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United States v. Meadow Brook Club

decided.: August 6, 1958.


Author: Clark

Before CLARK, Chief Judge, and LUMBARD and WATERMAN, Circuit Judges.

CLARK, Chief Judge.

This appeal by a property owner in a condemnation proceeding questions the adequacy of the compensation awarded by the court for land taken by the United States. The central issue concerns the alleged failure of the trial court to evaluate the property for industrial rather than residential use. The property in question consists of an interior tract of 48.8 acres of land without frontage on any major street located adjacent to Mitchel Air Force Base in the Town of Hempstead on Long Island. Originally it was part of the grounds of the Meadow Brook Club, which for many years provided private facilities for golf and polo competition at this location. On October 18, 1954, the United States filed a complaint in condemnation and the district court ordered the immediate delivery of possession to the United States of 70.5 acres of land belonging to Meadow Brook for use in connection with the proposed enlargement of the airfield. Eleven months later, on September 26, 1955, two parcels were eliminated from the proceeding and returned to Meadow Brook. The United States filed a declaration of taking to the remaining 48.8 acres and deposited in the court $417,830 as estimated compensation for the tract. 40 U.S.C. ยง 258a-e.

Prior to 1953, when the Club was in full operation, all its property consisted of some 326 acres. In 1953, however, under threat of condemnation, it sold 160 acres at $6,000 per acre to the Jones Beach State Parkway Authority for a proposed extension to the Meadowbrook State Parkway. This price to some extent reflected the prmise of the Authority not to oppose efforts by Meadow Brook to have its remaining property zoned for industrial use. The Board of Directors of Meadow Brook then apparently concluded to move the Club elsewhere and to sell the remaining portions of the old site. Later in that year Meadow Brook sold 42 acres to the Old Country Trotting Association for $650,000, or approximately $15,500 per acre, for eventual use in connection with Roosevelt Raceway. This parcel, located to the north of the land now under consideration across a major street, Stewart Avenue, was especially valuable to the buyer, as it formed a corner of the Roosevelt Raceway property. In the same year Meadow Brook began negotiations for the sale of additional acreage to the Parkway Authority. This culminated in a sale in September 1954, again at $6,000 per acre.

The remaining land consisted of some 72 or 73 acres which, for descriptive purposes, can be conveniently divided into three parcels. The largest of these consisted of some 55.8 acres bordered roughly on the west, south, and southwest by Mitchel Field, on the east by Meadowbrook State Parkway, and on the north by the tracks of the Long Island Railroad which are located a good distance south of Stewart Avenue.*fn1 The major portion of this parcel is involved in this proceeding. The next parcel in size consisted of a rectangular area of some 12.5 acres in size located between the railroad tracks and Stewart Avenue. This parcel, together with 7 acres of the larger parcel which were located south of and fronting on the railroad tracks, was eliminated from the taking; and the court awarded Meadow Brook $13,592 for use and occupancy of this area during the period between the filing of the complaint (and the original order of possession) and the declaration of taking. The third parcel, some 4.5 acres in area which has never been part of the condemned area, was located to the east of Meadowbrook State Parkway and fronted on Merrick Avenue, a well used local road which intersects with Stewart Avenue. It was eventually sold to Granick Company, Inc., some six months after the complaint was filed in this proceeding.

Prior to the sale of the 160 acres to the Parkway Authority all of the Club's property was zoned for residential use. But when it became obvious that the Club would have to move its operations, its Board of Directors decided to petition for a change of the zoning classification of the remaining property (the three parcels described above) to industrial use in order to realize higher prices on sale. Evidence established at the trial showed that an industrial classification was consistent with the surrounding area, which for some years gradually had been becoming an industrial area. To this end Meadow Brook filed a petition with the Town Board of the Town of Hempstead in May 1954, but hearings on the proposed change were adjourned until the following September. When the matter was finally heard on September 14, 1954, the air force, an adjoining landowner, objected to the rezoning and the Board reserved decision urging the parties to adjust the matter if possible. Before any further action was taken by the Board, however, this proceeding was begun. Thus at the time of the taking the property was zoned for residential use only.

