Mississippi State Highway Com'n v. Franklin County Timber Co., Inc., 55471

• Decision Date: 14 May 1986
• Docket Number: No. 55471,55471
• Citation: 488 So.2d 782
• Parties: MISSISSIPPI STATE HIGHWAY COMMISSION v. FRANKLIN COUNTY TIMBER COMPANY, INC., et al.
• Court: Mississippi Supreme Court

Page 782

488 So.2d 782

MISSISSIPPI STATE HIGHWAY COMMISSION v. FRANKLIN COUNTY TIMBER COMPANY, INC., et al.

No. 55471.

Supreme Court of Mississippi.

May 14, 1986.

Walter Brown, Natchez, for appellant.

H.B. Mayes McGehee, W. Hollis McGehee, II, McGehee, McGehee & Torrey, Meadville, for appellees.

Before PATTERSON, C.J. and DAN M. LEE and ROBERTSON, JJ.

ROBERTSON, Justice, for the court:

I.

This eminent domain appeal arises out of a Franklin County jury's acceptance of a sawmill operator's hotly disputed proof that a highway right-of-way taking would put him out of business. Following less than amicable trial proceedings, the jury assessed Owner's damages at $350,000.00, and that in turn has been followed by this less than amicable appeal. For the reasons explained below, we affirm.

II.

Franklin County Timber Company, Inc. (sometimes hereinafter "Owner") is a Mississippi corporation having its principal place of business in Franklin County, Mississippi. Owner is in the sawmill business and employs about twenty-two people. The principal managing officers of the company are Messrs. Eddie Carter and Les Johnson. The property, which is the subject of this proceeding, has since about 1944 been used exclusively for the operation of a sawmill. Its highest and best use is as a sawmill.

Owner's sawmill property is bounded on the south by U.S. Highway 84 and 98 and Wells Creek; on the northeast by property belonging to Georgia Pacific Corporation; on the north and northeast by Illinois Central Railroad; and on the east by the "Old M.S. Whitehead Subdivision"; all within the northwest quarter of Section 19, T6N, R1E, Franklin County, Mississippi. The property contains 21.65 acres in all, 4.2 acres of which is unusable due to the terrain or other impediments. Owner argued at trial, supported by most of its witnesses, that the plant has operated on all the remaining 17.37 acres.

The Mississippi State Highway Commission (hereinafter "Highway Commission") filed on January 26, 1983, an application for eminent domain against the property of Franklin County Timber Company in the Special Court of Eminent Domain of Franklin County, Mississippi. Miss.Code Ann. § 11-27-3 (1972). In its application the Highway Commission sought to acquire, in connection with State Project 98-0015-01-072-10, lands totaling 11.70 acres either for a permanent right-of-way or a ten year temporary easement.

Owner had purchased the property from R.B. "Dunk" Wallace on September 28, 1979, for $900,000.00. Of this total purchase price, $250,000.00 was for rolling stock, leaving $650,000.00 for the land and permanent improvements. Since the purchase, $100,000.00 of improvements and repairs have been made to the property; $25,000.00 of which could be allocated wholly to the improvements.

Pursuant to the provisions of Miss. Code Ann. § 11-27-83 (Supp.1985), the court appointed Hall Wilson to make an independent appraisal of the property. In his report filed with the court on February 7, 1983, and amended and refiled on May 20, 1983, the appraiser valued the property at $135,000.00 before and at $71,200.00 after for a difference in compensation due of $63,800.00.

In its case in chief the Highway Commission described the taking. Glenn Beasley, an employee of the Highway Commission, testified that the Highway Commission would acquire a permanent right-of-way on 6.57 acres of the property and a temporary easement which would last for ten years on 5.13 acres of the property. The temporary easement is for the purpose of constructing and rerouting Wells Creek. On the reversion only .86 acres will be readily accessible to Owner, as the other portion would be across the creek. Access to the isolated area would require the construction of a bridge that could cost $100,000.00. Buildings would also be taken that are on the temporary easement.

The Highway Commission's witnesses insisted that the sawmill could continue profitable operations after the taking. Joe Long, an MAI called as an expert witness for the Highway Commission, testified that the before value of the property was $290,700.00 and the after value would be $208,400.00 for a difference in compensation due of $82,300.00. Dan Bland gave a before value figure of $280,285.00 and an after value figure of $195,270.00 for a difference of $85,015.00. Jay Dilmore, another expert and staff appraiser employed by the Highway Commission, testified that the property's present value is $291,506.00 and its after value will be $199,991.00 for a damage value of $91,515 due Owner.

