State ex rel. Washington University Medical Center Redevelopment Corp. v. Gaertner, 62733

• Citation: 626 S.W.2d 373
• Decision Date: 12 January 1982
• Docket Number: No. 62733,62733
• Parties: STATE ex rel. WASHINGTON UNIVERSITY MEDICAL CENTER REDEVELOPMENT CORP., Relator, v. Honorable Carl R. GAERTNER, Judge, 22nd Judicial Circuit, City of St. Louis, Missouri, Respondent.
• Court: Missouri Supreme Court

Page 373

626 S.W.2d 373

STATE ex rel. WASHINGTON UNIVERSITY MEDICAL CENTER

REDEVELOPMENT CORP., Relator, v. Honorable Carl R. GAERTNER, Judge, 22nd Judicial Circuit, City of St. Louis, Missouri, Respondent.

No. 62733.

Supreme Court of Missouri, En Banc.

Jan. 12, 1982.

Rehearing Denied Feb. 9, 1982.

Robert G. Brady and Gerald T. Carmody, St. Louis, for relator.

Samuel C. Ebling, St. Louis, for respondent.

Irvin Dagen and Gregory R. Smith, St. Louis, amicus curiae.

WELLIVER, Judge.

This is a proceeding in prohibition. Relator Washington University Medical Center Redevelopment Corporation, a corporation organized and existing under the Urban Redevelopment Corporation Law, Chapter 353, RSMo 1978, ¹ seeks condemnation of a tract of land in St. Louis owned by Dimitrios James (hereafter "landowner"). Landowner filed a counterclaim alleging, among other things, loss of rental between the date of the declaration of the area as a blighted area and the time of the actual taking of the property. Relator seeks to prohibit respondent judge from proceeding further until the counterclaim has been dismissed. Relator's first request for relief was to the Missouri Court of Appeals, Eastern District, which issued its preliminary writ and later made the writ permanent by a divided opinion. We ordered the case transferred because we viewed the question of whether a condemnee may file a counterclaim in a condemnation proceeding to be a question of general interest and importance. See Rule 83.03. ² We conclude that under current Missouri statutes and rules of civil procedure, no counterclaim may be brought by a condemnee in a condemnation proceeding, and we therefore order the preliminary writ made permanent.

Portions of the opinion of Crist, J., and of the dissenting opinion of Smith, J., have been adopted and used herein without quotation marks.

On June 13, 1974, the Board of Aldermen of the City of St. Louis declared the area in which landowner's land was located to be "blighted". Approximately four months later, relator submitted a redevelopment plan regarding this area to the board of aldermen, who approved the plan on February 28, 1975, and granted relator the authority to acquire the property in this area by eminent domain. Thereafter, relator began negotiating with various property owners in the blighted area for purchase of their property.

On April 12, 1977, nearly three years after designation of the area as blighted relator instituted its suit to condemn landowner's property. Judge Geary entered an order of condemnation on landowner's property and, pursuant to § 523.040 and Rule 86.06, (1977), appointed three commissioners to appraise the value of that property. They appraised it at $45,000. Relator excepted to this appraisal, elected not to pay the $45,000 into the court registry, requested a jury to assess the amount of damages sustained by landowner, and filed notice of lis pendens. See §§ 523.050-.060; Rule 86.08.

Landowner filed a counterclaim wherein he alleged that the submission and processing of relator's redevelopment plan, together with the attendant publicity, made it common knowledge that his property would be appropriated by relator in connection with its plan. Landowner further alleged that when relator subsequently contacted the owners and tenants of the various properties in the blighted area, it: (1) caused the occupants, including landowner's tenants, to relocate; (2) discouraged market activity in the area; (3) encouraged vandalism (thereby diminishing property values); and (4) left the landowner's property and the surrounding neighborhood physically and environmentally uninhabitable thereby making it impossible for landowner to rent his property. As a result of this "cloud of condemnation" which has been hanging over his head, landowner asserted he has been deprived of his right to have full use and enjoyment of his property and as a result has suffered "an unlawful taking and damaging of his property in violation of Article I, § 26 of the Constitution of Missouri and the Fifth and Fourteenth Amendments of the United States Constitution." He prayed for damages equal to the reasonable rental value of his property for the period between the date relator submitted its redevelopment plan and the date of the condemnation trial.

Relator moved to dismiss landowner's counterclaim on three different grounds, one of which was that a counterclaim cannot be maintained in a condemnation proceeding. Respondent denied this motion. Relator then petitioned for a writ of prohibition based upon the theory that no counterclaim may be brought by a condemnee in a condemnation action. Relator argued to the court of appeals, as it does to this Court, that § 523.060 and Rule 86.06 establish that a trial in a condemnation case is limited to consideration of the exceptions filed by either party to the appraisal made by the commissioners of damages incurred by the condemnee due to the taking of his property, and that since the damages alleged in landowner's counterclaim necessarily arose prior to the legal date of the taking of his property, they are not cognizable in a condemnation action. The claim for loss of rent, relator contends, is a tort claim which must be brought in a separate, in personam action, not in a condemnation proceeding, which is an in rem action.

