United States of America, Plaintiff, Appellee, v. 125.07 Acres of Land, More or Less, Situate in the Towns of Truro and Wellfleet, County of Barnstable, Commonwealth of Massachusetts, Thomas W. Rich, et al., Defendants, Appellants, 667 F.2d 243 (1st Cir. 1981)

This is an appeal from a final judgment of the district court, entered January 16, 1981, awarding the appellant landowners $39,800.00 as compensation for lands condemned by the United States for the expansion of the Cape Cod National Seashore Project (hereinafter "Seashore").¹  The district court based its award on the report of a three-member commission appointed under Fed. R. Civ. P. 71A(h) to take testimony and view the property. On appeal, the landowners urge that the court erred in adopting the report of the commission because its award was outside the range of expert testimony and because certain deductions made by the commission for road improvement costs are not chargeable to the landowners as a matter of state law. This court has jurisdiction under 28 U.S.C. § 1291 (1976).

Because we believe that important issues of state law, peculiarly local in nature, were not fully considered by the district court and because the resolution of those issues may reflect upon the adequacy of the commission's instructions and analysis, we will vacate the judgment of the district court and remand for further proceedings not inconsistent with this opinion.

The tract of land at issue here, denominated No. 25T-5723, was described by the commission as follows:

"The subject tract is located in the Town of Truro on an ancient way known as Pond Road. It is approximately 2850 feet easterly of Old County Road, a paved way, and approximately 4130 feet from Route 6, a State Highway running through Truro. The tract has an area of 9.3 acres. It has a frontage on Pond Road of 1380 feet, its northern boundary. It has a depth on the West of 225 feet; on the East 390 feet; and on the South 1330 feet. The tract is fairly level, with the exception of its easterly portion which is affected by a kettle-hole, so called, which has a maximum depth of about 20 feet. The tract is wooded, with a growth of scrub oak and pine, which is characteristic of the area.

"Access to the subject tract from Old Colony Road (sic),²  the nearest paved road, is by way of dirt and/or sand road, called Lombard Valley Road for a distance of some 460 feet to Pond Road, and thence along Pond Road for some 2390 feet to the northwesterly corner of the property. As noted heretofore, there is also access from Route 6, lying to the East of the property, but it is more than 4130 feet from the subject tract. Pond Road is presently approximately 10 feet wide and is composed of dirt and sand."

Report of Commissioners, at 1-2.³ 

At the trial before the commissioners, the landowners' engineer testified that, in his opinion, the property could be subdivided into eight residential lots. He also testified that 10 lots could be created with Planning Board approval and described the condition of Pond Road and Lombard Valley Road. An appraiser testified for the landowners that the highest and best use of the property was for a residential subdivision and that, at that use, the tract had a gross value of $76,260.00. This figure was based upon an analysis of four "comparable sales" with adjustments for time, topography, access, and the like. From the gross value, this appraiser deducted $3,896.00 for the cost of bringing utilities to the property and $2,000.00 for the cost of minor improvements to Lombard Valley Road.⁴  This left a net, or fair market value opinion of $70,064.00 which he rounded to $70,000.00.

An engineer called by the Government testified that his study of the property indicated that the best use of the tract would be for "assemblage"-that is, that it be held for future residential development in conjunction with adjoining land. The principal basis for this conclusion was the witness' belief, based upon his experience in such matters, that Pond Road provided inadequate access for the landowners' proposed subdivision and that, whatever Pond Road is called, its legal status is not such that the town, rather than the landowners, is responsible for its maintenance. An appraiser called by the Government essentially corroborated the testimony of the engineer. He testified that, in his opinion, the highest and best use of the property was for assemblage and that it had a gross value for that purpose of $50,589.00 based upon comparable sales. Applying a 50% discount factor to account for the fact that the tract is "backland," as well as for the costs of assemblage and development, road improvements, and utilities, he concluded that the fair market value of the tract under this use would be $25,300.00.⁵ 

To test this hypothesis, the Government appraiser also priced out a subdivision of two oversized home lots. This use yielded a gross value of $76,300.00, road and utility costs of $58,300.00, and a net fair market value of $18,000.00. Based upon this result, the appraiser reaffirmed his conviction that the highest and best use of the tract would be for assemblage. Upon questioning by the commission, he further opined that, assuming that the legal status of Pond Road is such that Planning Board approval would not be required, a 10-lot subdivision would yield a gross value of $118,000.00 but a net value of only $34,155.00, adjusted for time, in light of substantial road improvement and utility costs.

