Williams v. Alabama Power Co.

• Decision Date: 12 March 1999
• Parties: Velpeau WILLIAMS, Jr. v. ALABAMA POWER COMPANY.
• Court: Alabama Supreme Court

730 So.2d 172

Velpeau WILLIAMS, Jr. v. ALABAMA POWER COMPANY.

1970267.

Supreme Court of Alabama.

March 12, 1999.

John H. Lavette, Birmingham; and Powell Lipscomb, Bessemer, for appellant.

Cavender C. Kimble and Tom S. Roper of Balch & Bingham, L.L.P., Birmingham; and Jon B. Terry of Bains & Terry, Bessemer, for appellee.

KENNEDY, Justice.

This appeal involves an eminent domain proceeding brought by Alabama Power Company, seeking to condemn various parcels of property, including a parcel owned by Velpeau Williams, the appellant. On August 18, 1988, Alabama Power filed a complaint for condemnation in the Probate Court of Jefferson County. The probate court entered an order of condemnation and appointed commissioners to determine the amount of compensation due the landowners. The commissioners assessed the value of Williams's land for the easement sought by Alabama Power at $22,950. In November 1988, Alabama Power appealed the commissioners' finding to the circuit court. Williams demanded a jury trial.

In December 1988, Alabama Power deposited $608,759.23 in an escrow fund held by the probate court. The funds represented the total amount assessed by the commissioners on various parcels, including Williams's property, plus interest. The funds were later placed in an interest-bearing account, and $7,800, the amount offered to Williams before the institution of the condemnation proceeding, was distributed to Williams, pending the outcome of the appeal. The only issue before the circuit court was the amount of "just compensation" Williams should receive for the easement across his land.

On September 29, 1995, a jury entered a verdict awarding Williams $44,000 for the easement across his property. On November 17, 1995, the trial court entered a judgment in favor of Williams for $33,244.40. The trial court's order indicated that the amount of the judgment was calculated by adding to the $44,000 interest calculated at 12% per year from 1988 through 1995 ($18,349.03), and subtracting from that amount $7,800, which is the amount paid to Williams in October 1989, and the $21,304.63 still on deposit with the probate court. In calculating the amount of interest, the trial court applied the version of § 18-1A-211 in effect on the date of the taking of Williams's property, which specified that interest at the rate of 12% should be added to the amount representing the value of the property, calculated from the date of the taking to the date of payment.

Alabama Power and Williams both filed motions to alter, amend, or vacate the trial court's judgment. The trial court denied the motions, and both parties appealed to the Court of Civil Appeals. Williams claimed that the trial court had incorrectly calculated the amount of interest due him, arguing that $39,399.03, not $33,204.40, was the amount he was due. Alabama Power also challenged the interest award, claiming that the trial court should have applied the amended § 18-1A-211, i.e., the version that was in effect on the date of the judgment, rather than the version that was in effect at the time of the taking.

The Court of Civil Appeals held that the trial court should have applied the amended § 18-1A-211. Williams v. Alabama Power Co., 698 So.2d 134 (Ala.Civ.App.1996). It reversed the trial court's judgment and remanded the case for the trial court to recalculate the judgment. This Court denied Williams's subsequent petition for certiorari.¹

On remand, the trial court entered a new judgment, applied the amended § 18-1A-211, and construed that section as precluding an award of prejudgment interest. Citing the language of the statute, the trial court held that "Williams [was] not entitled to any prejudgment interest."

Williams now appeals to this Court, arguing that the amended § 18-1A-211 cannot be construed to preclude an award of prejudgment interest because, he says, the state and federal constitutions require that "just compensation" be paid for property condemned in an eminent domain proceeding and prejudgment interest is part of the just compensation when payment is not made at the time of the taking. Alabama Power argues that the right to interest on a condemnation award can be conferred only by statute. We agree with Williams, and we reverse and remand.

Putting aside the issue of which version of § 18-1A-211 should be applied in this case, we first address Williams's contention that the amended § 18-1A-211(a) cannot be construed to preclude an award of prejudgment interest in a delayed-payment condemnation action, i.e., a condemnation action in which payment is not made contemporaneously with the taking.²

I. Whether Prejudgment Interest is a Part of Just Compensation

The Takings Clause of the Fifth Amendment of the United States Constitution provides that private property shall not be taken for public use "without just compensation." This clause has been interpreted as requiring that to be just, "the compensation must be the full and perfect equivalent for the property taken." This clause has been applied to the states through the Due Process Clause of the Fourteenth Amendment. Monogahela Navigation Co. v. United States, 148 U.S. 312, 326, 13 S.Ct. 622, 37 L.Ed. 463 (1893). In addition, Article XII, § 235, Constitution of Alabama 1901, requires that just compensation be paid to landowners whose property is taken by a corporation "invested with the privilege of taking property for public use."

