Opinion · Court of Appeals for the Second Circuit

Westchester County Park Commission v. United States

143 F.2d 688

Type
Opinion
Court
Court of Appeals for the Second Circuit
Jurisdiction
Federal
Date
1944-06-05
Topic
general

FRANK, Circuit Judge. 1. Under the Fifth Amendment, the owner of land taken by condemnation is entitled to “just compensation.” The key notion is indemnity, measured in money, for the owner’s loss of the condemned property. In an effort to definitize this notion, it has been said that it requires the payment of a sum equal to the “value” of the property taken. But if “just compensation” is a baffling indefinite *692 concept, “value” is no loss so. 1 To mouth it is not to answer but to ask a question. In the condemnation cases, the courts, trying to contrive a practical standard,- have adopted the concept of “market value,” i.e., what it fairly may be believed a willing buyer (one not forced to buy) would, in fair market conditions, have given to a willing seller (one not forced to sell).

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WESTCHESTER COUNTY PARK COMM. v. UNITED STATES,143 F.2d 688(2nd Cir. 1944)
WESTCHESTER COUNTY PARK COMMISSION et al. v. UNITED STATES.
No. 316.
Circuit Court of Appeals, Second Circuit.
June 5, 1944.
Page 689
Appeal from the District Court of the United States for the Southern District of New York.

Condemnation proceeding by the United States against 2.02 acres of land, more or less, situate in the City of New Rochelle, County of Westchester, State of NewPage 690York, and against Westchester County Park Commission and the County of Westchester. From the judgment,51 F. Supp. 56, insofar as it relates to 1.23 acres of land, the Westchester County Park Commission and the County of Westchester appeal.

Affirmed.

This is an appeal by the Westchester Park Commission and the County of Westchester, New York, from a final judgment, in a condemnation proceeding, begun, August 27, 1942, by the United States. The judgment was entered after a trial by the judge sitting without a jury. So far as this appeal is concerned, the proceeding relates to 1.23 acres of land within and owned by the County and under the supervision and control of the Park Commissioner. For convenience, both appellants will be called, collectively, the County.

The title of the County of Westchester to lands, of which those taken are a part, came through a deed of Martin J. Keogh, Jr., dated September 17, 1925, by which was granted for the approach to Glen Island, part of the Westchester County Park lands, .87 acres or 37,897 square feet, and also all of the right, title and interest of the grantor in land under water by reason of a grant from the State of New York and which adjoin the upland contained in the acreage mentioned. There had been two grants by the State of New York to Martin J. Keogh, the father and grantor of Martin J. Keogh, Jr., one dated February 9, 1894, and the second October 27, 1900. The first grant was of .81 of an acre of land under water between high and low water mark in front of and adjacent to other land of Keogh "for the beneficial enjoyment of the same by the said adjacent owner pursuant to the statutes in such case made and provided." The second grant was of .202 of an acre of land under water between high and low water mark, adjacent to the upland of Keogh for the purposes "to build a retaining wall and to fill in the lands under water herein granted," but unless that was done within five years from the date of the grant, the same would become null and void; the grant excepted and reserved to the People of the State of New York the full and free right and privilege of entering upon and using all and every part of the described premises excepting such parts as are actually occupied and covered by structures, docks or building of a substantial character, and such parts of said premises as have been actually filled in and reclaimed from low or marshy land. A third grant by the State was made, on March 27, 1931, to the County of Westchester, then the owner of the upland, of 20,002 square feet of land under water upon two express conditions: The first was that, unless the lands granted should be improved within five years from the date of the grant, "by filling in the lands under water hereinabove described to provide for park and parking place, which park and parking place is to be faced with a stone wall (which shall be known as improvements) then these letters patent and this grant shall become null and void as to the part not so improved; and no right, title or interest in and to the lands hereinabove described not so improved shall vest in the said patentee * * *; and the People of the State of New York may thereupon re-enter into and become possessed of the lands hereinabove described, or any part thereof which have not been or which are not then so improved, without any liability"; the right to enter upon and use the part not improved was fully reserved. The second condition was that if the State should at any time acquire the premises and lands, or any portion thereof, the liability of the State should be limited to the amount paid by the patentee for the patent, or a proportionate part thereof, together with the expenses necessarily incurred for the acquiring of the patent, fixed at $350, and also the value of the improvements on the premises or the proportionate part thereof which might be acquired.

