City of Mishawaka on Behalf of Dept. of Redevelopment v. Fred W. Bubb Funeral Chapel, Inc.

• Decision Date: 23 October 1984
• Docket Number: No. 4-583A160,4-583A160
• Citation: 469 N.E.2d 757
• Parties: CITY OF MISHAWAKA, Indiana, on Behalf of its DEPARTMENT OF REDEVELOPMENT, Appellant (Plaintiff Below), v. FRED W. BUBB FUNERAL CHAPEL, INC., Appellee (Defendant Below).
• Court: Indiana Appellate Court

Page 757

469 N.E.2d 757

CITY OF MISHAWAKA, Indiana, on Behalf of its DEPARTMENT OF REDEVELOPMENT, Appellant (Plaintiff Below), v. FRED W. BUBB FUNERAL CHAPEL, INC., Appellee (Defendant Below).

No. 4-583A160.

Court of Appeals of Indiana Fourth District.

Oct. 23, 1984.

Edward A. Chapleau, South Bend, for appellant.

John Schindler, Jr., Schindler & Olson, Mishawaka, for appellee.

MILLER, Presiding Judge.

In this condemnation case, appellee, Fred W. Bubb Funeral Chapter, Inc. (Bubb), owned a funeral home and a warehouse in Mishawaka, Indiana. The warehouse, where limousines and caskets were stored, was located two city blocks away from the funeral home. When the City of Mishawaka condemned the warehouse property, Bubb sought damages to the funeral home property as "damages to the residue" and the trial court, accepting Bubb's theory that the funeral home was part of the residue, awarded damages both for the value of the warehouse property and for residual damages to the funeral home. The trial court also awarded Bubb an additional $2,500 for litigation expenses since the award exceeded the City's last offer of settlement pursuant to IND.CODE 32-11-1-10.

The City raises a number of issues in this appeal. Because we reverse, we address only two:

(1) Whether the funeral home, located two blocks away from the property condemned by the City, was properly considered as residue property; and

(2) Whether the trial court erroneously awarded Bubb litigation expenses pursuant to I.C. 32-11-1-10.

FACTS

Bubb owned and operated a funeral home business in Mishawaka, Indiana. The funeral parlor was located on a parcel of land owned by Bubb at 204 North Main Street. Bubb also owned another parcel of land two city blocks away on which a garage/warehouse was located. The City of Mishawaka (City) sought to condemn the second parcel by this action.

On February 5, 1982, the trial court entered an order, stipulated to by the parties, appropriating the real estate, appointing appraisers, and approving instructions to the appraisers. On February 12, 1982, the appraisers filed their report assessing damages to Bubb for the land sought to be appropriated and the improvements thereon in the amount of Thirty-Four Thousand Dollars ($34,000.00). The appraisers also specifically found there was no damage to the funeral parlor, or the remaining property owned by Bubb. On February 24, 1982, Bubb filed exceptions to the report of the appraisers, alleging the damages assessed for the value of the land sought to be appropriated were too low and that he was entitled to damages for the loss of value to the residue of his property.

The City filed a motion for partial summary judgment on the issue of residual damages claiming that since the City appropriated an entire tract of Bubb's land, there could be no residue left to be damaged. This motion was overruled and trial commenced on January 17, 1983, without a jury. On January 29, 1983, the court rendered judgment in favor of Bubb on his exceptions to the appraisers report in the amount of Seventy-Eight Thousand Dollars ($78,000.00). Both parties filed Motions to Correct Errors, and the court rendered its amended judgment on April 25, 1983, awarding Seventy-Eight Thousand Dollars ($78,000.00), consisting of:

1. The fair market value of the garage/warehouse property: $41,500.00

2. The damages to the residue of the property of the defendant (funeral home parcel) caused by taking out the part appropriated: $36,500.00

The judgment also awarded litigation expenses of $2,500.00.

