State ex rel. State Highway Commission v. Samborski
| Citation | 463 S.W.2d 896 |
| Decision Date | 08 March 1971 |
| Docket Number | No. 1,No. 55189,55189,1 |
| Parties | STATE of Missouri ex rel. STATE HIGHWAY COMMISSION of Missouri, Relator, v. E. A. SAMBORSKI, Alice N. Samborski, and Ruby Caldwell Kenworthy, Respondents, and Sun Oil Company, Appellant |
| Court | Missouri Supreme Court |
James P. Tierney, John H. Calvert, Kansas City, William B. Waters, Liberty, for respondents, Lathrop, Koontz, Righter, Clagett & Norquist, Kansas City, Hale, Coleberd, Kincaid & Waters, Liberty, of counsel.
Samuel J. Molby, Kansas City, S. Morton Rurtherford III, Tulsa, Okla., for appellant, Watson, Ess, Marshall & Enggas, Kansas City, of counsel.
HIGGINS, Commissioner.
Proceedings under Section 523.053, V.A.M.S., for distribution of $47,500 condemnation award between landowners-lessors and lessee. The condemnor, State Highway Commission, paid the award into court and took no interest in this part of the condemnation action. The remaining parties waived a jury and went to trial on issues limited to a determination of lessee's interest in the award in which lessee claimed in excess of $23,000. The trial court determined and adjudged that landowners-lessors were entitled to the entire award; lessee has appealed.
On July 10, 1954, E. A. and Alice Samborski and Ruby Kenworthy owned adjacent tracts of land each with 100-feet frontage on U.S. Highway 69 in Claycomo, Clay County, Missouri. On that date both landowners entered into separate identical leases with Sun Oil Company of the front 90 feet of their tracts. Under the leases Sun could hold possession until September 1, 1974, by exercising 5-year extension options. Such options were exercised to retain possession until September 1, 1969. Sun erected a gasoline service station on the leased premises and commenced its operation in December, 1955.
Sun's improvements consisted of a 2-bay vitrified building with canopy, offices, and restrooms; two 4,000-gallon underground storage tanks; two pump islands each with two pumps; signs, floodlights, concrete and asphaltic entrances from Highway 69; underground wiring, piping, conduits, septic tanks, sewer facilities, waste oil facilities; gravel parking areas, and shrubbery. Sun was the owner of the buildings, fixtures, and improvements, and had the right to remove same.
Sun operated the station by sublessee operators. The first operated from December 1955 to March 1960. Eight other sublessees were at the station from March, 1960, until July 1, 1966. The station was not operated after July 1, 1966, and the leased premises were taken by condemnation proceedings for Route I--435 in which the commissioner's report was filed March 13, 1967, and the award was paid into court April 7, 1967.
Between 1957 and 1959 it became common knowledge that Route I--35 would be opened and it was opened to traffic in December, 1959, or January, 1960. The opening of I--35 resulted in a diversion of interstate and through traffic from Highway 69 at the site of the leased premises.
In 1963 it became common knowledge that yet another highway improvement would take place in the area. This latter improvement was by way of I--435, and these premises were taken for that purpose by the present condemnation proceedings instituted in October, 1966.
In 1962 changes occurred in Missouri gasoline taxes and taxing procedures and a gasoline tax advantage previously enjoyed by service stations located in Claycomo was lost to this operation.
During operation of the station Sun paid and accounted in accordance with the leases for all rents and taxes, the last quarterly settlement for same being made with landowners-lessors September 19, 1966. During its operation, Sun experienced difficulty in procuring sublessee operators and, in four quarterly periods, there were no sales made or rents paid. There was no base or guaranteed rent; rentals were contracted at 1 to 1.12 cents per gallon of gasoline sold. No gasoline was sold from the quarterly periods June 1, 1962, to August 31, 1962, September 1, 1962, to November 30, 1962, December 1, 1962, to February 28, 1963, and December 1, 1963, to February 28, 1964. Total rental paid through the entire term of the lease was $11,004.14. The last sublessee operator gave up July 1, 1966, and Sun was unable to secure a sublessee after that date. Sun never undertook to use its own personnel or employ an operator at any time when no sublessee was present, and the station was out of operation for several periods, one of which lasted eleven months.