As can readily be seen, substantial portions of the testimony before the commission concerned the physical condition and legal status of Pond Road. The physical condition of the road itself and the expense involved in putting it in a condition where the lots along it would be salable, while hotly disputed by the parties, are essentially questions of fact as to which the commission, having heard the witnesses and viewed the property, is entitled to deference. The legal status of the road, on the other hand, is of great importance in determining whether and to what extent the various proposed subdivisions would require Planning Board approval and, crucial to this appeal, whether the Town of Truro or the developer-landowner must bear the cost of improving and maintaining the road.

Through their engineer, the landowners offered into evidence, over the Government's relevancy objection, an order of the district court, Garrity, J., in a related case, United States v. Certain Parcels of Land in Barnstable County, Etc., No. 74-182-G (D. Mass. Aug. 15, 1980) (hereinafter "Garrity decision"). The pleadings, affidavits, and memoranda of law in that case were made a part of the appendix in this appeal.⁶  In his order, Judge Garrity directed the commission in that case to appraise the tract based upon the fact that "Tract 25T-5724 bounds for the full length of its southerly side by a public road (⁷  hereinafter called Pond Road ... with a width of three (3) rods, or 49.5 feet." Slip op. at 1-2. The landowners argued at the trial before the commission that the effect of this decision is to declare Pond Road to be a "public way" for purposes of section 81L of the Massachusetts Subdivision Control Law,⁸  so that no Planning Board approval would be required for either the two-lot subdivision proposed as an alternative use by the Government or for the eight-lot plan proposed by the landowners.⁹ 

The Government's witness, on the other hand, testified that, in his opinion,¹⁰  the term "public road" as used by Judge Garrity was equivalent to the historical term "proprietor's road," but that neither of these terms constituted a "public way" within the meaning of the Subdivision Control Law.¹¹ 

In its report in this case, the commission recited the land description and comparable sales testimony at length and then concluded:

"We find that the highest and best use of the subject tract is for residential purposes. In our opinion the tract can be appropriately subdivided into two or more homesites, with a maximum number of eight (8) without Planning Board approval. We find that Pond Road provides legal access to the subject tract, with a width of 49.5 feet as determined by the United States District Court on August 15, 1980. At the same time the Court determined Pond Road to be a public road.

"On the issue of fair market value, we have carefully considered the comparable sales offered in evidence by both parties. We have viewed most of these properties on several occasions, and are in a position to appreciate their comparability to the subject tract and the necessity for adjustments for time, location, configuration, view, topography and like elements. In this case it has been urged upon us that we should depart from what might be termed 'a pattern of consistency.' (These are our words-not counsel's). It is true, as a reading of our reports to the Court will show, that we have uniformly valued wooded lots or tracts at $6,000 per acre, ($6,500 if one or two acres), where the access is over unimproved dirt or sand roads. A study and analysis of the comparable sales in this case only serve to confirm our opinion as to value. What we are dealing with here is a parcel of raw, unimproved land, 9.3 acres in area. It has a frontage of 1380 feet on a rough, dirt and sand road, which, whatever its legal width, on the ground is eight (8) to ten (10) feet wide. It is 2850 feet or more than half a mile from a paved road, it is surrounded by similar parcels of land.

