State Highway Commission v. Hooper

• Decision Date: 10 September 1971
• Citation: 259 Or. 555,488 P.2d 421
• Parties: State of Oregon, By and Through its STATE HIGHWAY COMMISSION, composed of Glenn L. Jackson, David B. Simpson and Fred W. Hill, Petitioner, v. John N. HOOPER and Catharine Hooper, husband and wife, and Bill Rose, Respondents.
• Court: Oregon Supreme Court

Page 421

488 P.2d 421

259 Or. 555

State of Oregon, By and Through its STATE HIGHWAY COMMISSION, composed of Glenn L. Jackson, David B Simpson and Fred W. Hill, Petitioner, v. John N. HOOPER and Catharine Hooper, husband and wife, and Bill Rose, Respondents.

Supreme Court of Oregon.

Argued and Submitted Nov. 2, 1970.

Decided Sept. 10, 1971.

Leslie B. Hampton, Asst. Atty. Gen., Salem, argued the cause for petitioner. With him on the briefs were Lee Johnson, Atty. Gen., and G. E. Rohde and Glen V. Sorensen, Asst. Attys. Gen., Salem.

George W. Mead, Portland, argued the cause for respondents. With him on the brief was James G. Heltzel, Salem.

Before DENECKE, P.J., and HOLMAN, TONGUE, HOWELL and BRYSON, JJ.

HOWELL, Justice.

This is a condemnation case involving land owned by the defendants at the Woodburn interchange. The Court of Appeals affirmed the judgment awarded defendants in the trial court, and we granted the plaintiff's petition for review.

The plaintiff, Oregon State Highway Commission, condemned 2.4 acres of approximately 150 acres belonging to defendants for the purpose of constructing a diamond interchange for improved exit from Interstate 5 from the south, as shown on the map.

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

The defendants' land is bordered on the west by the northbound lanes of Interstate 5 highway, and on the north by the Hillsboro-Silverton highway, which runs east and west and which intersects Interstate 5 by an overhead crossing northwest of defendants' land. The taking of the 2.4 acres did not result in any basic change in the access to the roads and highways serving defendants' property, which had no access to the freeway (Interstate 5) before or after the taking, but did have access to the Hillsboro-Silverton highway both before and after the taking. The part taken is contiguous to a frontage road which connects with the Hillsboro-Silverton highway on the north. The improvement contemplated by the Highway Commission includes relocation of the frontage road to the southeasterly edge of the 2.4 acres, contiguous to the remaining land of the defendants, and defendants will have the same access to the relocated frontage road.

Fifty-two of the 150 acres owned by defendants, including the parcel taken, were zoned 'interchange development' or 'commercial.' The balance of the land was zoned 'residential and agricultural.' All of the land is level and of similar general characteristics, and was previously farm land.

The plaintiff alleged that the amount of just compensation to be awarded defendants was the sum of $9,600. The defendants alleged that the fair cash market value of the property taken was $48,000. Defendants claimed no damages to the remainder property. A jury awarded defendants $24,000.

The primary issue in this case is whether the 2.4 acres taken should be valued as a separate parcel or whether it should be considered as a part of defendants' entire tract. If just compensation is to be determined by considering the 2.4 acres taken as part of the entire tract, does such method violate the rule in State Highway Comm. v. Bailey et. al., 212 Or. 261, 281, 319 P.2d 906 (1957), that any benefits to the property that remains can be used only to offset damages to that property and cannot be used to reduce the fair market value of the land taken.

The trial court restricted the evidence to the value of the 2.4 acres considered as a separate parcel and not as a part of the whole of defendants' land; and refused to admit evidence as to the highest and best use and evidence of the value of the defendants' entire property and of the value of the defendants' remaining property. The trial court found from the evidence and plaintiff's offer of proof that benefits accrued to the remainder. The trial court ruled that evidence of benefits to the remainder would be improper under State Highway Comm. v. Bailey et. al., Supra, because the defendants were claiming no damages to the remainder; consequently, only evidence of the fair cash market value of the 2.4 acres would be considered.

The trial court also refused to give instructions requested by plaintiff that the market value of the 2.4 acres should be determined by considering it as a part of the entire property and not as a separate parcel.

The Court of Appeals, Or.App., 468 P.2d 540, also found that the parcel taken should be valued as a separate parcel and not as a part of the whole of defendants' land.

The basic premise and the constitutional requirement in all condemnation cases is that the landowner is entitled to be awarded just compensation for the taking of his property. Oregon Constitution, Art. 1, § 18.

