United States v. Fuller

PETITIONER:United States
RESPONDENT:Fuller
LOCATION:Allegheny County District Court

DOCKET NO.: 71-559
DECIDED BY: Burger Court (1972-1975)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 409 US 488 (1973)
ARGUED: Oct 18, 1972
DECIDED: Jan 16, 1973

ADVOCATES:
Frank Haze Burch – for respondents
Harry R. Sachse – for petitioner

Facts of the case

Question

Audio Transcription for Oral Argument – October 18, 1972 in United States v. Fuller

Warren E. Burger:

We’ll hear arguments next in 71-559, United States against Fuller.

Mr. Sachse?

Harry R. Sachse:

Mr. Chief Justice and may it please the Court.

This case is here on a writ of certiorari to the Court of Appeals for the Ninth Circuit.

The issue presented by the case is the following: when the Government condemns land for public project, must it pay for the value added to the land by a permit to graze cattle on adjacent public land, and I can refine that one step further; when that permit is admittedly a revocable permit that the Government can revoke without payment of compensation.

The factual situation in which the case arose is the following: Government determined that it was necessary to build a dam as a flood-control project on the Bill Williams River in Arizona, an area that is subject to flash floods.

Mr. Fuller owned three tracts of land in the vicinity of this project.

It was the total — about 1,280 acres.

It was necessary for the Government to take two of those tracts that totaled 920 acres.

It was not necessary for the Government to take the third and third tract was not taken.

In connection with his land, Mr. Fuller for a number of years had been using 30,000 acres of federal grazing land to graze his cattle in it.

He used that land under permit issued under Section 5 of the Taylor Grazing Act of 1934.

Section 5 permit, now, I will talk about in a little more detail later, is a revocable permit that by statute does not create any right, title or interest in the public land.

Harry A. Blackmun:

Mr. Sachse, does it have a term stated however even though it is revocable?

Harry R. Sachse:

The term is not stated in the statue except that it cannot exceed 10 years as an administrative regulation and practice.

The permits are issued year by year.

The permit has to be reissued each year.

They are customarily reissued to the same person and had them the year before, but the permit is for one year.

Harry A. Blackmun:

There isn’t any formal procedure for termination, isn’t it or is there?

Harry R. Sachse:

If — I think there is a formal procedure for termination and to this extent that if a man applies for the permit for a second year and the Government determines not to grant the permit the second year, the Government will allow him to — it will state its reasons why the permits not being granted and will allow him to state his reasons why he thinks the permit should be granted.

It’s not — the Government won’t deny a permit just out of hand, but the permits are revocable and often when the property is needed for another purpose or the property hasn’t been properly used are revoked.

Now, there’s a peculiarity of this case that needs to be kept in mind.

The Government did not revoke Mr. Fuller’s grazing permit when it took these two tracts of land.

The reason it didn’t do so is that it didn’t take his third tract of land and he was free to continue to use this permit in connection with the third tract of land.

In Arizona, the basis for having a grazing permit is having sufficient water for the cattle that roam on the federal land to use on the private land and he had sufficient water apparently on his third tract of land and so far as we know, Mr. Fuller is still using this permit.

William H. Rehnquist:

And it’s your contention, I take it that the department — was it, agriculture or interior?

Harry R. Sachse:

It’s interior.

William H. Rehnquist:

The Department of the Interior will not take a jaundiced view of the renewal of his permit because he has less fee land now than he did before?

Harry R. Sachse:

That’s correct.

It has not done so as far as I understand.

Harry R. Sachse:

Actually, part of what brings this case here is that the Department of the Interior has been very generous with the use of this land because if the Department of Interior had revoked his use of the 30,000 acres of public land before it took the land in question, at least according to the jurisprudence in the Courts of Appeal, up to this point, there wouldn’t have been no question at all that he would have had no right to ask the jury to evaluate his use of the public land along with his use of his private land and it’s our contention that it’s just nonsense to say that this revocable permit creating less than a property right and the public land that could have been revoked; gives him a right to additional compensation because the Government chose not to revoke it.

If the Government now took his next piece of land, the third of piece of land, under the ruling of the Ninth Circuit.

The Government would have to pay again for the same permit.

Now, in the trial of the case, Mr. Fuller relied heavily on the number of cows that could be grazed on his land plus the public land and obtained an instruction from the trial judge that the jury could take into account his use of the public land and giving him compensation for his private land so long as it also took into account the fact that the public land was held under revocable permits that those permits could be revoked without payment of compensation.

The jury returned a verdict of $350,000 for the 920 acres of ranch land that was taken and the Government appealed.

The Ninth Circuit divided on the case.

The majority held that because the permit had not been revoked distinguishing this from the situation with permit had already been revoked, he had a right to get the value of the public land along with the value of his private land and I should say that more accurately.

He had a right in determining the value of his private land to have added to that any special value provided by the use of the public land.

The Court was at pains to distinguish this Court’s decision in United States versus Rands which in a rather similar situation had held exactly to the contrary.

The man had private land along a river and had a special value added to that land by its possible uses of port site that the Government in taking the land would not have to pay the special port site value that was added.

The dissenting judge found that the decision in Rands was controlling in this case.

Byron R. White:

Where is the — the land has been overruled by the Congress or at least in the narrow facts of Rands, it has been pretty well run over I think.

Harry R. Sachse:

I don’t think so at all Your Honor and Mr. Burch argues that but I think it points out a very essential distinction.

