Bear Creek Water Ass'n, Inc. v. Town of Madison

• Decision Date: 30 June 1982
• Docket Number: No. 53168,53168
• Citation: 416 So.2d 399
• Parties: BEAR CREEK WATER ASSOCIATION, INC. v. TOWN OF MADISON, Mississippi.
• Court: Mississippi Supreme Court

Page 399

416 So.2d 399

BEAR CREEK WATER ASSOCIATION, INC. v. TOWN OF MADISON, Mississippi.

No. 53168.

Supreme Court of Mississippi.

June 30, 1982.

Herring & Self, James H. Herring, Canton, for appellant.

Young, Scanlon & Sessums, Stephen W. Rimmer, Jackson, for appellee.

PER CURIAM.

PATTERSON, Chief Justice, for the Court:

The Town of Madison (hereinafter Madison) petitioned to condemn a portion of a certificate of public convenience and necessity held by Bear Creek Water Association, Inc., (hereinafter Bear Creek). From an award of $920.37 by an Eminent Domain Court of Madison County, Bear Creek appeals.

On June 28, 1971, Bear Creek, a non-profit corporation, was issued a certificate of public convenience and necessity by the State Public Service Commission to distribute water to an area of southern Madison County comprising some 39,136 acres of land. On April 13, 1979, the boundaries of Madison were expanded and 245 acres of the certificated area were annexed to the municipality. Thereafter on January 14, 1980, Madison petitioned to condemn that part of Bear Creek's certificate embracing the annexed 245 acres which included a significant part of Summertree Subdivision, a recently developed residential area. However, no physical facilities or other real property of Bear Creek were included in the proceedings. Indeed, in the condemned area, Bear Creek owned only the certificate of public convenience and necessity granting it the right to distribute water.

When the petition was filed on January 14, 1980, there were no water customers residing on the 245 acres and Bear Creek was receiving no revenue from it. However, the developer of the subdivision had installed water distribution facilities in the condemned portion at an approximate cost of $85,000. Moreover, it appears to be common practice for subdivision developers to install water distribution facilities which are later dedicated to the person or concern owning the right to serve the area. At the time the petition was filed, however, the developer had not conveyed the facilities to anyone although Bear Creek appeared to be the only logical recipient because it owned the exclusive right to serve the area, at least until Madison filed the eminent domain proceedings.

The litigants are not in disagreement that the certificate of public convenience and necessity has value for which just compensation must be made under the mandate of Section 17 of the Mississippi Constitution of 1890 and our decisions in Mississippi Power & Light Company v. City of Clarksdale, 288 So.2d 9 (Miss.1973), and City of Jackson v. Creston Hills, Inc., 252 Miss. 564, 172 So.2d 215 (1965). They thereby necessarily acknowledge that just compensation must be made for the condemned portion of the certificate. They sharply disagree, however, as to the formula for the ascertainment of just compensation for the taking and the consequential damages, if any.

Bear Creek contends the proper measure should have been the difference between the fair market value of the business of the appellant, of which the certificate is a part, as a going concern before and after the taking, plus any damages to the business remaining after the taking. Madison argues that in an eminent domain case the condemnee is entitled to (1) recover the fair market value of the property condemned; and (2) a sum equal to the damages, if any, sustained by the remainder of the property if less than whole is taken, both to be determined by the "before and after rule" and that the "going concern" formula urged by Bear Creek on the basis of City of Jackson v. Creston Hills, Inc., supra, is patently erroneous.

The trial court adopted the formula urged by Madison and sustained a motion in limine which prohibited Bear Creek from introducing any testimony concerning (1) the physical facilities maintained by Bear Creek, its capacity to provide water service to the area, the facilities' value and their proximity to the area in question; (2) any matters pertaining to the part of the Summertree development outside the area covered by the portion of Bear Creek's certificate, which was condemned; (3) any matter pertaining to water facilities in the subject area which were neither installed nor owned by Bear Creek at the time the petition was filed; (4) any matters pertaining to the development activities occurring after the filing of the petition in the area covered by the portion of the certificate condemned and (5) any matters pertaining to alleged future revenues and profits which might be derived through the sale of water to future residents of the area.

In its first assignment of error Bear Creek complains of the formula the trial court used in instructing the jury on the compensation due Bear Creek for the condemnation, which was the difference between the fair market value of the certificate immediately before the taking and the fair market value immediately thereafter. Bear Creek contends, as mentioned, the proper measure should have been the difference between the fair market value of the business of the association as a going business concern immediately before the taking and immediately thereafter. It relies upon Creston as controlling authority.

Although Creston is not directly on point, it sets forth by analogy the proper measure for compensation in this case, in our opinion. Creston involved a suit by a certificated public utility against the City of Jackson for damages caused when the City annexed the area certificated to Creston which was previously outside the city limits. The City laid a water system in Creston's area and began attracting customers without instituting condemnation proceedings. On petition by Creston in 1960 the Public Service Commission ordered the City to cease and desist, but a chancery court on appeal overturned the Commission's order,...