# Appendix — Board of Commissioners of the Port of New Orleans v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385601_1588%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1964 - **Citation:** 377 U.S. 916 ## Text >? ikea aR tals Wr See aE APPENDIX A | _ IN THE | United States Court of Appeals FOR THE-FIFTH CIRCUIT ~ No. 18837 —U NITED STATES OF AMERICA, - Appellant, versus _MICHOUD INDUSTRIAL FACILITIES and BOARD ~OF COMMISSIONERS OF THE PORT OF NEW ORLEANS, Ef AL, - Appellees. “(AND REVERSE, TITLE:. — Appeals from the United state s District Court for the Eastern Disific t of Louisiana. ‘«(Migust 22, 1963.) oO Before TUTTLE, C hief jules. RIVES and BROWN, Circuit Judges. TUTTLE, Chief Judge: There.is here in issue: the‘ correctness of the determination by the trial court, based upon the awards made by commissioners, of the values of three different types of interests resulting from. the con- demnation by the United States of the 1,000.22-aere tract. - of land,.and 22 buildings comprising the Michoud Indus- . trial Facilities in New Orleans, Louisiana. The three Fete ee eR tO IVER AE A2 ‘ine giving rise to the edd for three types of valu- ation, occurred as follows: ‘Effective May 1, 41951, the Government took pos- session of all but one building. (the Laclede Steel Com- pany: Building) and all of the land comprising the Mi-. choud facilities. It took possession initially under a tak- ~ ing of’a leasehold for the entire property.to December. 23, 1952, extendible to June 30, 1975. .This required valu- atian of this yight of possession from May 1, 1951 to.“ December 23, 1952. By Amendment, filed in February,, ~ 1952, the Government took the entire leasehold ‘estates of the tenants, for ‘whatever period they were to- run. This required a valuation of the several leaseholds from ‘the May 1, 1951 date of taking possession. Finally, on: ‘December 22, 1952, the Government filed an Amendment. taking the fee of the property. This, of course. required. a valuation of the. fee' as of December 23, 1952. A brief iaitery of this property “will aid in a discus- sion of the appeal. . 7 ‘Yhe property, consisting of 1,000°22 acres ‘of land and improvements, while within the city limits of the City of New Orleans; abutting on the United States High- wi 90 from New Orleans to Mobile, is approximately miles east from downtown New. Orleans. Much un- improved and tundeveloped land lay. between the built-up city and this tract. It is bounded by two canals, the Intra- ‘coastal Canal on the south and the Michoud Canal on the east. It is served by rai] connections, with the main line of the Louisville and Nashville Railroad at the extreme I. By using the term “fee” we do not use it in a technical sense, but we use it as that interest,owned by the Dock Board separate from the, interest of the lessees, and separate from the interest of the United Stztes Government, which heid a vendor's lien on the entire property . arising trom its previous sale to the Dock wae: 4 is ~ ; : ed ae , ge 3 ) . AB northeast side of the property. The tract was originally. acquired by the United States in 1942.0n behalf of the - _ Deferise Plant Corporation for the construction of a ship- ' yard. At that. time ‘the land was marshy and subject to © tidal overflow, but it was filled and graded and drainage was provided. The industrial plant, which had cost the United States approximately $17,721,000, was completed in 1944. During the period of “construction the purpose. of the plant was changed from, ship building to the fabri- cation of aircraft. This effort was equally abortive and ‘no aircraft were built, so that by the end of the Second World War the plant stood as a monument to the inef- . ficiencies of waging a war which requires tremendous industrial construction before production-of war essentials can be undertaken. eas At -the ae of the.War,. the property was declared surplus. Extehsive efforts were made to dispose of it -without success. In November, 1947, it was sold, together with all machinery, equipment, tools, furniture, fixtures, and other personal property located thereon, tor the Board — of Commissioners of the Port of New Orleans, which, for convenience, we vefer to herein-as the “Dock Board.” The contract of sale called for the payment of $9,506,- 541, with no cash down, and the total consideration to _ be paid only from rents and aa its which the Dock Board might receive for fifteen years. The property;«onsisted of 22 buildings and 16 other .installations: inchiding some’ trackage, sewerage facilities. airplane runways, docks, parking lots, etc.. The buildings themselves covered ap- ° proximately 50 acres. Much the Jarzest and most .im- : portant facility was a main manufacturing building more than ‘a quarter of a mi’e ix Jenzth, with ceiling heights from 48 to 55 feet. Other important buildings were a . ad’. two-story. administration building, 837 - feet long, and a ¢* tme-atery engineering building, 1157 feet long. FR Because of the bearing on the outcome of the appeal - .of underlying legal questions, we eoncltide that it is not- necessary to maké a more specific or accurate description of the facilities and land.that were subject to valuation. .~, These legal problems arise from the peculiar circum- stances: (1). thatthe 1,000.22-acre tract with such a ‘tremendous complex including buildings of truly gargan-_ _.tuan size, which must be valued as a whole by determin- ing its fair market value, does not really have any com- parables in th® market on which expert opinions of valu- ations can be based; (21 that the very size and nature of. the improvements so narrowly limit the potential market of those who might be ready, willing and able to acquire and use the property for which it was most ideally suited that; according to the principles announced: by this. Court _in United States v. Benning Housing, 5°Cir., 276 F. 2d 248, the cost of reproduction, less depreciation, cannot be used as an aid to valuation;-and (3 31 the fact that within © a few months of the date of taking on May ,If 1951, of all of the unleased space, there was approximately 1,767,- 000: square: feet of space in these buildings then being _ offered to the public ‘by the Dock Board for long term leases at rentals of approximately 20 cents per square, foot per year and more than-700 acrés of raw land being offered at $200 to $350 rent per annum, is so indicative - of the lack of demand and the lack of the rental possi- bilities of the property as to completely dominate, if not absolutely control, the incomie factor in any ‘capitalization formula for arriving at’ the fair matket value of the ° property as i ie 1, 1951; there’is also the fact that - on December 23, 1952, any hypothesis dealing’ with an assumption. Pe ther e would be a purchaser ready, will- ° ing ard able to buy fr fm a seller. ready, willing and able 4 ’ / . . S to sell, must ; include the fact that these buildings with 1,767,000. square feet of floor space would hang over the New Orleans market for similai factor y and warehouse - space to such a-degrée that it must also be considered. to have a dontinating, if not an absolutely controlling, place ." ’ in determining the market value of. the’ fee as of that date on any valuation based on capitalization of income. ‘ Finally, there is the circumstance that the lack of avail- able space for the tenants to lease when their leasehold interests were taken. by the May 1, 1951-condemnation was directly attributed to the contemporaneous taking by the Government of all of the unoecupied space in the Michoud buildings. g : . ; On May 1, 1951, there were 32 lessees of part of the ‘property, much-the greater, part of whom held ‘space in the tremendous main manufacturing building, but some- of whom had entire buildings or spaee in the office build- ing and the engineering building. The latest of these - leases to be executed had been signed as receritly as Janu- - ary, 1951. One of these January leases was for 4,200 | square feet of space in the main manufacturing building © for a term of nearly five years at 20 cents per foot; one of, them was for 45,300 square feet of space in the manu- ‘ . ° . . ‘ sae ¥ facturing building for a.ierm of 10 years at 20 cents per, square foot; another was for (400 square feet’ in what is known as the office or administration building for. a term of ten years at/25 cents a square foot. All of these leases were in conformity with. a published rate schedule of the Dock Board dated May 1, 1950, which offered nearly 1,500,000 feet ofspace jn the main manufacturing building at 20 cents per b it for terms of from 5 fo 25 years and offered some 40,Q00 square feet in the office ~ building at 30 cents per square foot for office, use and at 25 cents per square foot for: light manufacturing. It also offered 60,000 square feet in the, engineering building at — 3) ‘M2 oe 30 cents per square foot for office space and 25 cents per square foot for light manufacturing space. » In the same schedule published by the Dock Board as of May oe the rental rates for the vacant land were $200 pér canals nor roads, $300°per acre per year for lands adja- cent to canals and roads, $300 per acre per year for land adjacent to paved roads only and $350 per acre, per year ot 15 acres that. were paved. The only acreage leases in ect were one for two acres entered into April 15, 1950 at $350 per acre and one for one acre entered into in January, 1951 for $300 per acre. The main thrust of the Government’s argument here is that there was so much building space available in the three principal buildings owned by the Dock Board (from - 85 to 95 per cent o¢ the tote! space according to the par- ticular building! and so much vacant land in: the tract offered .to the public for rent at an-average price per square foot of a little over 20 cents per year for the build- ing space and an average rental of $300 per year for the land that for all valuation purposes as to the three dif- ferent takings involved here, these rentals at which the . ‘property was being offered to the public up to January _ ° 15, 4951, were either controlling. as a matter of law or they were so overwhelmingly dominant. in light of the ‘then existing conditions as to. make any different finding of valuation clearly erroneous. ApplVing the Govern- _Ment’s contention throughout, thus giving the guoted. prices of the property, the effect of completely controlling the market value, with-a few ‘modifications pw ard to meet certain specific situations.