In Rands, this Court held that as a constitutional matter, Fifth Amendment of the Constitution of the United States provides that just compensation for the taking of private property for public use does not include the value of any special use in public property and the fact situation there was the public property was the use of the water way for the port site — the use of the property of riparian property for a port site and the court relied on the Government’s navigational servitude saying that the Government decides whether someone can or cannot use navigable waters for a port site.

Now Congress, after that case passed an act that said that where riparian land is taken in one situation — that where the entirety of the riparian property is taken for harbor improvements or river improvements that any special value that it has as a port site can be included in the valuation of the land.

I have two points to make here.

One it’s not at all unusual for this Court to say what the constitutional requirement is for just compensation and if the Congress then to provide more if it thinks in a particular situation then it should do so.

And secondly, the Congressional Act doesn’t go nearly as far as the Rands case went.

The Rands case created a broad principle that would apply to any riparian taking.

Congressional Act applied only if the entirety if a man’s land is taken which by the way was not the case here.

Byron R. White:

And it’s just a statutory decision would have capability of overruling the constitutional conspiracy?

Harry R. Sachse:

It’s a Statutory Act without capability of overruling a constitutional decision.

William H. Rehnquist:

Well nonetheless, Congress gets its way in this case because as you say Congress can grant more than the Fifth Amendment requires it to give?

Harry R. Sachse:

And Congress could get its way in this case if Congress did something that it has not done, and that is to declare that a Taylor Grazing Act permit, on Section 3 of Taylor Grazing Act creates a vested right of property interest in land.

Congress not only hasn’t done that.

It has resisted suggestions that it should do so and it particularly chose not to do so when it had both possibilities in mind and I would like to elaborate on that a little bit.

In the 1890s, ranchers in the west used the public land absolutely as if it were their own and it led to a bad situation of range warfares into the destruction of the range land through overgrazing.

In 1891, Congress had first time tried to do something about that and it passed the Forest Service Act and included some range land in the Forest’s Service Act.

But the Government under the Forest Service Act, that was the Secretary of Agriculture would not permit grazing on the public land except by permits that he would issue for a limited a period of time revocable if the land were needed for other purposes or if the land were abused.

Now, the ranchers in the west strenuously objected to this as taking away their vested right to use the range as they saw fit and they brought the case all the way to this Court, Light versus the United States, United States versus Light and I think its in 220 U.S., it’s cited in our brief.

Harry R. Sachse:

In Light, this Court strongly upheld the right of the Government to treat the public domain land as a propriety and to either grant or not grant rights to private individuals to use the public domain and if it granted rights to private individuals to determine how much that right should be.

And in 1934, when Congress passed the Taylor Grazing Act, it set up two separate systems.

Set up one system under Section 13 of the act in which a rancher could get a leasehold interest in a part of the public ranch, but it only set that up small or non-contiguous tracts of land, and that would be an interest protected from expropriation without payment of its value.

William O. Douglas:

I remember —

Harry R. Sachse:

Sir?

William O. Douglas:

— in the Western part of the country, there at some places, some land that borders a wilderness area and the wilderness area is one under the act that cannot be developed or you owned that the Federal Government for recreation purposes.

Harry R. Sachse:

Correct.

William O. Douglas:

Now, the location of that land in looking out over a wilderness, gives it a very enhanced market value.

Do you say that that should be not taken into consideration?

Harry R. Sachse:

No, I think that should be taken into consideration and any general environmental value ought to be taken into considerations, but what shouldn’t be taken into —

William O. Douglas:

So that would taken into consideration then the value of what the Government is providing in the wilderness area?

Harry R. Sachse:

That’s right and I don’t want to argue and I don’t think it would be right to establish a broad principle that says that any conceivable value that the Government is added to property is not a subject to compensation.

What I am arguing is that when Congress has acted and said that a single individual can use a specific part of the public land, but that he shall have less than a vested right in that land and this, I mean to get to it and I’ll get to now, and that vested right, that less than invested right, that permit is a considerable subsidy to this individual.

It’s a right for him to use that land at less than its value.

If he wanted to rent the grazing land from private owner, he’d have to pay great deal more than he does — than he pays to Government.

William O. Douglas:

But we do know that the Taylor Grazing Rights are usually available only to contiguous owners?

Harry R. Sachse:

That’s correct.

They are usually available to contiguous owners or I think the owners in the vicinity or owners with adequate water source such as that.

But our main point here is that Mr. Fuller has been subsidized in a large way through the use of less than a vested right, less than a property right of the public land and he continues to have that use in fact.

And when his land is taken, he didn’t say the Government which has paid him a benefit over the years by letting him use its land, didn’t pay him again.

William J. Brennan, Jr.:

Does he pay anything for the permit?

Harry R. Sachse:

Yes sir.

He paid something for the permit, but the value is generally considered very much less than the true value of the use of the land.

Potter Stewart:

Is it just some nominal sum or —

Harry R. Sachse:

I — well, I wouldn’t want to mislead the Court.

I think the sum is $8 or $9 a head and I think that is about a third of the commercial rate or fourth commercial rate or something like that.

Warren E. Burger:

Going back to this other situation, I suppose if a man has a home overlooking Rock Creek Park either in Washington or up the platonic on the palace aids area, the view that he has contributes to the — enhances the value of the real estate?

Harry R. Sachse:

Correct.

Warren E. Burger:

But that doesn’t give him any absolute right to the view or does it?

Harry R. Sachse:

No, it doesn’t.

Warren E. Burger:

Government might come along and put a dam right there and spoil his view without giving him any right, I assume to recover for spoiling his view?

Harry R. Sachse:

That is correct.

What —

William H. Rehnquist:

Mr. Sachse, (Inaudible) to start with this question.

