little in the way of clarity and usually adds to the confusion. So it has been said that a benefit is "special," if it is "unique" or "peculiar to the owner," or, it is a "local" or a "neighborhood" benefit, in contrast to a "community" or a "speculative" benefit. A number of States have adopted the "increased market value" test which is believed to be the Federal rule. In other States it has been said that, in addition to enhancement in market value, there must be a "physical benefit" to remaining land, such as improved drainage. Many States take a broader view, however, and permit the deduction of benefits due to increased highway frontage, more convenient access, added transportation facilities, or the increased flow of traffic. Almost all States agree that the fact that other property owners abutting a highway project may derive similar benefits does not prevent a benefit from being "special." But, in some States, it is suggested that if the benefits also accrue to nonabutting property owners they will be regarded as "general." For more intensive consideration of the law of benefits and tables showing the applicable law in each State see: Condemnation of Property for Highway Purposes (pt. III, p. 33), Highway Research Board, Special Report No. 59 (1960). See also: Bishop and Phelps, Enhancement In Condemnation Cases, Right of Way magazine, December 1962. Enfield and Mansfield, Special Benefits and Right-of-Way Acquisition, the Appraisal Journal, October 1957. Haar and Hering, The Determination of Benefits in Land Acquisition (1963), 51 California L. Rev. 833. Hagman, Special Benefits in Road Cases, Myths and Realities (1964), Institute on Eminent Domain, Southwestern Legal Foundation. I. THE BEFORE AND AFTER PROCEDURE When there is a partial taking, the most reasonable measure of just compensation is the difference between the value of the entire property before the taking and the value of the remainder immediately after the taking (Stephenson Brick Co. v. United States, 110 F. 2d 360 (C.A. 5, 1940); Baetjer v. United States, 143 F. 2d 391, 396 (C.A. 1, 1944), certiorari denied, 323 U.S. 772, Porrata v. United States, 158 F.2d 788, 789-790 (C.A. 1, 1947). A true before-and-after valuation automatically provides for the value of the part taken, any diminution in value of the remainder property and any benefits to the remainder. The before-and-after approach comes closest to actual payment on the basis of the market value standard in partial takings. For the combination of the cash received as compensation and the value of the property retained by the owner will be no less than the total cash value of the entire property of the owner before the project. A difficulty with the so-called before-and-after process frequently used today is that it is not a true before-and-after process. As one legal writer recently put it: *** As a pure matter of law then the market value concept is better named the market value but *** concept. The rule is that market value minus A, B, C, etc., is the test (Heaney, "Valuation of Property for Highways Under Emi- The author presumably is calling attention to the fact that certain decreases in the market value of a remainder property are not paid under present law; i.e., decreases caused by the project rather than by the specific part taken, as discussed in the previous section relating to severance damages, and decreases caused by the project which are regarded as an exercise of the police power. The reluctance of some States to permit the deduction of all benefits affecting the market value of a remainder property that are caused by a project may be due, at least in part, to the lack of any parallel rule requiring the taker to pay all damages affecting the market value of a remainder property that are caused by a project. J. COMPENSATION FOR BUILDINGS, STRUCTURES, AND FIXTURES 1. General matters affecting compensation for buildings, structures and fixtures a. Power of Congress to define property and interests in property required for public use by the United States The general rule is that Federal law controls the substantive and procedural rights and obligations of the parties in a condemnation proceeding instituted by the United States, or when a claim for compensation is made under the Tucker Act, where the Federal eminent domain power is exercised to execute a Federal constitutional function (United States v. 93.970 Acres of Land, 360 U.S. 328 (1959)). It is settled law that Congress in its definition of property interests to be acquired by the United States is not limited to terms known to State law, but may define such interests in terms of Federal law. As it was said, concerning the condemnation of an owner's leasehold interest and his improvements in a Wherry housing project: Condemnation being an essential governmental function and Congress not having chosen to make State law applicable to the definition of property interests condemned by the Government, it follows that the United States is not limited to condemnation in terms known to the State, but rather may define such interests in terms of Federal law. We hold, therefore, that the United States can condemn a leasehold interest subject to an existing mortgage lien thereon, and that the district court erred in applying Illinois law to the contrary (United States v. Certain Interests in Champaign County, 271 F. 2d 379, 384 (C.A. 7, 1959), certiorari denied, 362 U.S. 974). And as the Supreme Court said with respect to the exercise of the power of eminent domain: ***Condemnation involves essential governmental functions. (See Kohl v. United States, 91 U.S. 367.) We have often held that where essential interests of the Federal Government are concerned, Federal law rules unless Congress chooses to make State laws applicable * * * (United States v. 93.970 Acres of Land, supra, p. 333). b. Exercise of the power of eminent domain by Congress and delegation of the power to executive and administrative agencies As it was shown in chapter VI, the necessity for the acquisition of property for public use is a legislative question: а ***which Congress itself may determine or delegate for The power of eminent domain may be broadly delegated by statute to a Government agency for such public purposes as urban renewal and redevelopment to solve problems arising from slum and blighted conditions which threaten the public health, safety, morals, and welfare (Berman v. Parker, 348 U.S. 26 (1954)). And the broad delegation in this case is in accord with the general practice of Congress to delegate in the broadest terms to executive agencies the question as to what lands and what title to them should be acquired: The nondelegation of legislative power principle relates to regulatory activities. Once Congress has determined the purpose