United States v. Miller1 is the most misunderstood condemnation case ever decided. The facts of the case were fairly simple; the United States condemned a strip across property owners’ land for tracks of a railroad that had to be relocated because of prospective flooding of the old right-of-way. The project had been recommended in 1934 with funding authorized in 1937. The property owners had purchased and subdivided the property in question in 1936 and 1937. After the condemnation in 1938, claimants sought direct and severance damage. The court held that:
If a distinct tract is condemned, in whole or in part, other lands in the neighborhood may increase in market value due to the proximity of the public improvement erected on the land taken. Should the government at a later date determine to take these other lands, it must pay their market value as enhanced by this factor of proximity.…The question then is whether the respondent’s lands were probably within the scope of the project from the time the government was committed to it. If they were not, but merely adjacent lands, the subsequent enlargement of the project to include them ought not to deprive the respondents of the value added in the meantime by the proximity of the improvement. If, on the other hand, they were, the government ought not to pay any increase in value arising from the known fact that the lands probably would be condemned.2
The Supreme Court subsequently affirmed the scope of the project rule in United States v. Reynolds:
[T]he development of a public project may also lead to enhancement in the market value of neighboring land that is not covered by the project itself. If that land is later condemned, whether for an extension of the existing project, or for some other public purpose, the general rule of just compensation requires that such enhancement in value be wholly taken into account, since fair market value is generally to be determined with due consideration of all available economic uses of the property at the time of the taking.3
The ‘Miller’ Rule
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