People ex rel. Dept. Pub. Wks. v. Simon Newman Co.

• Decision Date: 20 February 1974
• Citation: 112 Cal.Rptr. 298,37 Cal.App.3d 398
• Court: California Court of Appeals Court of Appeals
• Parties: The PEOPLE ex rel. DEPARTMENT OF PUBLIC WORKS and Department of Water Resources, Plaintiff and Appellant, v. SIMON NEWMAN COMPANY, Defendant and Appellant. Civ. 1644.

Page 298

112 Cal.Rptr. 298

37 Cal.App.3d 398

The PEOPLE ex rel. DEPARTMENT OF PUBLIC WORKS and Department of Water Resources, Plaintiff and Appellant, v. SIMON NEWMAN COMPANY, Defendant and Appellant.

Civ. 1644.

Court of Appeal, Fifth District, California.

Feb. 20, 1974.

As Modified Feb. 21, 1974.

Harry S. Fenton, Sacramento, John P. Horgan, William C. DeMartini, Harry C. Miller and William R. Edgar, San Francisco, for plaintiff and appellant.

C. Ray Robinson, William T. Ivey, Jr., Ronald H. Marks and William F. Cook, Merced, for defendant and appellant.

GEO. A. BROWN, Presiding Justice.

The condemnor and the condemnee have each appealed from a judgment in condemnation after a trial before the court without a jury.

The action was commenced by the State of California on behalf of the Department of Water Resources to acquire a right of way for the California Aqueduct and on behalf of the Department of Public Works to acquire a right of way for the construction of the Interstate 5 freeway. The segments of those projects involved in this action were sought to be acquired from large ranch holdings of the Simon Newman Company, a corporation (hereinafter Newman corporation) located in westerly Stanislaus and Merced Counties. Attached as Appendix 1 is a modified portion of an exhibit from the proceedings which will assist in a ready understanding of the location and layout of the improvements as they relate to the parcels of property being taken and affected insofar as they pertain to the issues raised on these appeals.

The relevant chronology is this: ¹

It was stipulated that the date of trial (January 4, 1968) would be the valuation date. (Code Civ.Proc., § 1249.) ²

With reference to the freeway, and aside from the value of the 'take' which is not here in controversy, the court found severance damages (Code Civ.Proc., § 1248, subd. 2) in the sum of $69,342 and special benefits (Code Civ.Proc., § 1248, subd. 3) in the sum of $136,450 and offset the special benefits against the severance damages. The special benefits were assessed because of the creation of freeway service station sites on the four quadrants created by the interchange at the freeway and Sullivan Road (hereinafter the interchange properties). (See Appendix 1.)

Regarding the aqueduct, severance damages in the sum of $28,371 were awarded. There were no benefits assessed.

On August 31, 1955 (recorded September 27, 1955) Newman corporation entered into an agreement (hereinafter 'excess lands contract') with the United States Department of the Interior, Bureau of Reclamation, pertaining to the disposition of certain 'excess' lands owned by the Newman corporation. The excess land contract permitted the Newman corporation to receive irrigation water from the federally financed Delta-Mendota canal (see Appendix 1) for a period of 10 years for lands it owned in excess of 160 acres in return for the corporation's agreement to dispose of such excess lands within 10 years after entering into the contract. (Act of June 17, 1902, ch. 1093 (32 Stat. 388).) Included in the described excess lands were the parcels which have been darkened on Appendix 1 which, as will be noted, encompass the interchange properties, the special benefits to which were valued in these proceedings at $136,450.

Pursuant to the same contract, Newman corporation did in fact sell all of the excess land described in the contract--except the land condemned for the freeway and aqueduct--on August 25, 1965, including the interchange properties, to Simon Newman Company, Ltd., a limited partnership (hereinafter Newman partnership). ³

Under the contract, the price at which the excess land could be sold was to be at its fair market value without regard to any increase in value thereof attributed to the existing or prospective availability of water service from the Delta-Mendota canal. ⁴

In the case at bench, the sales price of the excess land was fixed by a single federal appraiser and the values arrived at were introduced in evidence. In addition to the appraiser's report, the values were listed on a single sheet summary as being 'AGREED VALUES OF LAND AND IMPROVEMENTS. . . .' The price fixed for the interchange properties was $21,680. The three appraiser procedure authorized by paragraph 3 (see fn. 4) was not invoked by the Newman corporation and not reappraisal pursuant to paragraph 7 was requested (see fn. 4). It is clear, however, from the appraisal report that in fixing the value the appraiser purported to take into consideration the potential commercial use of the interchange properties by reason of the construction of the freeway.

Newman corporation's sole contention in this appeal is that since, pursuant to the excess lands contract entered into before the commencement of the action, it had agreed to dispose of the properties found to be benefited, and since it did in fact dispose of those lands prior to the trial and valuation date, the court erred in offsetting special benefits found to exist as of the trial date against severance damages. In other words, since it did not own the interchange properties on the date of valuation, it was error to assess the benefits attributable to those properties against the award of severance damages.

