RESPONDENT: Virginia Electric & Power Company
LOCATION: John H. Kerr Dam and Reservoir
DOCKET NO.: 49
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Fourth Circuit
CITATION: 365 US 624 (1961)
GRANTED: Apr 18, 1960
ARGUED: Nov 10, 1960
DECIDED: Apr 03, 1961
Perry Morton - for the petitioner
Ralph H. Ferrel, Jr. - for the respondent
Facts of the case
In 1944, Congress authorized the construction of a dam on the Roanoke River and for that purpose sought to acquire a 1,840-acre easement from the 7,400-acre estate surrounding the Dan River, a tributary of the Roanoke River. The Virginia Electric Company owned 1,540 acres of the property in question that had been purchased from the estate owner in 1907 and would be part of the government’s easement. In 1951, the government reached an agreement with the estate owner to purchase the easement for one dollar and to officially acquire the land through a condemnation proceeding. The Virginia Electric Company, whose land was about to be taken in the easement, intervened to contest the issue of just compensation.
The district court awarded a substantial compensation to the Virginia Electric Company, and the U.S. Court of Appeals for the Fourth Circuit affirmed. The Supreme Court remanded the case for reconsideration in light of the decision in United States v. Twin City Power Company that held that the amount of compensation should not take into account the value of the land for water power purposes. On remand, the district court appointed commissioners to evaluate the value of the land and awarded $65,520 in compensation. The Court of Appeals affirmed.
Does land used for easement have compensable value when appropriated by the government?
Media for United States v. Virginia Electric & Power CompanyAudio Transcription for Oral Argument - November 10, 1960 (Part 1) in United States v. Virginia Electric & Power Company
Audio Transcription for Oral Argument - November 10, 1960 (Part 2) in United States v. Virginia Electric & Power Company
Mr. Morton, you may proceed.
Perry W. Morton:
Thank you, Mr. Chief Justice.
At the recess from the morning hour, I was at the point of saying that the case was first tried in January 1954 resulting in a judgment for $61,600 in favor of the power company.
The only valuation evidence offered at that trial was by the power company.
And it related to the fee simple value of the 1540 acres covered by the power company's easement excluding only merchantable timber, which I insert parenthetically by arrangements with the Government.
Mrs. Williams had been permitted to remove out of all the area that would be covered by the power coop.
I missed that.
What did -- what did she (Voice Overlap) --
Perry W. Morton:
I say all of the timber was --
Perry W. Morton:
-- permitted to be removed out of the area that would be covered by the power coop.
Now, the Court of Appeals affirmed.
And as before stated, you granted certiorari, vacated the judgment, remanded the case for further consideration in the light of your Twin City decision the week before.
On remand, the Court of Appeals was constrained to recognize that under the Twin City decision, there could be no recovery against the United States or rights which would have value only in connection with the development of the water power of a navigable stream.
But in returning the case to the District Court, the Court of Appeals directed that there'd be an award to the power company of compensation for the taking of the Government's easement.
Excluding from the valuation, any element of value arising from the availability, these are its words, "of the land for water power purposes due to it's being situate on a navigable stream, but including," and I resume, "other elements of value not related to the flow of the stream such as its value for agricultural or grazing purposes".
Along the return of the case to the District Court, the Commissioners were appointed under Rule 71A (h) and were instructed to return their answers to four specific questions insisting on its position that the power company's flowage easements could have no possible value as against the United States.
The Government again offered no valuation evidence at the retrial before the Commissioners in June of 1958.
And after a further hearing before the Court, the District Court that is, in November of 1958, the Court entered judgment against the United States in favor of the power company, this time for $65,520 plus interest.
In doing this, the Court held that the second of its inquiries to the Commissioners was and I quote, "the appropriate measure of value or compensation" is the word.
That second inquiry had directed the Commission to determine the difference between the fair market value of this Falkland Estate that belonged to Mrs. Williams.
The tract of 7400 acres with and without the servitude of the Government's easement, except that it would assume for that purpose that the easement, the Government's easement covered only the 1540 acres covered by VEPCO's easement up to contour 321 instead of 330 and excluding from both of such valuations any element of value arising from the availability of such land for water power development purposes due to it's being situate riparian to a navigable stream.
And in making their report, the Commissioners stated that $11,720 of the total difference of $65,520 represented "damages to the residue" of the Falkland Estate.
Well, the Government again appeals.
The Court of Appeals again affirmed.
And at that point, you have brought the case here.
On these facts, we think that the courts below have persisted in trying the wrong case.
And we are here in an effort to get the right case at long last decided.
In the Government's view, there is a very simple syllogism which requires a conclusion favorable to the Government against the power company.
The major premise of this syllogism is based upon your decision in the Twin City case that when the Government, in the exercise of its commerce power, appropriates the flow of a navigable stream for a government project, it is not obligated to pay those elements of property value which are solely dependent upon the flow of the navigable stream.