Just compensation is to be considered in terms of what the owner has lost and not what the condemnor has gained. See Santiam Lumber Co. v. Conhaim, 218 Or. 220, 344 P.2d 247 (1959); 3 Nichols, Eminent Domain 49--50, § 8.61 (3d ed. 1965). Compensation should be just to the condemnor as well as to the condemnee. See Searl v. School Dist., Lake County, 133 U.S. 553, 10 S.Ct. 374, 33 L.Ed. 740 (1890).

The measure of damages to be awarded the landowner in the case of a partial taking of his land is the fair market value of the land taken plus any depreciation in the fair market value of the remaining land caused by the taking. See Tunison v. Multnomah County, 251 Or. 602, 445 P.2d 498 (1968); State Highway Comm. v. Burk et al., 200 Or. 211, 265 P.2d 783 (1954); Pape et al. v. Linn County, 135 Or. 430, 296 P. 65 (1931). The depreciation in market value to the remaining land is often called severance damages. See State Highway Comm. v. Vella, 213 Or. 386, 323 P.2d 941 (1958).

In Oregon, special benefits to the remainder land may be used only to reduce the damages to the remainder land and cannot be used to reduce the fair market value of the land actually taken. See State Highway Comm. v. Bailey et al., Supra, 212 Or. at 277, 319 P.2d 906. This is also the rule in most jurisdictions, but has been widely criticized for the reason that if the special benefits to the remaining land exceed the severance damages to the remainder, the landowner is receiving double compensation--the market value of the land taken and the increased value of the remaining land. See Note, Benefits and Just Compensation in California, 20 Hastings L.J. 764, 767 (1969).

On the other hand, the rule has support on the theory that if benefits are allowed to be offset against the value of the land taken, the condemnee may be forced to accept unrequested benefits rather than money. See generally 3 Nichols, supra, at 93--98, § 8.6206(1); Peacock, The Offset of Benefits against Losses in Eminent Domain Cases in Texas: A Critical Appraisal, 44 Texas L.Rev. 1564, 1566 (1966).

As a result of the decision in Bailey, we have two categories relating to condemnation awards in partial taking cases: (1) compensation for the value of the land taken against which special benefits may not be offset, and (2) depreciation to the value of the remaining land against which any special benefits may be offset. If we follow the defendnats' contention we could also have a third category of compensation for only the value of the land taken without consideration of special benefits or damages to the remainder because no damages are claimed by the landowner.

The defendants herein contend, and the Court of Appeals found, that the 2.4 acres taken must be valued as a separate and distinct economic unit, and evidence of the condition and value of the remainder is not material.

To support this position the defendants rely primarily on the decisions in State v. Meyer, 403 S.W.2d 366 (Texas 1966), aff'g. 391 S.W.2d 471 (Tex.Civ.App.1965); Territory of Hawaii v. Adelmeyer et al., 45 Hawaii 144, 363 P.2d 979 (1961); and People ex rel. Dept. of Public Works v. Silveira, 236 Cal.App.2d 604, 46 Cal.Rptr. 260 (1965).

In Meyer the state condemned a 15-acre tract from the front of defendant's 103-acre tract in order to widen an existing highway. The land taken was 2600 feet long and 240 feet in depth. The defendant's right of access to the new highway was not acquired by the state. Texas, like Oregon, follows the 'value of land taken plus damage to the remainder' rule, thereby restricting any benefits to the remainder to be offset only against damages to the remainder. Also, in Meyer the landowner did not claim damages to the remainder and claimed only the value of the parcel taken.

Because the state was not condemning the right of ingress and egress from the remaining property, the trial court required the state to refrain from revealing to the jury that the 15-acre strip was in fact a part of a larger tract. Furthermore, the trial court would no allow the state to show that defendant's right of access was not being condemned.

The state contended that the part taken should be considered as part of the entire tract, and that evidence of the right of access was material. The state also offered evidence of value of the part taken on the basis of an average value of various portions of the entire tract.

While the Texas Court of Civil Appeals agreed that the parcel taken should be valued as a separate parcel because it was large enough to exist as an independent economic unit, that feature was not mentioned in the decision of the Supreme Court of Texas, 403 S.W.2d 366 (1966). The Supreme Court held that the retained access was relevant to the value of the remaining land, but where 'the landowner waives all claim to damages to the remainder, then damages because of denial of access, or benefits because of access being permitted, becomes immaterial to a determination of the fair market value of the land taken.' 403 S.W.2d at 373.

Regarding the second issue of whether the part taken should be considered as a separate tract or as part of the whole, the state in Meyer contended that the highway frontage was merely being moved over to the remaining land, thereby...