation of
The value of real and personal property and even movables is lumped by the experts before and after the taking. In this aggregation are included even the leases of Plantation upon lands not taken and in other ownership. By these and other devices, the experts succeeded in deducing a value to Plantation of $1,000.00 per acre for each acre held by lease or otherwise. By a fantastic process, involving a non sequitur, this figure per acre was testified to be the loss in value of the property of Plantation. It is, of course, clear that the real property held by Plantation was never appraised, either before or after the taking. Frankly, the witnesses say that the putative loss of $1,000.00 is arrived at by a capitalization of the earnings of Plantation, including its refinery, during years of most abnormal conditions in the island empire, while the price of sugar was supported by the Government. The formula thus applied produces its bizarre results because of the use of a factor comparable to infinity in mathematical calculations, of which the action is .unknown.
It can be thus demonstrated that these witnesses summoned by Plantation were stating loss to the business of growing cane, milling raw sugar and manufacturing refined -sugar. A minor chord vibrates through all the score: If it were able to ■buy “raws” of the competing monopoly, as it was able to do in war time, Plantation might have been able to make its ..accustomed profit, notwithstanding the takings.
The Trial Court says: “* * * usable land in Hawaii is scarce and tightly held by a comparatively few large corporation, trust, and estate owners who buy but rarely sell.”
In view of this statement, the only inference is that the fee properties of Plantation suffered no loss of value by the taking of surrounding lands, but were enhanced because of the increasing scarcity of such lands. These considerations constitute a conclusive refutation of the speculations of the “owners ” 5 and experts, and land’s end!
The finding of the learned Trial Judge that there was no damage to the remaining properties of Plantation by condemnation of lands of the Damon Estate is then approved on two grounds: first, there was no less value proved as to the lands owned by Plantation in fee simple, and, second, as above noted, Plantation owned no interest whatsoever in realty of the Damon Estate. This holding is affirmed, and Plantation’s appeal is dismissed.
By an inconsistent line of reasoning, the Trial Judge allowed “severance damages” because of the condemnation of the four hundred forty acres. The same question stated above is primarily involved here also. Plantation had no more legal •interest in these tracts than in the Damon Estate. As to these individual parcels of land, fee title was vested respectively in other estates and individuals. Plantation had long leases on each parcel, and a clause of each lease divested any interest or estate of Plantation, upon condemnation.
6
This
The clause in the Oahu lease contains substantially the language emphasized in Note 6. If under the property law of Plawaii 7 these words destroyed any compensable interest of Plantation in the realty condemned, as the Trial Court holds with regard to the Oahu lease, then the words have the same effect in the other leases. If Plantation owned no property in the realty taken, it was not entitled to just compensation by definition. Fifth Amendment. Since, by voluntary agreement upon condemnation, Plantation divested itself of any interest in property taken, the severance complained of was by its own act. To those consenting, there is no injury. The meaning of the contracting parties was made clear by emphatic words reserving all compensation in condemnation to the fee owner.
“Condemnation proceedings are in rem * * * and compensation is made for the value of the rights which are taken.” The lessee “had contracted away any rights that it might otherwise have had.” United States v. Petty Motor Co.,
The whole contention of Plantation as to these lands must be anchored to the reservation in the leases of claims for damage to its other lands.
8
Since Plantation had no property interest in the lands condemned, this claim is for business losses. Since the right to recover such losses does not exist by law,
9
certainly in the absence of the property right voluntarily destroyed by the clauses of the lease, as above pointed out, these contracting parties could not create by agreement between themselves such a right valid against the United States, as Judge Chesnut aptly shows in United States v. 8286 Sq. Ft. of Space in PacaPratt Bldg., D.C.,
Although disposition has thus been made of the erroneous claims and theories of the experts, it behooves us to consider whether Plantation is entitled to compensation, without regard to the clauses of the respective leases. The representatives of the United States did not assist the learned Trial Judge by production of any relevant evidence, factual or opinion, as to this particular claim. Their attitude was simply one of negation.
