Almota Farmers Elevator
& Warehouse Co. v.
Supreme
Court of the
409
Johnson,
pp. 861-865
Facts: Almota had a grain elevator
next to some train tracks. Almota had
extensively improved the land over a period of many decades. The federal government wanted to acquire the
land to build a dam and so it started an eminent domain proceeding against Almota. The government argued that just compensation
would be just the value of the rights under the remainder of the lease, while Almota
argued that the government should pay whatever Almota could get on the open
market for the remainder of the lease.
The District Court accepted Almota’s theory, while the Court of Appeals reversed
and accepted the government’s theory. Almota
appealed to the U.S. Supreme Court.
Issue: What is the proper measure
of the fair market value of a leaseholder’s interest in the remaining term of
its lease?
Rule: Fair market value is
determined by “what a willing buyer would pay in cash to a willing seller”.
Analysis: The majority says that the District
Court was right to take into account the value of the improvements on the land
and the likelihood that the lease could be renewed. The Court finds that a willing buyer would
probably keep using the land the same way it has been used before: as a grain
elevator facility. A buyer probably
wouldn’t have paid Almota much if they had any other use of the land in mind.
The
dissent, surprisingly written by Justice Rehnquist, says that the expectancy
interest in the renewal of the lease need not be compensated. This is based on the minority’s understanding
of Petty Motor. Rehnquist is usually so strident on private property
rights that this opinion really surprises me.
He seems to make a stare decisis argument that this decision upsets some
other decisions in the same area of law.
Conclusion: The Court of Appeals is
reversed and the District Court’s formulation of just compensation is used.