This is a condemnation proceeding instituted by the United States. At a pretrial hearing in the above entitled matter, the Government contended that direct testimony of comparable sales is admissible in the Federal Court sitting in California. The Government admits that comparable sales by direct testimony are inadmissible in the State Courts in California on direct examination, and cannot be considered by the jury as evidence of the market value of the condemned real property. The defendants, owners of the property condemned by the Governmerit, insist that the Federal Courts sitting in California are bound by the State law.

It has been the practice of this Court to follow the California rule now challenged for the first time. Heretofore, both the Government and the owners of condemned land have acquiesced in and followed the California law. A ruling is now requested, and the issue must be met.

*740 The rule in California is stated in Thompson v. Stoakes, 1941, 46 Cal.App. 2d 285 , 115 P.2d 830, 834 , where the Court said:

This rule is supported by several California cases: Atchison, T. & S. F. Ry. Co. v. Southern Pacific Co., 1936, 13 Cal.App. 2d 505 , 57 P.2d 575, 578 ; Reclamation Dist. No. 730 v. Inglin, 1916, 31 Cal.App. 495 , 160 P. 1098, 1100, 1101 ; In re Ross’ Estate, 1915, 171 Cal. 64 , 151 P. 1138, 1139 .

The California rule is fully stated in City of Los Angeles v. Deacon, 119 Cal.App. 491 , 7 P.2d 378 , as follows:

Only three other states of the Union hold to 'the view expressed by the California courts. They are Pennsylvania, New York, and Minnesota.

Are the Federal courts functioning within the State of California bound by the rule adopted by the highest courts of the State, as it applies to direct evidence of comparable sales on direct examination as competent evidence to establish value? Recent federal decisions hold to the contrary. United States v. Certain Parcels of Land and Wainright, 144 F.2d 626, 627 , decided by the Third Circuit Court of Appeals, on August 16, 1944, is directly in point. The landowner sought to introduce, upon the question of value, a written contract for the sale of property in Pennsylvania, which was being condemned. The trial court excluded the contract as inadmissible under Pennsylvania State law. The Circuit Court reversed the District *741 Court, holding that the contract was admissible. The Court said:

See also: Friday v. Pennsylvania R. Co., 204 Pa. 405 , 54 A. 339 .

The Court considered the possibility of fraud and collusion where a landowner might conspire to defraud the Government by manufacturing evidence. This was not held controlling for the reasons given in the opinion, as not sufficient to exclude the unperformed contract. The case was tried on the theory that the Pennsylvania law was controlling. The Court said:

The Court held that the contract should have been admitted simply as evidence of market value and not as “establishing a fair market value.” “We agree that the contract of sale would not have been controlling on the question of market value but would have been merely evidence thereof. Cf. Olson v. United States, 292 U.S. 246 , at page 255, 54 S.Ct. 704 , at page 708, 78 L.Ed. 1236 [and cases cited].”

Another recent case is Westchester County Park Commission and the County of Westchester v. United States, 2 Cir., 143 F.2d 688, 694 . The Government was permitted, upon direct examination, to introduce evidence of comparable sales. The landowner predicated error upon admission of this testimony as at variance with the New York State Law. The Court, in affirming the judgment, said:

In Northern Pac. Ry. Co. v. North American Tel. Co., 8 Cir., 1915, 230 F. 347, 350 , L.R.A.1916E, 572, a telegraph company sought to condemn the surplus use of a railroad right-of-way for its telegraph line. The telegraph company offered to prove the value of comparable rights which the trial court excluded. The court, in speaking of the character of the testimony excluded, said:

The Court reversed the judgment for exclusion of the evidence and remanded the cause for a new trial.

