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UNITED STATES v. 252.36 ACRES

January 13, 1972

UNITED STATES of America, Plaintiff,
v.
252.36 ACRES OF LAND, Defendant


Dumbauld, District Judge.


The opinion of the court was delivered by: DUMBAULD

In the pending land condemnation case, the owners and the federal government are in disagreement as to whether certain sand and gravel processing machinery located on the tract taken at the time taken are or are not compensable as being part of the real estate under the Pennsylvania industrial plant doctrine. Testimony has been taken, and it is believed that a reasoned ruling by the Court on this preliminary issue may expedite and simplify trial or settlement of the case.

 What the constitutional concept of "property" *fn1" contains within its scope, is of course ultimately a question of federal law. *fn2" But by reason of the comprehensiveness of the term, and the fact that most property interests are created under or generated by State law of one jurisdiction or another, federal courts normally *fn3" look to State law to determine whether or not a particular interest is "property" or not, or is too remote or inchoate to be so regarded, and to determine what is the precise extent or duration of the interests created or recognized by State law. U.S. ex rel. T.V.A. v. Powelson, 319 U.S. 266, 279, 63 S. Ct. 1047, 87 L. Ed. 1390 (1943); DeSylva v. Ballentine, 351 U.S. 570, 580-81, 76 S. Ct. 974, 100 L. Ed. 1415 (1956); U.S. v. Certain Property, 344 F.2d 142, 145 (C.A. 2, 1965); In re Taylor & Dean Mfg. Co., 136 F.2d 370, 372 (C.C.A. 3, 1943).

 Looking, then, to Pennsylvania law for the rule applicable in the case at bar, we are directed to two leading cases: Gottus v. Allegheny Co. Authority, 425 Pa. 584, 229 A. 2d 869 (1967), and Singer v. Oil City Authority, 437 Pa. 55, 261 A. 2d 594 (1970).

 In Gottus the owners ran a retail cleaning business on the condemned premises. They removed to a new location certain racks and pressing equipment, but left behind certain cleaning and washing machinery which circulated and recycled a petroleum base solvent. This machinery, permitted as a non-conforming use, could not have been used at the new location because of zoning regulations. 425 Pa. at 585-86, 589, 229 A. 2d 869.

 Justice Eagen cited the often quoted language of Judge Cardozo in Jackson v. State, 213 N.Y. 34, 35-36, 106 N.E. 758 (1914):

 
"'Condemnation' is an enforced sale, and the state stands toward the owner as buyer toward seller. On that basis the rights and duties of each must be determined. It is intolerable that the state, after condemning a factory or warehouse, should surrender to the owner a stock of secondhand machinery and in so doing discharge the full measure of its duty. Severed from the building, such machinery commands only the prices of secondhand articles; attached to a going plant, it may produce an enhancement of value as great as it did when new. The law gives no sanction to so obvious an injustice as would result if the owner were held to forfeit all these elements of value."

 For application of the doctrine, originally evolved to protect mortgagees of industrial plants, it is necessary that the machinery involved be vital to the business operation and permanently required for its functioning. 425 Pa. at 587, 589, 229 A. 2d 869.

 In Singer the doctrine was rechristened as the Assembled Economic Unit Doctrine (thus being extended to commercial as well as industrial plants stricto sensu) [437 Pa. at 65, 261 A. 2d 594], and also reshaped so as to conform to the statutory scheme of eminent domain established by the Act of June 22, 1964, P.L. 84, 26 P.S. § 1-101 et seq.

 In effecting this reconciliation with the statutory scheme, the Court excluded the applicability of the rechristened doctrine in cases where the damages awarded in other provisions of the statute enabled the owner of the enterprise to relocate his business as a going concern at a new location. "The Eminent Domain Code attempts to limit the enforced sale to only the building and land on which the business is located. By making provision for removal, transportation and reinstallation compensation for the other elements of the business, the condemnation becomes merely an enforced relocation of the business." [ 437 Pa. at 65, 261 A. 2d at 599].

 In further elaboration of this reshaped regime, Justice Eagen states:

 
In those instances where all or most of the machinery, equipment and fixtures of the economic unit are removable without significant injury to them, such that the economic unit is susceptible of continuance, as a comparable economic unit, in a new location, only those items of machinery, equipment and fixtures not removable from the condemned structure are to be considered a part of the realty taken by the condemnor. . . .
 
However, when such a portion of the assembled economic unit is not removable from the condemned property that that which is so removable will not constitute a comparable economic unit in a new location, then all machinery, equipment and fixtures, whether loose or attached, which are vital to the economic unit and a permanent installation therein, will be considered a part of the realty under the Assembled Economic Unit Doctrine, so as to entitle the condemnee to compensation therefor under §§ 601, 602 and 603(3). To hold otherwise would leave condemnee only with scattered pieces of second-hand machinery, equipment and fixtures, most probably significantly depreciated in value when severed from the economic unit. Since the condemnee cannot maintain his economic position by moving to a new location, the statutory scheme will ...

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