After the acquisition by the County of the property granted by the State, a sea wall was built, and the land under water between the sea wall and the upland was filled in in 1933, to the elevation of the upland acquired from Keogh. The cost of the construction of the sea wall was $4,750 up to high tide, and $1,300 more to 7½ feet, its present elevation. Witnesses for the County estimated that the fair and reasonable cost of filling in the lands acquired and building the sea wall was $14,000. Of the lands taken, 6,375 feet in front of the sea wall are still under water; but it was testified that it was entirely filled in to support and as the base for the sea wall, which extends out about 17½ feet into the water, the construction at the base of the stone wall being stone fill.Page 691

On December 6, 1940, the Park Commission, which has jurisdiction over the area now in dispute, leased to the United States the part now taken from the County, the areas stated in the lease being 17,500 square feet of upland, 30,000 square feet of improved water grant, and 6,375 square feet unimproved water grant, a total area of 53,875 square feet, "to be used exclusively for the following purposes * * * parking of Government owned and controlled motor vehicles, and allied uses," for one year with the option of renewal from year to year, but not beyond December 30, 1945, at a rental of $3,000 per annum. The lease was made after the national defense program was under way, in aid of the expanded uses of adjacent Fort Slocum. The lease was twice renewed, the last renewal expiring June 30, 1943. Up to the time of the lease, the property had been used for parking and park purposes. The property is located in residental A Zone so that if acquired by a private person, it would be subject to a use thus restricted.

Two expert witnesses for the County each testified that in his opinion the 1.23 acres were worth $50,000. The testimony of each was that, inasmuch as the property was taxfree, exempt, when owned by the County, from any zoning regulations, and could not be sold by the County, there was no market for such property, there was no comparable property by which the market price could be fixed, that the only value which could be given to it was its value to the County, and that could only be based upon the rental paid by the Government to the County, which capitalized at 6%, amounted to $50,000. Each of these witnesses stated that that value was not the fair market value of the property as between a willing purchaser and a willing buyer, but was the present worth of the property based upon its future benefits and by virtue of the lease.

On the other hand, for the Government, one expert witness testified that the fair market value of the property was $7,000, or .129¢ per square foot, and the other $5,350, or 10¢ per square foot; and there was introduced in evidence proof of sales made within a few years preceding the taking of properties in the same vicinity, at prices ranging from 5¢ to 13¢ per square foot, with one exception, and that was of a sale to the Columbia Broadcasting Station, the purchase price of which was $1.375 per square foot.

The trial judge said, in part, in his opinion: "In my opinion the just compensation to be awarded for the taking of the County of Westchester property cannot depend upon the amount of rental value, nor can it be that rental value capitalized. The lease had no permanency, and in my opinion, carried a very liberal rental. Nor can the value of * * * be governed by the fact that" it "is at present exempt from taxation or zoning." It "will so remain in the ownership of the Government. Much of" the property "was obtained from the State for a nominal consideration in view of the purposes and uses to which" it was "to be put. The cost in a large part was for the improvements placed upon the same, and that expenditure, in my opinion, must be given weight in fixing what is just compensation. After all, they are no more than lands along the Long Island Sound, improved by the erection of a sea wall and by filling in to the grade of the upland. Taking all of these factors into consideration, and the many others urged by counsel for the respective parties, I find that the value * * * is with the improvements made thereon: * * * 53,875 square feet, formerly owned by the County of Westchester, $8,081.25."

Judgment was entered in accordance with that opinion.
William A. Davidson, of Port Chester, N.Y. (Frank J. Claydon, of White Plains, N.Y., of counsel), for appellants.

