UNITED STATES v. VIRGINIA ELECTRIC & POWER CO.
No. 49
Supreme Court of the United States
Argued November 10, 1960. Decided April 3, 1961.
365 U.S. 624
Ralph H. Ferrell, Jr. argued the cause for respondent. With him on the brief were George D. Gibson and Francis V. Lowden, Jr.
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
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 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, 218 F.2d 524. After the judgment in the Twin City case was reversed by this Court, 350 U. S. 222, 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. 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.” 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
We granted certiorari to consider the Government‘s claim that the respondent‘s easement had no compensable value when appropriated by the United States. 362 U. S. 947. 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
This navigational servitude—sometimes referred to as a “dominant servitude,” Federal Power Comm‘n v. Niagara Mohawk Power Corp., 347 U. S. 239, 249, or a “superior navigation easement,” United States v. Grand River Dam Authority, 363 U. S. 229, 231—is the privilege to appropriate without compensation which attaches to the exercise of the “power of the government to control and
“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.
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 Ins. Co., 339 U. S. 799, 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 800-801. See also United States v. Willow River Co., 324 U. S. 499, 509.
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 the land for water power purposes. It argues, however, that the easement had other value, derived from uses of the land not dependent upon the flow of the stream. If the easement did have such value, then the Government must compensate for the easement‘s destruction under the rule of Kansas City Ins. Co., supra, since the easement was a property right in fast lands. The basic issue is thus whether the respondent‘s easement
We think such a finding might be warranted. The evidence was that the highest and best use of the servient land (unconnected with riparian uses) was for agriculture, timber and grazing purposes. The respondent had an exclusive and perpetual property right to destroy those uses and the value which they created. This right was an attribute of a transferable, commercial easement with intrinsic value. It had been acquired for a valuable consideration. It had a marketability roughly commensurate with the marketability of the subservient fee. Only an adventurous purchaser would have acquired the underlying fee interest in the 1540-acre tract for any purpose whatever, without also purchasing the easement.
If easements to flood fast lands were worthless as a matter of law when taken by the United States, it would follow that when the Government took such an easement from the owner of an unencumbered tract of land, the Government would have to pay the owner nothing. That is not the law. United States v. Kansas City Ins. Co., 339 U. S. 799. The Government itself acknowledges that it must pay such a landowner for the value of the property which does not stem from the flow of the stream, the value based upon the nonriparian uses of the property.
It follows that the Government must likewise compensate the easement owner for that aspect of the easement‘s value which is attributable not to water power, but to the depreciative impact of the easement upon the nonriparian uses of the property. The valuation of an easement upon the basis of its destructive impact upon other uses of the servient fee is a universally accepted method of determining its worth. See, e. g., Olson v. United States, 292 U. S. 246, 253; Karlson v. United States, 82 F.2d 330, 337; Jahr, Eminent Domain, 252 and n. 6 (collecting cases); 4 Nichols, Eminent Domain, § 12.41 [2], n. 27
But the Government contends that the market value of the easement to those interested in developing the nonriparian uses of the fee can be ignored. It is claimed that, despite the general principle of indemnification underlying the
The remaining question is whether the District Court‘s method of determining the amount of compensation to be awarded was correct. The court was clearly right in excluding all value attributable to the riparian location of the land. United States v. Twin City Power Co., 350 U. S. 222.
In apportioning the respondent‘s share of this value, however, we think that the court erred.5 The court
The guiding principle of just compensation is reimbursement to the owner for the property interest taken. “He is entitled to be put in as good a position pecuniarily as if his property had not been taken. He must be made whole but is not entitled to more.” Olson v. United States, 292 U. S. 246, 255. In many cases this principle can readily be served by the ascertainment of fair market value—“what a willing buyer would pay in cash to a willing seller.” United States v. Miller, 317 U. S. 369, 374. See United States v. Commodities Corp., 339 U. S. 121, 123; United States v. Cors, 337 U. S. 325, 333. But this is not an absolute standard nor an exclusive method of valuation. See United States v. Commodities Corp., supra, at 123; United States v. Cors, supra, at 332; United States v. Miller, supra, at 374-375; United States v. Toronto Nav. Co., 338 U. S. 396.
The record in the present case, as might be expected, contains no evidence of a market in flowage easements of the type here involved. In the absence of such evidence, the court valued the flowage easement as the equivalent of the value of the servient lands for agricultural, forestry, or grazing use. The court thus ascribed a maximum value to the respondent‘s easement, a value not supported by the record.