You stated that this is a type of right that the Government ordinarily accords only to contiguous owners, and I take it there is also a right that is a property right that vests in this individual himself as opposed to the general public’s right to go on other parts of the public domain.

Don’t you think that makes it a little different from Rands where I take it the right of access to the navigation was only in common with the general public?

Harry R. Sachse:

Well, I would like to start by saying that the right that this individual has to use the public land is by Congressional enactment less than a property right, is a permit to use the federal land.

William H. Rehnquist:

What do you mean when you say less than a property right?

Harry R. Sachse:

Less than a property right?

What I mean is this, when the Congress setup the Grazing Act, it allowed leases of land to some people, and that’s clearly a property right.

But as to the land, we are talking about Section 3 land, it provided in this statue.

This permit shall create “no right title or interest in the public domain” and it’s clearer than setting up that statute Congress was faced with the possibility if we take these rights of way, should we have to pay it for and Congress wanted to say no, that it was granting a benefit and it shouldn’t have to pay again, it took the benefit away.

And Congress knew that cattlemen historically had wanted to treat public land as their own.

So this was in the Roosevelt Administration and they didn’t want it to be treated that way.

William O. Douglas:

Some of our big ranches — the big ranches on the west have a little nucleus 200 acres owned and fee by the owner and 50,000 and more acres have particular grazing land around it that may sell it to the millions of dollars on the market price.

Harry R. Sachse:

That is correct.

I suppose the second part of that statement would be that if Mr. Fuller has paid less than the market price, he is not getting just compensation.

But when the Government takes that land, the Government is taking back land that was its land and the Government shouldn’t have to pay that value and Mr. Justice Douglas in the case of yours some time ago it may not be fair to cite cases.

Actually, it’s slightly different —

William O. Douglas:

Well, if you said you are long enough, you can always find something in Court against you.[Laughter]

Harry R. Sachse:

That’s right.

There was a case when the Government took some tugboats and in Cors versus United States, Government took some tugboats during World War II and the statute under which it took those tugboats said that it shouldn’t pay any value, over the value that any value created by the present emergency of something like that.

Tugboats, actually at the time of the taking were selling for quite a lot because the Government was buying them up and this Court held that the value which the Government itself created is a value which in fairness should — the Government — it’s a value which in fairness the Government should not be required to pay.

Warren E. Burger:

We’ll pick up after lunch at that point.

[Luncheon Recess]

Mr. Sachse, you may continue.

Harry R. Sachse:

I just want to make one or two points then to reserve the rest of the time for a rebuttal if I can.

First, I want to reemphasize is what we are dealing with here is a subsidy that Mr. Fuller has already received in having this grazing permit at less than its true value and then an attempt by Mr. Fuller to obtain what we consider a second subsidization when his base land is taken.

I want to emphasize also that the Courts of Appeals up to this point have held that if the grazing land is taken first, no compensation needs to be paid.

And if the base land is then taken that the value that the grazing land might have added is not to be considered.

Warren E. Burger:

Well, when you say, if the grazing land is taken first, you’re not using that phrase as a word of art to constitutional taking, are you?

You mean if they terminate first or if it had expired and refused to renew it.

Harry R. Sachse:

That’s correct.

Warren E. Burger:

And then we would take the fee under the conventional taking process.

Harry R. Sachse:

That’s correct.

You have proffered it correctly on that because there is no right title or interest in the graze land, there is nothing to take in the constitutional.

Warren E. Burger:

I say there is nothing to take, that’s your argument?

Harry R. Sachse:

That’s correct.

So it becomes a very anomalies situation we think that when the grazing land has not yet been taken, when it can still be used in connection with land that Mr. Fuller has, when he still to some extent is enjoying his subsidy, to then give him the second subsidization when his own land was taken.

William H. Rehnquist:

You say that at least the holding in Jaramillo is dead duck, isn’t it?

Harry R. Sachse:

Well, Cox versus United States is a case that I am talking.

Cox was — it seems to me was the major case that the Tenth Circuit decided and Cox had clearly said that the value of the grazing land could not be considered even though at that –- to get to real facts of Cox, the grazing land had not been taken there either but the court found that it would be lost as a result of the taking of the base land.

And the Court held there, no right to include the special value of the grazing land, in Jaramillo, its companion case decided just immediately after it didn’t (Inaudible).

William J. Brennan, Jr.:

Mr. Sachse.

Harry R. Sachse:

Sir.

William J. Brennan, Jr.:

Suppose the Government, the Federal Government had improved the land now being taken say with an expense of irrigation system or something like that, and now the United States wants to take the land.

Would you be making the argument you are as to the enhancement of the value?

Harry R. Sachse:

I don’t know whether I would.

I think that the case before the Court now is a much stronger case from United State’s standpoint because here, there was a use of public land involved.

Now the case you present would be that the public improves a man’s private land and whether the public should then have to pay for that improved value and I don’t know.

I’d rather not try to decide that one now.

William J. Brennan, Jr.:

How would you distinguish that in your situation?

Harry R. Sachse:

I’d distinguish it in one; the value added is by a use of public land that’s still in the public domain.

And that in the other, the value added is a benefit somehow that the Government has made to this man’s private land.

I want to look into the details of that more.

Warren E. Burger:

But most often — most often such an improvement if you would call it that is one of which is shared in common by great many people, perhaps people of different places, but if a new lake is created for example by backing up water with the dam, enhances the value of lake shore, creates lake shore a property out of which once was a pasture.

So that that’s something you shared in common with the great many people, isn’t it?

