State v. Heslar

• Decision Date: 27 October 1971
• Docket Number: No. 970S216,970S216
• Parties: STATE of Indiana, Appellant, v. Mabel Kathleen HESLAR, Executrix of the estate of Ola Fred Heslar, Deceased,et al., Appellees.
• Court: Indiana Supreme Court

Page 261

274 N.E.2d 261

257 Ind. 307

STATE of Indiana, Appellant, v. Mabel Kathleen HESLAR, Executrix of the estate of Ola Fred

Heslar, Deceased,et al., Appellees.

No. 970S216.

Supreme Court of Indiana.

Oct. 27, 1971.

Rehearing Denied Jan. 20, 1972.

Theodore L. Sendak, Atty. Gen., Robert F. Colker, Deputy Atty. Gen., Indianapolis, for appellant.

Don A. Tabbert, William D. Lalley, Indianapolis, for appellees Heslar and Rice.

L. Robert Lowe, Jr., Robert Hollowell, Jr., Indianapolis, for appellee Johnson Chevrolet Co., Inc. Lowe, Linder, Gray, Steele & Wiles, Indianapolis, of counsel.

HUNTER, Judge.

This is an appeal by the State of Indiana from an award for damages in a condemnation suit filed in Marion County Superior Court, Room One. The court appointed and instructed appraisers, after which they appraised the real estate to be taken and they made their report to the court. All parties filed exceptions to the appraisal. The cause was tried by jury and resulted in an award in the amount of one hundred ninety-five thousand dollars ($195,000) to the defendant-appellees Heslar and Rice, the owners of the fee, and one hundred fifty-five thousand dollars ($155,000) to defendant-appellee Johnson Chevrolet Co., Inc., the holder of a lease on the premises. The plaintiff, State of Indiana, filed a Motion to Correct Errors which was overruled and the State appeals.

The appeal essentially concerns the award to Johnson Chevrolet and only incidentally and without directly challenging the award to Heslar and Rice, owners of the fee. Before trial the State filed a Motion in Limine requesting the court to limit the evidence to the fair market value of the property to be taken. The court overruled this motion and the State alleges that court then allowed evidence which went to damages to a business not operated on the property taken and that there was no unity of title in the property taken and other property used by Johnson Chevrolet in the operation of its business.

This property, 1101 North Meridian Street in Indianapolis, was taken to be used in the construction of a limited access highway known as I--65 through the City of Indianapolis. The State needed all the property at 1101 North Meridian and there was no land left after the taking. The land was unimproved and was used by Johnson Chevrolet as its used car lot in conjunction with its dealership, the rest of which lay on tracts of land immediately south of the tract in question. Eleventh Street divided the tract taken and the other properties used. Evidence which concerned damage to the rest of the business by the taking of the tract in question was clearly allowed in over the continuing objection of the State. There was evidence and testimony concerning damage and destruction to the business of Johnson Chevrolet as a whole, while other testimony concerned the lease advantage of Johnson Chevrolet on its leasehold not taken at 1035 North Meridian. Testimony also involved the need for an auto dealer to have its used car lot close to the rest of its dealership and fronting on the same street as its new car dealership. Almost the entire case presented by Johnson Chevrolet concerned the damage to its dealership as a whole caused by the taking of the tract in question.

The elements of damages in a condemnation suit are listed in IC 1971, 32--11--1--6 (Ind.Ann.Stat. § 3--1706 (1968 Repl.)). They are as follows:

'First. The fair market value of each parcel of property sought to be appropriated, and the value of each separate estate or interest therein;

Second. The fair market value of all improvements pertaining to the realty, if any, on the portion of the real estate to be condemned;

Third. The damages, if any, to the residue of the land of such owner or owners to be caused by taking out the part sought to be appropriated;

Fourth. Suth other damages, if any, as will result to any persons or corporation from the construction of the improvements in the manner proposed by the plaintiff.'

We will examine each of these elements as they pertain to the award to Johnson Chevrolet and the allegations of the State.

