Crocker v. Mississippi State Highway Com'n, 58027

• Citation: 534 So.2d 549
• Decision Date: 23 November 1988
• Docket Number: No. 58027,58027
• Parties: Kenneth D. CROCKER v. MISSISSIPPI STATE HIGHWAY COMMISSION.
• Court: United States State Supreme Court of Mississippi

Page 549

534 So.2d 549

Kenneth D. CROCKER v. MISSISSIPPI STATE HIGHWAY COMMISSION.

No. 58027.

Supreme Court of Mississippi.

Nov. 23, 1988.

J.M. Ritchey, Cain, Cain & Ritchey, Canton, for appellant.

Richard B. Schwartz, Schwartz & Associates, Jackson, for appellee.

Before DAN M. LEE, P.J., and ROBERTSON and GRIFFIN, JJ.

ROBERTSON, Justice, for the Court:

I.

Today's appeal is from a jury's compensation award made to a commercial property owner a part of whose frontage has been taken in a highway widening project. We are presented issues regarding the property owner's alleged moving expenses, his expert's proffer of a valuation opinion based on capitalization of rent loss, and the weight of the evidence of compensation due. Having carefully considered the matter, we affirm.

II.

A.

Kenneth D. Crocker (Crocker) is a gunsmith by trade. His business is at 1011 E. Peace Street, Canton, Mississippi, on State Highway 16. Crocker uses the building there located to practice his trade and conduct a sporting goods business. The Mississippi State Highway Commission (MSHC) has sought to widen State Highway 16 from two lanes to three. MSHC calls its project No. 79-0024-02-007-10. Crocker calls it a taking without just compensation.

The strip of land taken is a parallelogram, 53.8 feet along Highway 16, with a depth of 10.7 feet. It is .013 acres, or 575.66 square feet. Prior to the taking Crocker's lot was regular in shape, approximately .19 acres total. Post-taking, the lot will have approximately .177 acres, or 7738 square feet, remaining.

On the lot is a two story masonry block building. The downstairs is the gun shop, upstairs a presently (at time of trial) vacant three bedroom, one bath apartment. The downstairs is twenty-four feet wide and thirty-six feet deep, approximately 864 square feet. Along the east side of the building runs a fourteen by fifty foot covered carport. Also, there is parking in front, but it is limited to a few vehicles, and they must be "crammed in". After the taking, the southwest corner of a metal awning in front of Crocker's building will extend between four and five inches into the highway right of way. Also, the southwest corner of the building will be fourteen feet from the highway, the southeast corner 18 feet.

Highway department engineer, William S. Cobb (Cobb), explained the need for widening Highway 16. Importantly, Cobb testified the construction plat was amended to move a concrete island to the east to allow better access to the side of Crocker's building to park in the back. Cobb observed that the access to the back "will be adequate, it'll be tight, but he can get through there, yes".

Next, Kathy Bass Russell (Russell), real estate appraiser for the Mississippi State Highway Department, testified, after being qualified as an expert. Russell testified the building was in fair condition, that parking would be reduced to zero in front, but parking in back was accessible. Russell offered her opinion that the value of the property taken was $1200.00 and that damages to the remainder was $24,800.00. Put otherwise, Russell testified that the building had a before value of $43,200.00 (land $18,400.00 and building $24,800.00) and an after value of $17,200.00 (land $17,200.00 and building 0.00) for a due compensation of $26,000.00.

Crocker offered Robert D. Morrow as an expert in real estate valuations. Morrow gave his opinion that before the taking Crocker's property had a fair market value of $57,000.00. After the taking that value had been reduced to $7,400.00. Morrow employed the three recognized approaches to fair market value. Under the market data approach, Morrow determined comparable property had a gross rent multiplier of 6.8 (fair market value of comparable property divided by its annual rental value) and that Crocker's shop and apartment could rent for $700/month, or $8400/year ($8400 X 6.8 = $57,120).

Under the replacement cost method, Morrow testified a contractor would rebuild for $72,000.00, and Marshal and Swift showed $73,200.00. The current building has an effective life of twenty years, and remaining useful life of thirty years, so forty per cent depreciation was taken. Thus, the building's before value under this method is $43,800.00 (note: this too is off--40% on $73,200 is $43,920; on $72,000.00 is $43,200). The land's before value is $13,200.00, for a total before value, again, of $57,000.00.

The third method Morrow used was the income approach, a reconstructed income statement. Here, all revenues and expenses were imputed, and the net capitalized. Morrow assumed gross income of $8,148.00/yr ($700/month rent minus vacancy loss) and expenses of $1,954.00/yr (fire insurance, taxes, repairs), for a net of $6,194.00/yr. Morrow then applied to that figure a capitalization "technique", for which there is no testimony, that shows before value of $56,500.00.

