State v. Innkeepers of New Castle, Inc.

• Citation: 375 N.E.2d 1129
• Decision Date: 16 May 1978
• Docket Number: No. 1-1077A236,1-1077A236
• Parties: STATE of Indiana, Appellant (Plaintiff below), v. INNKEEPERS OF NEW CASTLE, INC., Appellee (Defendant below).
• Court: Court of Appeals of Indiana

Page 1129

375 N.E.2d 1129

STATE of Indiana, Appellant (Plaintiff below), v. INNKEEPERS OF NEW CASTLE, INC., Appellee (Defendant below).

No. 1-1077A236.

Court of Appeals of Indiana,First District.

May 16, 1978.

Theodore L. Sendak, Atty. Gen., Dennis K. McKinney, Deputy Atty. Gen., Indianapolis, for appellant.

Robert J. Maley, Jr., Harrington, Maley, Gardner & Sayre, Richmond, James C. Cordes, Cordes, Baker & Bodwell, Connersville, for appellee.

ROBERTSON, Judge.

Plaintiff-appellant, State of Indiana (State) filed eminent domain proceedings against Andrew and Lucille Tabor in December, 1969, to appropriate certain strips of property bordering upon and access rights to Indiana State Road 3 near New Castle. In September, 1971, State moved to join defendant-appellee Innkeepers of New Castle, Inc. (Innkeeper) as a party defendant, and this motion was subsequently granted. Separate trials for Innkeeper and for the Tabors were granted, and in December, 1976, a jury trial was held to determine the damages to be awarded to Innkeeper. A verdict for damages in the sum of $800,000.00 was rendered by the jury, and the court entered judgment against the State for $800,000.00 plus $335,254.79 in interest, for a total of $1,135,254.79. The State now appeals from a denial of its motion to correct errors.

The State has raised one issue in its appeal: Did the trial court err by excluding evidence regarding the relationship between Innkeeper and the Tabors?

We reverse.

The substance of the controversy in this case dates back to July 8, 1966, at which time Tabor, as a representative of a proposed Holiday Inn Motel, made an application for a curb cut (permission to construct a driveway) onto Indiana State Road 3 near New Castle. Permission for this curb cut was denied because of plans to change State Road 3 in that area into a limited access highway. A portion of the letter from the State Highway Commission denying permission for the curb cut, dated November 29, 1966, reads as follows:

The proposed Right-of-Way in this area will be a Limited Access Right-of-Way and only a limited number of points of access will be allowed on the Limited Access portion of the project. These points of access will be limited to where there is an existing or platted county road or street and . . . (where) there are existing drives to existing residences. Since you are apparently the owner of all of the property between County Road 300 South, and the proposed Sandy Gale Avenue, we suggest that a frontage road parallel to State Road 3 between the above mentioned roads be constructed to serve the proposed Holiday Inn and any other commercial establishments or residences which might develop upon this property.

In April, 1969, the State offered to purchase from the Tabors, for approximately $7,000.00, the strips of land and access rights which were needed to convert State Road 3 into a limited access road, which the Tabors refused. In May, 1969, Tabors sold the portion of their land on which the Holiday Inn was being built to Innkeeper. This sale left the Tabors with title to two parcels of land, located on either side of the Holiday Inn, each of which fronted State Road 3 on one side and a county road on the other. The sale also left the land on which the Holiday Inn was located accessible only by way of State Road 3.

In December, 1969, the State filed its condemnation complaint against the Tabors to appropriate the small strip of land abutting State Road 3 (the State was apparently unaware of the transfer of land from the Tabors to Innkeeper). The purpose of this condemnation was to prevent access to State Road 3 from these parcels of land. The State finally joined Innkeeper as a party defendant but again failed to join any of the mortgagees of the land to be appropriated.

The case finally went to trial for the sole purpose of determining the damages suffered by Innkeeper as a result of the appropriation of its land and access rights. Innkeeper's witnesses testified that as a result of the State's appropriation, the Holiday Inn was completely landlocked and inaccessible to the public. Its witnesses further testified that Innkeeper suffered damages to the residue of its property and that the measure of damages inflicted upon this residue should be measured by the cost of construction of the motel. The estimates of the cost of construction given by Innkeeper's witnesses amounted to approximately $762,000.00 and $812,000.00.

The State attempted to show that the motel was not in fact landlocked by proving that Tabor was the major shareholder and chief executive officer of Innkeeper, that Tabor knew at the time he conveyed the land to Innkeeper that the Motel would soon lose its access to State Road 3, and that Innkeeper therefore had an implied easement by necessity over the Tabors' land. However, Innkeeper filed a motion in limine to prevent the introduction of any evidence of such nature, which was granted by the trial court. During trial, the court refused to allow the State to question Tabor concerning his interest in Innkeeper and his knowledge, at the time of the transfer of land to Innkeeper, of the State's plans to convert State Road 3 to a limited access road. The trial court further refused to allow the State's expert witnesses, Chitwood and Banowitz, to testify as to their estimates of the damages caused by the condemnation because they were assuming that the motel was not landlocked. The State argues that the exclusion of this evidence constituted reversible error.

It is the State's contention that the evidence excluded at trial was sufficient to show that Innkeeper had an implied easement over Tabor's land sufficient to provide access to the Holiday Inn, and the jury, therefore, should not have awarded Innkeeper its construction costs as damages to the residue of its property. We agree that evidence regarding an implied easement should have been admitted, and the judgment of the trial court must therefore be reversed and...