Acquisition of Land by Eminent Domain, Matter of

• Decision Date: 06 December 1996
• Docket Number: No. 75527,75527
• Citation: 261 Kan. 125,928 P.2d 73
• Parties: , Util. L. Rep. P 26,579 In the Matter of the ACQUISITION OF LAND BY EMINENT DOMAIN. KANSAS GAS AND ELECTRIC COMPANY, Plaintiff, v. WILL INVESTMENTS, INC., Defendant, and SAD, L.C., Appellee, and Mohammed Aghakani, Appellant.
• Court: Kansas Supreme Court

Page 73

928 P.2d 73

261 Kan. 125, Util. L. Rep. P 26,579

In the Matter of the ACQUISITION OF LAND BY EMINENT DOMAIN KANSAS GAS AND ELECTRIC COMPANY, Plaintiff, v. WILL INVESTMENTS, INC., Defendant and SAD, L.C., Appellee and Mohammed Aghakani, Appellant.

No. 75527.

Supreme Court of Kansas.

Dec. 6, 1996.

Syllabus by the Court

1. The interpretation and legal effect of written documents are matters of law upon which our standard of review is unlimited.

2. Contracts are presumed legal, and the burden rests on the party challenging the contract to prove it is illegal.

3. Agreements that grant and assign a right-of-way to erect, install, and maintain an electric transmission line to entities that are not public utilities are not illegal.

4. Only such an estate in property sought to be acquired by eminent domain may be taken as is reasonably necessary for the accomplishment of the purpose in aid of which the proceeding is brought.

5. Eminent domain statutes will be construed to authorize only the taking of an easement on or title to land sufficient for the public use intended rather than a fee title, unless the statute clearly so provides, either expressly or by necessary implication.

6. Under the facts of this case, the trial court correctly found the owner of a retained easement taken by a condemnor was entitled to the entire amount of the appraiser's award.

Robert W. Kaplan, of Kaplan, McMillan and Harris, Wichita, argued the cause and was on the brief for appellant.

John L. Kratzer, Jr., of Hershberger, Patterson, Jones & Roth, L.C., Wichita, argued the cause and was on the brief for appellee.

LARSON, Justice:

This case involves a unique set of facts wherein Mohammed Aghakani, the present owner of the underlying property, appeals the trial court's determination that SAD, L.C., the owner of a retained right-of-way for utility purposes, is entitled to the entire proceeds of a condemnation award for the SAD easement taken by Kansas Gas and Electric Company (KG & E).

Our result being basically fact driven requires us to state in considerable detail the background giving rise to this litigation.

In late April 1994, SAD acquired fee simple title to the Southeast Quarter of Section 19, Township 28 South, Range 2 East, Sedgwick County, Kansas, intending to subdivide the property and offer it for sale at public auction. Prior to the intended sale, KG & E contacted SAD concerning its desire to acquire an easement for the installation of electric transmission lines across the north 50 feet of the south 70 feet of the property.

KG & E and SAD were unable to reach an agreement regarding compensation for a voluntary grant of the easement prior to a scheduled public auction of the property. Knowing that prospective purchasers must be informed of the pending negotiations with KG & E and fearing this would result in a greatly diminished sale, SAD decided to offer the land for sale subject to an easement in place corresponding to KG & E's proposed right-of-way.

To accomplish this, SAD granted a right-of-way, dated and recorded May 24, 1994, to Will Investments, Inc., to erect, install, and maintain electric and communication lines, with provisions identical to those in a KG & E easement. Will paid SAD $12,000 and agreed that SAD could repurchase the easement for the purchase price plus interest at 9%.

When the public auction was held 2 days later, auctioneer Gearl Bannon announced to all parties that SAD was retaining a utility easement, that the property was being sold subject to this easement, that SAD was negotiating with KG & E for the sale of the easement, and that the present owner was retaining the right to all proceeds from the sale of the easement. Aghakani purchased a tract at the auction, subject to the easement, for $69,500. The existence of the easement was shown on the title insurance commitment, and the deed conveying the property from SAD to Aghakani was subject to easements of record.

In early December 1994, Will executed and recorded a grant of right-of-way to SAD, identical to the previous grant from SAD to Will, in return for $12,595. On June 15, 1995, Will filed an assignment to SAD of all of its interest in the easement by a document conveying ownership based on the previous grant.