- would produce ‘a total award for the Dock Board's inter ests of less than 3h 000,- 000. This is contrasted with-opinidn evidence by vitnesses “for the Bock. Board of $24,500, 000 to $22 325,695, and,an “f r acre per year for 400 acres, neither on > fp rs . . ‘ hi 2 = : AT award bythe Commission of $14,322:234 for the fee — interest as-of December 23, 1952. Likewisé the Govern- ment’s approach would produee a nominal valuation only for the cancellation of the leases of the tenants, based principally on the loss to them of improvements in their leased space, as contrasted with valuations of some $800,- ' 000 arrived. at by the tenants’-expert witnesses and an award by, the commissioners ‘to. the tenants of $702,293.02, representing the value of their leases above the rentals they had agreed to pay to the Dock Board. We have carefully read the record so far as germane * to these principal contentions of the- parties and it is ' apparent that. in all of the opiniong as to value testified to by the witnesses for the Dock ‘Board and the lessees, they ignored o~ undertook to cxplain as irrelevant both the rental rates being paid by the legsee, the fact that the leases had been made in some instances just three months. before the first taking and the fact that there would be ‘over 1,767,000 square feet of similar space available on the market both as of the date of the taking of the un- -oceupied space from May 1 to December 23 from the Dock Board and as of December 23, 1952, the date as of which ‘the value of the fee in the Dock Roard was to be arrived at. Of course, also, the witnesses discarded as irrelevant to the, valuation of May 1, 1951, the date on which.the lessees’ interests" were to be valued, the fact that the Lock . Board had up to January 1951 been offering this tre- mendous urused space for rent at an ayerage a little above 20 cents per square foot. “We think it is equally plain from reading the 255. page report by the Commissioners that they disregarded excluded any assumption as to théexistence of the 1,767,- ——" : these.same facts and they based their findings of values hypotheses used by the var ae aisal experts which AS 000 square feet of vacant space. Since we conclude that the failure of the expert witnesses to take this factor into consideration destroyed the value of zhe testimony -and conclude also that the commission erred in excluding this fact frem its consideration in arriving at the valuations, . _ we will first discuss. this feature of the case. ee . - r e No authority need be cited -for the proposition that - in a condemnation -proceeding such as that here before - the Court the owner of the property taken is entitled to just compensation and that within the meaning of the Fifth Amendment to the Constitution just compensation is the fair market value of the property at the time of taking contemporaneously paid in money. It is equally understood by all courts dealing. with the matter that _ “in determining this value the highest and most profit- - able use for which the property is adaptable and needed, or is likely to be needed in-the near future, is to be con- sidered.” Cameron Development Co. v. U. S., 5th Cir., 145 F. 2d 209. The Takings from the Dock Board. _ Turning our attention first to the pr operty: of the Dock Board that was taken, we find this to have been taken by the Government in two separate steps. The first step was the taking on May Ist, 1951 of a leasehold interest until December 23, 1952, in all of the unoccupied _. space in the buildings and all of the unoceupied .acreage of raw land; the second being the taking on December 23, 1952, of the fee title of the Dock Board in the same propérty; that is, the entire right, title and interest which the Dock Board owned; which of course excluded the lease- hold estates held by the tenants as of that date. As’ to these two takings, it was clearly erroneous for the ex- nee Puckacnein hare : Sl wey i acied . ings having 1,76 which up until 3 months previously had not appealed to ete ag pert witisentis upon. whose testimony the Commissioners ° relied so strongly and for the commissioners themselves to ‘disregard the undoubted fact that a hypothetical pur- chaser of the leasehold in rest ‘of all of the unoccupied , to December 23, 1952, would e property in light of the fact ing 1,000.22 acres of land and puild- ,000 square feet of rentable property, that he would be b the prospective users of such space at a rate of a little more than 20 cents a square foot. It, of course, makes no difference ‘that on May 1, 1951, this large area of. usable space was not actually on the market to be rented because of its having been removed by the Government. What the court has to do as of May: Ist is determine what the hypothetical purchaser would pay to a hypo- ‘uhetical owner of the leasehold interest both Being in the - market: without being :under any compulsion te buy or sell. Such hypothetical, parties would necessarily have — in mind that here is a thousand acre tract with 22 build- ings and many other installations. which must be valued as a whole with all of its advantages and disadvantages, and it must be valued as of that date in light of existing opportunities for investment. If, -instead of 1.700.000 square feet of vacant space, there had been a few hun-- dred thousand feet whichthe Dock Board was still offer- ing at 20 cents a square foot we would say it.would still be necessary for the Commissioners to give some con- sideration to the fact that rentals would sti!] be made at 20 cents, since no matter what caused the price of 20 plus cents per square foot to be fixed it was obvious that ~ the available space had not all been taken at that price. Such rental price would therefore be the best proof of the going’ market value as of the time the last leases were made in January. A10 eS, j»»> Where, as was here the case, some 85 per cent’ of the” entire building space was still hanging over the market as of January, 1951, a failure to consider this fact in appraising .the value of a lease to run from May’ Ist to December 23, 1952, is indicative of a failure to apply the underlying principles of appraising such property. So, too, with respect to the December 23,. 1952 valu- ation: of the fee. The Commissioners arrived at their - valuation by ‘capitalizing the anticipated income from the property. Of course, such valuations wouid vary directly according to the rental value assigned by the fact finders to the property. The Commissioners found an average valuation of all of the building space of 60 cents. per | square foot as contrasted with the average of a little over 20 cents per square foot at which it was 6ffered in Janu- ' ary, 1951. We do not understand that the Government ~~ here contends that this court should determine. that the 20 plus cents average should be accepted as a matter of law and the award modified accordingly. We do not do so. We do hold, however, that the Commissioners erred . in not considering as one of the most important elements of the value as of the date’of December 23,-1952, the fact . that a hypothetical purchaser and seller would arrive at a price which would be largely controlled by the fact that the purchaser’s return on his investment would depend on his being able to rent it on a market which, less than two years previously, had been unable to absorb a large part of it ata rental of approximately 20 cents per square foot. ‘The extreme significance of ‘the treatment given to’ this excess of factory space and excess of land in the two valuations as of May 1, 1951, and December. 