Transwestern Pipeline Co. v. O'Brien

418 F.2d 15, 1969 U.S. App. LEXIS 10236
CourtCourt of Appeals for the Fifth Circuit
DecidedOctober 30, 1969
DocketNo. 26631
StatusPublished
Cited by44 cases

This text of 418 F.2d 15 (Transwestern Pipeline Co. v. O'Brien) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Transwestern Pipeline Co. v. O'Brien, 418 F.2d 15, 1969 U.S. App. LEXIS 10236 (5th Cir. 1969).

Opinion

THORNBERRY, Circuit Judge.

Transwestern, appellant, as the holder of a Certificate of Public Convenience and Necessity issued by the Federal Power Commission for the construction of pipeline facilities, sought to condemn a sixty-six foot pipeline easement running through five sections of the appellees’ (hereafter referred to as Landowners) 21,240 acre ranch located in Winkler County, in far West Texas, for a total taking of forty acres. The ranch is located in an arid part of Texas and is populated principally by yucca, cactus, sandhill grasses, mesquite, eatclaw and burro grass. None of it is in cultivation and the surface is used only for cattle grazing purposes. The ranch, however, has many oil wells, tank batteries and other oil field equipment, and is crisscrossed with numerous pipeline easements and gathering lines.

The district judge referred the case to three Commissioners pursuant to rule 71A (h) of the Federal Rules of Civil Procedure, and issued to the Commissioners the court’s charge containing specific instructions on the measure of value and standards for the receipt of evidence. The Commissioners found the overall fair market value of the tract from which the easement was taken to be thirty dollars per acre. They further found that the value of the land within the easement strip itself was four hundred and one dollars ($401) per acre before the condemnation, and one dollar ($1) per acre after the condemnation, for total damages of sixteen thousand dollars ($16,000) for the forty-acre strip itself. The Commissioners also separately found damages to the remainder of the tract (21,200 acres) of five,thousand, three hundred dollars ($5,300), for a total award of twenty-one thousand, three hundred dollars ($21,300). The [17]*17district judge accepted the Commissioners’ award, and Transwestern takes this appeal from the district court’s judgment.

I.

In his charge to the Commissioners, the district judge instructed that they “should not permit the parties to introduce evidence which would not be admissible in a trial before a jury in this Court.” They were further instructed to report separately, as the two basic elements of compensation, the damage to the strip of land being condemned and the damage, if any, to the remainder of the tract from which the easement strip is taken. This was to be determined by comparison of the differences in value before and after condemnation for both the easement strip and the remainder. In applying the “measure of Compensation,” they were instructed that:

The term “value” as used herein is that sum of money which could have been obtained for the property in question on the open market on the date of taking, considering all of the circumstances; that is, it is the amount in terms of cash or its equivalent that, in all probability, would have been arrived at by fair negotiations between an owner, willing to sell and a purchaser willing and able to buy, neither being under any compulsion to act, and a reasonable time being allowed for negotiation.

This is a correct definition of market value. Market value is not an end in itself, but merely a means of ascertaining “just compensation,” which is the value of the land taken plus the damages to the land not taken. As the district judge rightly recognized, by fair market value is meant the amount of money that a purchaser willing but not obliged to buy the property would pay to an owner willing but not obliged to sell it, taking into consideration all uses to which the land was adapted and might in reason be applied. United States v. Miller, 1942, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336; United States v. Virginia Electric & Power Co., 1961, 365 U.S. 624, 81 S.Ct. 784, 5 L.Ed.2d 838. The general rule is to permit proof of the varied elements of value — that is, all the facts that the owner would properly and naturally press on the attention of a buyer with whom he is negotiating a sale and all the facts that would naturally influence a person of ordinary prudence desiring to purchase.

Transwestern appeals this case because it believes that the award of the district court did not reflect the true market value of the easement taken. Specifically, Transwestern argues that the district court erred in accepting and expressly approving the Commissioners’ report because the Commissioners’ just compensation award was based on sales of other easements to parties having the power of eminent domain, and thus wás contrary to the law and to the court’s charge.

The general rule is that the price paid at voluntary sales of land similar to that taken at or about the time of the taking is admissible as independent evidence of the value of the land taken. Jones v. United States, 258 U.S. 40, 42 S.Ct. 218, 66 L.Ed. 453. Market value, as previously indicated, is the price at which an article sells in the open market. The comparative sales approach enables the court to reason by comparison as to how much a prospective purchaser would pay and an owner accept for the property being condemned as of a certain date. Not all comparable sales, however, may be introduced as independent evidence of the value of the land taken. In Slattery Co., Inc. v. United States, 5th Cir. 1956, 231 F.2d 37, this Court stated:

Appellee * * * cites many cases from this circuit and elsewhere, laying down the rule that “The prices paid in settlement of condemnation proceedings or the sum paid by the condemnor for similar land, even if proceedings have not been begun, is inadmissible.” This rule, based upon the view that such payments are in the nature of [18]*18compromise to avoid the expense and uncertainty of litigation and are not fair indications of market value, is the generally prevailing rule in this circuit and elsewhere. The only recognized exceptions to it are in cases where the fact that parties were condemnor and condemnee either was not known or had no influence because the sale was not in connection with, or in anticipation of, condemnation proceedings.

As Judge Hutcheson indicated in Slattery, the reason for excluding sales to buyers possessing the power of eminent domain as evidence of market value is that those sales may be taken by the commissioners or jury as indicating true market value when in fact they do not. A company condemning land might be willing to pay more than it is worth, and the owner of land might be willing to take less than it is worth in order to avoid a lawsuit. Since a landowner would prefer to reach an agreement rather than be subjected to a lawsuit by a condemnor, a sale to a company possessing the power of eminent domain is more likely to show a compromise value than the true market value of the land. It would also be to the benefit of the company to avoid a time-consuming and asset-wasting lawsuit and thus the condemnor, too, is likely to compromise and perhaps pay more than the market value. See Nichols, Eminent Domain § 21.33.

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Bluebook (online)
418 F.2d 15, 1969 U.S. App. LEXIS 10236, Counsel Stack Legal Research, https://law.counselstack.com/opinion/transwestern-pipeline-co-v-obrien-ca5-1969.