Norman M. Littell, Asst. Atty. Gen., Harry T. Dolan and Vernon L. Wilkinson, both of Washington, D.C., and Roger P. Marquis, of Brooklyn, N.Y., for appellee.
Before L. HAND, SWAN and FRANK, Circuit Judges.
FRANK, Circuit Judge.
1. Under the Fifth Amendment, the owner of land taken by condemnation is entitled to "just compensation." The key notion is indemnity, measured in money, for the owner's loss of the condemned property. In an effort to definitize this notion, it has been said that it requires the payment of a sum equal to the "value" of the property taken. But if "just compensation" is a baffling indefinitePage 692concept, "value" is no loss so.1To mouth it is not to answer but to ask a question. In the condemnation cases, the courts, trying to contrive a practical standard, have adopted the concept of "market value," i.e., what it fairly may be believed a willing buyer (one not forced to buy) would, in fair market conditions, have given to a willing seller (one not forced to sell). As Orgel suggests, "The reference is not to actual buyers and sellers, but to hypothetical vendors and vendees of a vaguely described state of mind, and these phantom personalities constitute perhaps the most puzzling element in any attempted elucidation of the Court's concept of `fair market value' * * * The concept * * *, like the standards of reasonableness that are common in other branches of the law, * * * derives a large measure of its usefulness from this very vagueness, for it enables the court to adjust the rigid rules of law to the requirements of justice and indemnity in each particular case."2At any rate, an elastic standard, although perplexing, is often, as here, the only one available. It will not do to sneer at it. As Pekelis reminds us, "Concrete cases cannot be decided by general propositions — nor without them."2As to "value" in condemnation cases, the Supreme Court has said that often "the application of this concept involves, at best, a guess by informed persons."3But that guess must have a rational foundation. And the owner of the land must supply the court with materials for a guess having such a foundation. For on the owner, and not on the United States, rests the burden of establishing the value. United States ex rel. T.V.A. v. Powelson,319 U.S. 266, 273, 274, 63 S.Ct. 1047, 87 L.Ed. 1390; Ralph v. Hazen, 68 App.D.C. 55,93 F.2d 68, 70; Welch v. T.V.A., 6 Cir.,108 F.2d 95, 101.

The government urges that the rule is that the educated guess must not include among its ingredients the element of the special adaptability of the property to the owner's use, and that, applying that rule here, it would be improper to consider the special value of the land for use by the County as a park, since an ordinary buyer could not so use it; as a variant of this argument, the government asserts that the unique character of the owner, as distinguished from the unique character of the land, is not a proper factor. While, with some qualifications, that contention is not without support,4we are not ready to say that it states the correct rule with sufficient nicety. It may be that, if the County had proved the worth in money terms of the use as a park site, it would be entitled to compensation therefor. But we need not here consider that question since, although the County was at liberty to do so, it presented no evidence on that issue. Its expert witnesses based their figures exclusively on a capitalization of the rent in the short-term leases to the United States; and that rent had no bearing on the worth of the land to the County for its utilization as a park.

The exemption of the land from taxation when owned by the County is immaterial, since an ordinary buyer would not have enjoyed such an immunity. True, the land in the hands of the United States is thus exempt, but the United States did not acquire that exemption through the condemnation proceedings. Nor is it relevant that the County, without authorization by the State, could not sell; we must regard the situation as if it could,Page 693as if the property were being voluntarily sold by a seller free to do so.

The government's expert witnesses, therefore, employed the proper criterion: what an ordinary buyer under no compulsion to buy would pay a seller able to sell and under no compulsion to do so. As the land, if acquired by such a buyer, would have been subject to zoning for residential purposes, those witnesses correctly considered its value as thus restricted. On cross-examination, these government witnesses were asked whether they took into account the County's use for park purposes; they were permitted to answer, and said no; having in mind that the burden of proving value was on the County, we need not consider whether the witnesses' failure to allow for that factor vitiated their estimates.

The County's witnesses, employed an improper standard. They refused to testify concerning the value in the ordinary sense of that word,5disregarded sales of similar property in the vicinity, considered nothing but the unique worth of the land to the County for park purposes, and, as previously noted, reached their figures solely by capitalizing the rent payable under the leases to the United States. As a consequence, unless the rent under those leases constitutes a sufficient basis for ascertaining value, the only evidence on that subject consists of that introduced by the government; and clearly that evidence does not call for reversal of the judgment.

As reasonably prospective earning power is, of course, an important factor, rent paid under an existing lease of the taken land has relevance. But the United States made the short-term leases of this land when it was under a pressing need because of a threatened national crisis. The capitalization of the rent under those leases is shaky ground on which to erect an informed guess about the land's worth.6The government's experts testified that the rent did not represent fair rental value; the trial court could justifiably rely on that testimony.

The only evidence of a sale at a price per square foot at a higher figure than that allowed by the trial judge was the sale to Columbia Broadcasting of a small piece of 4,000 square feet zoned for industrial use. That single piece of evidence plainly cannot compel a reversal.