23, 1952 is fully recognized by the Commissioners. By their ‘improper treatment of these facts, their findings and conclusions are necessarily distorted. This is indicated SOU Saoe NC eaialinaa iad All Als : ‘ All by the statement of the Commissioners in their findings: “Whether or not this portion of the property was actually on the market significantly enough bears * upon the opinions of the experts as to the supply of industrial property on the market and _conse- . quently would have a strong bearing on. the -rea- sonablenesas and validity of their estimates of alue.” (Emphasis added) mmissioners then pointed to the fact that no itted by the Dock -Board after January 10, 1951, which action by the General Services Adminis- tration of the Government the Commission said, “turned out to be the means employed to prevent the Dock Board from making any further leases because [it] had a pro-. spective tenant for the unleased ‘portion of the property.” Thereupon, the Commissioners found “the Dock Board thereupon considered that the property was off the mar- -ket at that time;” and further, “under these circum- _ stances, we can only conclude that the unoccupied portion . of the property had been removed from the open market © on January 10, 1951, and.was not in fact available in the market from that date until the institution of these proceedings.” . ‘ . Thus, it is clear that in determining the value of the - unleased portion on a rental basis from May 1, 1951 to, - December 23, 1952, the Commissioners treated the matter as if the 1,767,000 square feet of unrented space were not" overhanging the market. This, as we ‘have pointed out ° above, would not be the case if we were to assume the existence of a hypothetical purchaser and hypothetical seller on May 1; bargaining over the price to be paid for ." such a lease. | The Appellee Dock Board stresses strongly the testi- ~ Al2 — mony given by a number of its witnesses to the effect. | that the 20 plus cent rental rate for which the property was being offered up to January 10, 1951 was a “‘sub- standard”, a “bargain”, and “ridiculously low” rate for the space. It is argued that the Dock Board did not need to make the kind of profit on the property that a private investor would. This, of course, has no relevance at all in the argument here made, because, no matter how . “ridiculously low” the price for the space was, it was not: being rented by the public even at that low price. - It makes no difference what it was that caused the Dock Board to price the property under the market, if, in fact, it did so and the property remained vacant. When it became apparent that such large quantities of the prop- erty would not move at that sub-standard price, then that price obviously was the most that could be obtained for it at the time. It is inescapable from what we have said, touching on the treatment accorued by the Commissioners to the ‘large area of unoccupied space that would have been avail- — able to 4 hypothetical purchaser on May 1, 1951, on a lease to December 21, 1952, and to a purchaser of the fee - on December 23, 1952, that the findings and conclusions _of the Commissioners as to the value of these two items . cannot stand. What we have said with respect to the building space applies with equal force to the vacant land. The Com- missioners concluded that the fair market rental value of the unleased excess land was $407,546.00 per ‘annum or approximately $575 per acre. This -contrasted with . rentals at which the land was offered by the Dock .Board up through January 15, 1951, ranging from $200 to $300 per acre. We find no basis in the evidence to warrant the Commissioners disregarding the rental rates which 7 , ? . Manner: Aj3 had been widely offered and unaccepted by the public in computing the value afew months later of the land which was not improved by the buildings. In ‘computing the value of the fee to the land on December 23, 1952, the ‘Commissioners assigned an average of $8,391.00 per acre based upon-a rate of $12,000 ‘per acre for 243.85 acres of so-called waterfront land and $7,000 for the remainder. This produced a total valuation of $5,938,142 for the 707 acres of open land. We think it is clear that the Commis- sioners disregarded the fact that the hypothetical seller and purchaser as of December 23, 1952, would have to consider a price to be paid for the entire 1,900.22 -acres improved as it was._ It could not be viewed upon the as- -sumptign indulged by the Commissioners that the Michoud | tract would be off the market in arriving at ‘that valu- ation. ; . Moreover, we conclude that the Government properly challenges the valuation of this land as of December 23, 1952. No reasonable hypothesis is stated by any of the. witnesses to support their opiniens of an acreage value in excess of $8,000 per acre for the excess land other than comparisons. with small tracts ‘from 1 acre to 15 acres! on the Harvey Canal.* In commenting on the bases of the opinions of the several experts who testified before. the Dock Board as to the values of the: land, the. Com- . missioners characterized the testimony in the follewing (WAGUESPACK?:: “This valid by the wit- . ness-appears to be nothing more than his particu- lar costs of reproduction method of appraisal of the buildings with his opinion and judgment of 2 This canal is the westward extension of che intra-coastal canal and extends from the Mississippi River westward from a point some .three miles upstream from Canal Street in downtown New Orleans. The industria! sites on the “Harvey Canal were heavily built-up at this time, _ largely by petroleum and related industries. Als we have - building costs and depreciation’ arrived at by/ his desire to be competitive if he were offering the property for sale on December 23, 1952. /Added to this is his competitive valuation of the Jand, not a reproduced cost of land, to arrive at his idea of what a willing buyer would have paid a_ willing seller.” (LEMARIE!: “Mr. Lemarie stated that the most comparable land to that of Michoud was the land along the intracoastal cana] at Harvey, Louisiana and that sales at Harvey were very largely the reason for his opinion of the value of the property © in question here. (BLUM): “The valuations which Mr. Blum placed 7 on the land as aforesaid were arrived at by con- sideration of what he referred to as comparable to Harvey, Louisiana. He described a saje of about 2-1/4 acres of land loca on the intracoastal canal of Harvey, Louisiana in July, 1948 for $13,500 “per acre and chose to predicate his Mi- choud land valuation principally on’that sale.” (AS TO ALL THREE WITNESSES) : “The Dock Board experts, holding that their opinions of value were based on their judgment, experience and knowledge as industrial realtors, did consider, as lteady pointed .out, the cost of repro- ducing the Michoud land in arriving at their con- clusions./ For these purposes, they employed the original ‘cost of the improvements made and the factor, 1.98, of incredse in-such costs. All. except Waguespack, also took into account the .ues —_— _ of the land at Harvey, Louisiana.” We have carefully read the findings of fact and con- clusion of the Commissioners and we find that they adopted the witness Lemarie’s opinion of value. On this res ies the Commissioners stated: “In reaching our conclusion of the fair market ~ value of the excess land, we have adopted the i aa TS: - : ; . ati tae Kone. Ald acre valuations placed thereon by. Mr. Lemarie, because we believe the evidence fairly sustains _ those valuations, which are $12,000 per acre for 243.85 acres of the so-called waterfront land and $7,000 per acre of the remainder. But; because we are of the opinion that the value influence of the canals would be more reasonably reflected in the . whole of the. property, we have computed the © weighted average value per acre, which we find to be $8,391 per acre. Applying such rate to the 707.68 acres of excess land, we have reached our aforesaid conclusion of the fair market value of . . that agreage.’ There was ng evidence anywhere in the record /of any tract of land approximating that of 707 acres, con- ‘sidered separately from the improved part of the Mi- choud tract, or a total of 1,000 acres of land. including the improvements, having sold for any sum approximat- ing $8,391 per acre. We think it is apparent from the - statement of the Commissioners that the only conceivable basis for their valuation was that propounded by the wit- ness, Lemarie, who stated that he was basing it on com- parisons with property sold on the Harvey Industrial Canal. While we have recognized the general proposition - that this court would not substitute its judgment for that of the trial court in determining whether a particular - sale was- too remote in point of time or was not com- parable in size, this principle related merely to the ad- - missibility of the evidence to be considered by ‘the trial | court. See International Paper Co. v. United States, Sth Cir., 227 F. 2d 201. It falls far short of constituting ‘a rule that the appellate courts may not reverse a finding _ of value which it finds to have been based on a comparison of the condemned property with other tracts which neither — by Jocation nor quantity of land involved or other char- acteristics bear any resemblance to each other in the mar- ral Al6 ket. We, of course, do not attempt to ascertain the true: - value of the unused land as a part of the total tract to. be valued. We do conclude, however, that the Dock Board did not carry its burden of establishing what the true . value is. Again, it is necessary for us to reiterate that the Commissioners did not have before them the problem of valuing separately the 707 acres of land. They had ‘the problem of valuing 1,000.22 acres with all of the im- provements and subject to all of the limitations which characterized the Michoud Industrial Facilities. What the Commissioners did in this respect was to accept the valu- ation based on a witness’ -testimony that in his opinion 27 cents per foot for the waterfront property and 20 cents ° per foot for the remainder of the acreage was the fair market value.. To the extent that he had any backing for this estimate at all it was that small tracts of land of two or three acres fronting the Harvey Canal, some fif- teen miles distant, had- sold at 30 cents per square foot. In this connection, when witnesses and Commissioners _ speak of valuing some 790 acres of land at so much pe~ square foot, it must be borne in mind that they are deai- ing with approximately 30,000,000 square feet. No wit- ness testified that :t was customary or usual in the New Orleans market to buy or ‘Sell any’ substantial acreage on a square foot basis. _ Obviously, since what we are dealing with here is not a lease of 1,767,000 square feet of. floor space in the . buildings alone or a lease of the unused acreage alone from May 1, 1951 to December 23, 1952, but is a lease of the entire tract of land, including the improvements thereon less the occupied portion for that peridd, it was improper for the- Commissioners to appraise the rental value of the buildings, even if they had used the proper rental value for’them, and ther. appraise the renta! value ef the land separately and add the two together in order “Ali to compute the value of: the property on a rental basis for these periods of time. See United States t: Buhler, . 