Clarmar Realty Co., Inc. v. Redevelopment Authority of City of Milwaukee

• Citation: 383 N.W.2d 890,129 Wis.2d 81
• Decision Date: 02 April 1986
• Docket Number: No. 84-1085,84-1085
• Parties: CLARMAR REALTY CO., INC., Plaintiff-Respondent-Petitioner, v. REDEVELOPMENT AUTHORITY OF the CITY OF MILWAUKEE, Defendant-Appellant.
• Court: United States State Supreme Court of Wisconsin

Page 890

383 N.W.2d 890

129 Wis.2d 81

CLARMAR REALTY CO., INC., Plaintiff-Respondent-Petitioner, v. REDEVELOPMENT AUTHORITY OF the CITY OF MILWAUKEE, Defendant-Appellant.

No. 84-1085.

Supreme Court of Wisconsin.

Argued Oct. 28, 1985.

Opinion Filed April 2, 1986.

Stephen T. Jacobs, Milwaukee, argued, for plaintiff-respondent-petitioner; Anne Willis Reed, Jerome M. Janzer and Reinhart, Boerner, Van Deuren, Norris & Rieselbach, S.C., Milwaukee, on brief.

Charles R. Theis, Asst. City Atty., argued, for defendant-appellant; Grant F. Langley, City Atty., on brief.

WILLIAM A. BABLITCH, Justice.

We review an unpublished decision of the court of appeals filed on April 9, 1985, 125 Wis.2d 567, 371 N.W.2d 429, reversing the judgment of the circuit court for Milwaukee county, Judge Thomas J. Doherty, presiding.

Clarmar Realty Co., Inc., (Clarmar) appeals, arguing that in a condemnation proceeding the fair market value of a truck terminal which it owns should be the value of the terminal in an integrated use with an adjacent parcel of land owned by another, less the cost of acquiring that parcel. The circuit court accepted this argument, ordering the Redevelopment Authority of the City of Milwaukee (Authority) to compensate Clarmar on this basis. The court of appeals reversed.

We hold that a court may determine the fair market value of a condemned parcel of land in combination with the land of another in a prospective, integrated use if: 1) the prospective use is the "most advantageous use" of the condemned land; 2) the "most advantageous use" of the land can be achieved only through combination with another parcel or parcels; 3) combination with another parcel or parcels is "reasonably probable; " and 4) the prospective, integrated use is not speculative or remote. Because we conclude the circuit court appropriately determined the fair market value of the condemned parcel of land in this case, we reverse the court of appeals and reinstate the judgment of the circuit court.

The issues for review are: 1) where the "most advantageous" use of a condemned parcel of land involves its prospective, integrated use with the land of another, may a court consider that prospective, integrated use in determining the fair market value of the condemned parcel; and 2) if so, did the circuit court correctly determine the fair market value of the condemned parcel in this case?

On April 22, 1983, the Authority condemned Clarmar's truck terminal, land and supporting buildings. When the Authority and Clarmar disagreed on the amount of compensation due, the Authority submitted to Clarmar a jurisdictional offer to purchase in the amount of $164,600. Clarmar provisionally accepted that amount, but appealed to the circuit court for additional compensation.

At trial the key issue was the fair market value of Clarmar's terminal on the date of its condemnation. On that date the terminal had 22 docking doors, 9 on the east and 13 on the north and west sides. The nine doors facing east were 58 feet from the line separating Clarmar's property from an adjacent parcel of land, which the Authority had condemned in 1981. All 22 doors were adapted to perpendicular docking by long and short trucks, but long trucks, which require more space to maneuver into a perpendicular position, could dock at the east doors only by first crossing onto the adjacent parcel to turn. According to testimony of Clarmar's president, the owner of the adjacent parcel had permitted trucks to use a 25 foot strip of his parcel as a turning area for a number of years.

Finding that the evidence supported Clarmar's claim that the value of its terminal was enhanced by the likelihood that a buyer would assemble its parcel with a strip of the adjacent parcel in order to obtain full use of the terminal, the circuit court awarded Clarmar $48,800. Its award represented the difference between the value of the terminal in full use ($228,800), less the cost of acquiring the other parcel ($15,400) and the Authority's jurisdictional offer ($164,600). It also awarded Clarmar interest, attorneys' fees and other litigation costs.

The Authority appealed. The court of appeals held that a court may, in an appropriate case, consider a prospective, integrated use of a condemned parcel with the land of another in determining the fair market value of the parcel, but concluded that this was not an appropriate case to do so. Clarmar appealed the decision and we granted its petition for review.

