Arkansas State Highway Com'n v. Barker

• Court: Arkansas Supreme Court
• Writing for the Court: DUDLEY; NEWBERN; CORBIN
• Citation: Arkansas State Highway Com'n v. Barker, 931 S.W.2d 138, 326 Ark. 403 (Ark. 1996)
• Decision Date: 28 October 1996
• Docket Number: No. 96-227,96-227
• Parties: ARKANSAS STATE HIGHWAY COMMISSION, Appellant, v. Roland A. BARKER, Jr., and Barbara Barker and Union State Bank, Mortgagee, Appellees.

Page 138

931 S.W.2d 138

326 Ark. 403

ARKANSAS STATE HIGHWAY COMMISSION, Appellant, v. Roland A. BARKER, Jr., and Barbara Barker and Union State Bank, Mortgagee, Appellees.

No. 96-227.

Supreme Court of Arkansas.

Oct. 28, 1996.

Robert L. Wilson, Barbara A. Griffin, Little Rock, for appellant.

Ronald L. Griggs, El Dorado, for appellee.

DUDLEY, Justice.

In January 1994, the Arkansas State Highway Commission condemned .47 acre in fee, along with the access routes, belonging to Roland and Barbara Barker and Union State Bank, mortgagee, in order to widen Highway 167 to three lanes south of El Dorado. The condemned land was a part of a 10.16-acre tract purchased by the Barkers in 1992 for $20,000. A little over seven acres of the tract were timberland and not suitable for industrial or commercial use, and three acres were suitable for commercial or industrial use. The .47 acre condemned is in the three acres that are suitable for commercial or industrial use. Before the taking, the Barkers constructed a metal building in the northeast corner of the three acres. The .47 acre is between the metal building and the highway. At the time of the taking, the Commission deposited with the court the amount it estimated to be just compensation, $1,450. The Barkers denied that $1,450 was just compensation and asked for adequate compensation. Ultimately, a jury returned a verdict for $15,100. The Commission appeals. We reverse and remand for a new trial.

The Commission timely filed a motion in limine asking the court to prohibit, among other things, the introduction of evidence proving the cost to cure damages to the residual property, if the cost was in excess of the decrease in the market value of the property taken and if the cost constituted a substantial betterment to the property. In its motion the Commission specifically alleged that the Barkers' appraisal report contained two estimates, one for $6,800 and one for $7,875, which when averaged was $7,300, for installation of a circular drive on the residual tract. An additional $3,000 was added for maintenance of the circular driveway, which brought the total betterments to $10,300. The Commission pointed out that, before the taking, the tract had sixteen feet of unpaved driveways that provided access to the highway and that the Commission's construction plans, filed with the court, required it to replace the unpaved driveways with two forty-foot asphalt driveways. Finally, the Commission alleged that if the utility of the residual property was diminished by the taking, that loss constituted the element of damage, and not the cost of a circular driveway, which was a betterment and which cost far more than the loss to the remaining property, especially when the Commission intended to replace sixteen-feet-wide unpaved driveways with forty-feet paved driveways. On appeal, the Commission contends that the trial court erred in allowing evidence of the $10,300 loss to be introduced. The Barkers do not contend that evidence of the cost to cure damages was admissible, but rather they respond that the Commission is "simply mistaken that testimony was offered as costs to cure damages which constitute a betterment on the residual property." We hold the trial court erred in allowing the evidence.

A landowner who has his land condemned is entitled to just compensation. City of El Dorado v. Scruggs, 113 Ark. 239, 168 S.W. 846 (1914). However, this does not mean that a landowner is entitled to be unjustly enriched at the expense of the public purse. See United States v. 158.24 Acres of Land, 696 F.2d 559, 564 (8th Cir.1982). There are three recognized formulas for measuring just compensation in partial-taking cases: (1) the value of the part taken; (2) the value of the part taken plus the damages to the remainder; (3) the before- and after-value rule. Young v. Arkansas State Highway Comm'n, 242 Ark. 812, 415 S.W.2d 575 (1967); see also Arkansas State Highway Comm'n v. Jones, 256 Ark. 40, 505 S.W.2d 210 (1974). In Young, we wrote that "the difference between the market value of the whole tract before the taking, and the market value of that part which remains after the taking, less any enhancement peculiar to the lands" has long been the measure of damages in partial-taking cases. 242 Ark. at 814, 415 S.W.2d at 576-77.

In the present case, the Barkers' real-estate-appraisal witness, Peter Emig, testified that the .47 acre taken did not have a "single highest and best use," but rather "that which was a part of the taking had a commercial/industrial type use because of elevation and proximity to the highway." Emig testified that he used three approaches in determining the before-taking value: the cost approach; the market approach; and the income approach. He testified that, in this case, the market approach was the best indicator of value. Using the market approach, he determined that the before-taking value was $105,000. He also testified that the market approach was the best indicator of value after the taking, and that value was $89,900, leaving a difference of $15,100. The trial court allowed his appraisal report in evidence. In his report, the witness used three comparable sales to determine after-taking value, but from each of the three comparable sales he deducted "$10,300 for the drive installation and maintenance." Thus, Emig deducted the $10,300 cost and maintenance of the circular drive in order to reach the after-taking value. Because of this error, we reverse and remand for a new trial.

We now address the remaining points of appeal that will likely arise upon retrial. The Barkers, in cross-examination of a Commission employee, asked about an appraisal of a nearby tract. The Commission objected because the tract had not been used by either party as a comparable sale, and thus it was not relevant. The Commission additionally objected because the appraisal was prepared for the Commission's condemnation offer on the other tract, and offers to buy are not competent evidence of the market value. The trial court erroneously overruled the objections. The appraisal of the nearby tract, prepared by a witness not present...