Reconciling the three approaches, Morrow's assessment of due compensation was $49,600.00 ($57,000.00 - $7,400.00 = $49,600.00).

Next, Morrow attempted to testify to what he claimed to be another method: capitalized rent loss. The County Court sustained MSHC's objection to this testimony. The court listened to a proffer on capitalized rent loss, which Morrow described as annual rent loss ($450/month: the value of the gun shop alone, not the apartment) "capitalized at 11% and we came up with the $49,000.00 that we mentioned".

Crocker testified on his behalf. He noted that five parking spots were being taken in front. He testified that the 7.9 feet on the west side of his property was not wide enough to drive through ("at least, I do not want my wife to try it."). The Court allowed Crocker's opinion as to the before ($65,000) and after ($47,000) value of the property: $65,000.00, determined by assuming a $500/month rent elsewhere, and Crocker said he would need about $66,000.00 in the bank now to earn $500/month, assuming a 9% interest rate. The $7,000.00 was determined by placing zero value to the building, paying inventory moving costs ($2,500.00), demolition ($5,500.00) and the cost of a new building ($50,000.00). MSHC objected to Crocker's proof of moving expenses, and the court ordered that testimony disregarded. However, the court allowed testimony as to building replacement to the extent it established a fair market value of the property.

B.

All of this occurred in the course of eminent domain proceedings commenced on June 5, 1986, when the Mississippi State Highway Commission filed its complaint in the County Court of Madison County, Mississippi. MSHC filed its statement of values on August 12, 1986, and an order granting it immediate possession was entered August 18, 1986. Trial was held October 13-14, 1986, during the course of which the jury personally viewed and inspected the property. In the end the jury found that Crocker would be damaged by the taking "in the sum of $26,000.00." Crocker timely moved for a new trial setting forth an assortment of grounds. By order entered October 23, 1986, the motion was denied. Crocker now appeals to this Court.

III.

Crocker complains that the Circuit Court erroneously excluded his evidence of what it would cost him to move his business as a consequence of the taking. Crocker testified that in his opinion moving expenses of $2,500.00 would be incurred in moving inventory from his old building on the same lot. He correctly notes that our cases have held moving expenses admissible, not as a separate element of damage, but incident to the determination of the "before and after" value of the land. See Mississippi State Highway Commission v. McArn, 246 So.2d 512, 514 (Miss.1971); Mississippi State Highway Commission v. Rogers, 242 Miss. 439, 136 So.2d 216, 217-18 (1961).

The issue is one of parking. Crocker says--and MSHC concedes--his front parking will be taken. But we are only talking about two to five spaces, depending on whose testimony is believed.

Here the matter is of no consequence for a preliminary factual question is whether it was necessary for Crocker to move his business at all. MSHC's witness Cobb testified that access to the building on the side and in the back would be adequate after the taking even though the front parking would be eliminated. Russell said Crocker would have to "redo the back to have adequate parking but that this could be done. ¹ The jury was thus presented the proposition that it would not be necessary for Crocker to move his gun business to a new location. The verdict of the jury may only be interpreted as a resolution of that factual issue in favor of MSHC and against Crocker. The fact that the jury viewed and inspected the property renders that finding impregnable. There is no reversible error in the Circuit Court's refusal to allow Crocker's proffered testimony on moving expenses.

IV.

Crocker next assigns as error the County Court's exclusion of Morrow's expert opinion testimony that the value of the taking could be based upon capitalization of rent loss. In a proffer, Morrow testified that Crocker's fair market rental value for the entire building would be $700/month, or $8400/yr, but after the take the apartment could still be rented for $250/month. Therefore, Crocker would experience a $450/month loss ($5400/yr) for the remainder of the building. This loss, according to Morrow, should be capitalized at 11% for a total rent loss of $49,000.00. The Court sustained MSHC's objection to this testimony.

A few basics need be reviewed.

Eminent domain proceedings are in a practical sense against property; Mississippi State Highway Commission v. Franklin County Timber Co., Inc., 488 So.2d 782 (Miss.1986); they are in the nature of in rem proceedings. ² Trustees of Wade Baptist Church v. Mississippi State Highway Commission, 469 So.2d 1241, 1244 (Miss.1985); Lennep v. Mississippi State Highway Commission, 347 So.2d 341, 346 (Miss.1977); Evans v. Mississippi Power Co., 206 So.2d 321, 322 (Miss.1968). Compensation must be...