It is advisable to establish our meridian before we proceed to survey the particular problems involved here. Plantation contends that the findings of value are conclusive. Findings of fact are conclusive on appellate courts, 12 including values placed on real property in condemnation. Nowhere did the experts set a value on the realty owned in fee by Plantation. There .was no finding that the remainder of Plantation’s property suffered a loss in market value by virtue of the taking of the leaseholds. Nor could there be any. Opinion evidence is not evidence of fact. 13 The trier of fact is not bound to follow the expert. 14 Based upon unwarranted theorems of the experts, the Judge found “severance damage” to the properties as a whole. Where unwarranted theories of law or assumptions of fact guide the expert and are used as a basis for value by the Court, the evaluation will be set aside and the cause remanded for new findings. 15
The rule requiring" compensation for loss in market value of the remainder of the tract is applied strictly only where there is but a single parcel owned by one party in fee simple.
16
An extension of the doctrine permitted the inclusion of another parcel in the same ownership if it lay contiguous to the principal tract. It is likewise perfectly true that the land cannot be valued alone without buildings or other structures which have been added thereto and which are a part of the real property.
17
According to common law, these are as much a part of the soil as are the rocks, sand and other natural features.
18
With some reluctance, the courts have held that
A lease is a chattel, a contract right which carries with it the right of possession which goes back to the fee owner upon end of the term. The ownership of a fee of one parcel and a lease, upon another do not connect the estates in the two. From earliest times in federal condemnation, additional compensation has been refused where the owner of the fee of one tract had a lease upon another parcel held in fee by a third party, 25 where the leasehold alone was taken.
The mirage conjured up by the experts and attorneys from the Baetjer case, supra, which gave fallacious promise of damages, is evanescent. It disappears and the familiar and long standing landmarks of condemnation law appear undistorted upon closer contemplation. There all the land involved was owned in fee by one individual. If all had been in one contiguous tract, the rule of deducting the
The cause must then be remanded. The Trial Judge is acquainted with local conditions, and his finding as to loss of value of any property owned by Plantation will be accurate. We have found there is no such property interest involved in these leaseholds. The record is not sufficient for us to determine whether there are other property rights involved. We cannot tell whether consideration was given to loss in market value to the main fee properties by the cutting off of other fee parcels for which actual value has already been allowed. Nor can it be discovered whether any consideration has been given to a possible compensation for an interlocking network of easements for railroads, roads and irrigation systems. See United States v. Aho, D.C.,
Notes
. The use of this term is to be criticized because it is apt to lead to loose thinking. United States v. Miller,
. Cf. United States v. Certain Space in Premises known as No. 2001 Market Street, San Francisco, D.C.,
. See County of San Benito v. Copper Mountain Mining Company of California,
. Campbell v. United States,
. Four or five persons, executives of Plantation and others, were authorized by power of attorney of the corporation to testify as “owners”! Two of these testified.
. “That in the event the
demised premises or any part thereof shall be
required, taken or
condemned for any public use, then in every such case, the estate and interest of the Lessee
in the part of the premises taken
shall at once cease and determine and the Lessee shall not by reason of such talcing be entitled to any claim either against the Lessor or others for compensation or indemnity for the talcing of any land or water, or any improvements or buildings as shall have been made prior to January 1, 1937, and all compensation payable to or to be paid by reason thereof shall be payable to and
. It is assumed that the property law of Hawaii on this point is in accord with the rule generally applied. Cf. In re Water Front on Upper New York Bay,
. This refers to the proviso in Note 6.
. United States ex rel. Tennessee Valley Authority v. Powelson,
. “True it is that
if
the tenant has a legal right to recover against the con
. The evidence shows that a claim was presented to Congress, but this exhibit was irrelevant to this controversy, and admission over Plantation’s objection was error.
. United States v. Lambert, 2 Cir.,
. Iriarte v. United States, 1 Cir.,
. Sartor v. Arkansas Natural Gas Corporation,
. The Conqueror,
. Campbell v. United States,
. Stephenson Brick Co. v. United States, 5 Cir.,
. Illinois, Iowa and Minnesota Railway Company v. Humiston,
. Porrata v. United States, 1 Cir.,
. United States v. 7936.6 Acris of Land, D.C.,
. Campbell v. United States,
. Mitchell v. United States,
. See Campbell v. United States, supra, 371,
. Tillman v. Lewisburg & Northern Railroad Company,
. United States v. Inlots, 26 Fed.Cas. page 490, 493, No. 15.441a affirmed on other grounds,