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July 21, 1964

DISTRICT OF COLUMBIA, a municipal corporation, Plaintiff,
All of LOT 813 IN SQUARE 568, containing 2,280.0 square feet, etc., et al.,Lee G. Rubenstein, et al., and Unknown Owners, Defendants

The opinion of the court was delivered by: YOUNGDAHL

Defendant's motion for a new trial came on to be heard before this Court on June 1, 1964. Upon the arguments of counsel and the memoranda submitted in support thereof, the Court has concluded that the motion should be denied.

This is a condemnation case in which the jury awarded defendants $ 412,457.50 as just compensation for a parcel of land condemned by the District of Columbia for use as part of the anticipated inner loop freeway, a major highway which will encircle the inner portion of Washington, D.C. The sole issue was just compensation for the land taken. The land was vacant at the time of the declaration of taking. Defendants had themselves demolished all existing structures, and had also begun excavations for a combination apartment house-office building which they planned to erect on the land. The Court instructed the jury that the cost of such demolition and excavation, amounting to $ 12,000, should be added to the jury's determination of the property's fair market value, since such changes in the land were similar to permanent improvements which a willing purchaser would take into account in deciding how much he would pay to a willing seller. With this figure included in the valuations of the expert appraisers, the various total estimates of fair market value on the date of taking were as follows: for the District of Columbia, two appraisers agreed that the fair market value was $ 374,600; for defendants, one appraiser said the fair market value was $ 459,250; another said the fair market value was $ 543,900. The Court observed that this jury was a particularly attentive jury, paying close attention to the entire trial. The jury had a full transcript of the evidence to assist its deliberations. Its award is an eminently fair one. This conclusion is supported by the fact that after its deliberations had begun, the jury, in the presence of the marshal, requested and made a careful second view of the property. The jury verdict should therefore not be set aside unless there was some error of law which might have materially affected the verdict. The Court has concluded that there was none.

 The Court instructed the Jury as follows:

 '* * * Just compensation includes all elements of value that inhere in the property, although it does not exceed market value fairly determined. The sum required to be paid the owner does not depend upon the uses to which he has devoted his land but rather is to be arrived at upon just consideration of all the uses for which it is suitable.

 'If the whole or any part of said land is peculiarly adapted by its location, surroundings, natural advantages, or intrinsic character, to some particular use or uses which give it a higher market value than it would otherwise have, the circumstance or circumstances which make up such peculiar adaptability for such particular use or uses shall be considered, and the amount awarded as compensation for the land should be based upon its present fair market value in view of the most valuable use or uses for which it is shown to be adapted.

 'However, the jury should not attempt to appraise the value of the property by its adaptability or availability for remote or conjectural future uses. The adaptability has to be one which is reasonably likely in the near future, and the speculative value of the land for remote prospective uses cannot be considered by you.

 'The owners are entitled to just compensation for the value of their land for the reasonably highest and best use of that land, but such highest and best use is considered to the full extent that the prospect of demand for such use affects the market value while the property is privately held. The element of higher use can only be considered in terms of the extent to which the possible higher use would have affected the price which a willing buyer would have offered for the property just prior to the taking. Therefore, in considering highest and best use you should consider not only uses theoretically possible under the zoning regulations, but also all facts bearing on whether or not a particular use was practical and feasible as of (the date of taking).

 'In other words, in considering the available uses to which the property might be adapted or devoted, or the highest and best use, the question is what an ordinary prudent purchaser would do, not what the landowners claim they would do. The fair market value is thus to be determined for the property as it was on the date of taking, and not as though already devoted or adapted to any prospective higher or better use. Such prospective higher or better use is relevant only to the extent that it would reasonably be considered by a prudent purchaser on the date of taking.

 'There have been received into evidence in this case certain architectural plans, and certain testimony about financial arrangements and building permits. The Court admitted these items of evidence solely to assist you in deciding the question of what was the highest and best use of this property on the date of taking as it would appear to an ordinary prudent purchaser.

 'To the extent that the existence of such plans, financial arrangements, and permits would affect the price which such purchaser would be willing to pay for the property in question, in view of an anticipated higher use of the property, you may consider them as bearing upon the fair market value.

 'However, you may not consider in any way the cost of such financial arrangements or architectural plans or building permits to the present owners, and the owners are not entitled to compensation for any losses due to expenditures made for a business venture which was frustrated by the condemnation proceeding.

 'It is not proper for you to consider what the value of the land would be if this or that improvement were placed upon it; nor can you consider the intention of the owners to make improvements, because fair market value must be established as the land would appear to an ordinary prudent purchaser on the date of taking.'

 There was an important difference in the opinions of the experts as to the highest and best use of the land taken. The experts for the District of Columbia believed such use was as a site for an apartment house; the experts for the property owners believed such use was as a site for an apartment house with some office space in addition. In order to support defendants' contentions as to the highest and best use of the land in the reasonably near future (and therefore the fair market value to a prospective purchaser), defendants were permitted to introduce testimony as to the existence of the financial arrangements, building permits, and architectural plans, but testimony as to the cost of these development activities was excluded because these arrangements, permits, and plans were not part of the property taken by the District of Columbia and were therefore a non-compensable, consequential loss to the property owners. This ruling and the above-quoted instruction to the jury follow the appropriate case law. United States v. Grand River Dam Authority, 363 U.S. 229, 236, 80 S. Ct. 1134, 4 L. Ed. 2d 1186 (1960); Mitchell, et al v. United States, 267 U.S. 341, 344, 45 S. Ct. 293, 69 L. Ed. 644 (1925); Omnia Commercial Co. v. United States, 261 U.S. 502, 513, 43 S. Ct. 437, 67 L. Ed. 773 (1923); Bothwell, et al v. United States, 254 U.S. 231, 41 S. Ct. 74, 65 L. Ed. 238 (1920); United States v. 25.406 Acres of Land, 172 F.2d 990, 992 (4th Cir. 1949) (evidence of the existence of plans, financial arrangements, construction contracts admitted to show that projected highest and best use was not for 'a vague hypothetical project' but was rather 'a ...

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