Owner's witnesses gave much higher damage opinions, reflecting their view that the taking would destroy the utility of the remainder for sawmill operations. Eddie Carter, one of the co-owners, placed a before value of $574,944.00 and an after value of $114,430.00 on the property. R.B. "Dunk" Wallace, the former owner and present holder of a deed of trust to secure the purchase price indebtedness, placed a before value of $501,250.00 and an after value of $99,000.00 on the property. He also testified that the property is suitably adapted for sawmilling purposes because of its location in the Homochitto National Forest from whence it gets its supply of timber.

Wallace described the sawmill as a modern, all electrically operated sawmill and one of two sawmills in the State of Mississippi cutting timbers this large. This mill is constructed out of steel and concrete, with two floor levels of 7100 square feet of concrete on each level or a total of 14,200 square feet of concrete. The upper floor and roof are supported by steel beams, which are embedded in the concrete and can't be moved. The electrical wiring and control panels were a major part of the costs of the building and can't be removed without damaging the building. The sawmill equipment and machinery are also affixed to the concrete and building itself and can't be removed without permanent damage to the building.

There is also located on the property a sorting shed or green lumber mill building, maintenance shop, equipment supply or storage building, office building which is a trailer with offices in each end with a steel shed constructed over the office, and an asphalt parking area for employee and customer parking. In front of the maintenance shop there are gasoline pumps, two 500 gallon and two 1000 gallon underground storage tanks.

Fleet Lofton, another sawmill operator who owns an identical sawmill as that on the subject property, placed a before value of $550,000.00 and an after value of $114,000.00 on the property. Lamar Hooker, a real estate appraiser, using comparable sales figures of other sawmill property, testified that the property was worth $503,000.00 before the take and worth only $108,000.00 after the take.

The jury viewed the subject property at the conclusion of all the testimony and returned a verdict of $350,000.00 as compensation due Owner. The trial judge adjusted the verdict so returned after adding interest at the legal rate minus $82,100.00 deposited by the Highway Commission with the court. The Highway Commission, feeling aggrieved, appeals to this Court.

III.

A.

Franklin County Timber Company is entitled to due compensation for the present taking. Due compensation has two components: the value of the property taken and the damage, if any, to the remainder.

Put another way, when a part of a larger tract is taken, the property owner is entitled to the difference between the fair market value of the whole tract immediately prior to taking and the fair market value of the remaining tract immediately after taking. Muse v. Mississippi State Highway Commission, 233 Miss. 694, 718, 103 So.2d 839, 849 (1958); Mississippi State Highway Commission v. Hillman, 189 Miss. 850, 866, 198 So. 565, 570-71 (1940).

Trustees of Wade Baptist Church, 469 So.2d 1241, at 1244. In accord, Emmerson v. Miss. State Highway Comm., 208 So.2d 441, 442 (Miss.1968). Cf. Miss. State Highway Commission v. Hillman, 189 Miss. 850, 198 So. 565, 571 (1940).

The just compensation in cases involving a partial taking is generally the value of the part taken plus all the damages which the residue of the property suffers, including a diminution in the value of the remainder... Anything less than the foregoing would encroach upon the constitutional guarantee of just compensation. Mississippi State Highway Commission v. Colonial Inn, Inc., 246 Miss. 422, 432, 149 So.2d 851, 856 (1963).

These legal definitions have long been regarded as wholly consistent with the familiar appraisal and economic concept of fair market value. Pearl River Valley Water Supply District v. Wood, 252 Miss. 580, 596, 172 So.2d 196, 203 (1965). Eminent domain proceedings are against the property itself; they are in the nature of in rem proceedings. Trustees of Wade Baptist Church, 469 So.2d at 1244; Evans v. Mississippi Power Co., 206 So.2d 321, 322 (Miss.1968). Compensation must be based upon the property itself and the damages to its fair market value.

B.

In this context, we note the Highway Commission's challenge to the use by Owner's witnesses of long term leases in the nearby town of Bude as "comparables". Of course, one of the three standard approaches to the determination of fair market value is the market data approach. Trustees of Wade Baptist Church v. Mississippi Highway Commission, 469 So.2d 1241, 1244 (Miss.1985). Transactions regarding properties similar to that being taken are thought highly relevant to the question of the fair market value of the property being taken. It is an accepted and established appraisal practice to rely on such transactions commonly called comparable sales. The point for the moment is that there is no need for a particular transaction to have been identical in every respect to the property in issue for it to have relevance. At the extreme, of course, a comparable might be totally discredited if it is shown to have been totally different from the property being taken. On the...