Ozark Real Estate Company, Appellant, v. United States of America, Appellee, 377 F.2d 88 (8th Cir. 1967)

This appeal is from a judgment of the United States District Court for the Western District of Arkansas approving the report of a condemnation commission appointed under Fed. R. Civ. P. 71A (h). The report fixed compensation for the Government's taking of certain lands and flowage easements for the Dardanelle Lock and Dam Project on the Arkansas River. The Government condemned fee title exclusive of mineral rights to certain designated portions and flowage easements to other portions of the area. The total area condemned approximated 1613 acres. Coal deposits and possibly natural gas underlie the lands involved. The mining activity and the character of the coal in this area are described in the opinion of this court in the recent case of Mills v. United States, 363 F.2d 78, 79 (8th Cir. 1966).¹ 

This case is unique in that at trial the parties agreed that the valuation of the taking should be considered by treating separately four distinct elements: (1) surface estate; (2) oil and gas estate; (3) strippable coal estate; and (4) deep coal estate. After pretrial conferences and the commissioners' viewing of the property, a hearing was held wherein seventeen witnesses testified and thirty-three exhibits were introduced. The commission found as just compensation for the total taking the sum of $240,600.00. It allocated the awards as follows: $25,000.00 for the strippable coal; $15,600.00 for the oil and gas interests; $150,000.00 for the surface estate; and $50,000.00 for the deep coal estate and severance damage. This appeal is only from that part of the total award involving the deep coal estate.

Ozark asserts as error the commission's failure to report the method by which the award was determined, thereby violating the teachings of United States v. Merz, 376 U.S. 192, 84 S. Ct. 639, 11 L. Ed. 2d 629 (1964), or, in the alternative, if compliance with Merz is found, the commission used an incorrect measure of just compensation in arriving at the award.

We find no merit in either argument. Recently we had occasion to carefully consider and analyze the Merz decision in United States v. Bell, 363 F.2d 94 (8th Cir. 1966); Mills v. United States, supra; and Morgan v. United States, 356 F.2d 17 (8th Cir. 1966). In Morgan, supra, Judge Blackmun writing for this court stated:

"We, however, read Merz as requiring not meticulous compliance with every particular therein mentioned, but as suggesting standards which assure fairness to both condemnor and condemnee and provide safeguards against a commission's natural tendency, when not controlled, to use its own assumed expertise." 356 F.2d at 23.

Mr. Justice Douglas in Merz, supra, after stating that the commission should be instructed in certain details and that " [c]onclusory findings are alone not sufficient" as they do not reflect the path taken by the commissioners through the maze of conflicting evidence, set forth as additional guidelines:

"The commissioners need not make detailed findings such as judges do who try a case without a jury. Commissioners, we assume, will normally be laymen, inexperienced in the law. But laymen can be instructed to reveal the reasoning they use in deciding on a particular award, what standard they try to follow, which line of testimony they adopt, what measure of severance damages they use, and so on. We do not say that every contested issue raised on the record before the commission must be resolved by a separate finding of fact. We do not say that there must be an array of findings of subsidiary facts to demonstrate that the ultimate finding of value is soundly and legally based. The path followed by the commissioners in reaching the amount of the award can, however, be distinctly marked. Such a requirement is within the competence of laymen; and laymen, like judges, will give more careful consideration to the problem if they are required to state not only the end result of their inquiry, but the process by which they reached it." 376 U.S. at 198-199, 84 S. Ct. at 643.

Judge John E. Miller, an able judge with much expertise in the field of eminent domain, meticulously instructed the commissioners in the instant case. Ozark makes no complaint concerning the court's charge. Its complaint is directed solely at the text of the report of the commission. This report, however, was much more than a conclusory finding. It clearly and distinctly revealed the path taken by the commissioners in reaching the amount of the award. The report, after describing the tracts involved and the issues as agreed to by the parties, the parties' connotation of "deep coal," the present mining activity on the property, the annual volume of production, the present market, and the lack of market for this type coal for fuel, then proceeded to set forth the substance of and analyze the expert witnesses' evidence of both parties. It made clear its rejection of the testimony of Ozark's expert witness, Mr. Robinson, who envisaged a hypothetical plant that could only operate profitably by capturing the entire market, thereby forcing competition out of business and at the same time greatly enlarging the future market for this type coal.² 