At the trial Meadow Brook sought to establish the value of the tract as industrial property. Its experts testified on the basis of sales of industrial property in the vicinity and estimated that prior to the taking the entire remaining property, excluding the 4.5 acres fronting on Merrick Avenue, was worth $2,174,000; that after the taking the 19.5 acres severed from the original area and still in the hands of Meadow Brook were worth $640,000; and that the difference, $1,534,000, represented $70,000 in severance damages (or $10,000 an acre for the severed portion south of the railroad tracks) and $1,464,000 (or $30,000 an acre) as the value of the condemned 48.8 acres. On the other hand, the expert who testified for the United States valued the property as residential and concluded that it was worth $414,800 (or some $8,500 per acre). He relied on a number of sales involving substantial acreage, including the two sales by Meadow Brook to the Parkway Authority at $6,000 peracre and other sales which indicated values between $7,000 and $11,500 per acre. The court, D.C.E.D.N.Y., 149 F.Supp. 749, 753, after considering "the zoning restrictions on use as they existed and the possibility or probability of a change to industrial use in the reasonably near future, in the light of all the testimony presented," valued the 48.8 acres at $488,000 (or $10,000 per acre).*fn2

Just compensation compatible with the requirements of the Fifth Amendment is the fair market value of the condemned property just prior to the taking. United States ex rel. Tennessee Valley Authority v. Powelson, 319 U.S. 266, 63 S. Ct. 1047, 87 L. Ed. 1390; United States v. Miller, 317 U.S. 369, 374, 63 S. Ct. 276, 87 L. Ed. 336, 147 A.L.R. 55; McCandless v. United States, 298 U.S. 342, 56 S. Ct. 764, 80 L. Ed. 1205. This evaluation should reflect not only the purpose for which the property has theretofore been used, but other uses which might render it more profitable. Olson v. United States, 292 U.S. 246, 54 S. Ct. 704, 709, 78 L. Ed. 1236. It would be improper to value the property as if it were actually being used for the more valuable purpose. But the "extent that the prospect of demand for such use affects the market value while the property is privately held" should enter into the calculation. Olson v. United States, supra, 292 U.S. 246, 255, 54 S. Ct. 704, 78 L. Ed. 1236. Obviously the more profitable operation must be one allowed by law to be carried out on the premises. Thus if existing zoning restrictions preclude a more profitable use, ordinarily such use should not be considered in the evaluation. Westchester County Park Commission v. United States, 2 Cir., 143 F.2d 688, certiorari denied 323 U.S. 726, 65 S. Ct. 59, 89 L. Ed. 583. On the other hand if there is a reasonable possibility that the zoning classification will be changed, this possibility should be considered in arriving at the proper value. This element, too, must be considered in terms of the extent to which the "possibility" would have affected the price which a willing buyer would have offered for the property just prior to the taking. The court below stated that it applied these principles in arriving at its decision. There is nothing in the record to support Meadow Brook's intimation that the judge did not carry out in good faith his own expressed intent. Thus we conclude that the court applied the correct legal principles to reach its result. United States v. Certain Parcels of Land in City of Philadelphia, 3 Cir., 215 F.2d 140.

Meadow Brook contends that in any event the rules stated above have no application to this situation.It claims that the property should have been valued as if it had already been rezoned for industrial use at the time of the taking because of the alleged imminence of such rezoning. Its theory is that but for the opposition of the air force before the Town Board the property undoubtedly would have been rezoned, thus allowing more profitable use. In support of this argument it points to the many parcels in the surrounding area which have been rezoned, including the tracts sold by it to the Old Country Trotting Association and Granick Company, Inc., its 12.5-acre parcel north of the condemned land, and other areas in the near vicinity. But this argument depends on the motive which led the air force to oppose Meadow Brook's application before the Board. Clearly the United States, like any adjoining landowner, was a proper party to resist rezoning. Meadow Brook realized this when it took as part consideration for the sale of acreage to the Jones Beach State Parkway Authority the later's agreement not to resist the Club's efforts to rezone the remaining property. If the air force had a proper motive, this well might have precluded rezoning at any time.Thus if the height of proposed factories or the congestion attendant on industrial concentration would have created undue flight hazards for the nearby runways, it is possible - in fact probable - that the property never would have been rezoned had a taking not occurred. Cf. United States v. Delano Park Homes, 2 Cir., 146 F.2d 473. But it is also clear that if the government's sole motive in resisting the change in zoning was to depress the market value of the property which it then intended to condemn, the court's estimate of the probability of rezoning (as a factor entering into the ultimate calculation of value) should not have reflected this opposition. In re Inwood Hill Park, 230 App.Div. 41, 243 N.Y.S. 63, affirmed 256 N.Y. 556, 177 N.E. 138. See also Monongahela Navigation Co. v. United States, 148 U.S. 312, 13 S. Ct. 622, 37 L. Ed. 463. The record, however, fails to support Meadow Brook's charge of bad faith; and the court's finding that the government's opposition was based in large part on the fear of flight hazards finds ample support in the evidence.*fn3 Thus to arrive at the fair market value at the time of the taking the court had to consider the probability that the air force would eventually withdraw its opposition and that the Town Board would otherwise grant Meadow Brook's petition. On the record we cannot say that the court failed properly to take all of these factors into account.