2. The trial judge made some allowance for the improvements. But the County argues that it is entitled to the full value of those improvements, because the deed from the State to it provided that, if the State re-acquired the land, its liability would be limited to the amount paid for the patent, the expenses incurred in acquiring it (fixed at $350), and the value of such improvements. The County contends that, as the condemnation has prevented the reacquisition by the State, it has thus deprived the County of the possibility of ever obtaining such reimbursement. But that possibility was so remote as to be incapable of measurement in money.7

3. The County asserts that the trial judge erroneously failed to allow anything for the damages to the adjacent property owned by it, i.e., for so-called severance damages. Assuming, arguendo, that recovery can be had for such injury, there can be no recovery here. For, although the County introduced some evidence tending to show that the taking would restrict the uses of such adjacent property, it offered no evidence whatever as to the money worth of the resultant loss and, accordingly, did not discharge its burden of proving damages.

4. In Robinson v. New York Elevated R. Co.,175 N.Y. 219,67 N.E. 431, the Court held it reversible error to permit expert witnesses on direct examination to testify concerning sales of similar property. The County contends that, under 40 U.S.C.A. § 258,8the Court below wasPage 694required to follow the doctrine of the Robinson case and that, accordingly, we must reverse because the government's expert witnesses were allowed to testify on direct examination as to such sales. As we agree with the courts of most states and with most commentators that the doctrine of that case is unsound, we think that it should never be followed if there is any escape from it. The government suggests that the Robinson doctrine no longer prevails in New York.9We shall, however, assume that it does. Even so, it is inapplicable here. For we have held that, under the Conformity Act, 28 U.S.C.A. § 724, the wording of which is substantially the same as 40 U.S.C.A. § 258, state rules of evidence do not bind the federal courts, when to follow those rules would "unwisely incumber the administration of the law." Massachusetts Bonding Insurance Company v. Norwich Pharmacal Company,18 F.2d 934, 939; Hawthorne v. Eckerson Company, 2 Cir.,77 F.2d 844, 846; see also Chicago N.W. Ry. v. Kendall, 8 Cir., 167 F. 62; De Soto Motor Corporation v. Stewart, 10 Cir.,62 F.2d 914, 917, 918.

We think that the remarks in United States v. Miller,317 U.S. 369, 375, 63 S.Ct. 276, 87 L.Ed. 336, 147 A.L.R. 55, do not indicate a contrary view. But even if they do, and if, therefore, the Robinson rule is applicable in the instant case, the deviation from it here caused no prejudice to appellants. This appears from the following: The government's witnesses testified on direct examination to eleven comparable sales. As to seven of those sales, however, the same testimony had previously been elicited from the County's witnesses on cross-examination; and the New York courts (illogically, to be sure) appear to have held that such testimony on cross-examination may be accepted as affirmative evidence of value and is not limited to its use in testing the witness' credibility.10The four sales concerning which the government's witnesses testified on direct, but concerning which the County's witnesses were not questioned on cross-examination, were at a higher rate per square foot than the other seven sales; accordingly, although those four sales were at a lower rate than the trial judge used in arriving at his judgment, testimony concerning them was advantageous to the County.

True, in the Robinson case, the court held that the admission of the improper evidence constituted reversible error despite the fact that the trial court had ignored that evidence and had rested its decision on other competent testimony. But the New York courts, since the Robinson case, have ruled that, in such circumstances, the reception of the improper evidence is harmless.11These rulings, to be sure, occurred in cases not involving condemnation; but that would seem to be a distinction without significance. Even, however, should we disregard those rulings, we would nevertheless conclude that there was no prejudice here. For, as under Rule 81(a)(7), 28 U.S.C.A. following section 723c, the new rules of procedure are applicable to appeals in condemnationPage 695cases, we must, under Rule 43(a), apply the more generous rule of evidence; therefore, the federal "harmless error" statute (28 U.S.C.A. § 391) governs; under that statute, the admission of the testimony was surely harmless. Cf. United States v. Miller,317 U.S. 369, 375, 63 S.Ct. 276, 87 L. Ed. 336, 147 A.L.R. 55.

5. Nothing is left to this appeal but, in effect, a request to us to conduct a trial de novo. This we cannot do. The trial court's determination of the facts must stand unless it is unsupported by substantial evidence.12We see no warrant for reversal on that score.