Issue 1: Where the "most advantageous" use of a condemned parcel of land involves its prospective, integrated use with the land of another, may a court consider that prospective, integrated use in determining the fair market value of the condemned parcel?

Clarmar urges this court to adopt an approach to valuation known as the "doctrine of assemblage." As Clarmar construes this approach to valuation, it permits valuation of a parcel of land at condemnation according to a use of the land which requires integration with other parcels when two conditions are met: the integrated use is the "most advantageous" use of the property and the integration of the parcel with another parcel is "reasonably probable." According to Clarmar, this approach does not permit valuation for a speculative use, which it defines as a use which a reasonable buyer would not consider when determining fair market value.

The Authority concedes that evidence of assemblage may enhance the value of a parcel of land when the evidence shows a "reasonable probability" that a buyer would combine a condemned parcel with another parcel in an integrated use and therefore would be willing to pay a greater price for it. The Authority also concedes that its present ownership of the parcel adjacent to Clarmar's terminal does not preclude the assemblage approach to valuation. It argues, however, that in this case the court applied the assemblage approach incorrectly by setting the value of Clarmar's parcel as though it included part of the adjacent parcel and as though that added land were used for a truck turning area, rather than by merely determining how the probability of future combination of the parcels enhanced the fair market value of the land Clarmar owned. According to the Authority, the circuit court's approach impermissibly inflated the value of Clarmar's terminal.

This court must decide questions of law independently without deference to the decisions of the trial court or the court of appeals. Ball v. District No. 4, Area Board, 117 Wis.2d 529, 537, 345 N.W.2d 389 (1984). Accordingly, we review the decision of the court of appeals in order to determine whether a court may consider the combination of a condemned parcel with another parcel for a prospective, integrated use in order to determine the fair market value of the condemned parcel.

Traditionally, the doctrine of assemblage has been defined as follows: "[w]here the highest and best use of separate parcels involves their integrated use with the lands of another, such prospective use may be properly considered in fixing the value of the property if the joinder of the parcels is reasonably practicable." 4 Sackman, Nichols on Eminent Domain 12.3142(1), pp. 12-329 (3d ed. 1978).

The assemblage approach permits a property owner to introduce evidence in a condemnation proceeding that the fair market value of its land is enhanced by its probable assemblage with other parcels. Generally, in jurisdictions which allow consideration of assemblage, the courts admit such evidence if combination with other parcels for a more profitable use is reasonably likely, whether or not the owner of the condemned property holds the other parcels. See United Gas Pipe Line Co. v. Becnel, 417 So.2d 1198 (La.App.1982); Cain v. City of Topeka, 4 Kan.App.2d 192, 603 P.2d 1031 (1979); State v. Long, 344 So.2d 754 (Ala.1977); and City of Indianapolis, Dept. of Met. Dev. v. Heeter, 171 Ind.App. 119, 355 N.E.2d 429 (1976). Specifically, these courts admit such evidence if a prospective, integrated use is the "highest and best use" of the land, can be achieved only through combination with other parcels of land, and combination of the parcels is "reasonably probable". United Gas Pipe Line Co. at 1202; Cain, 603 P.2d at 1033; Long at 759; and City of Indianapolis 355 N.E.2d at 434. Furthermore, these courts will not consider evidence of a prospective, integrated use which is speculative or remote. United Gas Pipe Line Co. at 1203; Cain 603 P.2d at 1033; and Long at 760. For example, in Long the Alabama court reviewed a probate court's award of damages and compensation for the condemnation of 96 acres of land for highway use. The court approved the admission of testimony that the condemned land, which had an unspecified current use, formed a prime industrial site in combination with other parcels. Id. It stated that the fact that the adjacent property was held by another did not of itself make combined use of the parcels speculative. Without expressly adopting the doctrine of assemblage, it concluded that a "reasonable possibility" of combination with another parcel for a more profitable use was a circumstance which could affect the market value of the condemned land. Id. at 759.

There is support for allowing a court to consider evidence of assemblage in condemnation proceedings in federal constitutional law and in prior standards set by this court.

Under the fifth and fourteenth amendments to the United States Constitution, a state may not appropriate private property for a public use through the power of eminent domain unless it pays the owner of the property a "full and exact equivalent" for the property. Olson v. United States, 292 U.S. 246, 254-55, 54 S.Ct. 704, 708, 78 L.Ed. 1236 (1934). In Olson the Supreme Court addressed the question whether the "full and exact equivalent," or fair market value, of a condemned parcel of land could be enhanced by the possibility of its more profitable use in...