5th Cir. 305 F. 2d 319. What the Government took and, what should be valued is the entire tract for a period of approximately 20 months. This, again, must be what hypothetical parties dealing at arms’ length would agree _on, viewing the land and buildings, with the disadvantages: of much of the choice locations having already been leased to others. We find no evidence in the record directed to- . wards an ascertainment of the worth of the land as im- _-proved in the hands of a willing purchaser acquiring it froma willing seller for such a leasehold interest. Moreover, the method of appraising the value of the rental on the vacant lahd from May’1 to’ December 23 is dleariy erroneous. The Commissioners accepted the testi- mony of one of the witnesses that the land would be worth an average of $5,391.00 an acre on December 23, 1952, and they then simply discounted this by 10 percent in ordér to compute its value as of May 1, 1951, and then assuming that an investment of this kind should yield a rental return of 6 percent to the owner they found that the annual rental value of this property was $407,546 per annum or $672,451 for the period..It is difficult to understand where the Commissioners found the authority for assuming a rental value of land based on their con- ception of what the land was worth. This is the reverse of the usual protess of ascertaining the value of land by capitalizing its rental potential. We think it is plain that _. in the absence of any-substantial evidence to the contrary it must be taken as we have indicated above that the ‘rental rates for the land, which were ifreffect as of Janu- ary 10, 1951 must. ‘be deemed to be the rents to be used for the valuing of the taking by the Government on May 1, 1951. °. . ‘La Als . > | the findings of fact and conclusions of law of | this case.’ Of course a record of that length inquiring into the multiple issues of this involved case had much conflict . in it. The case ended as it began with the parties in dispute as to the principal question of valuation of the several interests appropriated. This Court’s opinion recognizes as the first element that “1) * * * the 1000.22- acre tract with such a tremendous complex including buildings of a truly gargantuan size, which gnust be valued as a whole by determining its fair market value, ' does not really have any comparables in the market on . which expert opinions of valuations can be based.” This is a recognition that if the Fifth Amendment is to have the vitality which courts read into it, the determination i A3l of market value inescapably rests upon the expert judg- ménts and opinions of those skiJled in the field after the trier of fact makes such modification and adaptation of them-as the total record reas nably required.* A brief consideration of the Report anc -he record demonstrates, in my opinion, that: while the Commission did not accept the conténtions of the Government, it did not, as the Court’s opinion charges, ignpre these factors as irrelevant, nor was the Commission’s action a departure from accepted principles. | “TREATMENT OF UNLEASED SPACE AND VACANT ars LAND. The Court’s opinion would lead one to think that the experts for the Dock Board and tenants, as well as the Commission, looked on the case as though the 1,767,000 square feet of unrented space, as well as the, 700 acres of vacant land, was actually under lease.‘ It: also im- plies that in iving their several opinions, the experts were unaware hat despite active solicitation of tenants at the unjform 20 cent rate, substantial areas remained unoccupied. This leads the Court to state that “we think 3 The Supreme Court has ma:y times pointed out the elusive nature of this problem especially where large or unusual properties having no market currency are involved. See, e.g., Mississippi & Rum River Boom Co. v. Patterson, 1879. 98 U.S. 402, 25 L. Ed. 206; Olson v. United States, 1934. 292 U.S. 246, 54 S. Ct. 704, 78 L. Ed. 1226; see. alse United States v. Wateree Power Co.,-4 Cir., 1955, 220 F. 2d 226 The concur- . ring opinion of Mr. Justice Frankfurter in United States v. Toronto, Hamilton & Buffalo Navigation Co., 1949, 228 U.S. 396, #7. 70 S(t 217, 94 L. Ed. 195, dispels the easy myth that all becomes simple by e> hanging the term “just compensation” for “market value.” He «tates: “Resort to the conventional formulas, for ascertaining just compensation for the taking of property rarelg bought and soid, and having therefore no recogni market value, does not\yield fruitful results. The vari- ables are teo many to permit of anything except an informed judgment. Everything therefore, turns en the process of judgment to the end that judgment not based on standards too difficult of ‘application or ev:- dence too tenuous for solid inference.” ; ° ‘The Court states that these experts “ignored cr undertook to ®x- ; plain as irrelevant” or “discarded as irrelevant” the fact of the large amount of space available at the low rate of 20 cents per square foot. . 4 9 et ial eee e.g \ ; *-and, therefore, at May 1, 1951, the Micho CRC eee ‘it is: equally plain ee J 7 a « a | = 5% ° DS re cee _ their opinions that these stant are not ‘indicative of and “do hot-represent the fair market ne of the prop- erty ‘at the critical dates involved here : t ° Pa > . s Nor by. any stretch of the imagination Were the Com- missigj.ers freelancing on their own. Judge Christenberry had given precise written instructions with a clarity that could not have been improved: on ‘in an oral charge to a weary jury at the end of a 6-months trial. At the Govern- ‘ ent’s request, he first charged,. consistent with its theory Ch asserted, ghat the Commission could Seonsi r the "1947 “price of $9,500, 000 on the‘ sale by thé Government to the ‘Dock Board. On the other hand, the Court. in- structed that value was not dependent ; suport the use to —- ~ which the property. has been. devoted but sheuld be “ascer- tained and fixed on just consideration of all the uses for which the property is suitable * * * " as to which — ts dence as to all such uses may be offered by either side.” But the Judge. Was eyen: more. direct. The Court charged that the experts in reaching opinions and the Commission ‘in ‘determining just” compensation “are. entitled to -con- sider. many factors including, but not necessarily limited to" * (a) rentals for comparable property in the New Orleans area.” That instruction went on to ‘make the | matter specific. “In. consider’ ing et panel ty the Dock Board: for property ieased a‘ Michoud facilitiék, you ~are.also erititled to give consideration to the [a] special -cireumstances affecting this property, such as the [b] — availability of comparable space as of the date of the tak- ing, [ec] factors which might have influenced the eDock e 4 . ®Instruction XXIV, see also substantially repeated: in XXVI. © Board in making these leases, (d] which would’ not -be “present in the ease of other landlords on the open mar- ket, and fe] éther special - circumstances — might t bears repeating that the ieee acquiesced in this charge. The record shows. no objéction to it in the trial Court, and the specifications oi error here do not attack it. Pore . : If this instruction was erroneous, ile we ought not" to criticize the Commissioners for a breach pf their duty, - And_ before Judge Christenberry car be: put in. error, ‘date to hold that: there must be some objection. properly made ‘prior ‘to the commencement of a long and involved and expensive hear- - ing.” The rules are changed after the game is over. Instead of Judge Christenberry’s declaration that ‘the Commission was “entitled to give consideration to the special cir- cumstances affecting this preperty, such as the av ailability of comparable space * * * " etc., this Court now holds that as to the Dock Board te ey was clearly errone- ous * * * for the commissioners themselves to disregard the undeubted fact that.a hypothetical purchaser ai ee would have made his offer’ for the property in. light of the fact that he would: be buying 1000.22 acres of land -and buildings having 1,767,000 square feet ‘of rent»ble ) appealed to the prospective users of such ‘space at a rate Of a little mere’ than 20 cents a square foot.” Likewise, instead of declaring: that the trier of fact should give Ps A35 - _ property, which up until 3 months previously had not. some considey ‘ation to this, the Court goes on as a man. oe “~ * Letters in brackets [ ] added... : ‘Ti 2% record “hens that when. tne Judge finished réedine the cor- rected charge tg th® Commissioners he invited.written excenticns and objectiéns. The record is silent os to any objection concerning this one. such rental price would therefore be . . - d “ ; A36 the dest proof of the going market value as. of the time ‘the last leases were made in January.” -_- 5 Of course the difticuity’ in working with ‘the Court's opinion is that it is difficult to ascertain, when ‘we ‘are declaring law: and when we have taken on the role of persons skilled: in the sale, lease, rertal, disposition and management of ‘large industrial properties in a -major port. Thus, to the argument that the“.