City of Newport Municipal Housing Commission v. Turner Advertising, Inc.
| Decision Date | 11 March 1960 |
| Citation | 334 S.W.2d 767 |
| Parties | CITY OF NEWPORT MUNICIPAL HOUSING COMMISSION, Appellant, v. TURNER ADVERTISING, INC., et al., Appellees. |
| Court | United States State Supreme Court — District of Kentucky |
Morris Weintraub, Newport, for appellant.
Davies & Hirschfeld, Newport, for appellees.
CLAY, Commissioner.
Appellant, Municipal Housing Commission of Newport (hereinafter referred to as 'Commission'), pursuant to KRS 99.370 and 99.420, condemned for slum clearance purposes nine parcels of land owned by defendant, Turner Advertising, Inc. The jury awarded defendant a total of $57,000, and the nine cases are consolidated on this appeal.
The Commission appeals on the ground that incompetent evidence established an erroneous measure of damages and the awards cannot be justified on any proper basis. Defendant cross-appeals on the ground the statute authorizing this condemnation is unconstitutional.
We will dispose of the cross-appeal forthwith. In Miller v. City of Louisville, Ky., 321 S.W.2d 237, the constitutionality of KRS Chapter 99 was upheld. We see no reason to overrule that decision.
The fundamental problem involves the proper measure of damages in the taking of land which is presently being used for billboard advertising purposes. The defendant owner happens to be engaged in the business of selling billboard advertising space.
The value of the billboard signs as physical property was stipulated. Four expert witnesses for the Commission, basing their opinion on all factors considered by them pertinent, estimated the value of the nine parcels of land as ranging roughly between $21,000 and $24,000. Defendant introduced no evidence concerning the market value of the land.
The defendant did, however, undertake to prove that these particular parcels had a very special value to it in the operation of its billboard advertising business. Defendant's only two witnesses testified to the importance of strategic locations, the method of selling advertising space by 'package', and the effect of the loss of one billboard sign upon its entire business. Mr. Turner, defendant's principal witness, originally estimated that the present value of these nine parcels in its business was $243,000, which he subsequently reduced to $192,500.
We have some difficulty comprehending the precise theory upon which defendant calculates this sum as constituting the proper and fair valuation of the land taken. The two items that make up this figure (not including the value of the billboards) are designated by defendant as (1) 'lost productivity' ($118,000), and (2) 'impairment or depreciation to the remainder of the facilities' ($68,000). The first item was computed by determining the annual gross profit on each billboard owned by defendant and multiplying it by 15 (the average life of a billboard). The second consists of a loss to defendant's business as a result of losing these particular strategic locations which could be sold as a part of a 'package deal' in billboard advertising.
All of defendant's testimony was objected to by the Commission on the ground that it had nothing to do with the value of the land taken and involved a speculative business loss which did not constitute a proper measure of damages. The evidence was admitted by the court, and its relevancy is the important consideration before us.
Section 13 of the Constitution provides that no person's property shall be 'taken' for public use without 'just compensation'. Perhaps in no field of the law is more difficulty presented than in determining what constitutes the property taken and what constitutes just compensation for that property. An enlightening text authority on this subject is Orgel on Valuation Under Eminent Domain (2d Ed.--1953).
Many acts of the government, particularly in the exercise of its police power, though detrimental to certain species of property, do not constitute a 'taking' for which compensation must be made. Consequently, in the exercise of the right of eminent domain (a form of sovereign police power), it is possible that the total injury or damages caused to the owner of the land need not be compensated for. See 18 Am.Jur., Eminent Domain, Section 132 (page 756). Thus the constitutional provision generally means that a person is entitled to fair compensation for property taken rather than damages for consequential injuries caused by the exercise of the right of eminent domain. 29 C.J.S. Eminent Domain § 111, p. 919.
It is therefore necessary first to determine, and keep clearly in mind, what is the property taken. If it is land, the problem is somewhat simplified because this kind of property has physical existence, may be easily measured, and generally has marketability. If the latter factor exists, it is a uniformly accepted proposition that the best test to determine just compensation for the taking of land is its fair market value. Calor Oil & Gas Co. v. Franzell, 128 Ky. 715, 109 S.W. 328, 36 L.R.A.,N.S., 456. The fair market value may be stated as the price at which an owner who desires to sell, but is not required to do so, would sell the property in its then condition to a purchaser who desires to purchase but is not compelled to do so. Commonwealth v. Begley, 272 Ky. 289, 114 S.W.2d 127.
As pointed out in the last case cited, this concept excludes both the value of the property to the owner and the value of the property to the taker. See also Orgel on Valuation Under Eminent Domain (2d Ed.), Vol. 1, Sections 12 to 15. It is therefore necessary and proper in a case where an entire tract of land is taken which has a market value (as in each of the nine cases before us), to anchor our considerations to that market value. (There are exceptions, to be noted later.)
Many factors enter into market value, depending upon the nature, adaptability and present or prospective use of the land. Productivity of agricultural land in the way of crops is a proper item to consider. Kentucky Water Service Co., Inc. v. Bird, Ky., 239 S.W.2d 66. Relying on that case, defendant has apparently evolved an ingenious theory that it may properly show the productivity of these particular parcels in profits to its particular business enterprise. The basic fallacy in defendant's reasoning is the false premise that the Commission is taking, in the constitutional sense, one of its intangible assets, and must therefore pay damages not only for the land but for the consequential and incidental injury to its business.
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