Affirmed.
  1. Andrews v. Commissioner, 2 Cir.,135 F.2d 314, 317; Commissioner v. Marshall, 2 Cir.,125 F.2d 943, 946, 141 A.L.R. 445. ↩
  2. Orgel, Valuation Under Eminent Domain, 810, 837. ↩
  3. Social Research, September 1944. ↩
  4. United States v. Miller,317 U.S. 369, 63 S.Ct. 276, 280, 87 L.Ed. 336, 147 A.L.R. 55. ↩
  5. See, e.g., Monongahela Navigation Co. v. United States,148 U.S. 312, 13 S.Ct. 622, 37 L.Ed. 463; Boom Co. v. Patterson,98 U.S. 403, 25 L.Ed. 206; McCandless v. United States,298 U.S. 342, 56 S.Ct. 764, 80 L.Ed. 1205; United States v. Miller,317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336, 147 A.L.R. 55; United States v. Chandler-Dunbar Co.,229 U.S. 53, 33 S.Ct. 667, 57 L.Ed. 1063; Boston Chamber of Commerce v. Boston,217 U.S. 189, 195, 30 S.Ct. 459, 54 L.Ed. 725; Omnia Co. v. United States,261 U.S. 502, 43 S. Ct. 437, 67 L.Ed. 773; Mitchell v. United States,267 U.S. 341, 45 S.Ct. 293, 69 L. Ed. 644; Brooks-Scanlon Corp. v. United States,265 U.S. 106, 123, 44 S.Ct. 471, 68 L.Ed. 934; United States ex rel. T.V.A. v. Powelson,319 U.S. 266, 63 S.Ct. 1047, 87 L.Ed. 1390; United States v. Honolulu Plantation Co., 9 Cir., 122 F. 581, 585; Orgel, Valuation Under Eminent Domain, Chapter III. ↩
  6. One of them was asked: "You do not mean to create the impression that $50,000 would be the market value of this property as between a willing buyer and a willing seller on August 27, 1942?" He answered: "No, I do not." The other witness testified similarly. ↩
  7. The County points to 40 U.S.C.A. § 278a, which forbids a government officer to lease "any building or part of a building" at a rental in excess of 15% per annum of the fair market value of the rented premises. As the land here is unimproved, that statute counts for nothing in this case. Even if it did apply here, it would at most disclose that an army officer, not shown to be a real estate expert, thought the land was worth $20,000. ↩
  8. Cf. United States v. 53¼ Acres of Land, 2 Cir.,139 F.2d 244, 247. ↩
  9. That section reads: "The practice, pleadings, forms and modes of proceedings in causes arising under the provisions of section 257 of this title shall conform, as near as may be, to the practice, pleadings, forms and proceedings existing at the time in like causes in courts of record of the State within which such district court is held, any rule of court to the contrary notwithstanding." ↩
  10. The government refers to a New York statute (Laws of 1932, Chapter 391) specifically abrogating the Robinson doctrine, on certain conditions, in condemnation proceedings in the City of New York (see Orgel, Valuation Under Eminent Domain, 485, 486), and argues thus: The Southern District of New York includes New York City, and it is absurd to suppose that conformity depends upon the part of the district in which the land under condemnation is situated; cf. Mallett v. United States, 8 Cir.,137 F.2d 95. The government also cites Heiman v. Bishop,272 N.Y. 83,4 N.E.2d 944, where, under the wording of another New York statute, not relating to condemnation, the Robinson doctrine seems to have been ignored. ↩
  11. See Orgel, Valuation Under Eminent Domain, 482-483. In Matter of City of New York (School Site),222 App. Div. 554, 557, 226 N.Y.S. 536, 539, (affirmed250 N.Y. 588, 166 N.E. 335) the court said: "Despite the argument of the appellant and the wholly unreliable figures of some of the experts, so called, the market value of this property may be arrived at by a comparison of the sales of property similarly situated and in the same neighborhood"; cf. Matter of City of New York (Jennings Street),207 App. Div. 170, 201 N.Y.S. 799. ↩
  12. See, e.g., Manhattan Life Insurance Co. v. Schwartz,274 N.Y. 374,9 N.E.2d 16; Misner v. Strong,181 N.Y. 163,73 N.E. 965. ↩
  13. See 28 U.S.C.A. § 879; F.R.C.P. 81(a)(7). Cf. Ramming Real Estate Co. v. United States, 8 Cir.,122 F.2d 892, 895; Miller v. United States, 3 Cir.,137 F.2d 592; Fairmont Glass Works v. Cub Fork Coal Co.,287 U.S. 474, 481, 53 S.Ct. 252, 77 L.Ed. 439; United States ex rel. T.V.A. v. Powelson,319 U.S. 266, 272, 63 S.Ct. 1047, 87 L.Ed. 1390. ↩