Com., Dept. of Highways v. Cardinal Hill Nursery, Inc.

• Decision Date: 20 March 1964
• Citation: 380 S.W.2d 249
• Court: United States State Supreme Court — District of Kentucky
• Parties: COMMONWEALTH of Kentucky, DEPARTMENT OF HIGHWAYS, Appellant, v. CARDINAL HILL NURSERY, INC., et al., Appellees.

Page 249

380 S.W.2d 249

COMMONWEALTH of Kentucky, DEPARTMENT OF HIGHWAYS, Appellant, v. CARDINAL HILL NURSERY, INC., et al., Appellees.

Court of Appeals of Kentucky.

March 20, 1964.

As Modified on Rehearing June 26, 1964.

John B. Breckinridge, Atty. Gen., Wm. A. Lamkin, Jr., Asst. Atty. Gen., Frankfort, C. Dant Kearns, Lyndon, for appellant.

R. Vincent Goodlett, Rudy Yessin, Frankfort, for appellees.

DAVIS, Commissioner.

The Department of Highways appeals from a judgment entered by the Franklin Circuit Court, based upon a jury verdict awarding appellee $40,048.00 in a Chapter 177 (KRS 177.081-177.089) highway condemnation proceeding. An earlier procedural dispute in the same case was resolved in Commonwealth of Kentucky. Department of Highways v. Cardinal Hill Nursery, Incorporated, Ky., 343 S.W.2d 842.

After our decision just cited, the case was tried to a jury in the Franklin Circuit Court. That trial resulted in a verdict of $20,000.00 for the landowners. However, upon motion of the landowners, the trial court set aside the verdict and granted a new trial. It was upon the second jury trial that the verdict of $40,048.00 was awarded. From judgment entered upon the second verdict the Department appeals urging (1) that the first verdict be restored, or (2) alternatively, that the second verdict and consequent judgment be reversed for a third trial. The numerous contentions of the parties will be discussed in the course of the opinion.

The Department is acquiring a strip of land containing 33.81 acres from a tract originally consisting of 209.13 acres. The acquisition is incident to construction of a nonaccess interstate highway, designated as I-64. The tract from which the right of way is taken lies in Franklin County on the east side of the Kentucky River, approximately 2 1/2 air miles southeast of Frankfort; it is contiguous to and served by Glenns Creek Pike, the L. & N. Railroad, and the river. The right of way tract of 33.81 acres is carved from the original tract in such manner as to leave two severed tracts, one tract of 111.42 acres remaining on the north side of the condemned area and another tract of 63.82 acres remaining on the south side of the condemned area.

The date of the taking by the Department was December 18, 1959. By a written contract dated April 2, 1958, the then fee simple owner of the entire tract, Cardinal Hill Nursery, Inc., entered upon a lease agreement with Derby Construction Company. ¹ By the terms of the lease Derby was granted all of Cardinal's interest in and to the limestone in and under the surface of the entire tract. The lease accorded Derby complete mineral rights to the limestone, including rights to enter upon the premises to search for, explore, mine, quarry and remove limestone from the premises. Derby was granted the privilege to sink shafts and to deposit the waste minerals from such shafts on the land surface.

The lease provided an original term of five years; rental was based upon a royalty of 4cents per ton for limestone quarried, mined and removed from the premises during the initial five-year term. Derby was extended the option to renew the lease in successive five-year terms, so that the ultimate term of the lease could be extended to fifty years. The per ton royalty rate was set at 5cents per ton for any extensions of the lease beyond the original five-year term. Certain minimum guaranteed rentals were prescribed, and a per acre payment for surface areas appropriated by Derby in quarrying was included in the contract. Cardinal expressly reserved to itself all rights to minerals or other substances except limestone.

Derby was permitted to construct a service road on the premises from the site of the proposed quarry to a public road known as Hanley Lane. Permission was also given for the construction of service roads from the quarry site to the Glenns Creek Pike and to the Kentucky River. The lease contract specifically recognized that a doubt existed whether Cardinal's property extended to Hanley Lane, and it was agreed that Cardinal would acquire and make available to Derby a reasonable right of way from Cardinal's property to connect with Hanley Lane.

The lease contained a provision referred to by the parties as a 'condemnation clause.' By its terms, Cardinal and Derby recognized that an interstate limited access highway might be located on or across a portion of the leased property. Derby expressly relinquished to Cardinal any right to participate in any compensation or damages which might stem from the contemplated highway construction, with one exception. Derby retained the right to recover damages to Derby's contemplated service road to reach Hanley Lane.

On February 2, 1960, Cardinal and Derby amended the 'condemnation clause' of the lease. The substance of the amendment was that Derby did not waive its rights in condemnation proceeds for (1) damages for the taking or closing of Derby's service road to Hanley Lane, (2) damage to any of its improvements placed on the leased premises, and (3) any damage or loss which Derby might sustain by reason of its inability to quarry and remove stone from right of way taken, or its inability to have reasonable access to stone in land not taken but made inaccessible by reason of the taking. A part of the consideration for this amended agreement was Derby's release of any claim it may have had against Cardinal for Cardinal's failure to obtain, or delay in obtaining, the required right of way for access to Hanley Lane.

On January 1, 1961, before the date of the first jury trial, Cardinal and Derby (acting through The Franklin County stone Company, a division of Derby) entered into a contract of sale of the entire tract to Derby. A deed from Cardinal to Derby's subsidiary was executed and delivered, bearing date January 1, 1961. In this transaction Derby bought from Cardinal the fee simple title to the entire tract, together with all rights in the ultimate recovery to be had in the condemnation proceedings in the case at bar. The purchase price agreed upon was $90,000.00.

Before the first trial the Department was permitted to amend its complaint to incorporate the provision that the landowners shall have the right to quarry by tunneling under the surface of the 33.81 acres of right of way at an elevation not to exceed 480 feet above sea level, to be performed so as to provide adequate subjacent support to the right of way.

At the first jury trial the lease, amended lease, sales contract and deecd were admitted in evidence. ² The Department introduced appraisal witnesses who gave testimony indicating the entire tract had a before-value ranging between $83,456.00 and $90,000.00; these witnesses placed an after-value between $70,732.00 and $76,475.00. Their estimates of difference in the before and after values ranged from $12,624.00 to $13,525.00.

The landowners adduced appraisal witnesses who placed before-values ranging from $234,700.00 to $260,000.00 and after-value at $90,000.00.

The first trial was in November, 1961, and before our decision in Commonwealth, Department of Highways v. Sherrod, Ky., 367 S.W.2d 844. The jury's verdict on the first trial awarded $6,000.00 for the 33.81 acres taken and $14,000.00 as damages resulting to the remaining lands, for an aggregate verdict of $20,000.00. The landowners based the motion for new trial on the premise that the verdict was inadequate and not supported by the evidence. The trial court was of the same view. We agree that the verdict was improper, but not that it was inadequate.

It is true that the verdict of $20,000 was within the range of the outside limits of before and after market values. However, no witness on either side placed a value as low as $6,000.00 on the 33.81 acres taken. The case is governed by Pierson v. Commonwealth, Ky., 350 S.W.2d 487, since the amount of the item allowed for land taken is demonstrably erroneous. Here, as there, this unfounded item can receive no succor from the fact that the overall verdict falls within the scope of testimony. Since we conclude that the trial court correctly granted Derby's motion for new trial after the first verdict on the ground just stated, we do not reach the other alleged errors urged by Derby as additional bases to support the granting of the new trial. What we have said is not an adjudication that $20,000 is inadequate; merely that it was not properly reached on the...