United States v. 564.54 Acres of Land, 441 U.S. 506 (1979)

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Syllabus

The Government initiated condemnation proceedings to acquire land on which respondent, a private nonprofit organization, operated summer camps. Before trial, respondent rejected the Government’s offer to pay the fair market value of the property, demanding instead the cost of developing functionally equivalent substitute facilities at a new site. The District Court held that the "substitute facilities" measure of compensation was available only to governmental condemnees, and that respondent therefore was entitled only to the fair market value of its property. On interlocutory appeal, the Court of Appeals reversed and remanded, holding that private nonprofit owners can obtain substitute facilities compensation if there is no "ready market" for the condemned property and if the facilities are "reasonably necessary to public welfare." At trial, the jury found that respondent was not entitled to such compensation and awarded the fair market value of the property. The Court of Appeals again reversed, concluding that a new trial was required because of erroneous jury instructions on the "reasonable necessity" requirement.

Held: Allowing respondent the fair market value of its property, rather than the cost of substitute facilities, is consistent with the principles of fairness underlying the Just Compensation Clause of the Fifth Amendment. Pp. 510-517.

(a) In giving content to the just compensation requirement of the Fifth Amendment, this Court has sought to put the owner of condemned property "in as good a position pecuniarily as if his property had not been taken," Olson v. United States, 292 U.S. 246, 255. But this principle of indemnity has not been given its full and literal force. Because of serious practical difficulties in assessing the worth an individual places on particular property, the Court has resorted to the concept of fair market value -- what a willing buyer would pay in cash to a willing seller at the time of the taking -- even though this measure does not encompass all values an owner may derive from his property. However, when market value is too difficult to ascertain, or when such an award would depart too far from the indemnity principle, other standards of compensation are appropriate. United States v. Commodities Trading Corp., 339 U.S. 121, 123. Pp. 510-513.

(b) Here, there are no circumstances that require suspension of the normal rules for determining just compensation. Respondent’s property had a readily discernible market value. And an award reflecting that figure would not be unjust simply because it might preclude continuation of respondent’s use. This Court has previously held that nontransferable values arising from the owner’s unique need for the property are not compensable. That respondent is a nonprofit organization does not require a different result. Nor is it relevant whether respondent’s camps were reasonably necessary to the public welfare, since respondent is under no legal or factual obligation to replace the camps, regardless of their social worth. And that the camps may have benefited the community does not warrant compensating respondent differently from other private owners, for the principle of indemnity focuses exclusively on the owner’s loss. To the extent that denial of an award for the use value of respondent’s property departs from the indemnity principle, it is justified by the necessity for a workable measure of valuation. Pp. 513-517.

576 F.2d 983, reversed.

MARSHALL, J., delivered the opinion of the Court, in which all other Members joined except POWELL, J., who took no part in the consideration or decision of the case. WHITE, J., filed a concurring opinion, post, p. 517.