We think the correct approach to the problem of valuation in a case of this kind was formulated by the Court of Appeals for the Fifth Circuit in Augusta Power Co. v. United States, 278 F.2d 1. The basic issues in that case were virtually indistinguishable from those presented here.6 We are content to adopt the language of Judge Rives’ opinion with respect to the standard to be followed in valuing flowage easements of this character:
“If [the] Power Company had been successful in assembling the necessary lands, and in securing approval of the Federal Power Commission, and thereafter had actually exercised its easements by permanently flooding the lands, their value for agricultural and forestry purposes would have been destroyed. If, with that status, the United States had condemned the lands, the compensation due would be payable to [the] Power Company. That compensation would not include the hydroelectric power value, but it would embrace [the Power Company‘s] property right to destroy the value of the lands for agricultural and forestry purposes.
“At the other extreme, if factors such as difficulty of assemblage of all necessary lands, the increasing economic advantage of steam plants over hydroelectric plants, the need for additional power in the particular area, etc., had made it certain that the flowage easements would never be exercised by the . . . Power Company or its assigns, excluding the United States, then such compensation as might be due would be payable to the owners of the fee title and nothing to the . . . Power Company.
“. . . It seems to us that the maximum compensation payable for the flowage easement under any conceivable circumstances is so much of the value of the lands for agricultural and forestry purposes and for any other uses, not including hydroelectric power value, as the easement owner has a right to destroy or depreciate. That maximum is more simply expressed in the criterion adopted by the Commission, i. e., ‘the difference in the value of the land with and without the flowage easement.’ Subject to that maximum, the actual measure of compensation payable for the flowage easement is the value of the easement to its owner. ‘The question is, What has the owner lost? not, What has the taker gained?’ 1 Orgel on Valuation Under Eminent Domain, p. 352.” Augusta Power Co. v. United States, 278 F. 2d 1, 4-5. (Footnotes omitted.)
In a word, the value of the easement is the nonriparian value of the servient land discounted by the improbability of the easement‘s exercise. It is to be emphasized that in assessing this improbability, no weight should be given
The judgment is vacated, and the case remanded to the District Court for further proceedings consistent with this opinion.
It is so ordered.
MR. JUSTICE DOUGLAS, concurring.
If the 1,840 acres in question lay between low and high water, the United States by keeping the water level at the ordinary high-water contour would not in my view appropriate any private property. For that is use of the bed of the stream pursuant to the navigation servitude. Most of our cases deal with that. It was in that domain
If the 1,840 acres were a dam site, any of their value for such a purpose would be noncompensable within the ruling of United States v. Twin City Power Co., 350 U. S. 222. Dam-site value is water-power value. And the flow of the stream in its natural state or through a structure that is low or high provides “a head of water” (United States v. Willow River Co., 324 U. S. 499, 502) that often has great value. But when it is in a navigable stream, it is not a property right subject to private ownership and compensation under the
Yet if the Federal Government builds a dam that raises the water above the ordinary high-water mark by a foot, by a hundred feet, or by five hundred feet, it asserts dominion over property not within its navigational servitude. As we said in United States v. Willow River Co., supra, 509, “High-water mark bounds the bed of the river. Lands above it are fast lands and to flood them is a taking for which compensation must be paid.”
It is in the latter domain that the present controversy lies. The flowage rights being condemned are rights to flood a part of the 1,840-acre tract that lies above the “usual water line” which I understand to mean land above the ordinary high-water mark.
Whatever may be the reason why this particular interest in the uplands was acquired, the owner stands in the shoes of his predecessor in title. The owner of the easement is entitled, as the Court holds, to no water-power value. The owner is, in other words, entitled to nothing that gains value from the flow of the stream, from any head of water, or from the strategic location of his land
MR. JUSTICE WHITTAKER, with whom THE CHIEF JUSTICE and MR. JUSTICE BLACK join, dissenting.
In the hope that it might eventually acquire from the Federal Government a license to construct a power dam across a navigable river, the power company acquired, by conveyances from the fee owners, easements permanently to flood 1,540 acres of fast lands adjacent to the river. It did not own any other estate or interest in those lands, and the exercise of its easement to flood them was, of course, necessarily subject to the prior issuance of a federal license authorizing the private damming of the river, for without such a license the power company could not dam the river, see
No federal license to dam the river at or near this point was ever issued. Instead, the Federal Government itself determined to construct a power dam at this point in the river, and as a necessary consequence to inundate these lands as a part of the resulting reservoir. To that end, it brought this condemnation action against the power company, and therein filed its declaration of taking, and took, the latter‘s easement to back flow these lands, and the question here is: What value, if any, did that easement have to the power company at the time the Government took it?
We think that, as a matter of fact and of law, it did not have any value whatever at that time. This is so because: (1) The sole and only right the power company ever had
However, the Court, after adverting to the power company‘s argument that “the easement had other value, derived from uses of the land not dependent upon the flow of the stream,” says: “We think such a finding might be warranted.” It finds such value to exist in the “right to destroy [agricultural, timber and grazing] uses and the value which they created.”