for which property should be acquired, the determination of subsidiary questions as to what lands and what title to them should be purchased or condemned to execute that purpose cannot properly be called a legislative question which only Congress can determine. Thus, the practice has always been to delegate that function to the appropriate executive agency in the broadest terms. Consequently, the Supreme Court in the Berman case rejected the limitations expressed by the three-judge district court in this connection, saying: "We think the standards prescribed were adequate for executing the plan to eliminate not only slums as narrowly defined by the district court but also the blighted areas that tend to produce slums" (Marquis, "Constitutional and Statutory Authority to Condemn" (1958), 43 Iowa Law Review 170). Also, acts of Congress authorizing executive officers to acquire land by eminent domain are construed with extreme liberality to accomplish the purpose intended (Old Dominion Land Co. v. United States, 269 U.S. 55 (1925); United States ex rel. T.V.A. v. Welch, 327 U.S. 546, 551 (1946); 3 Sutherland, Statutory Construction (3d ed. Horack), sec. 6505). c. The General Condemnation Act and the Declaration of Taking Act The general practice of Congress to delegate the power of eminent domain in broad terms to executive agencies; i.e., to acquire by purchase, condemnation, donation, or otherwise any land or interest therein, must always be considered in connection with the General Condemnation Act of August 1, 1888, 25 Stat. 357, 40 U.S.C. 257 which provides in part: In every case in which the Secretary of the Treasury or any other officer of the Government has been or hereafter shall be, authorized to procure real estate for the erection of a public building or for other public uses, he may acquire the same for the United States by condemnation, under judicial process, whenever in his opinion it is necessary or advantageous to the Government to do so. [Emphasis supplied.] The term "real estate" is generic and has been interpreted to include the authority to acquire any interest in real property such as a temporary use, estate for years, obstruction, or avigation easement, etc. (United States v. Advertising Checking Bureau, 204 F. 2d 770 (C.A. 7, 1953); United States v. Hibernia Bank Bldg., 76 F. Supp. 18 (E.D. La. 1948); United States v. Fisk Building, 99 F. Supp. 592 (S.D.N.Y. 1951); United States v. Midland Nat. Bank of Billings, 67 F. Supp. 268 (D. Montana, 1946)). As the Court said in United States v. Advertising Checking Bureau, supra (p. 772): *** Its language is broad, and imports of no exceptions. its scope. *** The broad power of executive and administrative agencies to determine the nature and extent of the interest in real property or in "real estate" has been approved in several other cases (Simmonds v. United States, 199 F. 2d 305, 307 (C.A. 9, 1952); United States v. Kansas City, Kans., 159 F. 2d 125, 129 (C.A. 10, 1946); United States v. Brondum, 272 F.2d 642, 646 (C.A. 5, 1959)). In connection with the acquisition of any interest in land, the provisions of the Declaration of Taking Act, 46 Stat. 1421, 40 U.S.C. 258, may be used. This act provides that in a condemnation proceedings the title to land can be taken immediately by the filing of a declaration of taking and the deposit in court of the estimated amount of just compensation. The court is given power to fix the time within which and the terms upon which the parties in possession shall surrender possession to the condemnor. Upon application 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. The Declaration of Taking Act is not an independent statute for condemnation. As the Supreme Court said: *** It provides for no new condemnation proceeding. It merely affords steps ancillary or incidental to suits brought under other statutes *** (Catlin v. United States, 324 U.S. 229 (1945)). 39-949-65-6 Also, it is now well settled that, under the act of August 1, 1888, supra, the authority of a Federal agency to condemn is coextensive with its power to purchase (United States ex rel. T.V.A. v. Welch, 327 U.S. 546, 554 (1946); Hanson Co. v. United States, 261 U.S. 581, 587 (1923)). It may be observed that in the purchase of real property, the Government and landowners may agree between themselves as to what is just compensation. As the Supreme Court said in Albrecht v. United States: But the method used by courts to determine "just compensation" is an adversary proceeding where the parties have failed previously to agree on its amount is not the exclusive method for determining that question. The Fifth Amendment does not prohibit landowners and the Government from agreeing between themselves as to what is just compensation for the property taken. * * * And, as the Court said: *** Exactly what factors the parties consider, in addition to bare values, cannot easily be ascertained. This very group of transactions illustrates that there may be many such additional factors. For example, all the contracts here provided for immediate Government possession, though none contemplated immediate payments. We cannot know what amounts were added in the bargains to the bare market values as estimated, though unarticulated, allowances for the anticipated delays in payment. And other factors, which need not be enumerated, entered into the contract prices *** (Albrecht v. United States, 329 U.S. 599, 602, 604 (1947)). [Emphasis supplied.] 2. Tenant-owned buildings and fixtures a. Effect of separate agreement with landlord A situation which may work unintended consequences and hardship is where the Government acquires by either purchase or condemnation the interest of the landlord owner without acquiring at the same time the interest of the lessee. This is particularly true where the tenant has constructed valuable improvements pursuant to a lease, license, or permit arrangement, with either the right or duty to remove the improvements at the end of the term. (See United States v. 425,031 Square Feet of Land, Jersey City, 187 F. 2d 798 (C.A. 3, 1951); Southern California Fisherman's Ass'n. v. United States, 174 F.2d 739 (C.A. 9, 1949); Messer v. United States, 157 F. 2d 793 C.A. 5, 1946).) The latter two cases are authority for the proposition that where the United States makes settlement with the landlord owner, a licensee or permittee who has constructed valuable improvements on the land with the right to remove them is entitled only to the following, as stated in the Southern California Fisherman's case, supra: *** Appellant's loss, insofar as just compensation is concerned, was no greater than the legal rights allowed under the permits which, after service of notice of termination, was the removal value plus the right to retain them upon the land for |