The Government's expert witness, Mr. Weir, testified that the valuation of the deep coal property was $20.00 per acre — thus by simple multiplication, one could arrive at the value of the taking of approximately $32,000.00. The report, however, reflected the commissioners' finding that Mr. Weir failed to take into account the severance damage, the admitted possibility of some expansion of the market for this type coal and the loss of access to other coal.³ 

This evidence makes it abundantly clear what path the commissioners took in determining its valuation. The commissioners properly disregarded the speculative aspects of Ozark's expert witness and also noted that the Government's expert witness failed to take into consideration the severance damage. The District Court characterized the conflict in the evidence as primarily one of weight and credibility of the witnesses, rather than the substantiality of the testimony, and was convinced that the findings were not only fair but supported by substantial evidence. In a concluding paragraph of a nine page unpublished opinion, the District Court stated:

"In the opinion of the court the awards made by the Commission are supported by substantial evidence, and the Commission did a remarkable job considering the manner in which the case was tried by both parties. No injustice has been done, unless it would be in the award of $150,000 for surface estates, but there is testimony to support that figure although in the opinion of the court it appears to be rather liberal. The record discloses direct conflicts in the testimony of the mining engineers who testified, particularly with reference to future market, possibility of sale of additional coal to zinc operators, possible sale of coal for iron or steel mills, the use of coal for sintering purposes, and in all other respects. The conflicts are primarily a matter of weight and credibility rather than the substantiality of the testimony, and, as heretofore stated, the court is convinced that the report of the Commission is fair and supported by substantial evidence. The case was tried in the manner in which the parties themselves agreed to try it. They elected to try only the tracts involved, and the fact that testimony relevant to the amount of coal in other lands was heard was not prejudicial to the landowner. If it was error, it was induced by the parties themselves, and particularly the landowner. No doubt the landowner thought by injecting the other lands not involved herein in the case that he could thereby increase the damages to the deep coal that is involved in the instant proceeding."

The main thrust of Ozark's argument is that the commission report was not based on a "before and after" valuation. We are not persuaded by this argument. We recognize such an approach as a valid, useful standard, but its adaptability here was aborted by the parties' agreement that valuation should be determined by giving separate treatment to the four distinct elements. The standard of compensation in federal condemnation cases was described in United States v. Miller, 317 U.S. 369, 373, 63 S. Ct. 276, 279, 87 L. Ed. 336 (1943) as the "full and perfect equivalent in money of the property taken." However, experts for both parties testified as to the "before and after" value, and it is clear that the commission basically accepted the figure of the Government's expert but added thereto the severance damage and, as noted, the trial court found substantial evidence to support this award.

However, Ozark is in no position to complain because it agreed to the deviation from the court's instructions as a matter of procedure in trying this case on the issue of valuation of separate elements. It is nonsensical to suggest that it can accept the fruits of the commissioners' report based on the same method as to three of its findings and justifiably cry foul as to the fourth. It would be a queer rule that would permit one to induce or agree to the ground rules and then perch an error and obtain a retrial on one facet of the award which does not suit him. Judge Matthes of this court recently restated this principle in Tucker v. United States, 375 F.2d 363 (8th Cir. March 23, 1967) by quoting an apt excerpt wherein the rule was enunciated by this court in the earlier case of Carruthers v. Reed, 102 F.2d 933, 938 (8th Cir. 1939), cert. denied, 307 U.S. 643, 59 S. Ct. 1047, 83 L. Ed. 1523 (1939):

"Where parties, even in a criminal case, knowingly and deliberately adopt a course of procedure which at the time appears to be to their best interest, they cannot be permitted at a later time, after a decision has been rendered adverse to them, to obtain a retrial according to procedure which they have voluntarily discarded and waived."

The trial court was of the opinion that the total award was a little on the liberal side, but did not reduce it as there was substantial evidence to sustain it.

We find no prejudicial error and the judgment is affirmed.