Herman v. City of Wichita

• Decision Date: 14 June 1980
• Docket Number: No. 51182,51182
• Citation: 612 P.2d 588,228 Kan. 63
• Parties: Wendelin HERMAN, Tony Herman and Herman Oil Co., Inc., Appellees, Cross-Appellants, v. CITY OF WICHITA, Kansas, a Municipal Corporation, Appellant, Cross-Appellee.
• Court: Kansas Supreme Court

Page 588

612 P.2d 588

228 Kan. 63

Wendelin HERMAN, Tony Herman and Herman Oil Co., Inc. Appellees, Cross-Appellants, v. CITY OF WICHITA, Kansas, a Municipal Corporation, Appellant Cross-Appellee.

No. 51182.

Supreme Court of Kansas.

June 14, 1980.

Syllabus by the Court

1. In an inverse condemnation case, just compensation requires an allowance of interest from the date of taking by the governmental body until payment is made where there is a lapse of time from the time of taking until the time of payment.

2. In an inverse condemnation case, where interest prior to judgment is recoverable as an element of compensation, the legal rate of six percent (6%) per annum as established by K.S.A. 16-201 is to be allowed, there being no express contract providing for a different rate of interest.

3. The provisions of K.S.A. 16-204, allowing interest on judgments at the rate of eight percent (8%) per annum, should be applied in an inverse condemnation case.

4. Attorney fees and expenses of litigation, other than court costs, incurred by a prevailing party in the action, are not chargeable as costs against the defeated party in an inverse condemnation action. K.S.A. 26-509 is not applicable to such an action.

Phillip Mellor, of Mellor & Miller, P. A., Wichita, argued the cause, and Arden P. Miller, Kim A. Roberts, and Mark Mellor, Wichita, were with him on the briefs for appellant, cross-appellee.

John P. Woolf, of Martin, Pringle, Fair, Davis, and Oliver, Wichita, argued the cause, and Martin W. Bauer, Wichita, was with him on the brief for appellees, cross-appellants.

PRAGER, Justice:

This is an inverse condemnation case brought by certain landowners against the city of Wichita for a declaratory judgment and to recover just compensation for access rights taken by the city in converting a street to a limited access highway. The facts of the case are not in dispute and essentially are as follows: The plaintiffs, the Hermans, were owners of a tract of land along old Kellogg Street in Wichita. When Kellogg Street was changed to a controlled access facility, plaintiffs' property lost its direct access to the highway and instead was restricted in access to a frontage road, Kellogg Drive. Because there was no actual physical taking of plaintiffs' property, the city denied there had been any compensable taking. Plaintiffs then filed an action seeking a judgment declaring that a compensable taking had occurred, requiring the city either to purchase the property or institute formal condemnation proceedings, or in the alternative, to award plaintiffs just compensation for the taking. The district court found the loss of direct access to be a compensable taking. This court affirmed the trial court in Teachers Insurance & Annuity Ass'n of America v. City of Wichita, 221 Kan. 325, 559 P.2d 347 (1977). The city failed to initiate either negotiations to purchase or formal condemnation proceedings. The district court then proceeded to determine the issue of damages within the framework of the initial suit, on the theory of inverse condemnation.

The issue of damages to be awarded as just compensation was tried to the jury, and on March 22, 1979, the jury returned a verdict in favor of the landowners in the amount of $146,371.59 as just compensation for the taking of access rights. On May 16, 1979, the court filed its Journal Entry of Judgment, making the following findings of fact:

"(1) The parties agreed to use the date of July 16, 1975, as the date of taking to avoid the expense of reappraisal should another date of taking be selected after a contested hearing.

"(2) Absent the construction project, the property values in the area affected by the project were rising rapidly during the period in question.

"(3) Seven percent (7%) per annum was a commercially reasonable interest rate during the period of July 16, 1975, to the present.

"(4) Reasonable attorneys' fees for services rendered to the landowners in this case were $10,384.00 for the period prior to February 1, 1977, and $22,033.00 for the period thereafter, the later amount relating to the trial on the issue of just compensation."

Based on these findings, the trial court then made the following conclusions of law:

"(1) Plaintiffs are entitled to simple interest on the award at the commercially reasonable rate of seven percent (7%) per annum pursuant to the Fifth and Fourteenth Amendments to the U. S. Constitution and the Kansas Constitution.

