Housing Authority of City of Newark v. Norfolk Realty Co.

• Decision Date: 06 October 1976
• Citation: 71 N.J. 314,364 A.2d 1052
• Parties: HOUSING AUTHORITY OF the CITY OF NEWARK, a body corporate and politic, Plaintiff-Respondent, v. NORFOLK REALTY COMPANY and Davis White Co., Inc., Defendants-Appellants.
• Court: New Jersey Supreme Court

Page 314

71 N.J. 314

364 A.2d 1052

HOUSING AUTHORITY OF the CITY OF NEWARK, a body corporate and politic, Plaintiff-Respondent, v. NORFOLK REALTY COMPANY and Davis White Co., Inc. Defendants-Appellants.

Supreme Court of New Jersey.

Argued May 24, 1976.

Decided Oct. 6, 1976.

Joseph R. McMahon, Newark, for defendants-appellants (Lum, Biunno & Tompkins, Newark, attorneys; Joseph R. McMahon, of counsel; Walter J. Fessler, Convent, on the brief).

Ferdinand J. Biunno, Newark, for plaintiff-respondent (Friedman & D'Alessandro, East Orange, attorneys; Lauren B. Cohen, Passaic, on the brief).

The opinion of the court was delivered by

PASHMAN, J.

This is a condemnation case presenting three main issues. First, the Court is called upon to decide whether a condemnee can recover severance damages with respect to a parcel of land which is not physically contiguous to the property condemned but which is used as a unit. Second, the Court must determine if ownership by an identical entity of both the condemned portion and the remaining parcel is a prerequisite for recovery of severance damages. Finally, we are asked to clarify N.J.S.A. 20:3--13(b) by deciding whether it requires the condemnor or the condemnee to proceed first at a trial De novo.

Norfolk Realty Company (hereinafter 'Norfolk') is a partnership in which Franklin F. Davis, Myron Davis and Felix I. Delgato each hold an equal interest. Davis White, Incorporated (hereinafter 'Davis White') is a New Jersey corporation which processes meat. Its shares are also owned equally by the three Norfolk partners. Norfolk's main plant is located on the eastern side of the road at 218--222 Norfolk Street in Newark. Davis White owns a specific portion of the main plant realty; Norfolk owns the remainder and leases it to Davis White. Norfolk also owns the condemned parcel located at 219--221 Norfolk Street, being on the westerly side of the street and opposite the main plant.

Having been designated a blighted area in 1964, land on both sides of Norfolk Street in the nieghborhood of the Davis White plant was being considered by the City of Newark for its proposed Fairmont Urban Renewal Project. At that time, the Norfolk-Davis White interest did not own any property on the west side of the street, the business being conducted solely on the east side. When the proprietors of the business were considering expansion, representatives of Davis White met with representatives of the City of Newark and the Newark Housing Authority to determine whether it could safely use land on both sides of Norfolk Street in the planned expansion and modernization of its facility. After consideration of the Fairmont Project proposal was terminated, Davis White received assurances from the City that this area was no longer under consideration for condemnation. Consequently, Norfolk bought the parcel on the west side of Norfolk Street which is now the subject of this litigation. In 1968 Davis White completed at a cost of over a half million dollars an extensive modernization and expansion project which included installation of new processing equipment in the main plant and construction of a warehouse-garage at 219--221 Norfolk Street. The credit of both firms and the individual guarantees of the stockholders-partners were utilized to secure the necessary funds.

In 1972 the Newark Community Council, which had assumed responsibility for developing the area, decided to condemn the warehouse-garage in order to facilitate the proposed expansion of the Martland Medical Center. A condemnation proceeding therefor was instituted in March 1972 by the City of Newark. At the hearing before the condemnation commissioners to determine the fair value of the property, there was disagreement as to whether the condemnee should be awarded severance damage for injury to the property on the east side of the street. Upon application for instructions, the Law Division prohibited the condemnee from proving such damage. A motion for leave to appeal this ruling was denied by the Appellate Division. Thereafter, damages for the warehouse-garage property were assessed by the condemnation commissioners in the amount of $75,000.

Pursuant to N.J.S.A. 20:3--13 a trial De novo was held before the Law Division. The trial judge considered himself bound by the previous ruling regarding severance damage but allowed the condemnee to make an offer of proof with respect to that issue in order to perfect a record on appeal. The severance damages allegedly sustained were $142,073. The Appellate Division affirmed the judgment below. This Court granted certification. 68 N.J. 492, 348 A.2d 533 (1976). We reverse and remand.