In 1921, the Supreme Court of the United States recognized that, where compensation is not paid at the time of the taking, the payment of interest from the time of the taking until full payment is made is a "convenient and fair method of ascertaining the sum to which the owner of the land is entitled." United States v. Rogers, 255 U.S. 163, 169, 41 S.Ct. 281, 65 L.Ed. 566 (1921). Two years later, in Seaboard Air Line Ry. v. United States, 261 U.S. 299, 304, 43 S.Ct. 354, 67 L.Ed. 664 (1923), the Supreme Court held that "just compensation" requires that a landowner be put in as good a pecuniary position as he would have been if the landowner's property had not been taken. Expanding upon Rogers, the Court stated that, where the condemnor takes possession before full compensation is paid to the landowner, the landowner "is entitled to such addition as will produce the full equivalent of that value paid contemporaneously with the taking. Interest at a proper rate is a good measure by which to ascertain the amount so to be added." Seaboard Air Line Ry., 261 at U.S. 306, 43 S.Ct. 354.

Since Seaboard Air Line Ry., the Supreme Court has further defined the role of prejudgment interest as part of just compensation in delayed-payment condemnation actions. It is now generally recognized that "[i]nterest from the time of the taking to the time of payment is constitutionally required as a component of just compensation." Powell on Real Property, Vol. 13 § 876.18(3)(b), pp. 79F-168 to 169 (1996); see also Phelps v. United States, 274 U.S. 341, 47 S.Ct. 611, 71 L.Ed. 1083 (1927); Jacobs v. United States, 290 U.S. 13, 54 S.Ct. 26, 78 L.Ed. 142 (1933); Webbs Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 101 S.Ct. 446, 66 L.Ed.2d 358 (1980); and Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 104 S.Ct. 2187, 81 L.Ed.2d 1 (1984).

This Court has also recognized that prejudgment interest is a required element of just compensation in delayed-payment condemnation actions. Jefferson County v. Adwell, 267 Ala. 544, 103 So.2d 143 (1956); McLemore v. Alabama Power Co., 285 Ala. 20, 228 So.2d 780 (1969). In McLemore, this Court held that a landowner is entitled to interest from the date the condemnor takes actual possession of the property until the date of the jury's verdict. In explaining our reasoning, we set forth the following:

"`While the assessed value, if paid at the date taken for the assessment, might be just compensation, it certainly would not be, if payment be delayed, as might happen in many cases, and as did happen in this case, till several years after that time. The difference is the same as between a sale for cash in hand, and a sale on time.'"

285 Ala. at 27, 228 So.2d at 786-87 (quoting Warren v. First Div., St. Paul & Pacific R.R., 21 Minn. 424, 427 (1875)).

Before the enactment of § 18-1A-211, Alabama did not have a statute providing for the calculation of prejudgment interest in delayed-payment condemnation cases.³ However, in 1985, Alabama joined a majority of states in adopting a uniform method of calculating prejudgment interest. See the commentary to § 18-1A-211, Ala.Code 1975. In its original form, § 18-1A-211(a) was a modified version of § 1202 of the Uniform Eminent Domain Code. It read as follows:

"(a) Except as provided in subsection (b), the judgment shall include interest at a rate equal to the rate allowed to be charged on money judgments as set forth in section 8-8-10 as amended at the date of the final order in the circuit court upon the unpaid portion of the compensation awarded. The interest shall commence to accrue upon the date of valuation and be calculated to the earlier of the date of deposits into the probate court or date of entry of the judgment."

However, § 18-1A-211(a) was amended effective July 28, 1995. The amended § 18-1A-211(a) no longer addresses prejudgment interest. It reads, in pertinent part as follows:

"(a) Except as provided in subsection (b), the judgment shall include interest at a rate equal to the annual interest rate prevailing on the 52-week United States Treasury Bills at the date of the final order in the circuit court upon the unpaid portion of the compensation awarded. The interest shall commence to accrue on the date of entry of the judgment."

(Emphasis added.) Although the commentary to § 18-1A-211 was not amended in 1995 and continues to discuss the award of prejudgment interest, the clear language of the amended § 18-1A-211(a) addresses only post-judgment interest.⁴

In holding that Williams...