Harry R. Sachse:

That would be so.

William J. Brennan, Jr.:

But what I was thinking of it Mr. Sachse used to be two, I don’t know that still is.

In the rural county which I lived in New Jersey, United States Government used to finance the digging of ponds and the irrigation in that way on the local farms in the county.

William J. Brennan, Jr.:

Nothing like these (Inaudible) farm in the Western states of smaller farms.

They certainly added a good deal of the value of that farm.

Harry R. Sachse:

I would say this, Your Honor, with the right for the Solicitor General to change his mind if that case came up.

Say, the difference is this, that in that case, the Government would move on to private property, do some work and then leave and the Government interest would be over at that time.

But in this case, we are talking about a continued use of Government property and I think that’s a fundamental difference.

The right of the Government to not have to pay for the value of the public domain and I think it’s a kind of holding that this Court has already made in United States versus Rands and in a whole series of cases dating back into the 19th Century on which Rands was supported.

Potter Stewart:

The mere fact that you had a pasture, in other words acquired property or part of the property by gift from the Government, would not be relevant when at some later time, the Government tried to condemn the properties that is now your property as the pond gets there.

Harry R. Sachse:

That’s correct.

Thurgood Marshall:

The only point is a gift point?

Harry R. Sachse:

We’re not seeking a broad ruling in this case.

We are seeking a ruling based upon what Congress has done under the Taylor Grazing Act, that kind of interest that Congress gave under the Taylor Grazing.

Thurgood Marshall:

What kind of interest?

Suppose the state own this land and had the exact same agreement with Mr. Fuller, would you recognize that?

Harry R. Sachse:

If the state owned the land, we would argue that Mr. Fuller has less than a compensable interest in the state land which he held under tenure that was less than a lease, and then we would not have to pay for it.

But I —

Thurgood Marshall:

Why not?

Harry R. Sachse:

Because under what I hope are established principles of just compensation, the Government only pays for established property rights that a person holds, not for rights that are less than a type.

Thurgood Marshall:

So your point isn’t the fact that the Federal Government gave him this gift, is if anybody gave it to them.

Is that your position?

Harry R. Sachse:

No, no.

He —

Thurgood Marshall:

You don’t have to go that far.

Harry R. Sachse:

No, what I am saying is — I wasn’t thinking of the gift case, the gift case.

I was talking about the use of lands, of state lands under less than a —

Thurgood Marshall:

Well, that’s in real time.

Harry R. Sachse:

But I agree with you.

I don’t have to go that far and what I was about to say is that I think our case is much stronger than the case would be as a state land which is here, the Government itself has conferred a special privilege in a revocable fashion.

And when the Government takes this land, it seems particularly unfair and not as a question of just compensation to make the Government pay again for the favor that it did before.

And cattlemen in the West have received, it seems to me quite adequate subsidies from the Government without the court creating or making a single subsidy larger.

Warren E. Burger:

Tank you Mr. Sachse.

Warren E. Burger:

Mr. Burch?

Frank Haze Burch:

Mr. Chief Justice and may it please the Court.

Counsel has indicated to the Court, I think erroneously that — and perhaps inadvertently in response to a question that Fuller remained in business, that he was still operating around, these are the statements there as the record, they are not accurate and it simply points up the danger of applying the Rands analogy to these kind of cases.

I hope I can persuade the Court in my statement to you.

Warren E. Burger:

Well, does it really make any difference one way or the other, whether he is still there or whether he is gone?

Frank Haze Burch:

Only that I think that the possibilities of less than adequate compensation are present and the indication would be with counsel saying do that the Rands is still in existence and operating is not effect.

Matter of fact, matter was that the compensation that was received wasn’t enough to cover the existing debts.

So if it’s a thing the Court, I don’t think should consider in any event that it was there and the statement was inaccurate when it was made to the Court.

The U.S versus Jaramillo case which has been remarked onto the Court in oral presentation and which is briefed is directly in point with Fuller as we understand it, and I think it stands for the proposition, not as counsel has stated that one must be paid or subsidized, but that it simply means you can take into consideration in determining the market value of a ranch, the availability and the accessibility of permit land, and that’s really all that the Court instructed.

Judge Craig in the District Court was extremely careful not to distinguish Rands which he didn’t know about at the time, but to follow Jaramillo which we consider to be the law and certainly a well reasoned conclusion.

He did tell the jury as we have pointed out to you that they must recognize the possibility of Government revocation of the permits and the leases and incidentally the question I believe one of the justices remarked on, there was state land involved in this.

There was 30,000 acres of federal lease land, 12,000 acres of state land which the applicant owned and approximately 1,200 acres of fee land.

Also, there was some indication that the reason BOM did not revoke these leases was the remainder of the fee land.

The fact of the matter is that had nothing to do with the case at all.

It was isolated across the river and it couldn’t be made accessible under any set of circumstances.

William H. Rehnquist:

Mr. Burch, how is the state land treated in the judge’s charge of the jury, if it was treated at all?

Frank Haze Burch:

The judge specifically told them that they couldn’t consider the value of those permits either, although there were ten-year leases as I recall.

But I believe, I have the full instructions set out in our brief, Mr. Justice Rehnquist, and the court did in fact specifically state that the jury was not to consider any value given to state or federal permits as the case maybe, whether they were Taylor Grazing Act, Section 5 leases or State of Arizona land leases for agricultural purposes or grazing purposes.

Warren E. Burger:

Are where those ten-year leases terminable by the state?

Frank Haze Burch:

Yes sir.