* * * Dock Board stresses strongly the testimony * * *: that’ the 20+ ‘cent AZental rate * * * was a ‘sub-standard,’ a a ‘bargain,’ a -‘ridiculously low’ rate for the space’ since “.* * * the Dock Board did not heed to make the kind of protit’* * * that a private investor would,” the Couyl respends with - this absolute. “This, of course,“has no relevance’* *. -*. because, no matter how ‘ridiculously low’ the price for “the space was, it was not ‘being rented by the public even at that low price. 1t makes ‘no difference what it was that caused the: Dock Board to price the praperty under the market if? in fact, it did so and the property remained Vagant. When_it became apparent that such .lurge quantities of the property would not move at that - sub-standard. price, then that price obviously was the most - pat could be obtained for it at that time.” + here are only two things wrong with that statement. _ First, as I read the cases, it is mst correct as a thatter of . * , . . law. - Seeond, jt is hardly true as a matter of economics: As to the economies, it asserts that unless, “pivee of. property —- an industrial or business: ho -_—— = > Only slightly wanes down is the Cents further declaration, | = _disavewing a holding that the 20>-cent lease rates must be accepted * a matter of law.” The-Court does not stop there. The Court goes on $0 hold that the Commissioners erred in not considering “as one of the most iniportant elements * * * the fact * * ‘that the purchaser.and -seller gaan be “largely controlled by, the fact that the purchasers’ re- ‘twtn * ould, de pend on his being able te rent it on a market t which ess than twe years previously. had been unable fo chsorb a large, rear? of jt at a rental of approximately 20) Jonts per Se ucgry foot.” : se ; ad Pe) A37 plex is fully rented at the rate iota offered, it. proves. -that the market demant is less than the rate being of- fered. If. that were so, a major modern office building, if condemned shortly after completion, would- have no value on capitalized rents. Nor would a- major shopping center which takes time to fully lease: In this respect, there is, of coursd, a significant difference between the — Dock Board’s claim for ‘a) the value of occupancy from ~ May 1, 1951 to December 23, 1952, and.(b). the. value. of the fee on December 23, 1952. The former is essentially a probiem of. making good to-the property owner the in- come which he would have earned during that brief -period of occupancy.- Unless in reasonable likelihood all of it would have been leased-for the indicated rental value, the Court, on familiar principles of damages, could not make an award for 100°. occupancy.” The fee claim, however, . 2 . -a° . tue does not rest upon the immediate earnings of the property: as ‘of. the date of taking. The ‘property owner is being permanently deprived of his ownership. He is being de- prived of. the opportunity to receive income in the future. That future is here not less than the agreed expectancy of 33 years for the useful life of the buildings. True, the future must be a. foreseeable one. But for pr such vast proportions as this Michoud facility, its rental capability in an area and_era of increasing property values and business expansion can_ nearly two years before (January 10, 1951 versus Decem- her 2 23. 19 gy are of dominant. controlling — The Court’s approach is, to me, also faulty on the law. For under the. law yralue on a capitalization formula oo is not. determined by improvident or unusual leases which, a e or / . Except to illustrate the vital difference between the two claims, I do not presently intimate any ylew as to the element of the award for -occupancy. of $2.364, 040.45. Po rdly be fixed by © ordaining as a matter of law that r ntal rates offered _ ” eo. Is (ae pe en cane cs in the credited judgment of -qualified. competent experts, .. do not actually reflect going market conditions.. “Where property in condemnation has been leased for_a particular . use, evidence of what the owner can fairly and reasonably” receive as rental return for suth use, even though. this amount differs from the rental fixed in the existing lease, is proper 2s_a possible capttalization factor to assist in the determination’ of actual market yalue. For capitaliza- . tion purposes, neither the condemneg nor ‘the. condemnor shauld be bound by the rental of an unreasonable or im- ‘provident lease.” Chicago B & Q R.R. v. North Kansas City Development Co., 8 Cir., 1943, 134 F. 2d 142, 152. - See also. Westchester County Park Commission x, United States, 2 Cir., 1944, 143 F..2d 688," 693; Siffentes. r. United States, 1 Cir., 1948, 168 F. 2d 264, 266; 1 Orgel, Valuation Under Imminent Domain § 179, p. 704, $,182, p..708; 5 Nichols, Imminent. Domain, § 19.2; p. 215: The Commission, from the running, ceaseless advocacy - of the parties,. the-examination, re-examination, cross ex- ‘amination, recross examination and swabbing ofall of the witnesses through hours and days of endless testimony, was theroughly-familiar with the Government’s-main—7— theme.~ The Commission did not “ignore” it. It was w eighed and found Wanting. ae ia I for one do not claim to “know enough about New Orleans industrial property to declare; with the full weight of law behind it, that no reasonable person could have so concluded: 3 . GOVERNMENT'S EXPERTS ASCR IBE. RENTAL VALUE IN EXCESS OF DOCK BOARD UNIFORM Ee, . _ - RATES. ¢ ) : " Scoalis proffered by the cgndemnees were not the sole source of facts showing a value‘in. excess. 6f Dock Board rates. The Government expert Aschaffenburg re- I” . 4 i 3 ‘ | f° s . > 2 S "e we “ — . ; 6 is ™, . . ; 7 . fs ” se peatedly asserted that between the period May 1,-1951- _ December 23, foe, there had been an increase 6f ap-- - proximately 12 to 15 percent in the level of industrial -rents. Likewise the Government expert Johnson asserted that there had been an increase in excess of 50 percent ‘¢ over the Dock Board contract Fates in the same period — - * of time.'' Since the Court holds that the Dock Board con- tract rates were theoretically available on May 1, it is _eyident that theré must besa comparable increase if they ~ “sare to be.used in capitalizing value as of December 1952. ¢ —___ Yet Government counsel are indifferent to that here. Moreover, as to individual leaseholds the Government experts gave sworn opinions substantially in excess of £3) . the contract rate. For example as to the Laclede lease “~ ink the Hammer Building where Lemarie stated a rental ° value of 75 cents per square foot ‘which was accepted | by the Commissioners), Government expert Nichols gave . -it-a value of 40 cents and Johnson 30 cents per square: . * foot. Similarly, Johnson asserting that a substitute prop-.- .erty on Gentflly Road was camparable to that formerly ve ‘occupied by Cloar-Glass Company, Inc., in effect placed - ~*~ ad 49.8 cént value on Cloar’s lease: For other ‘eases, stfu ffenburg fixed the value of: 40 cents per square foot for floor space in the main munufacturing building — . nd 50 cents per square foot inthe Dry Kiln Building. - 4 . : Se Ee ‘ The Government offered*tach of these two witnesses. ’ ve Despite this and now, ‘without objectioy to the charge = —- given to the Commission. it_now feels free.to assert, as 5 ————— et 5 1! This is a moderate summury of their testimony as the -Report reflects: “However,-* * * Mr. Aschaffenburg and Mr. Johnson, in their ._ conclusions of the fairremy/ket value of the property,* predicated their % 2 estimates of the expected income, in their capitalization approaches, on +? increases of' 331;,% to 100° in. the square foot rates. of particular areas, and a weighted averagé increase computed by us a¥ 70% to 80%, a in the case of Aschaffenburg,-and 50% in the case of Johnson. in the ——— ; _* | fair rental_values, per square foot, of the buildings at Michoud at De- Be cember 23, 1952, over May 1, 1951." . eae ag Add : t : it does, that the value of this leasehold could not exceed __ + the 20.cent published rate. . The fact that some of these figuess were testified to - in connection with the claims of the’ tenants for the value of the unexpired leaseholds is of no significance. . If the leaseholds én the critical date had that vilue to. the lessee; it is because the leases had a free market value, in that ‘amount: To determine the value of the fee on that same date thrdugh the capitalization process, the same market value would have to be applied. - _ These few instances picked at random out of “this “vast record illustrate why in this hypothetical process of: treating with a buyer and seller-who never. in fact ex- isted, it is the informed judgment-of those having exten- sive practical dealings with properties of this kind which finally prevails: Where such witnesses for both sides ad- vance, as they did here, substantia] and detailed reasons ae why the Dock Board published rates were not indicative, it_was permissible for’ the Commission to credit these ex- planations' and, determine fhat’ the published rate was not a reliable guide of real worth. ‘ . VALUATION OF THE. . VACANT LAND. As to the valuation of the vacant land® areas, the decree of Judge Christenberry expressly adopting the findings of the Commission is swept aside with the pro- . nouncement that “we *’* * conclude.