Sun paid Clay County and Claycomo real estate taxes for 1966 and 1967 on the premises, as required by the leases, and had obtained its merchant's licenses through 1967. On February 13 and 14, 1967, lessors mailed written notices to Sun purporting to accept a claimed abandonment of the premises by Sun by virtue of nonoperation of its station, to request removal of improvements, and to demand possession.
Exhibits and admissions showed the following record of gallonage sold, operation, and chronology of significant events during Sun's operation of its station on the leased premises:
Average
Annual Monthly
Lease Year Gallonage Gallonage Sublessees Events
---------------- --------- --------- ----------------- ------------
12/55-12/56 112,547 * 9,379 Bond Station
opened
12/56-12/57 134,600 11,217 Bond Notice that
I-435
would
be construc-
ted
12/57-12/58 175,250 14,604 Bond
12/58-12/59 223,696 18,641 Bond
12/59-12/60 91,574 7,631 Bond to 3/60
Knipker to 6/60 I-35 opened
12/59
Williamson to
12/60
12/60-12/61 86,475 7,206 Roberson
12/61-12/62 28,400 2,367 Roberson to 2/26 Gasoline tax
Rutherford advantage
lost.
12/62-12/63 57,376 4,781 Rutherfo- 4/63 Jones
rd to
12/63-12/64 90,049 7,504 Jones to 6/64
12/64-12/65 49,027 4,086 Wollard to 8/65
Woolston
12/65-12/66 47,476 3,956 Woolston to 7/66 station
closed.
12/66 to 4/7/67
(Date of taking) 0 0
B. E. Franke of Tulsa, Oklahoma, was the coordinator for construction for the southern division of Sun Oil Company, DX Division. He placed the 'fair market value of the physical improvements' on the leased premises on the date of taking in March, 1967, at $23,700. He admitted it was not economically feasible to remove the station, paved spaces, and underground facilities from the premises and that Sun recouped salvage value of $1,376.87 from removal of certain equipment. Mr. Franke stated that a station design and style depended upon anticipated gallonage and he estimated that this unit was 'pegged to do in the eighteen to twenty thousand per month range.'
Keith DeLacey, also of Tulsa, was the senior real estate representative for condemnations and appraisals for Sun Oil, DX Division. He recognized problems with the station as early as 1962. He also admitted that the opening of I--35 had adverse effects on gasoline sales on the leased premises in that major traffic left Highway 69 and went to I--35. The tax change produced a similar effect. In his opinion, the 'fair market value of the physical improvements there on the leased property' at the time of taking was $23,045, and the highest and best use of the property was for a service station. His evaluation of the same after the taking was $1,376.87. Mr. DeLacey did not place any value on the remaining term of the leasehold 'because there was not an economic value to the lease itself over and above the contract rent.' In his opinion Sun Oil would not have been able to sell its leasehold interest. He also admitted that the site was chosen on a basis of 18,000 to 20,000 gallons sold per year. He stated that 4,000 gallons per year was a poor station, and that the gallonage sold at the station made it an 'uneconomical' site and unattractive to potential operators. When a company attempts to sell a leasehold interest the buyer looks into what the station has produced by way of gallonage sales.
Norman Davidson of Independence, Missouri, was a real estate appraiser employed by landowners-lessors to appraise the various interests in subject property. In arriving at the 'fair market value of the DX leasehold interest' on the date of taking, he assumed a conventional cent-and-a-half per gallon rental on the gallonage sold, resulting in a net profit of $233 per year to Sun; a 7 per cent return discounted by Inwood tables over the remaining seven years and five months of the lease, a value of $1183; added $750 actual salvage of station shell, and arrived at a leasehold value of $1933. The experience with this station indicated the sales were too low to permit Sun to amortize its estimated $32,000 in improvements over the...
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