Warren E. Burger:

So, that puts them in the same posture as (Voice Overlap)

Frank Haze Burch:

Somewhat different, Mr. Chief Justice, somewhat different simply because there is a preference in Arizona that I am unaware of whether not it holds over in Taylor, but Arizona, if the state needed that land for any purpose for a length of time and then put it back on the market, the preference would go to that (Inaudible) who had been the prior lessee or permittee.

But nonetheless, I think the court properly instructed and the jury was properly aware that these values, if there was any value in the permits, must not be considered and the testimony in the case was quite clear that those who testified as the value distinguished the permit land and reduced the total value of the fee land by whatever they felt was the value of the permit land.

(Inaudible)

Frank Haze Burch:

Yes, I have a note here that the court in its instruction said, give to the fee lands such value as the availability and accessibility of the permit and fee land might create in conjunction with the fee.

Now the Government has said —

William H. Rehnquist:

The state and federal permit lands were treated alike then for purpose of fixing?

Frank Haze Burch:

Coincidently, the state was in there to get the value of its land in the proceeding also and that was a separate matter which was settled out of court ultimately.

We agree with the Government that permits for grazing are not compensable property right, but we do not agree that a jury must to take a legal fiction and say they are not accessible, they are not available, they do not exist when in fact you have an actual operating cow/calf operation, and the Government is going to take that operation and leave you with the permits.

Now it doesn’t then make a fair compensation.

Frank Haze Burch:

It certainly doesn’t take into effect the work, the effort, the improvements of that existing cow/calf operation had and I say that the cow/calf operation, because it’s distinguishing factor.

This was not some lease of a large amount of federal acreage where someone run a steer operation on the permit land, bought cows or calves in the winter, fed them during the spring and sold them in early summer.

As the record revealed and as the Court of Appeals understood, the fee land was the important reason for the existence of this ranch.

You will have two wells —

Byron R. White:

Would it make a difference to your argument if that permit land had been that way, would it?

Frank Haze Burch:

No.

As a matter of fact, most of our appraisers and their testimony simply said, the permit land we put to one side.

The fee land can support somewhere between 800 and 1,000 cow units per year by reason of its accessibility of water, its fertileness, its Bermuda grass, pastures, its alfalfa crops.

We can support X number of cows, if you allowed us to consider the permit land, it would be worth this much more, and that’s how the testimony went and that’s how the verdict was arrived at.

They did not consider it.

The permit land as having any value except that it was available in case of a good year, you could put those cows on and maybe grow more fee.

William J. Brennan, Jr.:

You are suggesting the $350,000.00 award has nothing in it for the enhancement because of permit land?

Frank Haze Burch:

Precisely.

Warren E. Burger:

What about the stipulation on that subject?

Frank Haze Burch:

I say you this, and perhaps I don’t follow Mr, Justice —

William J. Brennan, Jr.:

I thought what you just said that a lot of testimony that without laying a permit land aside, because of the water and the number of head and everything else, and I was wondering if you were implying in saying that; that the $350,000.00 verdict was arrived at without reference to the value of it.

Frank Haze Burch:

I think it must have been.

Simple reason that all of our experts testified that the property had a considerably larger value than that.

William H. Rehnquist:

Well, what exactly —

Potter Stewart:

You have the instructions to the jury that allowed the jury to —

Frank Haze Burch:

Oh!

Yes.

They were told to consider the availability of the land, its accessibility, but to give it no value in coming to their conclusion.

Byron R. White:

Was there some testimony that as to what the value would have been, if you didn’t consider the availability and accessibility?

Frank Haze Burch:

Oh, yes.

Byron R. White:

And what was that to you?

Frank Haze Burch:

It’s a side and I believe in the Government’s brief — one man a Mr. Perry who was an appraiser testified would be I think it worth about $1,150,000.00 with the permits and approximately a million without them.

He gave the permits — the permit in that land a very little value, about a $150,000.00 as I recall.

Thurgood Marshall:

Mr. Burch, did you say that they instructed the jury to consider the accessibility and availability, but to give it no value?

Frank Haze Burch:

In the sense that they are no award could be made for the permit land.

Thurgood Marshall:

Well how could you consider if you didn’t give it some value?

This whole proceeding is value and money and bucks, that’s all it is?

Frank Haze Burch:

I would agree that the proceeding was to determine the value of the fee land and that determination was to be made considering the use it was put to and the accessibility of adjacent lands which we have a permit for.

But if there was to be any value given to those permit lands, it could not be translated into a jury award and the court is right there to tell them that it must not be.

Warren E. Burger:

Am I mistaken that there was a stipulation on this subject somewhere on the values?

Frank Haze Burch:

Oh, no sir.

Warren E. Burger:

Perhaps I think —

Frank Haze Burch:

In fact, the matter of value was quite bitterly fought.

Warren E. Burger:

That’s in subsequent case that they have a stipulation on alternative values?

Frank Haze Burch:

Yes, yes.

No, in our case there was a great hideous between the appraisers for the owner, Fuller and the Government.

William H. Rehnquist:

Mr. Burch, I take this — the giving of this instruction by Judge Craig was quite closely contested with the Government objecting this.

Why did you insist on handing that instruction if in fact your appraisers didn’t need it or am I wrong in taking you are saying your appraisers didn’t need it?

Frank Haze Burch:

Well, we wanted to make sure that our appraisers, Justice Rehnquist, could testify as to what in fact a cow/calf operation was, and we wanted to get before the court and the jury as much information as possible about the very nature of the operation.

It was completely distinguishable from, as I have indicated to you, a steer operation.