"We find that the subject tract has a value of $6,000 per acre, or a total value of $55,800. From this figure must be deducted the cost of bringing utilities to the site and improving the road to make it reasonably safe and serviceable for the residences that would be constructed in the proposed subdivision. The defendants urge that these costs should be divided among the landowners in the immediate area, who would benefit by the introduction of utilities and the improvement of the road. In the absence of any evidence from any landowner or landowners in the area as to whether they would be willing to share in such costs or as to when they might seek to develop their property, we find the proposed allocation too speculative and conjectural to consider in connection with these findings. We find the cost of bringing utilities to the subject tract would be $3.50 per linear foot, or a total sum of $14,000 for the 4000 feet involved. We also find that the cost of improving the road to provide adequate access for the homesites for the proposed subdivision would be $2,000. This results in total costs of $16,000 which should be deducted from the total value of $55,800. Making this calculation, we find the fair market value of the subject tract to be the sum of $39,800."

Report of Commissioners, at 4-5.

The landowners filed timely exceptions to the commission report alleging, inter alia, that the award was outside the range of expert testimony, that the report was conclusory, that the commission relied on improper "arbitrary formulas," and that the utility and road cost deductions were improper because "(t)here were two comparable sales on unimproved dirt roads which lacked utilities," and the award here was less per acre than the award in the comparable sales.¹² 

In a brief judgment, the district court dismissed the landowners' objections as being "without legal merit;" confirmed, approved, and adopted the commission report "as the findings and conclusions of this Court;" entered judgment for the landowners in the amount of $39,800.00; and ordered that title to the property would vest in the United States upon satisfaction of the judgment "by deposit of the award into the Registry of the Court."

This appeal followed.

While the evidence presented in a condemnation case is often conflicting and confusing, the basic rules of law are refreshingly clear. To begin with, "(t) he only absolute standard is that provided by the Constitution-'just compensation'-and the only sure guide in a difficult condemnation case is the consideration 'What compensation is "just" both to the owner whose property is taken and to the public that must pay the bill?' " United States v. 320.0 Acres of Land, More or Less, Etc., 605 F.2d 762, 781 (5th Cir. 1979), quoting United States v. Commodities Trading Corp., 339 U.S. 121, 123, 70 S. Ct. 547, 549, 94 L. Ed. 707 (1950).¹³  The issue then becomes the fair market value of the property-the amount a willing buyer would pay a willing seller at the time of taking. United States v. 320.0 Acres of Land, More or Less, Etc., supra, 605 F.2d at 781. Further, as the court explained in 320.0 Acres,

"... since a hypothetical, 'reasonable man' buyer will purchase land with an eye to not only its existing use but to other potential uses as well, fair market value takes into consideration '(t)he highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future * * * to the full extent that the prospect of demand for such use affects the market value while the property is privately held.' Olson v. United States, supra, 292 U.S. (246) at 255, 54 S. Ct. (704) at 708 (78 L. Ed. 1236). Thus, 'just compensation' is not limited to the value of the property as presently used, but includes any additional market value it may command because of the prospects for developing it to the 'highest and best use' for which it is suitable."

Id.

Thus, the factfinder is presented with multiple sets of conflicting value estimates: first, the hypothetical value of the property when developed to and sold at its highest and best use (the "gross value"); second, the costs of developing the land from its present state to the highest and best use (the "development costs"); and, third, the present fair market value of the tract, determined by subtracting the development costs from the gross value. From all of this evidence, and from a view of the property, the factfinder-in this case the commission-is required to make a finding of just compensation. The commission having done so, and the district court having adopted it, the scope of review in this court is limited. As the court in United States v. 9.20 Acres of Land, More or Less, 638 F.2d 1123 (8th Cir. 1981), has succinctly and cogently stated the rule:

If the condemnation commission distinctly marks the path it follows in making a specific compensation award, and if the district court adopts the commission's report, the court of appeals must determine whether the report, as adopted by the district court, is "clearly erroneous." ...

In addition, the "scope of the evidence" rule is applied in condemnation cases. "The rule is that an award of just compensation will not be disturbed if it is within the scope of the evidence. Generally, this rule can be simply applied by determining whether the award falls within the extremes of the adverse parties' opinion testimony." United States v. 1,162.65 Acres of Land, 498 F.2d 1298, 1301 n.5 (8th Cir. 1974). However, a factfinder's compensation verdict which is outside the range of the experts' ultimate value opinions for the property may also be upheld where the verdict is supported by other evidence. Id. at 1301 and n.5. See also United States v. 38.60 Acres of Land, 625 F.2d 196, 201, 201 n.9 (8th Cir. 1980) (scope of the evidence rule defined).