Landowner maintains that Rule 55.32(a), relating to compulsory counterclaims, is applicable in condemnation proceedings, that his counterclaim arises out of the same transaction or occurrence that is the subject matter of the condemnation proceedings, and that consequently his counterclaim not only may be raised in the condemnation proceeding but in fact must be raised there.

This case involves a problem which has plagued the judiciary of this state for some time without satisfactory resolution. It arises with increasing frequency because of redevelopment of metropolitan areas. To start redevelopment, the area involved is declared blighted by the municipal legislative body and becomes subject to redevelopment. See Mo.Const. art. VI, § 21; Ch. 353. The organization or agency which proposes to redevelop the area is given the power of eminent domain to acquire the blighted area. § 353.130. The blighted designation applies to the area as a whole and normally includes some parcels of property (frequently much property) which would not by any usual definition be considered blighted. Parking Systems, Inc. v. Kansas City Downtown Redevelopment Corp., 518 S.W.2d 11 (Mo.1974); Maryland Plaza Redevelopment Corp. v. Greenberg, 594 S.W.2d 284 (Mo.App.1979). Frequently the property involved is rental property, either commercial or residential in nature. Because of the blight designation and the general public knowledge that the property will be acquired for redevelopment, an exodus of tenants ensues, sometimes allegedly encouraged by the redevelopment authority, and no equivalent influx of similar tenants occurs. Often times the property depreciates and deteriorates, the neighborhood declines, vandalism and destruction of the property occurs, and the landowner, anticipating the eventual taking of the property, does not expend money to improve his unproductive asset. Under our statutes and our condemnation cases, the taking of the property occurs when the condemnor pays the commissioners' award into the registry of the court, or if it refuses to make such payment, as is true in this case, at the time of trial. See, e.g., Conduit Industrial Redevelopment Corp. v. Luebke, 397 S.W.2d 671, 674 (Mo.1965); St. Louis Housing Authority v. Barnes, 375 S.W.2d 144, 147 (Mo.1964); Land Clearance for Redevelopment Authority v. Massood, 526 S.W.2d 354, 355-57 (Mo.App.1975); Harris v. L. P. and H. Construction Co., 441 S.W.2d 377, 384 (Mo.App.1969); Mo.Const. art. I, § 26. As in the case here before us, it is not uncommon for a lengthy period of time to elapse between the time when the area is declared blighted by the legislative body and the time when the property is taken for condemnation purposes. Between the time of blighting and the time of taking, the property frequently has substantially deteriorated in value at great loss to the landowner. See Gould v. Land Clearance for Redevelopment Authority, 610 S.W.2d 360 (Mo.App.1980).

Under current Missouri law of condemnation, no provision is made for compensating a landowner for the decline in value of his property between the date when the area in which his property lies is declared blighted and the date when the de jure taking occurs. State ex rel. State Highway Commission v. Samborski, 463 S.W.2d 896, 902-03 (Mo.1971); St. Louis Housing Authority v. Barnes, 375 S.W.2d 144, 147-48 (Mo.1964); Land Clearance for Redevelopment Authority v. Massood, 526 S.W.2d 354, 356-57 (Mo.App.1975); State ex rel. State Highway Commission v. Anderson, 485 S.W.2d 614 (Mo.App.1972). This is because declaration of blight is treated much the same as the threat of condemnation proceedings, the initiation of condemnation proceedings, and negotiation by the condemnor with property owners for the purchase of their property, all of which are considered neither taking nor damaging within the meaning of Mo.Const. art. I, § 26. State ex rel. City of St. Louis v. Beck, 333 Mo. 1118, 63 S.W.2d 814, 816 (1933); State ex rel. State Highway Commission v. Samborski, 463 S.W.2d 896, 902-03 (Mo.1971); Hamer v. State Highway Commission, 304 S.W.2d 869, 871 (Mo.1957); State ex rel. State Highway Commission v. Armacost Motors, 552 S.W.2d 360, 365 (Mo.App.1977); 4 Nichols on Eminent Domain, § 12.3151(5), (3rd ed. Sackman & VanBrunt 1980), notes 25-27; Annot. 37 A.L.R.3d 127 (1971).

In addition, with regard to the taking clause of the Fifth Amendment of the United States Constitution, the Supreme Court in Danforth v. United States, 308 U.S. 271, 285, 60 S.Ct. 231, 236, 84 L.Ed. 240 (1939) said, "A reduction or increase in the value of property may occur by reason...