State Highway Commission v. American Memorial Parks, Inc.

• Decision Date: 14 July 1966
• Docket Number: No. 10149,10149
• Citation: 144 N.W.2d 25,82 S.D. 231
• Parties: The STATE HIGHWAY COMMISSION of the State of South Dakota on Behalf of and in the Name of the State of South Dakota, Plaintiff and Appellant, v. AMERICAN MEMORIAL PARKS, INC., Ed. H. Lacey, Angela E. McConville, and Pine Lawn Memorial Park, Inc., Defendants and Respondents.
• Court: South Dakota Supreme Court

Page 25

144 N.W.2d 25

82 S.D. 231

The STATE HIGHWAY COMMISSION of the State of South Dakota on

Behalf of and in the Name of the State of South

Dakota, Plaintiff and Appellant, v. AMERICAN MEMORIAL PARKS, INC., Ed. H. Lacey, Angela E.

McConville, and Pine Lawn Memorial Park, Inc.,

Defendants and Respondents.

No. 10149.

Supreme Court of South Dakota.

July 14, 1966.

Frank L. Farrar, Atty. Gen., John B. Wehde, Carl W. Quist, Sp. Asst. Attys. Gen., Pierre, for plaintiff and appellant.

Bangs, McCullen, Butler & Foye, Geo. A. Bangs, Joseph M. Butler, Rapid City, for defendants and respondents.

BIEGELMEIER, Judge.

This is a condemnation proceeding. In 1936 W. G. Lacey became the owner of the 30 acre tract of land involved under plans made by persons interested therein to create a cemetery. The topography of this tract was such that approximately the west 16 acres was unsuitable for burial purposes. The east 14 acres was then bisected by U.S. Highway 16. As part of the plan defendant Pine Lawn Memorial Park, Inc., herein referred to as Cemetery Corporation was organized to operate the cemetery and Lacey entered into a contract for deed with it which in much detail set up their business relations. Perhaps because cemetery corporations may not appropriate any profit to the corporation or its members, one of the many provisions was that Lacey retain title to the real estate, but upon deposit of 50% Of the proceeds of the sale of any lot or $50 if the lot sold for less than $100 he would execute a deed for that lot to the Cemetery Corporation. Pursuant thereto that part of the 14 acres west of Highway 14 was platted in 7,441 burial spaces with drives, roadways, etc. A $14,000 chapel was erected on this west tract and a well with water distribution system installed at a cost of roughly $18,000. Later a $20,000 house in which the caretaker lived was built. There was testimony that the chapel and house were to serve both the tracts on the east and west sides of Highway 16, though they were placed on the west side; no part of the water distribution system was ever extended to the east tract as it was inadequate for that added area. Through November 1963, the time of trial, 2,670 burial places had been sold--all from the tract west of the highway. There was no evidence of the number of interments. As 4,771 burial places remain unsold west of the highway, there was no occasion for the sale or platting of the tract east of the highway, nor was the east tract platted until August, 1957. Mr. Powers, one of defendants' witnesses and originally interested in organizing the cemetery, testified he was a friend of the Chairman of the State Highway Commission, and was told by him in 1956 that the new highway was to be built which would take the east tract and asked him 'not to make any burials in that portion'. After a public hearing on location of the road held in the spring of 1957 a plat of the 7.46 acre tract east of Highway 16 was filed. It indicated 6,248 burial places making a total of 13,689 burial places in both tracts. Other than the filing of the plat, nothing had been done to change or improve the east tract and it remained in its original natural state. The condemnation suit for the proposed highway does not take any part of the tract west of the highway; does not interfere with access thereto, nor change Highway 16. It does take practically all of the tract east of Highway 16, and for purposes of the trial and this appeal the parties assume that the whole of the tract east of the highway was appropriated. The trial judge stated before the trial and in the rulings during the trial that the rule of damages for the taking of the tract east of Highway 16 would be that substantially set out by the Supreme Court of Nebraska in Graceland Park Cemetery Company v. City of Omaha, 173 Neb. 608, 114 N.W.2d 29.