Based on the evidence offered as to severance damage, the Appellate Division concluded that 'Condemnation of the separate garage parcel has not effectively damaged the principal use for which the tract was designed.' The Appellate Division also held that the Law Division had the discretionary power to require the condemnee to proceed first at the trial De novo. The unity of ownership issue was not reached.

The landowner, Norfolk, claims that the condemned warehouse-garage was a functionally integrated part of the Davis White meat processing business, and that they were used together in an integrated manner known in the meat packing industry as the U--flow process. The condemnee was allowed to make a proffer of proof in support of these contentions which the Appellate Division described as follows:

On the condemned property, 219--221 Norfolk Street, was a one story cinderblock warehouse garage. Across the street on the other four lots is a modern processing plant for the operation of a wholly-integrated meat packing business with extensive refrigerated storage vaults of varying temperatures and receiving, processing, packaging and warehousing facilities for shipping and distributing frozen portion control and vacuum packaged meat to the ultimate food service industry and consumer.

The proffer classified the buildings, including the warehouse garage in question, as highly specialized and single purpose structures known in the trade as unique. When the plant was renovated a U--shaped flow and operational procedure was established which moved meat and other products through the plant and warehouse quickly and orderly. The freezing equipment is capable of freezing 3500 pounds of portion-controlled meat cuts on 18 adjustable loading stations in approximately two and a half hours, using freezing plates on top and below the package to be frozen and thus eliminating meat discoloration and shrinkage. The vacuum packaged plastic pouches can be shelved and aged for longer periods without fear of shrinkage or trim loss.

The refrigerated trucks are loaded with products at the end of the day, are driven across the street to the warehouse garage and stored there overnight for early morning deliveries. The garage has special wiring and power supply in order to keep the trucks under refrigeration during the night. During the day the garage serves as a parking facility for plant employees. Fuel pumps to supply the truck fleet are located at the garage entrance and space is provided for daily garbage accumulation which must be kept apart from the processing plant by reason of federal regulation. A number of items were marked as offers of proof to support the contentions of defendants, including experts' appraisals and reports and various photographs and charts. Admittedly, defendants could obtain another site for the garage within the same block in which the meat processing plant is located.

Defendants contend the garage forms an integral part of the overall facility which cannot be separated from it without causing detrimental effects on the operation. Plaintiff alleges the two properties do not constitute a common tract by reason of their physical non-contiguity and their separate uses.

Severance damage in condemnation cases can occur only when there is a partial taking of another parcel of property. The traditional measure of damages for such a taking may be stated as either (1) the value of the property actually taken together with the diminution in value of the part that remains (severance damage) or (2) the difference between the value of the entire property before the taking and the value of the remainder after the taking. Washington Market Enterprises v. Trenton, 68 N.J. 107, 117, 343 A.2d 408 (1975); Ridgewood v. Sreel Investment Corp., 28 N.J. 121, 125, 145 A.2d 306 (1958); State v. Cooper Alloy Corp., 136 N.J.Super. 560, 567--568, 347 A.2d 365 (App.Div.1975); State v. Interpace Corp., 130 N.J.Super. 322, 329, 327 A.2d 225 (App.Div.1974).

The mere fact that the condemned parcel is physically separated from the remaining parcel does not foreclose a condemnee from recovering severance damages. See New Jersey Turnpike Authority v. O'Neil et al., 133 N.J.Super. 445, 337 A.2d 381 (App.Div.1975); Cf. Napier Hat Mfg. Co. v. Essex Co. Park Comm., 110 N.J.L. 213, 164 A. 484 (E. & A.1933). Although this Court has not previously addressed itself to this problem, we find that the majority of American jurisdictions have permitted severance damages even though the property taken is physically separate from another parcel allegedly damaged as a result, providing there . . . (is) such a connection or relationship of adaptation, convenience, and actual and permanent use as to make the enjoyment of the parcel taken reasonably and substantially necessary to the enjoyment of the parcels left, in the most advantageous and profitable manner in the business for which they are used.

29A C.J.S. Eminent Domain § 140 at 591 n. 19 (citing jurisdictions which have adopted or considered the foregoing standard). See also 4A Nichols, Eminent Domain, § 14.31(1) at 399 (Rev.3d ed. 1974).

In order to obtain severance damages, the landowner must show that the remaining parcel and the parcel which has been taken were constituent parts of a single...