But the right to “destroy” agricultural uses, although a proper consideration in determining the damages to be paid to the owner of the unencumbered fee when an easement to flow is being condemned and taken from him, United States v. Kansas City Ins. Co., 339 U. S. 799; Olson v. United States, 292 U. S. 246, 253-254, is not a thing of value—even of recognizable “hold up” value—to the owner of the easement, United States v. Chandler-Dunbar Co., 229 U. S. 53, 79-80, except for the authorized flooding use, or possibly as against the owner of the subservient fee who might be willing to pay for the riddance of the easement and restoration of his original right to make agricultural uses of the land. See Roberts v. New York City, 295 U. S. 264, 282-283. At all events, the clincher is that any right of the power company to “destroy” agricultural uses of these lands consisted solely of its right to dam and back the river‘s waters upon them, and when the Government determined to construct the dam for its own benefit even that nebulous “right” was gone. Hence, the easement had no possible value—not even a nuisance value—to the power company at the time the Government took it.
It is settled that the “just compensation” required by the
The
Nor does the
“But the Constitution does not require a disregard of the mode of ownership—of the state of the title. It does not require a parcel of land to be valued as an unencumbered whole when it is not held as an unencumbered whole. It merely requires that an owner of property taken should be paid for what is taken from him. . . . And the question is what has the owner lost, not what has the taker gained.” 217 U. S., at 195.
Here the power company rests solely upon a claimed right to back the river‘s waters upon these lands. It thus necessarily depends upon and claims a right in and to use the waters of the river for that purpose. This Court held in the Twin City case, supra, that the owner of adjoining fast lands has no interest in the waters of a navigable river, and that those waters do not, as against the Government, attribute to the value of such lands. It said:
“If the owner of the fast lands can demand water-power value as part of his compensation, he gets the value of a right that the Government in the exercise of its dominant servitude can grant or withhold as it chooses. The right has value or is an empty one dependent solely on the Government. What the Government can grant or withhold and exploit for its own benefit has a value that is peculiar to it and that no other user enjoys.” 350 U. S., at 228.
The Government, by determining to exploit its stream for its own benefit, “displace[d] all competing interests and appropriate[d] the entire flow of the river for the declared public purpose.” Id., at 225. In these circumstances, “[t]o require the United States to pay for this water-power value would be to create private claims in the public domain.” Id., at 228.
The Twin City and Chandler-Dunbar cases, supra, seem clearly to require the conclusion, on the facts here, that the easement to flood these lands had no value to the power company at the time the Government took it.
To the Court‘s observation that “the Government‘s argument would mean, in a case like this one, that compensation could be denied the fee owner because he had already conveyed the flowage easement, . . . and denied the owner of the easement because it was valueless against condemnation by the United States,” the law requires us to say: Exactly so. The fee owners had sold and conveyed, for consideration satisfactory to them, the right permanently to flood these lands and no longer owned any interest in that estate. Indeed, they claim none. That estate in these lands was not taken by the Government from them. Not having taken anything from the fee owners, the Government does not owe them “just compensation” for anything. This also demonstrates the Court‘s further error in remanding the case for “apportionment” of the “damages” between the owner of the easement and the owners of the fee. In no event could there be anything to apportion to the fee owners. What the Government took was the easement. It belonged solely to the power company, and if it had any value at the time it was taken by the Government, that value belonged solely to the power company. But the easement had no value to the power company at the time it was taken by the Government. The power company‘s sole estate in these lands was an easement to back the river‘s waters upon them. The exercise—and hence the value—of that easement was always contingent upon the prior issuance of a federal license authorizing the private dam-
It is of course true, as already stated, that if the Government had taken the right to flow these lands from the owner of the unencumbered fee, the law would require it to pay his damages resulting from that deprivation of his right to make agricultural and similar surface uses of these lands. United States v. Kansas City Ins. Co., supra. From that premise it is argued that the owner of the easement to flow, having acquired it from the owner of the unencumbered fee, “stands in the shoes of his predecessor in title” and is thus entitled to like damages from the Government when it takes that easement from him. But that premise is erroneous. The error lies in the obvious fact that the power company never acquired or owned any right to make agricultural uses of these lands. Hence it did not suffer, and is not entitled to recover, any damages for the destruction of such uses. Quite distinguishable from an unencumbered fee, the only estate of the power company in these lands was the right to store the river‘s waters upon them. Once the Government determined to construct the power dam for its own use no possibility remained that the power company could ever use the lands for that purpose and, having no right to use the lands for any other purpose, it must follow that the easement was wholly without value to the power company for any purpose at the time the Government took it.
For these reasons, we think the judgment should be reversed with directions to enter judgment for the Government.