In North American Telegraph Co. v. Northern Pac. Ry. Co., 8 Cir., 1918, 254 F. 417, 418 , certiorari denied 1919, 249 U.S. 607 , 39 S.Ct. 290 , 63 L.Ed. 799 , upon a subsequent appeal of the same case, the railway company had been permitted by the trial court to prove the market value of other similar individual transactions. The telegraph company complained that such proof was inadmissible. The court affirming the judgment said:

In Miller v. United States, 9 Cir., 1942, 125 F.2d 75 , a California case, the Circuit Court held that comparable sales were admissible. Pages 78-80, 81 of 125 F.2d. In reversing the cause upon other grounds, United States v. Miller, 1943, 317 U.S. 369 , 63 S.Ct. 276, 283 , 87 L.Ed. 336 , 147 A.L.R. 55 , the Court said, respecting another local rule of evidence:

In De Soto Motor Corporation v. Stewart, 10 Cir., 1933, 62 F.2d 914, 917 , the Circuit Court considered the effect of the Conformity Act, 28 U.S.C.A. § 724 , as affecting general evidentiary rules and said:

In Chicago & N. W. Ry. Co. v. Kendall, 8 Cir., 1909, 167 F. 62, 64 (cited and referred to in De Soto Motor Corporation v. Stewart, supra), the Circuit Court held that local decisions on questions of evidence are not binding upon Federal Courts but that the applicable decisions of the Federal Appellate Courts should be the rule of decision notwithstanding contrary rulings in the State Courts. The Court said:

Other cases holding the federal courts are not bound by the rules of the state courts in admitting evidence are: Bates v. Preble, 151 U.S. 149 , 14 S.Ct. 277 , 38 L.Ed. 106 ; Chicago Lumbering Co. v. Hewitt, 6 Cir., 64 F. 314 , 12 C.C.A. 129 ; Raynor v. Norton, 31 Mich. 210 ; Misner v. Darling, 44 Mich. 438, 439 , 7 N.W. 77 ; Mason v. Phelps, 48 Mich. 126 , 11 N.W. 413 , 837; Adams v. New York, 192 U.S. 585 , 24 S.Ct. 372 , 48 L.Ed. 575 .

Incidental damages is a matter of substantive law.

The owner of condemned land may demand federal court not adopt state procedure which is less favorable to him than federal procedure.

“Under federal statute providing that condemnation proceedings by the United States shall conform, as nearly as may be, to the procedure in the state courts ‘in like causes,’ the procedure to be followed is that established by state statute in condemnation proceedings generally, and a federal court is not authorized to adopt a procedure specially provided by a state statute for proceedings by the United States, which is less favorable to the property owner, over his timely objection. United States v. Chichester, D.C.Va., 283 F. 650 .” 35 C.J.S., Federal Courts, § 113, p. 976. See also 35 C.J.S., Federal Courts, § 117, p. 977, and § 99, p. 968, for discussions of the Practice Conformity Act as modified by the Rules of Civil Procedure for District Courts. See also cases cited in Cum.Ann. Pocket Part, 1944, C.J.S. Vol. 35.

Circuit Judge Garrecht, speaking for the court in Re City of Oakland v. United States, 9 Cir., 124 F.2d 959, 964 , certiorari denied 316 U.S. 679 , 62 S.Ct. 1106 , 86 L.Ed. 1753 , made reference to the extent compliance with state statutes was required in condemnation cases:

It is clear that in Minnesota, Pennsylvania, and New York, the three states where the rulings on the question of the admissibility of direct testimony of comparable sales on direct examination, as evidence of market value, hold that such evidence is not admissible, the federal courts have declined to follow the state rule. In all of the other states where the federal courts have jurisdiction, the rule contended for by the Government in the instant case has been followed and there is no decision of a federal court to the contrary. It would seem, therefore, that the overwhelming weight of authority is that evidence of comparable sales on direct examination as evidence of the fair market value of property, is admissible. The defendants contend that to ignore the local law would “lead to endless confusion.” The Court believes the contrary to be true. A Federal District Judge, while appointed to act in a certain designated district, is nevertheless a United States Judge with full authority to act wherever designated in any state or territory of the United States. It will make for greater uniformity and less confusion if one rule applies and that rule a Federal rule, rather than to follow diverse rules in the various jurisdictions. Again, where the compensation is to be paid by the Federal Government, that Government should determine how far it will follow local law.

For full discussion of testimony on value, real property, see 32 Corpus Juris Secundum, Evidence, § 545d, page 295.

The Court will give the following instruction to the jury, and allow an exception to all of the defendants: '

The sales admitted in evidence should be considered by the jury insofar as such sales, looking at the circumstances, in each instance, may evidence or throw light upon the fair market value of the land being condemned, unaffected by the Government’s acquisition thereof for public purposes.