Because the date of valuation is the trial date (Code Civ.Proc., § 1249, see fn. 2), we must determine if the existence and extent of the larger parcel to be benefited under Code of Civil Procedure section 1248, subdivision 3, is to be determined as of the date of the trial or as of an earlier date.

In substance, Code of Civil Procedure section 1249 provides that '(f)or the purpose of assessing compensation and damages the right thereto shall be deemed to have accrued at the date of the issuance of summons . . .,' except that when the cause is not brought to trial within one year 'the compensation and damages shall be deemed to have accrued at the date of the trial.' This section is a procedural section (City of Los Angeles v. Tower (1949) 90 Cal.App.2d 869, 872, 874, 204 P.2d 395) enacted to give condemning authorities an incentive to proceed to trial without undue delay. (People v. Murata (1960) 55 Cal.2d 1, 6, 9 Cal.Rptr. 601, 357 P.2d 833.) By the precise terms of the statute, it applies only '(f)or the purpose of assessing compensation and damages. . . .' Accordingly, this section has been held to be concerned only with the time of determining the Amount of compensation once the Right to compensation (and thus the liability for special benefits) has been established. (City of Stockton v. Bascou (1970) 12 Cal.App.3d 983, 987, 91 Cal.Rptr. 223; see also State of California ex rel. Dept. Water Resources v. Clark (1973) 33 Cal.App.3d 463, 467, 109 Cal.Rptr. 39; Redevelopment Agency v. Diamond Properties (1969) 271 Cal.App.2d 315, 320, 76 Cal.Rptr. 269.) These and other cases make clear that Code of Civil Procedure section 1249 is concerned with the value of the property condemned once the right to compensation has been established. The determination of ownership, larger parcel, severance damages and special benefits is established as of the time the summons is issued and mandatory lis pendens filed. (Code Civ.Proc., §§ 1243, 1244; People v. Klopstock (1944) 24 Cal.2d 897, 902, 151 P.2d 641; People ex rel. Dept. Pub. Works v. Bond (1964) 231 Cal.App.2d 435, 439, 41 Cal.Rptr. 900; People ex rel. Dept. of Public Works v. City of Fresno (1962) 210 Cal.App.2d 500, 508, 26 Cal.Rptr. 853; City of Los Angeles v. Blondeau (1932) 127 Cal.App. 139, 15 P.2d 554; cf. Klopping v. City of Whittier (1972) 8 Cal.3d 39, 104 Cal.Rptr. 1, 500 P.2d 1345). The rule obtains regardless of whether the property is subsequently transferred to another (City of Los Angeles v. Ricards (1973) 10 Cal.3d 385, 389, 110 Cal.Rptr. 489, 515 P.2d 585, and cases therein cited) subject, of course, to rights established by agreements between the transferor and transferee.

Thus the condemnor, upon causing the issuance of the summons describing the parcels to be taken and the parties and interests therein and the filing of the lis pendens, need not be concerned from that date forward during the pendency of the action with transfers and transactions affecting the parcels. Such transfers and transactions are with notice of and subject to the outcome of the action and with knowledge of the influence that the pendency of the action may have upon the value of said parcels, if any.

Consonant with this scheme of procedure is Code of Civil Procedure section 1246.1, providing for a bifurcated trial. ⁵ As set forth therein, the condemnor is entitled to have the amount of the award for said property first determined as between the condemnor and the condemnees for all of the interests in each parcel in one lump sum; thereafter, in the same proceeding, the respective rights of the condemnees in the award are determined and apportioned accordingly, the condemnor not normally being involved in the second phase.

It is in this second phase of the bifurcated proceedings to determine the interests in a condemnation award between the condemnees, their lessees and successors in interest, Inter se, where the courts have stated the property is 'taken' as of the date the condemnor takes possession pursuant to article I, section 14 of the California Constitution and Code of Civil Procedure section 1243.5. (See Brick v. Cazaux (1937) 9 Cal.2d 549, 71 P.2d 588; Security Co. v. Rice (1932) 215 Cal. 263, 266, 9 P.2d 817; People ex rel. Dept. of Water Resources v. Gianni (1972) 29 Cal.App.3d 151, 155, 105 Cal.Rptr. 248; City of Industry v. Willey (1970) 11 Cal.App.3d 658, 89 Cal.Rptr. 922; People ex rel. Dept. of Public Works v. Hartley (1963) 214 Cal.App.2d 378, 380--381, 29 Cal.Rptr. 502; People v. Joerger (1936) 12 Cal.App.2d 665, 668--671, 55 P.2d 1269; Towne v. City of Los Angeles (1935) 4 Cal.App.2d 418, 420, 41 P.2d 363.) Like pronouncements are found in cases determining the responsibility...