638 F.2d at 1126 (citations omitted) (emphasis added). See also United States v. Iriarte, 166 F.2d 800, 805 (1st Cir.), cert. denied, 335 U.S. 816, 69 S. Ct. 36, 93 L. Ed. 371 (1948).

We believe that a fair reading of the case law compels the common sense interpretation of this rule to mean that the relevant figures are the experts' "ultimate value opinions"-that is, the "net" or fair market value of the property. What is of fundamental importance is whether the award -the "just compensation" required by the Fifth Amendment-is within the range of expert opinion or is otherwise supported by the evidence. In this case, the "ultimate value opinions" range from $18,000.00, for a two-lot subdivision testified to by the Government's appraiser, to $70,000.00, for an eight-lot subdivision testified to by the landowners' appraiser. The commission found the fair market value to be $39,800.00. This figure is clearly within the range of the experts' "ultimate value opinions."

The landowners disagree with this analysis. In their brief, they focus exclusively on the gross value figures and appear to argue that each element of the award-presumably the "gross," "development costs," and "net" values-must be within its respective range of testimony in order for the ultimate award to be valid.¹⁴  Here, the commission's gross award was lower than the gross award figures offered by the experts.¹⁵  We are not persuaded that this requirement of each of these values being within the range of testimony is the law and none of the cases cited by the landowners support a contrary result.

Two of the cases relied upon by the landowners are clearly inapposite because, in each of the cases, there was only one value opinion in evidence and thus no "range" at all. See Gregory v. Town of Pageland, 374 F.2d 490 (4th Cir. 1967); United States v. 685.2 Acres of Land, 146 F.2d 998 (7th Cir. 1945). Another case, United States v. 3,727.91 Acres of Land, 563 F.2d 357 (8th Cir. 1977), is likewise unsupportive. In that case, there were three net value opinions in evidence and the award was less than any of them. Id. at 362. Finally, United States v. Hilliard, 412 F.2d 174 (8th Cir. 1969), was a partial taking case and thus is distinguishable both factually and legally. Clearly, in a partial taking case, both the "before taking" and "after taking" values are critical to the damage award determination. They are truly "elements" or "components" of the award because the ultimate dollar award in a partial taking case has no significance other than as the difference between the before and after taking values. In a complete taking, however, there is really just a single issue: the fair market value of the tract at the time of taking and the dollar award has critical independent significance as the fair market value of the tract, while the gross and development cost opinions simply serve to enable the reviewing court to discern how the ultimate opinion was reached.

In their reply brief, the landowners make a further argument. There they maintain that the net value opinions of the Government's appraiser are somehow "mooted" once the commission arrives at its development cost figure.¹⁶  The landowners cite no authority in support of this argument, nor has our research disclosed any. Further, the proposition again strikes us as contrary to the flexible and common sense approach mandated by the cases. As we have stated, the overriding issue here is fair market value.¹⁷  In this case, the landowners' expert testified that the tract would yield $76,260.00 at its highest and best use and would require only $5,894.00 in improvements to achieve that use. The Government's appraiser essentially agreed as to the gross value for this use ($76,300.00) but clearly believed that the achievement of that use would be time-taking and expensive.¹⁸  Obviously, the commission believed that the tract was less like the comparables than the landowners claimed but more like them than the Government argued. They chose to express their conclusion through, if you will, a more realistic gross value estimate rather than through more finely tuned development costs. This seems to us to be a perfectly reasonable and proper approach and an example of why the landowners' theory that the gross, cost, and net figures must all be within their respective ranges of testimony is artificial, often impractical, and not essential.¹⁹ 

We conclude, therefore, what while the commission report was not a model of specificity, the commission award was clearly within the range of the testimony presented. Consequently, unless the presentation and analysis of that testimony is irremediably flawed with an error or errors of law, the district court's judgment should be affirmed. It is to this issue that we now turn.