"(2) Plaintiffs are entitled to said interest from July 16, 1975, to the date judgment is entered herein. To select a date other than July 16, 1975, for the purposes of awarding interest would deprive the plaintiffs of a proper determination of the value of the property on any subsequent date of taking.

"(3) Under Kansas law, landowners are not entitled to attorneys' fees unless they come within the terms of the Kansas Condemnation Act.

"(4) Defendants are estopped as a matter of law and equity from asserting the landowners were not within the "(5) As a matter of law, after February 1, 1977, the proceedings were in substantially the same position as if the condemnor had appealed and the landowner prevailed. Thereafter, plaintiffs are entitled to the reasonable attorneys' fees incurred after said date pursuant to K.S.A. § 26-509. . . .

terms of the Kansas Condemnation Act after February 1, 1977.

"(6) Plaintiffs are not entitled to any other attorneys' fees."

The court then ordered defendant to pay simple interest on the $146,371.59 awarded as damages at a rate of seven percent (7%) per annum from July 16, 1975, to the date of judgment, and the statutory eight percent (8%) interest thereafter, plus $22,033.00 for attorney fees. It is from this judgment for interest and attorney fees that the city appeals to this court. The city has not appealed from the jury's verdict fixing the amount of damages at $146,371.59. The landowners have cross-appealed, contending that the trial court erred in denying plaintiffs their attorney fees for services rendered in the case prior to February 1, 1977.

There are four basic issues presented for determination on the appeal. They are as follows:

(1) Is interest allowable prior to judgment on the damages awarded a landowner in an inverse condemnation case?

(2) If interest is allowable prior to judgment, what rate of interest should be awarded?

(3) What rate of interest should be awarded after judgment was obtained by the landowners?

(4) Under the circumstances of this case, are the landowners entitled to recover their attorney fees and, if so, for what services rendered on their behalf?

We will consider each of these issues in order.

INTEREST

The city's first point on appeal is that the trial court erred in allowing interest on the damages awarded prior to the entry of judgment. In support of its position, the city maintains that a claim for damages for just compensation in an inverse condemnation action is an unliquidated claim, and as such, the party asserting such a claim is not entitled to interest on the damages awarded until the date the judgment is rendered at which time the damages become liquidated. In support of its position, the city relies upon Foster v. City of Augusta, 174 Kan. 324, 256 P.2d 121 (1953). The landowners contend that the allowance of interest as damages from the date of taking is an integral part of just compensation to which the landowner is entitled in a condemnation case. We have concluded that the trial court properly held that the landowners were entitled to interest on the damages awarded from the agreed date of taking, July 16, 1975, until the date judgment was entered. The reliance of the city on Foster v. City of Augusta is misplaced, as Foster dealt with a common-law action for damages resulting from the building of a levee, not an inverse condemnation case. In the opinion, the court specifically stated that the city did not exercise any right of eminent domain and that the proceeding was not based on any condemnation by the city.

This court has long recognized the propriety of allowing interest before judgment on damages awarded in inverse condemnation cases. In Cohen v. St. L., Ft. S. & W. Rld. Co., 34 Kan. 158, Syl. P 5, 8 P. 138 (1885), it was held that where a railroad company has taken and appropriated a strip of land for a right-of-way, and afterward the owner sues the railroad company to recover compensation and damages as for the permanent taking and appropriation of the land, the owner may recover interest, or damages in the nature of interest, on the amount that should be allowed him from the time of the taking and appropriation of the land up to the time of the trial. The general rule is set out in Flemming v. Ellsworth County Comm'rs, 119 Kan. 598, 602, 240 P. 591, 593 (1925), that "where there is a substantial The rule followed in Kansas is the rule generally followed throughout the United States. See 27 Am.Jur.2d, Eminent Domain § 297, and the many cases cited therein. We have no hesitancy in following the Kansas cases and in holding that, in an inverse condemnation case, just compensation requires an allowance of interest from the date of taking by the governmental body until payment is made where there is a lapse of time from the time of taking until the time of payment. The district court properly allowed interest on the damages awarded prior to the entry of judgment in this case.

lapse of time between the actual taking of the property and the payment, interest on the damages for the taking of the property from the time of taking until the time of final payment, or, what amounts to the same thing, damages in the nature of interest for delay in payment of compensation, is properly allowed." Other Kansas cases supporting this rule are the following: Burke v,. Board of Education of Common School District No. 110, 181 Kan. 534, 537, 313 P.2d 272 (1957); Great Lakes Pipe Line Co. v. Carson, 168 Kan. 100, 106, 211 P.2d 70 ...