We felt that any appraiser that got in and I simply said, I looked at 1,000 acres of land without understanding what it was, couldn’t come up with an intelligent evaluation, and we felt that that kind of testimony in the light of Jaramillo was absolutely a necessity.

Otherwise, they would simply have been saying, we have a 1,200 acres or whatever the case maybe which we will pretend is not the cow/calf operation which is its highest and best use.

I might at this point digress for a moment and remark on Rands and its ultimate effect, I think upon ranchers and people with riparian fast land holdings.

As I read it, the Government’s case and as I understand their position in this matter, their position basically is that if you are adjacent in the case of Rands to a navigable stream or body of water and you own fee land and it is condemned by the Government, then you cannot consider any use that that land might have relating to accessibility to the water, to the navigable stream or body of water.

And counsel says, they want a very limited interpretation of this case and that its application perhaps by assumption and would be limited.

But in all the western states, in fact all of the states in the country bordering on big rivers, Arizona, particularly where I come has the Colorado, a whole city has been built on the Colorado on fee land, secured from the state of Arizona, and they call it Havasu City.

They built the London Bridge there.

That use is specifically because the Colorado River is there.

If I follow the Government’s reasoning and the application of Rands, what they are saying if it is necessary for the Federal Government to go to Havasu City, take the bridge, the houses, the resorts, the restaurants, the recreation area on fee land immediately adjacent to that river, but solely related to the presence of that river, they don’t have to pay the fair market value of that land.

They have the legal fiction that because it is adjacent to a navigable stream, it has value only without the application of that stream.

(Inaudible)

Frank Haze Burch:

Yes sir.

That’s how Rands can be extended as I read it.

Potter Stewart:

Not since in 1970 legislation?

Frank Haze Burch:

No.

Frank Haze Burch:

Only at that — in limited areas.

Byron R. White:

In fact the Rands itself or whatever the facts though in there the question was whether not only its value, not that it is located on river, but its value —

Frank Haze Burch:

As a potential.

Byron R. White:

(Voice Overlap) a port in which you would use the navigational services?

Frank Haze Burch:

That is correct.

If we have that was the potential use.

Byron R. White:

(Voice Overlap) let’s say use.

Frank Haze Burch:

Yes, sir.

Warren E. Burger:

Now this is river that you speak about in Arizona, a man-made river?

Frank Haze Burch:

No, sir.

Warren E. Burger:

Suppose you had a man-made river, dam and usual backup of water as with many of these projects and you had great enhancement of the value of the land, the cities grew up, resorts and then for some reason or other, the United States Government, decides that for environmental reasons or others, they are going to terminate the dam.

Frank Haze Burch:

Then, they pay full market value sir.

Warren E. Burger:

Terminate the dam, because the water goes away?

Frank Haze Burch:

Oh, I beg your pardon.

I beg your pardon.

I follow you.

Warren E. Burger:

We’re talking about the water going away.

The Government put it there, and now the Government is taking it away.

Frank Haze Burch:

In that instance, Rands wouldn’t apply in any event, because it is not navigable stream as you understand.

That wouldn’t be the case.

Where if they simply took the dam down and went away, property owners at the dams, they are in the same position he was before.

He was received nothing, he has lost nothing because that has occurred.

Warren E. Burger:

Well, whatever he got, he got for nothing and whatever is taken away is —

Frank Haze Burch:

Our situation here is —

Warren E. Burger:

— their lost?

Frank Haze Burch:

Of course, as they came and took the land.

It wasn’t the matter of taking away the facility.

Warren E. Burger:

But you do you concede that if the Government had refused to renew the permit, at the terminal point a few months before that the situation would be different?

Frank Haze Burch:

Only slightly different.

We would then be talking about a cow/calf operation with 12,000 state acres.

Frank Haze Burch:

As the case was, we were talking about a cow/calf operation with 12,000 state acres and 32,000 federal acres immediately adjacent to it.

So it would only been a small matter of degree.

As our witnesses testified some years on that land that the Government saves as valuable subsidy.

You are lucky if you can run a cow on a section that 640 acres.

Sometimes maybe you get a cow to a thousand acres.

The answer if the Government feels it’s being undone by the subsidy to simply raise the rental which they have every right to do.

We have made comment in our brief to the Court that there is another point to be considered in this matter and that is simply the proposition that while Rands may control the compensation under a taking or did control until the amendment that which reduced its effectiveness and I think indicates a congressional change in the onerous rule of Rands that while Rands may control as to riparian fast lands, that is a situation where the Government has exercised its full authority in the law under the Commerce Clause of the Fifth Amendment.

That in Taylor Grazing Act land, the Government has done something less than make this full exercise of its power.

It has said to ranchers, if you go out and build and develop a ranch and that what occurred in this instance and you make improvements, we will rent to you adjacent lands for your use and in this instance, I think the analogy of the Monongahela case which we cite which said, I believe as I recall, though it held sometimes basically in the area of estoppel, that you come it at the implied or expressed invitation of the Government in making improvement, then you should be compensated for it, that is an exception to the fast land cases.

The Twin City case which we cited to the court in our brief, specifically holding against in that instance the land owner still stood for the proposition that if there is this implied consent, if there is this invitation to come in and use land, then the Government must take you as it finds you when it determines compensation for a taking.

We feel that the cases cited to support the Government’s position deal basically with loss of possible future opportunities or frustrated business opportunities or a destruction of a business as oppose to a taking of land or possibly the loss of a renewal expectancy.

When we are basically talking in Fuller about the taking of a thousand acres and the very heart of a cow/calf operation which could not be restored after the taking, and that this operation had incidentally to its use.

