Potters II v. State Highway Com'n of Mississippi, No. 90-CC-1096

• Court: Mississippi Supreme Court
• Writing for the Court: ROBERTSON; ROY NOBLE LEE
• Citation: 608 So.2d 1227
• Parties: POTTERS II, a Mississippi General Partnership, Owner; Westinghouse Credit Corporation, Beneficiary; Robert R. O'Conner, Trustee; and U.S. West Financial Services, Inc., Possible Assignee Beneficiary v. STATE HIGHWAY COMMISSION OF MISSISSIPPI.
• Decision Date: 26 August 1992
• Docket Number: No. 90-CC-1096

Page 1227

608 So.2d 1227 POTTERS II, a Mississippi General Partnership, Owner;
Westinghouse Credit Corporation, Beneficiary; Robert R.
O'Conner, Trustee; and U.S. West Financial Services, Inc.,
Possible Assignee Beneficiary
v.
STATE HIGHWAY COMMISSION OF MISSISSIPPI. No. 90-CC-1096. Supreme Court of Mississippi. Aug. 26, 1992.

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Newt P. Harrison, James L. Halford, Brunini Grantham Grower & Hewes, Jackson, for appellant.

Michael C. Moore, Atty. Gen., Henry C. Clay, III, Sp. Asst. Atty. Gen., John H. Price, Jr., Barry S. Zirulnik, Thomas Price Alston Jones & Davis, Jackson, for appellee.

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

ROBERTSON, Justice, for the Court:

I.

This eminent domain case presents discrete questions concerning the legal contours of what is being taken, and its value, and damage to the remainder. Landowner operates a nationally franchised fast food restaurant. It presses to add the going-concern value of its particular business to the "before" value of the taking. It claims as well, under guise of damage to the "remainder," for personal property trade fixtures and equipment it has removed from the premises.

The Court below rejected the plea but was quite generous in allowing Landowner's appraiser to give value based thereon. The jury gave a not insignificant award of $503,000.00. The Hinds County Special Court of Eminent Domain rejected Landowner's plea for an additur. We affirm.

II.

Potters II is a Mississippi general partnership with two general partners--William L. (Bill) Hall of Brandon, Mississippi, and Frank McComas of Columbia, South Carolina. Hall and McComas formed the partnership around 1981 and have become a local franchisee of Burger King Corporation, operating seven Burger King fast food restaurants in the Greater Jackson area--Brandon, Richland, Pearl and, most recently, Clinton. Hall is the managing partner.

In 1987, Potters II began plans to open a Burger King in Clinton. Hall found what he considered an ideal location, an unimproved 1.104 acre parcel of land just off a major interchange on Interstate Highway 20, some 700 feet north of the Springridge Road Exit. The property had a frontage of 169 feet on the east side of Springridge Road and was originally some 300 feet deep. ¹ After obtaining approval from the Burger King Corporation, Potters II bought the land for $165,000.00 and spent $434,448.00 more to complete the building. Potters II's Clinton, Mississippi, Burger King opened for business in February of 1988.

Potters II was protected from the eventuality which has come to pass. Its Burger King Restaurant Franchise Agreement includes:

If the loss of possession is the result of governmental exercise of eminent domain, franchisee may with BKC's consent and subject to availability relocate to other premises in the same market

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area for the balance of the term of this agreement.

It is undisputed that Burger King's real estate division assists franchisees in obtaining new locations under such circumstances. The importance of all this will presently appear.

Not too long after the new Burger King sold its first Whoppers, the Mississippi State Highway Commission (MSHC) decided it needed a substantial portion of the frontage of subject property. On December 28, 1989, MSHC formally commenced the present proceedings by filing its complaint in the County Court of Hinds County, taking for public use .353 acres (15,387.9 sq. ft.) on the west side of subject property, "including in their entirety the improvements located partially on the lands ... [being taken] and partially on ... [Potters II's] remaining land." MSHC made the taking for highway right-of-way purposes in order to improve and upgrade Interstate Highway No. 20, including the construction of four new ramps connecting I-20 to Springridge Road, and the reconstruction and widening of Springridge Road. Also named as a party defendant was U.S. West Financial Services, Inc., assignee-mortgagee under a recorded deed of trust. ²

After several pre-trial hearings relating to discovery motions and motions in limine, trial commenced July 12, 1990. MSHC presented its staff appraiser, Michael Pritchard, who offered his opinion that before the taking, subject property had a fair market value of $608,900.00 and that, after the taking, it was worth some $179,900.00, for a net compensation due of $429,000.00. Potters II's expert valuation witness, James V. Davis, Jr., had a different view. Davis told the jury subject property had a "before" value of $1,135,000.00 and an "after" value of $210,000.00, with due compensation fixed at $925,000.00. The jury was not buying but awarded Potters II a not immodest $503,000.00.

