Kirby Forest Industries, Inc. v. United States
81 L. Ed. 2d 1, 1984 U.S. LEXIS 84, 467 U.S. 1 (1984)
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Rule of Law:
In a straight condemnation proceeding under 40 U.S.C. § 257, a Fifth Amendment 'taking' occurs on the date the government tenders payment for the property, not on the date it initiates the condemnation suit. However, the owner is entitled to just compensation measured by the property's fair market value on the date of payment, and courts must have a procedure to adjust the award if its value changes materially during a substantial delay between the date of valuation and the date of payment.
Facts:
- Kirby Forest Industries, Inc. (Kirby) owned 2,175.86 acres of timberland in eastern Texas.
- In the mid-1960s, the National Park Service proposed the creation of the Big Thicket National Park, which would include Kirby's land.
- Beginning in 1967, Kirby voluntarily observed a moratorium on logging its property within the proposed park area.
- In 1974, Congress enacted legislation creating the Big Thicket National Preserve and directed the Secretary of the Interior to acquire the land within its boundaries.
- After attempts to acquire Kirby's land through a negotiated purchase broke down, the government proceeded with condemnation.
Procedural Posture:
- The United States filed a complaint in condemnation against Kirby Forest Industries, Inc. in the U.S. District Court for the Eastern District of Texas.
- The District Court referred the matter to a special commission to determine just compensation.
- The commission recommended compensation of $2,331,202, using the date of the trial as the date of valuation.
- The District Court adopted the commission's recommendation and also awarded interest from the date the complaint was filed, ruling that the filing constituted the taking.
- Both parties appealed to the U.S. Court of Appeals for the Fifth Circuit.
- The Court of Appeals reversed the interest award, holding that the taking occurred on the date the government paid the judgment, and remanded for further findings on the property's value.
- The U.S. Supreme Court granted certiorari to resolve a conflict among the circuits.
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Issue:
In a condemnation proceeding initiated by the United States under 40 U.S.C. § 257, does a 'taking' of property for Fifth Amendment purposes occur upon the filing of the lawsuit, or upon the government's payment of the final compensation award?
Opinions:
Majority - Justice Marshall
No, a taking does not occur upon the filing of the lawsuit. In a straight condemnation proceeding, the taking occurs when the government pays the compensation award and acquires title. The court reasoned that this conclusion is supported by precedent, statute, and procedural rules. Citing Danforth v. United States, the Court affirmed the principle that a taking happens upon payment unless an actual physical appropriation occurred earlier. Furthermore, Federal Rule of Civil Procedure 71A(i) allows the government to dismiss the condemnation action before payment, which would be inconsistent with the idea that a taking had already occurred. The existence of an alternative, expedited 'declaration of taking' procedure (40 U.S.C. § 258a), which vests title in the government immediately upon filing and deposit, would be superfluous if a standard condemnation suit itself constituted an immediate taking. The Court rejected Kirby's argument that the pending lawsuit deprived it of the 'economically viable use' of its land, finding that any impairment of market value due to pending litigation is not a compensable taking. However, the Court held that the Fifth Amendment requires the final compensation to reflect the property's fair market value on the date of the actual taking (the payment date). If there is a substantial delay and material change in value between the valuation date (often the trial date) and the payment date, the landowner must have a procedural mechanism, such as a motion under Federal Rule of Civil Procedure 60(b), to amend the award to ensure just compensation.
Analysis:
This decision provides a clear temporal rule for when a taking occurs in the most common type of federal eminent domain proceeding, tying the constitutional event to the transfer of payment and title. By doing so, it distinguishes between the non-compensable economic consequences of pending government action, such as a depressed market value, and a formal constitutional taking. The case is also significant for establishing a flexible procedural safeguard to protect landowners from the effects of lengthy litigation, ensuring that the 'just compensation' they receive accurately reflects the property's value at the time it is actually lost. This practical solution, suggesting the use of Rule 60(b), prevents constitutional violations without mandating a rigid rule like the automatic payment of interest.