Of course, it was lease land.

It was there and existed, the Government leases and the state leases.

We think that the instruction of the District Court judge was a fair one and that it was calculated to make sure that the owner got just compensation, not a subsidy, but simply whatever the value of that land was and the light of its then existing use and to the light of the adjacent land to it.

The Government is not —

Byron R. White:

What would you say if the Government said that — if it were clear that because of the condemnation within a year, the leases would be — the permits would be canceled, there would be no more permits on that land in that area?

Frank Haze Burch:

Well, as I remarked to the Chief Justice —

Byron R. White:

Except for the condemnation though, the land would have sold in the open market if things that gone on is that as they had, it would have sold at a higher price?

Frank Haze Burch:

If in fact, the Government had just simply said to us, the (Inaudible) says of no more lease after X such a year, the Rands would have continued in operation.

It was designed to stay there and it would have continued until it became valuable for something else or its highest and best use became apparent, if there were should have been a change.

The testimony —

Byron R. White:

But do you agree that if the Government had canceled these permits before the condemnation that the outcome would be different?

Frank Haze Burch:

I am not certain that monetarily the outcome would have been any different.

I don’t believe it wouldn’t be.

Byron R. White:

But legally there would not have been the necessity for this instruction?

Frank Haze Burch:

I think not.

In this respect, the court would then undoubtedly have instructed, we have the Fuller fee land and we have the State of Arizona lease land and you, jury, are entitled to consider the use of the Fuller ranch with state land, but you must not give it any value.

Basically, the same instruction that was given.

Now under those circumstances, we would be probably right back up here because the Government I am sure wouldn’t have objected to that.

Warren E. Burger:

As Justice Marshall put it to you, how can you consider this element if you don’t take it into account and give some value on it?

What’s the meaning, the real meaning of that instruction in the minds of the jurors who hear it?

Isn’t it a really a contradictory thing in light of what you saying?

Doesn’t it tell the jury, you can weigh the value of that Taylor Grazing land?

Frank Haze Burch:

Yes, but I think it also tells the jury that if you feel it has no value or that it’s detrimental and reduces the value of this property by the hazard involved of the cancellation, you can take that into consideration too, it cuts both ways.

Warren E. Burger:

Did the judge tell him about the hazard of cancellation?

Frank Haze Burch:

Oh, and the Government did too at great length.

Warren E. Burger:

In arguments?

Frank Haze Burch:

Yes, indeed.

And that there was a considerable argument as to whether or not this land had X value sir, by reason of the fact of these leases and they are intransigent so to speak.

Warren E. Burger:

Isn’t the solution to the problem simple for the Government, if you are right by having the Government pay careful attention to its Taylor Grazing permits?

Frank Haze Burch:

Absolutely.

Warren E. Burger:

Terminate them all well in advance of any contemplated taking?

Frank Haze Burch:

And it seems to me that they would have no trouble doing that except —

Warren E. Burger:

And you would be out?

Frank Haze Burch:

We would be out as far as any fight with the Government is concern at all.

Then the land would be paid for on whatever basis, a jury determined was adequate and real.

Warren E. Burger:

And so the consequences of that position really is, isn’t it that because the Government allows the ranchers and farmers to use the land right up to the time of the actual taking, the Government is penalized for its policy?

Frank Haze Burch:

I don’t see that the Government is penalized if what it pays is fair market value.

The Government would be penalized if it paid more than the land was worth.

Warren E. Burger:

You — I take it to you’d agree that you wouldn’t have gone any such award as you received here if the Government had canceled or refuse to renew the Taylor permits six months or a year before?

Frank Haze Burch:

On the contrary I think I made a bad mistake.

I think in the trial of the matter I got considerably more money.

If I had simply went in and said this is as it was a unique green spot in the middle of Mojave County, the driest place in Arizona, we have a natural spring, two good wells, great grass producing qualities and we can run a cow/calf operation on this thousand acres.

I made a bad mistake.

I should have got about $700,000.00.

Potter Stewart:

You said there was some testimony that the fee property alone is worth about a million dollar?

Frank Haze Burch:

That is correct.

And that was the general area.

Potter Stewart:

Alright.

Frank Haze Burch:

That’s why I said I think a bad mistake.

I feel that the court’s instruction hurt me and that it reduced the value and I say that tool can cut both ways sir.

Potter Stewart:

Well, if we decide against you, I suppose there’d be a new trial, maybe you —

Frank Haze Burch:

I can find Mr. Fuller who is [Laughter] somewhere out looking for a new profession.

William H. Rehnquist:

Mr. Burch, on the theory that your appraisers took, and that was a adopted at least in part by the jury, if they were comparing the fee land as it was before this taking with permits in existence and the fee land and the situation were that the Government have revoked the Taylor Grazing Act permit.

Wouldn’t those appraisers have had to say that the value in the second situation was less than the first, even though they are just valuing the fee land?

Frank Haze Burch:

I really don’t know what they say, because each of the four men I believe we called came to this valuation on a different basis.

One was a professional appraiser, one was the owner, one was a rancher, one was a man skilled in buying and selling ranches.

Each came up, but each stated to the court and jury that they in the coming to the final value that they put on the land did not consider the permit land, because they were instructed not to, and they deducted it from any value that they put on the total property.

Now there were various figures in the trial of the issue that they gave to the permits.

Warren E. Burger:

What was the Government’s testimony on the value of land without Taylor Grazing permits?

Frank Haze Burch:

The Government appraiser came to a figure, I believe of a $136,000.00 based not on the cow/calf operation, however, but based I think upon a potential resort, a treatment of some area.