While we adhere to our view that the principal concern in a condemnation case is the commission's fair market value opinion, that is by no means the end of the analysis. To the contrary, it cannot be clearer that "(t)he first responsibility of the District Court, apart from the selection of responsible commissioners, is careful instruction of them on the law." United States v. Merz, supra, 376 U.S. at 198, 84 S. Ct. at 643. Manifestly, if the commission is given an erroneous instruction, or no instruction at all, on a question of law which may have an impact upon their determination of fair market value, their decision is tainted in the same manner as a jury verdict returned upon an erroneous instruction. The legal status of Pond Road is just such a question.

As we intimated earlier, this issue goes far beyond the question of whether the commission's deduction of $2,000.00 for improvements to Pond Road must be set aside.²⁰  Rather, the status of Pond Road, both as to the Subdivision Control Law and the responsibility to maintain, is of necessity a critical element in formulating a value opinion for the tract. The transcript of the commission hearing makes clear that the principal opinions of the experts were based upon differing assumptions concerning these issues. Further, when one side would press the other's witness for an opinion based upon a different assumption, the witness would seek to avoid answering and, when pressed further, would render an opinion but then discount it as a rough guess. Thus, it is possible that, while the commission's award is within the range of testimony presented, that "range" may be unreliable-not because the Government's net figure is based upon development costs other than those found by the commission, but because it may be based upon a faulty legal premise either as to the power of the Planning Board or the burden of maintenance. Clearly, the "high" end of the range could be unreliable for similar reasons.

The problem that this presents on appeal is obvious and underscores the need to raise and litigate these sorts of issues before the commission receives its instructions. It was just such a procedure which led to Judge Garrity's order and which should have been employed here. The commission was provided with a set of 26 detailed instructions covering nearly 40 pages. Instruction No. 22 lists the public roads in Truro.²¹  Included in this list is a "Pond Road." At the very outset of the commission hearing, however, counsel for the landowners acknowledged that the "Pond Road" mentioned in the instructions is not the "Pond Road" at issue here and then sought to argue the collateral estoppel effect of Judge Garrity's decision.²²  We are at a loss to understand why counsel, who obviously had discovered this discrepancy in preparing their case, did not go to the district court and seek to have the instruction clarified, the effect of Judge Garrity's decision determined, and the subdivision and maintenance issues resolved.

In a civil jury trial, "(n)o party may assign as error the giving or failure to give an instruction unless he objects thereto before the jury retires ...." Fed. R. Civ. P. 51. See 5A J. Moore, supra, P 51.03. There is no analogous language in Rule 71A(h) or in Rule 53 to which Rule 71A refers. Nonetheless, the Supreme Court has made clear that "the litigants have a responsibility to assist the process by specifying their objections to instructions, by offering alternate ones, and by making their timely objections to the reports in specific, rather than in generalized form ...." United States v. Merz, supra, 376 U.S. at 199, 84 S. Ct. at 643.

Because these issues are likely to recur in these Seashore cases and because their resolution would impose a degree of order and certainty in these proceedings, we are convinced that they should be addressed in this case. While we hesitate to prolong this case any further, we are equally convinced that the record before us is insufficient for a proper resolution of such highly technical and peculiarly local questions of state law, none of which has been fully briefed or argued, to our knowledge, either here or in the district court.²³  Therefore, we will remand the case for a full consideration of these issues, and, in doing so, we will try to illustrate the problems which we see lurking in this record.

To begin with, the district court must determine precisely what the issues before Judge Garrity were and which, if any, of them he actually decided. We suspect, but do not decide, that the landowners may be correct in their assertion that that decision may have some collateral estoppel effect here, at least insofar as it decided that the "Pond Road" at issue here is the "Pond Road" laid out by the Town of Truro in 1714-15. Cf. Bruszewski v. United States, 181 F.2d 419 (3d Cir. 1950); Restatement of Judgments §§ 68, 73 & 75 (1942). The much more important question, though, is just what this determination means and, as to that, the questions abound.