* * * that the ‘Dock . Board djd not carry its burden of establishing what the true value is.”” In reaching this conclusion several errors ‘are specified.: The first, as in the case of unleased por- tions of the buildings, was the lack of any “basis in the evidence to warrant the Commissioners disregarding the _ rental rates which had been widely offered *-* * ” for the a ¢@ | - AAL. Sy o unimproved land. Second, sales of ming on the Harvey -Cdnal are the sole basis for acreage values in the neigh- _ borhood of $8,000 and as a inatter of law this is not a - comparable. Third, values of buildings and values of’ vacant land ought not to have been separately ascertained and then aggregated. And relaied to this, there is no evi- dence cn the aggregate valug of the entire or: to a willing, single oe ae t = We deal first with the Harvey Canal matter. ° The . Court first states there is “no reasonable hypothesis gees stated by any of the witnesses to support ° ‘their opinions of an: acreage value in excess of $8,000 per acre* * * ~~ , _. . other than comparison to small tracts * *@& on the Harvey” -- ~~" Canal.” Later am, after pointing out whafno one can deny that there was. simply no instance the salé of land approximating 707 acres, whether considered sep- arately or as a part of an improved tract of 1,000 acres, the Court reached this conclusion. “We think it is ap- parent from the statement of the commissioners that the only conceivable | basis for their valuation’was that pro-°: pounded’ by the witness, Lemarie, who. stated that he was basing it on comparisons with prope) sy sold on the Har- -vey Industrial Canal.” This leadythe Court to declare ~ the rule; recast by ame in affirmat{ye terms, that an®appel- late court “may * * * reverse d'finding of value which it finds to have been based on a comparison: of the con- demned property with other tracts which neither by lo- cation nor quantity of land involved or other character- isties bear any resemblance each other irf the market.” \ ; . c gh +> With all deference, these conclusions are not support- _ ed -by the record, and tHe legal declaration iis in error. - In condemnation cases evidence ‘of sales of other -prop-- ’ erties is admissible for either one or both of two pur- ° poses: (1) to establish an actual going market for sales - - ? dan O°: aa2.’ ne ea ae ee of like property. which ‘then becomes the best (if not the only) measure of just compensation; (2) as tangible evi- _ dence of one of the many factors leading a skilled expert — ta, reach’a conclusion on value -where there is no going market... The distinction is vital as this Court has pointed. ’ out. “When the effort is not to show the sale of other | > property * * * as.a-stahdard of value, but these are re- — ferred to by a witness experienced in_ dealing with such properties in the geighborhood and qualified to haveaan opinion on values, merely, as things in his knowledge - ‘ which contributed to the opinion’ which as an experienced man he holds, his opinion ought not to be rejected from evidence, but ought to go to the jury for their considera- tion of its reliability * * *,” Atlantic Coast Line R.R. vs United States,'5 Cir., 1943, 132 F. 2d 959, 963. As we more recently stated in approving this case, the “experts mustgbase their opinions on such information in the art | that accounts for their becoming experts.” And, not sur- © prisingly, that means that-even. “a certain amount of . hearsay is a neceSsary ingredient of the dpinion * * *.” International Paper Co. v. United States, 5, Cir., 1955, _- 227-F. 2d 201, 208. What was sail by the Ninth Circuit J in United States v: Johnson, 9 Cir., 1960, 285 F. 3g 36, \ e . 39, n. 2, properly characterizes the evidence in: this rec-.— ord as to. Harvey Canal sales. “FE rthermore, such evi- dence was not offered or ads the measure of’ value of the property on the date of taking, but was merely one, approach used by all the experts, including the one Who testified for the- Govérn , in arriving at their opinions + to the value ie property: and as a check on such opinions.” ‘That Court then proceeds to Maintain - \ the distinction as to the legal admijssibility _and treatment : -such-evidence is to receive. “Quote [sic] obviously when evi- . dence of the price for which similar property~has been sold is offered as Substantive proof of the vglue.of the - . oe eee -A43 property under. consideration, a foundation ‘should be laid showing that’ the cther property was sufficiently near that in question, and that it was.sufficiently like the prop- erty in ‘question cas to character, situation, usabilit¥ and ' improvements to make it clear that the two tracts ‘were — comparable in value. ‘However, where evidence of sales” of similar property is offered not as substantive proof of value, but' merely in support | of, and gs ~baekground for, the: opinion of an expert as to the value of the land’ in question, the requirement of such foundation’ is not so strict.”" 285 F..2d 35, 4]. Continuing on and quoting | ~ from Chief Judge Parker, the Court then’ points out that 2? the expert’s s opinion is tg be tested through cross examina- tion which ‘was, of course. done. at great lengths here. As we pointed out , in Atlantic Coast. Line RR. v. U nited States, supra, any other rule would effectually _deny Fifth -Amendment protection to large or unusual properties: especially in an era and area-of an expanding economy in which no: ‘comparable sales could be cited or pointed out. It is uncontradicted, as the Commission's Report found, that “all experts agreed that there. were no 4racts’ of industrial properties av ailable which were situated on a tidéwater.channel ini or around N vew Orleans * * *-which was similar -in size,*c haracter and condition ux the Michoud land.” The Commission was not, as this Court’s opinion implies, misled into believing that Harvey ond Mic! -vad.were comparable.}? he Commission under the heading ‘ef ‘tComparable Sales” extensively analyzed ‘he testimon’ of the competing experts. It pointed out hat 00 Dock Board's appraisal Witnesses ‘in ‘reaching © bd as. * ‘ 12 The many rie ate were recognized. For example, the Com- mission f6 und * ‘there were available for ind ust rial use. larger, acrevges n surfounding parishes, some of wi = had Mississippi Rit. ‘frontages niv and. so me without any kind of water frontage. Libemise. there was he iene are Sou tne 1 ustrial aaa t 2 et 7; Lo ‘ ‘ Bie fillsne ; ae x or £ . 3 . . sd . e 6 .* Ad + their suites of value” either “relied on“ or. attached considerable weight” toesales at Harvey as*all thought it “was the most’ comparable * * * because it was located on the same tidewater cgual.” In. the same ‘discussion the Report pointed dut thatthe “Government appraisers . ) : cited none of’the sales at Harvey, assigning generally as ~~ tHe reason the fact that they considered the property “at * | _Harvey not comparable to the Michoud land of the smaller size of the former * * *.” Following is the. ~. Commission then discussed at greater length the sale of the 140 acres of raw land adjoining Michoud purchased ~ by the New Orleans Public Service in August 1952.'* In. usin® this as a basis for value both sets of‘ experts had ‘to make numerous adjustments because of the difference | in elevation, the expenses ‘to- raise that land ta the eleva- . tion of the improved Michoud ! land, etc. But this was not “all... The Commission followed. this by an even more ex- ., tended discussion of. the value of various leases cited as. comparables... Aftet all of: this information—Harvey — ‘Canal. Public Service, leases, etc.--had been weighed and * analyzed, the Commissi6s recorded its conclusions. In so - doing the Commission ‘expressly. discloséd that its valua- © tions were not the product of any erraneous use of assert- ed comparables. 2 8 This was cited as significant by all of the experts. — ° '4 The Report stated: “Because of the nature, character and size of the property in suit and the non-existence of any other property*in the - are. bearing greater likeness or similarity to that in suit than those. involved in the cited sales and leases-of other, properties, it is under- _standable, that the appraisers fad to-resort to the cited sales ahd leases for market data. They have-undoubtedly produced what thejr judgment dictated was the best data available under the circumstances which, we believe, demanded that gteater latitude, than normally allowed, be_per- mitted in the introduction of. such’ market data. “Neediess to say, jwe c cannot and do not predicate any findings or corclusiéns of value, or awards of just compensation solely on eny indi- ¥idual sale or lease cited. We do not regard the evidence of market data conclusive cr in itself détermimative of the issues of ‘value he ein. Such, evidence of that data as we have given. weivht, viewed, in tne litht of ithe whole eg | oy the évidenee, has. however, furnished us with some “indies itidN the v gues to be dete rmined.” ’ "th . 3 - / a opinion, this Court was thetarget of petty garbling ‘which, hee Pale i Set AB: Though this. fact is. not mentioned in the Court’s . even within the limits of strong: advocacy, hardly does :. credit to the sovereign, The impression “which the Gov-. ernment soufht to creaté is’ that these opinions of .Mr. Lemarie, seriously considered by the Commi§sion, were. mere: exaggerations in beha!f of interests served by him_ for a fee. Thus the Government urged the Court to reject, as it does, Mr. Lemarie’s valuation of $12,000 per acre - for waterfront property at Michoud because he got the . ‘figure “out of my -head.” * ae . ie On I resist the temptation to embellish it, for the record, as. i aecarta is more than sufficient refutation: ree: Out of my head. ‘ 2 : ““Q. In other words, you had nothing to rely on as a comparable to give you a figare of. 30 cents - per‘square foot?) .