DECISION

The Indiana Eminent Domain Statute, IND.CODE 32-11-1-6 provides the measure of damages and benefits allowed for the taking of property by condemnation. In pertinent part, it allows for "damages, if any to the residue of such owner or owners to be caused by taking out the part sought to be appropriated." The City contends this section applies only to partial taking of a single tract. Since the entire tract of land at First and Spring Streets was condemned, the City argues there is no residue left to suffer damages. Under this theory, a separate parcel of land cannot suffer residual damages even if owned by the same person, as is the case here.

Bubb's position, with which the trial court agreed, is that he was using the two separate tracts as integral parts of his funeral home business. The property located at 202 West Main held the funeral parlor itself and a small parking lot, while the lot at First and Spring Streets held a garage/warehouse used for storing limousines and caskets. Bubb contends that because the properties were used together in business they should be treated as one tract, the partial taking of which will result in residue. Bubb presented evidence that a garage/warehouse was a necessity to a funeral business, a fact not disputed by the City, and the trial court concluded his funeral home tract was damaged by the taking of the garage/warehouse.

Indiana follows the general rule that to award damages for a severance of a single tract there must be unity of title, unity of use and contiguity. State v. Heslar, (1971) 257 Ind. 307, 274 N.E.2d 261; See also City of Elkhart v. No-Bi Corp., (1981) Ind.App., 428 N.E.2d 43; State v. Church of Nazarene of Logansport, (1976) Ind.App., 354 N.E.2d 320; modified (1978) 268 Ind. 523, 377 N.E.2d 607. In the case at bar, the City argues the required element of contiguity is lacking, barring Bubb's claim for severance damages to the property upon which the funeral home was located.

Indiana courts have not previously defined contiguity other than to specify it is a required element for severance damages. The City argues that actual physical contiguity is required--the property taken must "touch" the residue which is claimed to be damaged. No Indiana case has addressed this issue. Church of Nazarene and City of Elkhart involved residue properties that were physically contiguous to the properties condemned.

An examination of decisions in other jurisdictions reveals that while actual physical contiguity is ordinarily required for severance damages it is not essential. A majority of states will award damages for the "severing" of separate parcels if there is unity of use. See, e.g. Board of Transportation v. Martin, (1978) 296 N.C. 20, 249 S.E.2d 390; State by Commissioner of Transportation v. Bakers Basin Realty Co., (1977) 74 N.J. 103, 376 A.2d 1189; Moore v. County of Montgomery, (1975) 22 Pa.Cmwlth. 262, 348 A.2d 762; Sauvageau v. Hjelle, (1973) N.D., 213 N.W.2d 381; State Highway Comm. v. Renfro, (1973) 161 Mont. 251, 505 P.2d 403; Victor Co. v. State, (1971) 290 Minn. 40, 186 N.W.2d 168; DiVirgilio v. State, (1968) Fla., 205 So.2d 317; Petition of Mackie, (1967) 8 Mich.App. 299, 154 N.W.2d 631; Ives v. Kansas Turnpike Authority, (1959) 184 Kan. 134, 334 P.2d 399.

In the federal courts, the rule is one of integrated use. In Baetjer v. United States, (1st Cir.1944), 143 F.2d 391, the court stated: "Integrated use, not physical contiguity is the test whether land condemned is part of a single tract warranting award of severance damage, but physical contiguity is important as bearing on unity of use, and separation remains an evidentiary, not an operative fact." In Baetjer, the court awarded severance damages although the parcels were 17 miles apart, because they were integrated parts of a sugar cane business.

While Baetjer is indicative of the expansive stance courts have taken on the award of severance damages, it is still the rule in most jurisdictions that a mere business relationship between the separate parcels will not suffice. There must be such a connection or relation of adaptation, convenience and actual and permanent use as to make the enjoyment of the parcel taken reasonably and substantially necessary to the enjoyment of the parcels left, in the most advantageous and profitable manner in the business for which they are used. Sharp v. United States, (1903) 191 U.S. 341, 24 S.Ct. 114, 48 L.Ed. 211; Housing Authority of City of Newark v. Norfolk Realty, (1976) 71 N.J. 314, 364 A.2d 1052; City of Los Angeles v. Wolfe, (197...