State By and Through State Highway Commission v. Assembly of God, Pentecostal, of Albany

• Decision Date: 21 February 1962
• Parties: STATE of Oregon, by and through its STATE HIGHWAY COMMISSION, composed of M. K. Mclver, Kenneth N. Fridley and Glenn L. Jackson, Appellant, v. ASSEMBLY OF GOD, PENTECOSTAL, OF ALBANY, a non-profit Oregon corporation; Frank Betzer and Sarah Elizabeth Betzer, husband and wife; F. Leslie Stephen and Lulu F. Stephen, husband and wife; and Church Extension Plan, a nonprofit Oregon corporation, Respondents.
• Court: Oregon Supreme Court

Page 937

368 P.2d 937

230 Or. 167

STATE of Oregon, by and through its STATE HIGHWAY

COMMISSION, composed of M. K. Mclver, Kenneth N.

Fridley and Glenn L. Jackson, Appellant, v. ASSEMBLY OF GOD, PENTECOSTAL, OF ALBANY, a non-profit Oregon

corporation; Frank Betzer and Sarah Elizabeth Betzer,

husband and wife; F. Leslie Stephen and Lulu F. Stephen,

husband and wife; and Church Extension Plan, a nonprofit

Oregon corporation, Respondents.

Supreme Court of Oregon, Department 2.

Argued and Submitted Jan. 11, 1962.

Decided Feb. 21, 1962.

Robert H. Anderson, Asst. Atty. Gen., argued the cause for appellant. With him on the briefs were Robert Y. Thornton, Atty. Gen., and L. I. Lindas and Charles Peterson, Asst. Attys. Gen.

Orval N. Thompson, Albany, argued the cause for respondents. On the brief were Weatherford & Thompson, Albany.

Before McALLISTER, C. J., and WARNER, SLOAN, O'CONNELL and LUSK, JJ.

O'CONNELL, Justice.

Plaintiff appeals from a judgment on a verdict awarding defendants $3,792.75 as compensation for the taking of a portion of defendants' land for highway purposes. The defendants were also allowed $600 attorneys' fees and costs.

The property taken consisted of a strip of land along the edge of an existing highway. The defendants maintain a large church building on the portion of the property not taken. There is no issue of severance damage, the sole issue presented by the pleadings being the true value of the land taken.

Plaintiff's complaint contained the allegation that the true value of the property sought to be taken was $1,700. Defendants alleged in their answer, as amended, that the true value of the condemned property was $4,500. The reply reasserts the value to be $1,700. Defendants moved to require plaintiff to amend its complaint and reply so as to allege $2,375 as the true cash value. The trial court granted the motion. The motion was based upon the ground that plaintiff had, in a letter mailed to the defendants, made an offer of $2,375 for defendants' property and that by virtue of this offer the commission officially declared the true value of the property to be $2,375.

In support of this contention it is argued that the authority of the plaintiff highway commission to acquire property for highway purposes by negotiation or through the exercise of the power of eminent domain, as provided by statute, ¹ is subject to the proscription of Article I, § 18 of the Oregon Constitution which provides that 'Private property shall not be taken for public use * * * without just compensation * * *.' Defendants' brief summarizes this point as follows:

'The plaintiff, State Highway Commission, derives its authority to acquire land for rights of way from the sections of the Oregon Revised Statutes above quoted. The power of the Commission to acquire property by negotiation or the exercise of the power of eminent domain is subject to and restricted by the above quoted provision of the Oregon Constitution which requires that just compensation must be paid for such property. The Commission does not have the right to pay more nor less than just compensation for any particular piece of property. Hence, it is necessary that the Commission make a determination of the amount which it determines to be the true value of a particular piece of property. This, from the standpoint of the Commission, would constitute just compensation. If the Commission and the landowner can not agree upon a value then the Commission may resort to eminent domain proceedings, and in its complaint 'shall allege the true value of the real property and the damage resulting from the appropriation thereof.' (ORS 366.380(1)) The true value that must be alleged in the complaint is the value which the Commission has placed upon the property in its official determination.'

The defendants assert that the 'official determination' of true value was made in a letter from the highway commission to defendants, the concluding paragraphs of which read as follows:

'I have been authorized by the State Highway Commission to offer to you, and do hereby offer and tender to you, the sum of $2,375.00 for a warranty deed conveying the said real property and easement to the State of Oregon, by and through its State Highway Commission, free and clear of all taxes, liens and encumbrances, including the proportionate part of the taxes for the fiscal year during which the State takes possession of or receives title to said real property, whichever is the earlier.

'Without your immediate acceptance of this offer, I have been instructed to institute and prosecute to final determination such condenation [sic] proceedings as may be necessary. The time and services of the right of way agent who has heretofore negotiated with you will continue to be at your disposal towards arranging the details of transaction should you desire to conclude a settlement on the basis of this offer. To that end I am suggesting that the agent contact you again and I sincerely hope that such a settlement may yet be reached so that legal action will not be required.'

The defendants describe the foregoing communication as 'an official notification of the official action taken by the State Highway Commission in which the property owners are advised that the Highway Commission has made an official determination that the particular tract of property has in the opinion of the Commission a true value of $2,375.'

It is conceded by defendants that the highway commission has the statutory power to negotiate with a property owner with respect to the compensation to be paid for the property taken (ORS 366.370(1) authorizes the commission to 'attempt to agree with the owner * * * with respect to the compensation to be paid') but, it is maintained, the letter was not a part of any negotiations; rather it was an outright offer and in making it the commission was required by force of Article I, § 18, to establish the true value of the property sought to be taken.

We do not agree with defendants' interpretation of ORS 366.370(1) and Article I, § 18 as applied to the highway commission's authority to negotiate in condemnation cases. The commission, in making an offer to an owner, does not purport to adjudicate officially the true value of the property sought to be taken; the amount offered by the commission is nothing more than its estimate of the value of the property based upon the opinion of the commission's appraisers. The true value of condemned property is never known until the jury returns its verdict. Prior to the jury's determination the commission has the statutory power and duty to negotiate with the owner. As we interpret the term, negotiation includes an unqualified offer to pay the owner the amount which the commission regards as just compensation for the taking. If the commission's firm offer to pay a stated amount must be construed as an official determination of true value then, according to defendants' reasoning, the commission would be without authority subsequently to pay a larger sum even though through negotiations the larger sum was agreed upon by both the commission and the owner as the compensation to be paid for the taking. We do not believe that ORS 366.370 was intended to limit negotiations within such narrow limits.

Where private parties negotiate on a question of value the amount agreed upon frequently reflects the anticipated cost of litigation if an agreement cannot be reached. It is not unreasonable to assume that the legislature intended the commission to have the power to negotiate upon a similar basis and to add to the estimated value of the property the probable cost of litigation. If defendants' argument were accepted, ORS 366.380(9) would be practically meaningless. That subsection provides in part that 'if it appears that the commission tendered the defendants before commencing the action an amount equal to or greater than that assessed by the jury, the state shall recover its necessary disbursements from the defendants.' If the complaint must always equal the state's offer the state would seldom recover its disbursements because the jury could never return a verdict less than the amount alleged in the complaint. We hold that the amount recited in the complaint as the alleged true value of the property sought to be taken need not conform with the amount of the commission's previous offer.

Nothing we have decided or said in previous condemnation cases is at variance with our present holding. State by and through State Highway Commission v. Nelson et al., 222 Or. 458, 353 P.2d 616 (1960), relied upon by defendants, decided only that the owner has the burden of proving that the...