In early January 1995, KG & E commenced a condemnation action to acquire all interest in the retained right-of-way and the reversionary interests of the then fee owners of the property.

Aghakani retained counsel, had the property rezoned, and presented evidence of value at the appraiser's hearing. SAD, although properly notified, neither appeared nor responded. The appraiser's award, filed in April 1995, appraised the tract before the taking at $187,500 and after the taking at $157,985, awarding $29,515 in compensation for the condemnation of the easement. KG & E filed a timely notice of appeal of the award.

Aghakani moved for a determination of entitlement and disbursement of the appraiser's award. Will and SAD then claimed the funds, setting up the present dispute among the parties for resolution as required by K.S.A. 26-517. Will later filed a disclaimer of interest in the property.

The trial court heard the motions and entered findings of fact and conclusions of law determining that the easement was given for a lawful purpose and that the requirement that an easement owner be a licensed public utility before actually constructing, operating, or maintaining electric transmission lines was simply a condition precedent to the easement's enjoyment. The court noted the significant disparity of the price Aghakani paid for the land and the appraised value prior to the taking and found Aghakani paid a discounted price for the property and received the estate he bargained for at the auction. The trial court also ruled that Aghakani would be unjustly enriched if allowed to receive any portion of the condemnation award.

The trial court further concluded that the conveyance from Will to SAD was sufficient to convey ownership to SAD, that KG & E only obtained the existing easement, and that Aghakani held no interest in the easement at the time of the taking. The court ordered the entire award to be distributed to SAD. The court later modified the order to rule that the award included damages for diminution in value of the remainder interest.

Proceedings were stayed pending the filing of an appeal, which was transferred to this court pursuant to K.S.A. 20-3018(c).

In commencing our analysis of the issues, we first restate our basic standard of review: " 'Where the trial court has made findings of fact and conclusions of law, the function of this court on appeal is to determine whether the findings are supported by substantial competent evidence and whether the findings are sufficient to support the trial court's conclusions of law.' " Gillespie v. Seymour, 250 Kan. 123, 129, 823 P.2d 782 (1991). The first is a deferential standard of review, and the second involves a question of law based upon given facts. Chrispens v. Coastal Refining & Mktg., Inc., 257 Kan. 745, 762, 897 P.2d 104 (1995). Further, the interpretation and legal effect of written instruments are matters of law, Dutta v. St. Francis Regional Med. Center, Inc., 254 Kan. 690, 693, 867 P.2d 1057 (1994), and our standard of review is unlimited on a question of law. Gillespie v. Seymour, 250 Kan. 123, Syl. p 2, 823 P.2d 782.

Were the deeds granting a right-of-way from SAD to Will and Will to SAD and the assignment of the right-of-way from Will to SAD illegal contracts and, therefore, void?

Aghakani first contends that the grants of the right-of-way are illegal contracts because neither party was a public utility as defined by K.S.A. 66-104, the grants involved an attempt to erect an electric transmission line without being a properly certified public utility under K.S.A. 66-131, and the transfer of the grants began site preparation for an electric transmission line without the proper permit as required by K.S.A. 66-1,178. We hold that each of these contentions are without merit.

Neither Will nor SAD generated or sold electricity, nor did they attempt to do so by acquiring the right to install electric transmission lines over the property. Neither Will nor SAD attempted to transact business without a proper certificate, nor did they do any act which is in violation of the permit requirement of K.S.A. 66-1,178.

The two Kansas cases Aghakani cites, Early Detection Center, Inc. v. Wilson, 248 Kan. 869, 811 P.2d 860 (1991), and Brumm v. Goodman, 164 Kan. 281, 188 P.2d 913 (1948), may support the contention that contracts made to perform illegal acts are not enforceable, but there is no showing that the agreements in issue in our case violated any of the statutes cited or were against public policy. Contracts are presumed legal and the burden rests on the party challenging the contract to prove it is illegal. See In re Estate of Shirk, 186 Kan. 311, 326, 350 P.2d 1 (1960). The contracts in issue were of record, fully disclosed, and clearly understandable, and the parties never attempted to perform them in any...