Potters II moved for an additur or, in the alternative, a new trial on damages. The Court denied the motion. Potters II now appeals to this Court.

III.

A.

The Constitution of this state provides:

Private property shall not be taken or damaged for public use, except on due compensation being first made to the owner or owners thereof,....

Miss. Const. Art. 3, Sec. 17 (1890). It becomes important to remember the Constitution commands due compensation for property taken "or damaged." Parker v. State Highway Commission, 173 Miss. 213, 162 So. 162 (1935), reminds us the words "or damaged" were added to the Constitution to secure a private property owner for damages not covered by the actual taking. Parker, 173 Miss. at 219, 162 So. at 163.

Notwithstanding, we have never held compensable every diminution of value. Zoning laws and the authority to place public projects are familiar sources. "Many exchangeable values may be destroyed intentionally without compensation," ³ Dycus v. Sillers, 557 So.2d 486, 497 (Miss.1990), quoting International News Service v. Associated Press, 248 U.S. 215, 246, 39 S.Ct. 68, 75, 63 L.Ed. 211, 223 (1918) (Holmes, J., concurring); see also, City of Gulfport v. Anderson, 554 So.2d 873, 874 (Miss.1989); Mississippi State Highway Commission v. Ladner, 243 Miss. 139, 145, 137 So.2d 791, 793 (1962); but see, Gilich v. Mississippi State Highway Commission, 574 So.2d 8, 12 (Miss.1990). Nor have we settled where the line ought be drawn. For the moment, takings are (de)limited by law which may or may not include all values--matters of fact. Value is the measure of due compensation attendant upon a taking or damage previously and independently defined by law. In a given case, subject to legal parameters, what is taken

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is a function of the complaint filed by the condemning authority. And the same of what damage is compensable.

Taking defined, we seek value and damage. Both "before" and "after", we seek fair market value, which is a value in exchange. The canonical definition is

the most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.

American Institute of Real Estate Appraisers, The Appraisal of Real Estate, 43 (10th Ed.1992) (hereinafter "AIREA, The Appraisal of Real Estate, __"). One formulation familiar in this state is, the sales price that would be negotiated between knowledgeable and self-interested persons, one who wants to purchase and one who wants to sell, the seller being under no obligation or compulsion to sell, and the buyer being under no necessity of having the property. ⁴ See, e.g., Crocker v. Mississippi State Highway Commission, 534 So.2d 549, 552 (Miss.1988); Mississippi State Highway Commission v. Havard, 508 So.2d 1099, 1100 (Miss.1987); Bear Creek Water Association, Inc. v. Town of Madison, 416 So.2d 399, 401 (Miss.1982); Mississippi State Highway Commission v. Wagley, 231 So.2d 507, 509 (Miss.1970).

This Court has long respected the appraisal profession's judgment that fair market value is an opinion best formed by competent persons pursuing not just one, but three separate and distinct but nevertheless interrelated, approaches to value: the cost approach, the market data or sales comparison approach, and the income approach. See AIREA, The Appraisal of Real Estate, 79-81; and, thereafter, Rebelwood, Ltd. v. Hinds County, 544 So.2d 1356, 1360-62 (Miss.1989); Crocker v. Mississippi State Highway Commission, 534 So.2d at 553; Trustees of Wade Baptist Church v. Mississippi State Highway Commission, 469 So.2d 1241, 1244 (Miss.1985).

Here we have a partial taking. By its complaint, MSHC is taking .353 acres of the front of subject property, plus all improvements and fixtures wherever located. Our rule has been settled for at least half a century,

[W]hen part of a larger tract of land is taken for public use, the owner should be awarded the difference between the fair market value of the whole tract immediately before the taking, and the fair market value that remained immediately after the taking, without considering general benefits or injuries resulting from the use to which the land taken is to be put, that are shared by the general public. ⁵

Mississippi State Highway Commission v. Hillman, 189 Miss. 850, 866, 198 So. 565, 569 (1940); Mississippi State Highway Commission v. Havard, 508 So.2d at 1101; see also, e.g., Sanderson Farms, Inc. v.

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Mississippi State Highway Commission, 324 So.2d 243, 244 (Miss.1975); and New v. Mississippi State Highway Commission, 297 So.2d 821, 823 (Miss.1974); Muse v. Mississippi State Highway Commission, 233 Miss. 694, 718, 103 So.2d 839, 849 (1958).

Subject property is commercial property by any standard. Commercial properties are bought and sold because of their income-producing capacity. Their value is in large part a function of the earnings one might reasonably expect from prudent use, and so future profitability is a major...