Before Judge Garrity, the Government appeared to concede that the document at issue there "constitutes a 'formal layout' of a public way" but argued that that "way" was not "Pond Road." Judge Garrity disagreed. If that is true, and the Government is bound by it, the question then becomes whether that "public way" is the same sort of "public way" referred to in the Subdivision Control Law²⁴  and whether it is synonymous with the term "town way" for purposes of section 1 of chapter 84, which makes towns responsible for the maintenance of "highways and town ways."²⁵  If not, does it constitute what is now called a "statutory private way" which is laid out by the town²⁶  and in which the public may over time gain a right of access, but for whose maintenance the town is not responsible?²⁷  Further, if the town is responsible to maintain the roads "so that they may be reasonably safe and convenient for travelers,"²⁸  does that require improvement necessary for a subdivision or simply maintenance at the level of use existing or reasonably anticipated when the road was laid out?

While the age of these roads and various rules of law applicable to them at different times make these questions difficult, the law nevertheless seems clear that "(w)hen the fact of a public way is disputed, the burden of proof falls on the party asserting the fact." Witteveld v. City of Haverhill, --- Mass.App. ---, ---, 421 N.E.2d 783, 785 (1981), citing Commonwealth v. Hayden, 354 Mass. 727, 728, 242 N.E.2d 431 (1968). This is so because to hold the town responsible for the maintenance of a road is also to hold it liable for negligence in performing, or failing to perform, that maintenance. Loriol v. Keene, 343 Mass. 358, 361, 179 N.E.2d 223, 225 (1961). Although the cases do not speak to this precise issue, reading these cases and the relevant statutes together would seem to indicate that the same burden applies in determining the issue of whether a road is "public" for maintenance purposes and whether it is "public" for purposes of the Subdivision Control Law.²⁹ 

The recent case of Fenn v. Town of Middleborough, 7 Mass.App. 80, 386 N.E.2d 740 (1979), appears to state the rule clearly:

"In general, it may be said that an existing way in a city or town in this Commonwealth is not a 'public' way-that is, one which a city or town has a duty to maintain free from defects (see G.L. c. 84, §§ 1, 15, 22; First National Bank of Woburn v. Woburn, 192 Mass. 220, 222-223, 78 N.E. 307 (1906))-unless it has become public in character in one of three ways: (1) a laying out by public authority in the manner prescribed by statute (see G.L. c. 82 §§ 1-32); (2) prescription; and (3) prior to 1846, a dedication by the owner to public use, permanent and unequivocal (see Longley v. Worcester, 304 Mass. (580) at 587-589, 24 N.E.2d 533; Uliasz v. Gillette, 357 Mass. at 104, 256 N.E.2d 290), coupled with an express or implied acceptance by the public. Because the 1846 statute put an end to the creation thereafter of public ways by dedication and acceptance (Loriol v. Keene, 343 Mass. 358, 361, 179 N.E.2d 223 (1961)), it has only been possible since that time to create a public way by a laying out in the statutory manner or by prescription."

Id. at 83-84, 386 N.E.2d at 742. Consequently, it is for the district court to determine upon remand whether Pond Road qualifies as a public way under any one of these three tests. The burden is on the landowners either to show that this issue was decided by Judge Garrity or to litigate it de novo. Once this issue is resolved, the court must determine whether the town's maintenance obligation, if it exists, precludes the assessment of any road costs against an abutting landowner. Finally, the court must determine whether, regardless of its status for maintenance purposes, Pond Road is a public way for purposes of the Subdivision Control Law.

For the foregoing reasons, the judgment of the district court will be vacated and the case remanded for further proceedings not inconsistent with this opinion.

We leave it to the informed discretion of the district court whether, after having resolved these issues of law, it should resubmit the issue of compensation to the commission or "itself resolve the dispute on the existing records, or on those records as supplemented by further evidence." United States v. Merz, supra, 376 U.S. at 200, 84 S. Ct. at 644.

The parties will bear their own costs.