¢ “A. Mr. Wisdom [Gévernment counsel], I think “the formulas that I used are means of check- ing. But I think that reasonable. judgment is ex- pected Of me gs 2 witness that has: been in the- 5° business forget ma years.as I have been to apply ° - that -reasondble judgment to the figure that I have. - compiled. I have compiicd'a lot of figures here, but when I get-right down to it. use what-I consider is reasonable judgment to determine the. wahie: f , the ey: ek! Ps oe ee Sue * MQ, I can under: stand. Mr. Lemarie. your. . . stating that 30 cents was the figure per. squars foot that vou. assigned as the value of the property ; = at Michout, and that if you say -so, that that was : a matter of judgment, but what T want sto make. , - certain ‘is. that there were no comparable Proper- j ‘6 ties that you eximined ‘that led you to that con- ’ ~clusion? 7 ae er a . . . aie te ‘ : : e --« . i ae 7 ast , 47 ' ** sor . . ’ * *% MGis bane alan MIPTICUIaP ‘Property Inco bs i H I : / Moe - consideration. I know that property. in the heart of the city sells for $1.50 ‘to $2.00 a square foot. I knaw that property sells in other areas for 50 cents a square foot. I -know that property has sold on the Harvey Canal for 40, 50, and 60 cents square foot. . I know, that property down: in the’ 5 rear area here along the river front has sold _ for $1,00 and’$1.25 a square foot. I put all of that - together and I used my. experience that I have had, sind reasonable judgment in determining ‘If I know * all of this, what is this worth’ and I say it is: worth 27 to 30 cents a Square foot.” of Coir That Gesiaele and the Commission were “aa “sound d, the Government expert, Johnson, makes clear. | first testifying that he investigated sales of other prop&yties which he thought to be as comparable as possi- ble, Jotmagn ir response to this question: “What did you do in. order to help you reach your conclusions as to the values you ‘placed. on the open land * > *.” gave this answer : Cy "s a. “A. * * * But in the final analysis | used my ‘judgment based on my years of experience, and knowlegé cf industrial property in this vicinity.” Ant, then, -breathing life int» recognized’ works on Yeal estate appraisal.” Mr. Johnson stated that “1 thoroughly subscribe” io @lart's text that “after the apprals' r has applies “ill the theory and has analyzed all of the: data, Landepes Comes up with hig conclusions, he shoul! walk — ° ] ‘ ‘ aah ! 4 . j anh ' ham acrors the s #eetand put it on the curbs: and s * \ >1 try in Vy rt | + : “aig . oe o tea BAY LO himself, ° Now, What.can |! peddle it tor: And if the onswer doesnt coincide with the answer do ter: ined Soe y] f } . ae oy bs ¢ é by the study of all of the data. then they. owebt te co out, the wvindew end the comn sense froure ; ‘bused upon square footage. I wonld doubt that one as seasaned BQ Juvisre ¢ nristenberry was misled by the ylittering. meenitude of 0.000% square feet. He, as must be et . 86 as to the CommMissaonpers and the re estite experts who made a living at ther trade, is presemaly able to translote 15,560 square sect mto 1} ” amount to aseertaen the jy. oy gore: Moreover, tnere is « positive ‘testimony’ that industr-ai property is sold on a square fry isis in New Oriea sir preed by air is Fated by pounds, by rie vtidred we . rot Pit busimessmen somehow han- - * on a hypothetical _sale which would never in ract Le ‘made has not yet reguced | the Fifth Amendment to any such absurdity. Moreover; this case was not tied before the Com- missiai under any aitificin! procedural’ shackle by which one and only one: figure could ever be stated. In the first place the Court's charge (XXIV» stated that value “is to ~he ascertained and ‘fixed on just consideration. ofa!) the’ > . A50 “ uses for, which the property is suitable, and evidence as . to all such uses may be offered’ by either side.”'* The Commission “concluded that the. weight of the evidence’ establishes that single occupancy of the plant is indicated as its highest and best use * * *.” It fully understood what that meant. In the light of its holding that “ * * * the property in suit, taken as a whole, had no counter- part in New Orleans or surrounding area,” the Report stated the problem in traditional terms. “The appraisal of - the fair market value must be made considering the in- formed willing hypothetical seller and purcha: ie of the whole. ° > equally - important the Government ‘through the ques- tions propounded by its advocate and responses ade by © its experts foMowed exactly that same method. In detail- . ing the evidence from Government exnert Aschaffenburg ‘covering pages 415-447 of the Report), the first 11 pages | reflect his analysis ard methods‘employed in valuing va- cant acreage (not including acreage attributable to build- °ings:.- His testimony and the Commission’s analysis ®f it - demonstrates further that the single-shot method envis- aged by the Court’s opinion never Would work, For in his judgment the raw acreage had to be further divided into several sub-categories such as submerged, batture land, etc. In other testimony, he then elaborately evaluated the - buibfinds from a rental standpoint for purposes of capi- talization. And Chart No. 3 annexed as a part ofthe . Commission Report reflects ‘that while his figures* were different, he, as did the Dock Board experts, attributed s separate dollar values to:(a} land attributed to buildings, ‘bh! the value of buildings theggon , (ce) the value of open land and (d) the deductions from the value onaccount of existing long term leases. The same was true of Govern- ‘IS Tf this was an error, the Government did not object below, and it asserts none here. : e is o Aol ment expert Johnson (pages 447-47%) ."° Moreover,’ pawn sop’s testimony ‘as the Commission’s detailed analysis of its reflects) illustrates the very process through which’ intelligent, conscientious, experienced; competent real es- tate experts go in arriving at some idea of value where, as here, there is and can be no real comparable.*’ Thus the Government’s own expert valued vacant land, not on ‘the basis of the Dock Board rental rates of $200 to $350 per acre which this Court lays down as the imperative _standard,*' but rather upon a reconstruction based upon his entire judgment and experience. That professional opinion, as with that of others, was a matter for the triers of fact to weigh in the light of all other’ evidence. For similar reasons I think there is no basis for the _Court’s criticism that fixing rental values for vacant land © .. by a specified return on stated land yalues “is. the reverse of the usual process ‘of ascertaining the value of land by capitalizing its rental potential.” A consideration of the detailed Report “shows: that ail of the experts—recogniz-” ing that in the final analysis it was a matter of infoyaied 1% He treated vacant land in. ‘four-main- cutegitietattlbating. a a sep- : arate per acre dollar value to each to produce a ‘total vamey Of $2,305,697- 00 for the open land. The report then discusses in detail his calculations. ona capitaliza- tion method for producing the effective values ofthe buildings and land thereunder. Chart No. 3 reflects this valuy’ sepfrately states “ $: 3,705, 55 a 8 -0 Thus, for’ example, his estimate of sapo. per acre .for- land ia category “G"-—Protected by Levee—was referable ‘to three cited. sales. Starting with an adjusted cost of raw land At Miche id of $1,455 he-then added increments such as the following’ to reflect advantages of the Michoud property ‘over the cited sales: . For sewerage facilities $500 per acre For drainage 50O*per acre - Michoud cleared, leveled and graded 300 per acre Michoud waterfrontage greater ~* 400 per acre Location of Michoud somewhat better © . 500 per acre These or similar. adjustments produced Michoud values of $3, 655 ed $4,244 which he rouhded-off at $4,000. “1 The Court states on vacant land values: ‘“We think it is plain that. . in the absence of any Substantial evidence to the contrary, it must be taken * * * that the rental rates for the land * * * in effect as of January 10, 1951, must he deemed to be the rents to be used for the valuing of the takine * * * May 1, 1951." { ei, ‘ “~ + 6) - *>5 'AB2 : Pn a various methods to -test. tn result. In such testing, an element which is proved by-one approach is Assumed to be — in — another.*” “THE. LESSEES' INTERESTS. : o If: J can understand w ‘hat the Court, says, , the Lessees for all practical purposes are thé real victims of a fiction. In the Court’s preoccupation with the hypothetical ideal “of a single seller and a single purchaser of: property that never was or would be- seld, the Lessees with valuable ad- vantageous leaseholds are caught between ‘two fictions. men The Court reasonsthat ‘the leaseholds had no extra- - ordinary-valut because theoretically on May 1, 1951—the instant before condemnatjon—they could’ have obtained like space from unleaseC pertions of Michoud itself. And -as to those few leases which the Court seems ‘tu, recognize. might have some extraordinary advantage, the less sus- tained by-thehesseés ix not recoverable ‘because the cost to them of replaceme nt space was brought about by the Government taking of Michoud itself. f Thus what has no value suddenly becomes irreplace- able. 1 do not think that the Fifui Amendment has yet become so “fictionalized by United. States +. Cors, 1949, 337 U.S..325; 69S. Ct. 1086, 93 L. Ed, 1392." 6 ° the ‘record — the Commission's findings show the . ~ existenre of -a-real economic value in favorable leases. The loss. of the Lessees is the, loss *ststained by having thet valuable intérest taken away. The loss does not come frém increased costs by virtue of the Government ° condi mmition. 