He remarked when the lake was there, it might have attractive possibilities, but actually the truth of matter that the ground taken was all going to be underwater as the lake arose and subsided, but that was his determination.

As a matter of fact, this is not a permanent lake.

It’s flood control dam where the water will rise and recede and it’s for flood control purposes the land was taken.

Lewis F. Powell, Jr.:

Mr. Burch, if Mr. Fuller had sold his fee land to another rancher, would the permit have passed automatically or would it have been necessary for a new permit to be issued?

Frank Haze Burch:

As a matter of custom, it would have been transferred — it would have been approved.

I recall at no time when it hasn’t been, and the large ranch holdings in the west are consistently sold small fees, 50, a 100, 200 acres along with 20,000 or 30,000 acres of permit land both state and federal and the transfer as a matter of administrative practice for many, many years has been approved.

That’s what they sell basically.

Byron R. White:

The lawyers — the buyers rather regularly check with this land on to see if they wouldn’t be able to —

Frank Haze Burch:

No, I think they just can go down and get verbal confirmation say yes —

Byron R. White:

They know that power is there not to approve.

Frank Haze Burch:

They know the powers, they are not to approve.

They accept that and on the open market, the property has a considerably a larger value, but then they are considering the fee.

Lewis F. Powell, Jr.:

How long had Mr. Fuller held this permit?

Frank Haze Burch:

A number of years, and I am sorry I cannot tell your Mr. Justice Powell the exact time, but he had built over a period of a number of years the total ranch property including wells, and houses, ditches, and fencing.

It had been I think — it was nothing of recent, it took him a number of years.

I think 5 or 10 or something of that nature.

Thank you Mr. Chief Justice.

Warren E. Burger:

Mr. Sachse, you have about four minutes left.

Harry R. Sachse:

I just have few things I want to straighten up.

First on the instruction to the jury.

The judge said, you may take these permits into consideration in arriving at your value of the subject land, keeping in mind the possibility that they maybe withdrawn without compensation.

So that jury was instructed, they could take them into consideration.

William H. Rehnquist:

But there would be error only if some appraiser had in effect, indicated he had done so or as counsel argued (Voice Overlap).

Harry R. Sachse:

I am about to get to that.

In the appendix that we submitted with which is just a very small part of the record, there are four volumes of the record, we picked out a few places where references were made to the permit land, but it’s all through out this record that — maybe Mr. Burch did pick the wrong strategy for the case, but the strategy he picked was to evaluate this fee land and permit land together and try to get the value of that permit land.

We wouldn’t have had any objection if he said this is a beautiful piece of fee land with water and thus and thus and thus and so, and it left out the business about the use of 30,000 acres of federal land.

Now here, at page 25 of the appendix is Mr. Fuller himself testifying, and he is describing his lands, he says, well, it has of course fine water and very fine climate for growing the kind of crops that we have to have.

Then we have soil which is not quite so important, but still it is necessary.

So as then, we have the availability of federal land as well a state land.

Byron R. White:

If an appraiser got on the stand and told you and testify that about the value of this fee land and it sounded rather large, I would expect that you on cross examination would have asked if he took into account the enhancement from permit land, wouldn’t you?

Harry R. Sachse:

I don’t know.

If we have got an instruction from the jury —

Byron R. White:

Well, what if you — what I would think you would have it — if that appraiser testified to a value far in excess of what the Government testimony?

Harry R. Sachse:

I think there is such testimony in the record of this case where the lands were treated together and the Government on cross examination tried to point out well, you are figuring the two and together and Mr. Fuller’s appraisers will say, well, it’s one unitary operation, you can’t value one without the other.

Warren E. Burger:

Do you have in mind what Mr. Fuller’s experts value on the fee land alone amounted to, something over million dollars?

It would have been an enormously high acre per acre figure, would it not?

Harry R. Sachse:

I believe they came out in the area of $800,000.00 for an award on what they called the value of the fee land, but in figuring the value of the fee land, they figured how many cows could be raised on the fee land together with the —

Warren E. Burger:

How many acres of fee was there?

Harry R. Sachse:

920.

Warren E. Burger:

920, wasn’t it?

So that it was something approaching a thousand dollars an acre —

Harry R. Sachse:

They got a good deal less than they might have gotten and a good deal more than the Government thought they should have had on the basis of the fee land itself.

William H. Rehnquist:

Isn’t true in most condemnation cases?

Harry R. Sachse:

I think that’s often so.

Potter Stewart:

Oh really?

The only issue before us is the correctness of the instructions to the jury.

Harry R. Sachse:

I think that is correct.

The proposition of law involved here as to whether the Government has a legal duty to pay for the value added —

Potter Stewart:

That’s right — a lot more money with even if you are in the case.

Harry R. Sachse:

I think that’s —

Thurgood Marshall:

Well, suppose during the case, the US Attorney had said that we have revoked to permit.

Harry R. Sachse:

If during the case?

Thurgood Marshall:

Put on testimony and said it’s now revoked?

Harry R. Sachse:

Right in the middle of the trial?

Thurgood Marshall:

Yes.

Harry R. Sachse:

I guess [Attempt to Laughter] depending on what the prior testimony had been, you might have a mistrial.

But actually I think it would — the problem with the trial was a pretrial order that stated that the value of the permits could be considered, a testimony that said it could be even the instruction.

I believe my time is up.

Warren E. Burger:

Thank you Mr. Sachse.

Thank you Mr. Fuller.

Mr. Burch.

The case is submitted.