Defendants Ed. H. Lacey and Angela E. McConville apparently were two heirs of W. G. Lacey to whom, the opening statement said, a portion of the contract passed. The record shows a portion of the W. G. Lacey contract 'passed' to defendant American Memorial Parks, Inc. Witness Robert G. Powers testified he was principal stockholder and Secretary of American Memorial Parks, Inc. and that it had a sales contract with the Cemetery Corporation by which a commission of 40% Of the sales price of every pre-need lot sold by American Memorial Parks, Inc. was to be paid to it; that the contract had not been in effect for 10 or 15 years. Pre-need lots, as the term implies, are generally sold in special campaigns prior to actual need. He was secretary of a 39,922 burial site cemetery corporation at Sioux Falls, South Dakota, which he organized and for which he purchased and platted the ground and conducted all the developments and sales since 1933. He selected the 30 acre tract involved here, and was instrumental in its purchase, financing by Lacey, and the organization of defendant nonprofit Cemetery Corporation. He testified the average number of sales the first half of the cemetery's existence was 56 and 92 and the last half roughly 100. The exact figures in the record show: A sales campaign resulted in 442 lots sold in 1936 and 248 in 1937; in the seven years from 1938 to 1945 the total was 157; in 1945--337; 1946 through 1953--165; 1954--505; 1955--367; 1956--236 (three campaign years); 1957 through 1963--211. Average annual sales for the 28 years were 96 lots a year--90 the first 14 years and 102 the last 14 years. Rapid City doubled in population from 13,900 in 1940 to 25,300 in 1950 and tripled to 42,400 in 1960. Powers was not aware of the mortality rate, yet he expressed the opinion the 11,000 remaining grave sites could be sold in 20 years or at a rate of 550 a year. That rate had never been reached, but was evidently based on the sales rate at Sioux Falls where he kept two men selling steadily and the sales campaign in Rapid City had been conducted only from three to six months a year rather than selling steadily the full year. The average sale price of a grave space over the last ten years were $92.67.

There was some evidence of the amount needed to improve the tract east of Highway 16 to make it suitable for burial sites. Largely on Powers' evidence and assumptions of sales of 550 a year, it was computed, shown in evidence to the jury and is argued the balance of the lots on the west side would be sold out in 8 2/3 years and those on the east side over the succeeding 11 1/3 years; thus completing a 20 year sales timetable. The jury verdict allowed $26,500 for the land taken east of the highway and $48,000 additional as severance damages to the west tract.

Value of Land Taken East of Highway 16

Defendants' opening statement, their evidence, contentions in the trial court and in this court as to the 7.46 acres of land taken are now outlined. Assuming the east tract is dedicated to be and is to be treated by the platting as part of the cemetery and as lots thereof, they start with $92.67 as an average burial space selling price; they then deduct (by interesting and involved formulae covering nearly three printed pages of their brief) $82.95 per lot. The latter includes a 30% Sales cost, improvements, administration and maintenance of the cemetery spread over all 13,689 graves for 20 years and, as 2,670 have been sold, over 11,011 unsold graves for perpetual care. The remainder of net value on a per lot basis is $9.72 multiplied by 6,248 or $60,730, the present value of which to be received over a 20 year period at 3 1/2% Is $43,227. They contended in the trial court and repeat here the market value rule does not apply to 'cemetery property' and introduced evidence in support of their theory, in part set out above. The trial court concurred and the correctness of rulings on admission of evidence, motions to strike, the giving and refusing of instructions to the jury are before the court on this appeal. That the problem first presented to this court is a vexing one appears from the different opinions and results reached by courts which have had occasion to consider it. See annotation in 62 A.L.R.2d 1175. We will first state basic and general principles of law and their application to the facts and later refer to the subject of the annotation.

I. The 'just compensation' (Art. VI, § 13, S.D. Constitution) to which an owner of property taken for public use is entitled is the full market value at the time of taking. Market value in turn is the highest price for which property considered at its best and most profitable use can be sold in the open market by a willing seller to a willing buyer neither acting under compulsion and both exercising reasonable judgment. City of Huron v. Jelgerhuis, 77 S.D. 600, 97 N.W.2d 314, and Chicago, M. & St. P. Ry. Co. v. Mason, 23 S.D. 564, 122 N.W. 601. The market value guide line has been uniformly adhered to by the court. They are set forth in the instructions given in State Highway Commission v. Fortune, 77 S.D. 302, 316, 91 N.W.2d 675, 684, where they were approved except for use of the term 'entire tract' to include land separately owned by two defendants and government permit land. Here the 7.46 acres taken east of Highway 16 had not been platted before the cemetery was notified it was to be condemned for a new highway; only then was it platted on paper. No physical improvement to, or change was made, on the tract. In State by Lord v. Malecker, 265 Minn. 1, 120 N.W.2d 36, where the property was platted and roads had been graded and graveled but no improvements were on the land and no sales had been made, the court subscribed to the view expressed in an Illinois opinion with which we agree that "the platting of (real estate) does not, without more, alter the value of such property." The measure of compensation is not mathematically the aggregate of prices of lots into which it can be, or has been divided on paper, as that is too uncertain and conjectural. Nichols on Eminent...