22 The Jaw is not above sueh cireuler reason: ng. Compare the test for esudies an instructed verdic t with that for er ranting. . in. 0.1 s Pn on" 3 - . DISPOSITION ON REMAND. . I-have two principal concerns as to the Court’s pro- » posed disposition on remand. The first. is that 1 am baf- fled by the outlined . disposition or remand. [| try: to put: myself in the position of the District Judge? Just what is-he to do? What Sact findings .are to be respected? Where is he to find the subordinate facts upon Which pre- *ymably he is to make some. more of his own? ¢ The “second is that wile it lene not mnandatorily order kk retrial before a jury, the Court’s coments, ‘que- tations and directions add up to anether strictureagainet oo -the use of Commissioners undey any cifcumstqnce— ‘ease began as a complicated .one: -1t is still complicated. We have anarety added to its complica tions. & ~ The presence of a Suter on the bench in the presence of 12 jurors is nqt going to chgnge it.. Except as to Gost of reproduction ‘which the Commissioners. rejected |, ii a - we have had to deal’witn turns upc - admissibility of evidence as such. The hope ex therefore in United States ¢.*Leaveil & Ponder; F.2d 398-7 409, Will not invest us or the Ariai Judge with the poweR of an aic chemist: we cannot’ make simple that w hich is evinplex. ° ” 1 only: know one thing: this case will be back with us“vears and thousands and thousands of pages later. . 7 ; : > _ Tt has been tried on jegal principles to which there was no timely objection registered or preserved. #1, was certainly the kind of case pee a jury trial ee gS eel F.R.Civ.P. T1Ath). Fact finttings have been. “mde “hy — —— — —_ — 2A gury-triaf at at Which the trial judge. promptly rules on the ad- missibility of the proper testimony and ti.en narrows the issue by appro re priate charge to the’ jury may. indeed, frequently simplify even what CR appears to be a compex valuation problery.” : s ——---- —- Peal Pe -A54 ; ; : tHe body constituted under the rules to determine such u case. There, in the main, it should end. For that is’ the meaning.of clearly erroneous even in condemnation cases.** oe 24 United States v. Tampa Bay Garden Apdgtments, Inc., 5 Cir., 1961, — 294 F. 2d 598; Parks v. United States, 5 Cir.. 1961, 293 F. 2d 482; United © States vy. Twin City Power Co., 5 Cir., 1958, 258 F. 2d 197; Stephens v. United States, 5 Cir., 1956, 235 F. 2d 467. oe . ; ‘ > ' cs . s ° . ° ° 7 . > ,. . . . . . , * - e - S & . rs ° , 2 * . id — e PARI ane AD5 APPENDIX B Federal Rules of Civil Procedure: ~ Rule F ndings by the Court » . (@) Effect. In all actions tried upon the facts with- out a jury or with an advisory jury, the court shall find the facts specially and state: separately its conclusions of law /thereon and direct the entry ‘ef the appropriate judg-" ment; and in granting or refusing interlo¢utory injunc- - tions the court shali similarly set forth the findings of . fact and conclusions ef Jaw whith constitute the grounds « | r of its action. Requesta : for findings are not necessary for purposes of review. _ Findings of fact shall not be set aside unless clearly erroneous, and due regard shall -be © given to the opportunity. of the trial court to judge of “the credibility of the witnesses. The findings of a master, .to the extent that ‘the “court adopts sthem, shall “be con- ° sidered as the findings of .the court: If an opinion or memorandum of ‘decision is filed, it will be sufficient ‘if the findings.of fact and conclusions of law appear there- - in. Findings of fagt and conclusions of law are unneces- sary on decisions of motions under Rules 12 or 56 or any other motiop excépt as provided in Rule 41‘b'.- As amended Dec. 27, 1946, effective March 19, 1948. 4 . Rule 53(e)(1I) Sorin in (II) In ‘Non-Jury Actions. . In an action to be tried — without a jury the court shal] accept the master’s find- ings of fact unless cleariy erroneous. Within 10 «days after being served with notice of the filing. of the report * ‘any party may-serve written objection= thereto’ upon the other parties. Application to the court for. action upon the report and upon objections thereto shall be by motion and upon notice as prescribed. in @fule 61d). The court after hearing ‘may adopt the report or may modify it or | & A56- at | may reject, it in whdle-or in part or may. receive further ovinenes or may recommit .it with instructions. — Rule TIACh) a eS eae & (h) Trial. If. the action involves ‘ie exervise of the power of eminent domain under the law of tic United “ States, any tribunal specially constityged by an Act of Congress governing the case for the trial of the issue of ~ _ just compensation shall be the tr ibunal for the determina- tion: of that issue; but if there is no such pecially con- . stituted tribunal any party may have a trial by jury of the issue bs just compehsation by filing a demant there- for within the time allowed for answer or, within such further time as the court may fix, unless the court in its discretion orders- that, because of the character, loca-_ - tion, or quantity of the property to be condemned, or for other reasons in the interest of justice, the issue of com- pensation shali be-determined’ by a commission of three persons appointed by it. If a commission is appointed it shall have the powers of a master provided in subdivision . - (ec) of Rule 53 arid proceedings before it shall be govérned by the provisions of paragraphs (1) and (2) of sub- ‘diyision id) of Rule 58. Its action and report shall be . determined aby a majority and its findings and report . shall have the effect” and be dealt with by the court in accordance with the practiee, prescribed in paragr ‘aph (2e of subdivision ie) of Rule 53. Trial of all issues shall othetw ‘wise be by. the court. ' 28 U.S.C. 125411) , § hes § 1254. Courts of appeals; - certiorari; appeal, certified questions: Cases’ in ‘the courts of appeals may be reviewed by the Supreme Court by the following. methods: € . J ad 7 (3 ‘ ; Pm Abd7 ° (1) -By writ of certiorari granted upon the petition _ of any party to any civil or criminal case, before or after _ rendition of judgment or decree; ae, 28US.C.138 = 40 § 1358.-' Eminent domain The district courts shall fave original jur risdiction of all proceedings to. condemn real estate for. the use of the ‘United States or its departments or agencies. June 25, «° 1948, c. 646, 62 Stat. 935,.~ | ake Ws 40 U.S.C. 258a ‘7 , § 2586. Same; lands, easements, or idiiiciiiolaiay for pub- lic use; taking of possession and title in advance re F of final judgment; authority; procedure : “In any proceeding in any court of: the United States ‘outside of the Districy,of Columbia which has been or may be instituted by and in the. name of and uiuder the authority of the United St tates: for’ the acquisition of any land oy easement or right of way in lerd for the. public use, the petitioner may file ‘in the cause, with the petition - or at any time before judgment,’a declaration of taking ; signed -by ‘the authority empowered by lav jo acquire the lands described in the petition, decl¥yig that said lands ao ~ are thereby taken for the use “of thyp/United States. Said declaration. ef taking shall copfain -oF have. annexed , . thereto—+ ae | 4 (1i A statement of pe authority under which and r + the public use for whiebSaid lands are taken. \- ; (2) A destripsion’ of -the lands: taken sufficient for . +r ¢. * ’ : , the identification’ thereot. Gtutement of. the estate or interest ino said er for said public use. ° ee oe A eg Ss dy (4) A plan showing the lands taken. _ __ fae : \ 30 SH, s (5) A statement of the sum of money estimated by said acquiring authority” to be: just compensation -_ the. land taken, Siorks —— ‘ « : Upon the filing. said. didiasetias of taking and of the . deposit in the court, to the yse of the’ persons entitled ‘thereto, of the mount. of. the estimated compensation ‘stated in said declaration, title to the said lands in fee ~ simple absolute, or such less estpte or interest therein as’ | . is specified in said declaration, shall vest. in tKe United .. States of America, and said lands shall be deemed to be - ‘condemned and taken for the -use of the United States, and the right to just compensation for the same shall vest.» in the persons entitled thereto; and said ‘compensation shall be ascertained and awarded in said proceeding and ° - established by judgment therein, and. the’ said judgment shall include, as partiof- the just compensagion awarded, interest at the-rate of 6 per centum per annitm on the amount finally» awarded as the value of the property as of the date of taking, from said date to the date of pay- ment; but intérest shall not be allowed on sé muclr ‘thereof - as shal] have been paid: into the court. No sum so paid "into the court’ shall be, chargpd with commissio: < or: _poundage. £4 ed | - Upon the applicationi of the parties in interest, - the court.may order that the money deposited in the court, or any part thereof# be paid forthwith. for or°on account of the just compensation to be awarded in said proceeding. If the: compensation finally awarded in respect of said lands, or any parcel thereof, shall exceed the amourt of the mawey so received by any person entitled, the -court _ shall. enter juidgment againstthec waited States for the amount. of the deficiency. Gian: the filing-of/a, declaration of taking, the court - shall®have power to ‘fix’ ‘the time within which and the ternis upon which the -parties in possession shall be re- . quired to surrender possession .to the petitioner. The court shall have power to make such orders in respect: of ‘ encumbrances, liens, rents, taxes, assessments, insurance, and other charges, if. any, as slfall be just and equitable. Feb. 26, 1931, ¢. 307, § 1, 46 Stat. 1421. CQ ¢ x , « i} + --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385601_1588%3A3. Public record. Not legal advice.