The first element would be the leasehold interest of Johnson Chevrolet in the property. Generally, the measure of damages where a leasehold interest is taken under eminent domain is the fair market value of the unexpired term of the lease over and above the rent stipulated to be paid. See, Arlen of Nanuet, Inc. v. State (1970), 26 N.Y.2d 346, 310 N.Y.S.2d 465, 258 N.E.2d 890; Luby v. City of Dallas (Tex.Civ.App.1965), 396 S.W.2d 192; City of Chicago v. Shayne (1964), 46 Ill.App.2d 33, 196 N.E.2d 521; Wayne Co., Inc. v. Newo, Inc. (1962), 75 N.J.Super. 100, 182 A.2d 369; City of Santa Cruz v. MacGregor (1960), 178 Cal.App.2d 45, 2 Cal.Rptr. 727; In re Appropriation for Highway Purposes (1957), 166 Ohio St. 249, 142 N.E.2d 219; United States v. Certain Lands, etc. (3d Cir. 1950), 183 F.2d 320; 3 A.L.R.2d, § 3, pp. 290--294; 27 Am.Jur.2d Eminent Domain § 352. There was extensive and uncontroverted testimony that Johnson Chevrolet had no leasehold interest in the property taken, in that it was paying at least as much or more than the fair market value of the lase. Johnson Chevrolet never contended it had such a leasehold interest. It was stated in Douglas v. Indianapolis & N.W. Traction Co. (1906), 37 Ind.App. 332, 76 N.E. 892 that where a tenant fails to plead any interest in the land, he may be deemed to have assented to a recovery of all damages by the landlord.

In addition, there was a stipulation filed stipulating and agreeing that Johnson Chevrolet had no leasehold interest in the subject property and had no interest in any improvements on the property condemned. The stipulation is as follows:

'The defendants, Johnson Chevrolet Co., Inc., Heslar and Rice do hereby stipulate and agree as follows:

1. That Johnson Chevrolet Co., Inc. has no leasehold interest in the premises known as 1101 North Meridian Street, and that the defendant Johnson Chevrolet Co., Inc. has no interest in any improvements on the premises known as 1101 North Meridian Street.

2. That the defendants Heslar and Rice have no interest in any other damage that might accrue to the business of Johnson Chevrolet Co., Inc., caused by the taking of the real estate known as 1101 North Meridian Street by the State of Indiana.

3. That the defendants agree to introduce no evidence relating to the leasehold interest of Johnson Chevrolet Co., Inc., on the premises at 1101 North Meridian Street and will not comment to the jury on same except that the parties may comment that the amount awarded by the jury to the defendants Heslar and Rice as the result of the taking by the State of Indiana of the property known as 1101 North Meridian Street will not be diminished in any way by the amount that might be awarded by the jury to Johnson Chevrolet Co., Inc., and that the amount, if any, awarded to Johnson Chevrolet Co., Inc. as a result of any other damages sustained by it as a result of the taking by the State of Indiana to the business of Johnson Chevrolet Co., Inc. will not be diminished by any amount recovered by Heslar and Rice with respect to the premises known as 1101 North Meridian Street. * * *'

Such a stipulation would seem analogous to a provision in the lease itself stating the rights of the respective parties in case of condemnation. Such provisions have generally been held to be valid. See 96 A.L.R.2d 1140--1178, 27 Am.Jur.2d Eminent Domain § 250. It should also be noted that the lease contained a provision which said the owners of the fee had the right to sell the property and should they do so they could cancel the lease upon six months notice to the lessee, Johnson Chevrolet. An estate in land which could be cancelled at any time does not seem to be an interest which would have a compensable value in a condemnation suit. This is another indication of Johnson Chevrolet's lack of an estate in the land. Thus, it is apparent from the uncontroverted testimony, from the stipulation between the lessor and the lessee, and from the termination provision of the lease that Johnson Chevrolet had no estate in the tract of land taken which would allow damages to accrue to them under the first element of damages listed in the statute.

The above stipulation would also preclude any claim for damages to improvements on the property, which is the second element in the statute. In addition, there was no evidence presented which indicated there were any extensive improvements on the property nor was any evidence presented at trial which showed a right of Johnson Chevrolet to any damages pertaining to improvements on the property. The lessee, therefore, had no right to damages under the second element contained in the statute.

We next consider the third element of damages concerning severance damages to the residue of the land of the owner. Heslar and Rice, the owners in fee, own no other property contiguous or close to the property taken. Johnson Chevrolet, on the other hand, leases and owns other property close to the property taken and uses all the property in conjunction with its automobile dealership. Almost universally there are three requirements to entitle a party to severance damages. They are unity of ownership, unity of use, and contiguity. There is a split of authority as to what constitutes unity of ownership. See 95 A.L.R.2d 887--904. The only case in Indiana dealing with this question is Glendenning v. Stahley (1910), 173 Ind. 674, 91 N.E. 234, which seems to say there must be unity of title. In that case, a man owned an eighty (80)...