In the light of the court's proper treatment of the effect of the zoning restrictions on the property, it is apparent that there is substantial evidence in the record to support the court's valuations. This was an interior plot, with no direct access to nearby roads. It was large and irregular, bounded on three sides by Mitchel Field. Certainly this proximity detracted from its value for residential or industrial purposes, especially in the light of the probable restrictions which would have been imposed because of the increased air activity. Although Meadow Brook through its experts introduced evidence relating to the value of nearby property used for industrial purposes, most of these tracts were not comparable to the one involved here. In addition to being located further from the airfield, most of them were smaller in size and had direct access to adjacent roads. On the other hand, evidence introduced by the United States indicated a value lower than that settled upon by the court.*fn4

Meadow Brook also raises a number of specific objections relating to the admission and exclusion of certain items of evidence which we shall deal with briefly. The most important one was the exclusion of evidence of the sale by Meadow Brook of its 4.5-acre tract to Granick Company, Inc. This sale occurred in March 1955, some six months after the filing of the complaint, for a price of $85,000. Probably it would have been wiser for the court to have admitted this evidence. Cf., e.g., United States v. 63.04 Acres of Land, 2 Cir., 245 F.2d 140, with its later holding, 2 Cir., 257 F.2d 68. But we find no prejudicial error in its exclusion, for this parcel was substantially unlike the condemned land. First, it was much smaller in size and fronted on Merrick Avenue. Second, its price reflected industrial use, for the sales contract made the transaction contingent on a change in zoning from residential to industrial. Third, the sale occurred well after the crucial date of the government's taking possession. United States v. Dow, 357 U.S. 17, 78 S. Ct. 1039, 2 L. Ed. 2d 1109.

Meadow Brook's next objection is to the admission of evidence concerning the sale by it of adjacent property to the Parkway Authority for $6,000 per acre. It contends that this evidence was irrelevant, because these were forced sales made under threat of condemnation. There is nothing in the court's opinion which indicates that it gave controlling weight to these sales; and we would be hesitant to rule that a court, sitting without a jury, committed any sort of error in admitting and considering such evidence for what it is worth. This is especially true because Meadow Brook's president testified as to facts which allegedly accounted for the depressed price. Moreover, it is quite ridiculous to contend, as does Meadow Brook, that the government's appraiser should have ignored such sales in reaching his conclusion as to the worth of the remaining land. Obviously this is a relevant factor which he should have taken into consideration. United States v. Delano Park Homes, supra, 2 Cir., 146 F.2d 473.

Next Meadow Brook claims that the court erroneously considered as an admission against interest a letter offered in evidence by the Club which contained a statement that it had been offered up to $1,000,000 for its property. It has been said that offers to buy the condemned tract (unlike offers to sell) are not probative evidence of land value in a condemnation proceeding. Sharp v. United States, 191 U.S. 341, 24 S. Ct. 114, 48 L. Ed. 211. Whatever be the rule here, there is no indication that the court considered this letter as independent evidence of value. In any event the statement certainly was relevant to check the credibility of Meadow Brook's experts, who valued a lesser portion of the property at more than twice the amount stated in the communication.

Lastly, Meadow Brook objects to the court's failure to award severance damages and to the alleged inadequacy of the compensation for use and occupancy of the severed parcels. We find no error in either of the court's conclusions. Meadow Brook offered nothing persuasive to show that the 7-acre tract was less valuable as a separate parcel than it was as part of the larger area. Neither before nor after the severance did this tract have direct access to nearby roads. And the decrease in size, for all we are told, might have enhanced, rather than decreased, its value. As to compensation for use and occupancy, Meadow Brook takes no exception to the formula applied by the court, but only to the land value to which the formula was applied. But here, as before, the evidence adequately supports the court's conclusion as to value. Meadow Brook's final point, that the court's findings were inadequate, is without merit. The decision adequately sets forth the essential facts upon which its conclusions are based. And unlike the findings in United States v. Bobinski, 2 Cir., 244 F.2d 299, these show without ambiguity the method which the court employed in reaching its valuations. See United States v. Bobinski, 2 Cir., 254 F.2d 686. In the simple and uncomplicated federal practice there is no provision for ...

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