The STATE of Texas, Petitioner, v. Jerry WINDHAM, et al., Respondents.
No. D-0619.
Supreme Court of Texas.
June 10, 1992.
Rehearing Overruled Oct. 21, 1992.
837 S.W.2d 73
Vaughan E. Waters, A.W. Davis, Bryan, for respondents.
CORNYN, Justice.
We decide in this condemnation action involving a partial taking whether the trial court erred by excluding evidence offered by the condemnor, controverting that of-fered by the landowner and admitted by the court, regarding the appropriate eco-nomic unit to be considered by the jury for determining the market value of the part taken. We hold that the trial court revers-ibly erred by excluding such evidence. Be-cause the court of appeals affirmed the trial court‘s erroneous exclusion of the con-demnor‘s evidence, 803 S.W.2d 340, we re-verse the judgment of the court of appeals and remand this case for a new trial.
This dispute arose when the petitioner, the State of Texas acting through its De-partment of Highways and Public Trans-portation, condemned approximately two acres out of a nineteen acre tract belonging to respondents, Jerry Windham and Frank Thurmond (collectively referred to as “Windham“). The part taken consists of a 110 foot deep strip of Windham‘s land lying immediately adjacent to State Highway 6 to be used for widening the existing high-way. The county court appointed a panel of special commissioners to determine the amount of adequate compensation to be paid by the State to Windham. See
Prior to trial, Windham filed a motion in limine in which he stipulated to the State‘s right to condemn the 2.12 acres sought by the State and expressly waived his right to damages to the 16.88-acre remainder. However, Windham purported to unilater-ally designate a larger strip of land, 200 feet wide and consisting of 3.84 acres im-mediately adjacent to the existing highway, as the economic unit upon which he con-tended the market value of the part taken should be based.
Windham contended the 2.12 acres taken by the State was configured in such a manner that it could not be considered a self-sufficient economic unit for commer-cial development purposes which, in Wind-ham‘s opinion, was the highest and best use of his property. Windham argued that a 200 foot wide strip could be used for commercial development and thus, an addi-tional 1.64 acres should be added to that sought by the State to comprise the appro-priate economic unit to be considered by the jury in assessing the market value of the land condemned. Windham‘s motion in limine sought to exclude evidence of the market value of the 19-acre tract as a whole, and of the value of the condemned tract as a percentage of the whole, because he contended such an “averaging” method of valuation would not constitutionally compensate him for his loss.
The trial court granted Windham‘s mo-tion in limine and ordered that all testimo-ny regarding the market value of the part taken be based on the 3.84-acre tract desig-nated by Windham as the appropriate eco-nomic unit. The court did not allow the State to present evidence to support its contention that the market value of the condemned land should be based on an economic unit consisting of the entire 19-acre tract, which it contended had a highest and best use of being held for investment purposes. Thus the only evidence of the appropriate economic unit to be used for
After the trial court excluded the State‘s proffered evidence of the appropriate eco-nomic unit, the State perfected a bill of exception consisting of the testimony of its expert, Clemo Ray. Ray‘s testimony dis-puted Windham‘s economic unit analysis; he testified instead that the entire 19 acres formed the appropriate economic unit based on the highest and best use of the property and he proffered his opinion of the market value of the condemned proper-ty based on this analysis. In Ray‘s opinion, the highest and best use of the land was to hold it for investment purposes because high density commercial development was not at that time economically feasible. Ray testified that because each acre of the 19 acres was of equal value, in his opinion, the land in close proximity to the highway was of equal value to that farther away from the highway. Moreover, Ray also disagreed with Windham‘s claim that the 3.84 acres adjacent to the highway com-prised an independent economic unit be-cause there was no current demand to sub-divide the property into tracts of that size. Based on these premises, Ray appraised the value of the entire 19-acre tract at $0.77 per square foot. Because each acre had an equal value in his opinion, he valued the 2.12-acre part taken by the State at $0.77 per square foot for a total value of $71,000.00.
Ray was, however, allowed to present some expert testimony before the jury. His testimony was confined by the court‘s ruling on the motion in limine to a valua-tion based on the economic unit designated by Windham. Using comparable sales in the area as his method of determining mar-ket value, Ray testified that the value of the 3.84-acre tract was $1.00 per square foot. Experts testifying on behalf of Windham appraised the designated 3.84-acre tract at a figure between $1.50 and $2.00 per square foot. Ultimately, the jury found the market value of the 2.12-acre tract taken by the state to be $1.50 per square foot, or $138,520.50.
The trial court rendered judgment in ac-cordance with the jury‘s verdict.1 The court of appeals affirmed the trial court‘s judgment based on its interpretation of Buffalo Bayou, Brazos & Colorado R.R. Co. v. Ferris, 26 Tex. 476 (1863), which construed the precursor of Article I, sec-tion 17 of our constitution. That section provides: “[n]o person‘s property shall be taken, damaged or destroyed for or applied to public use without adequate compensa-tion being made, unless by the consent of such person....”
In Carpenter2 we held that when only a part of the land is taken, the “just compen-
Thirty years later, in State v. Meyer, we recognized the right of the landowner in a condemnation case to waive his claim for damage to the remainder and proceed to trial solely on the issue of the market value of the land taken. 403 S.W.2d 366, 374 (Tex.1966). Therefore, when the landown-er waives his claim for damage to the re-mainder, the trial court properly excludes evidence of any enhancement of value to the remainder because it is legally irrele-vant to the issue of the market value of the part taken. Id. Further, Meyer expressly disapproved calculation of fair market val-ue based on the “average” unit value of the entire tract when it is undisputed that the land taken has a higher unit value than the remainder at the time of its condemna-tion. Id. at 375.
When the severed portion of the land can be considered as an independent economic unit, the market value can be determined without reference to the re-mainder. See City of Tyler v. Brogan, 437 S.W.2d 609, 613 (Tex.Civ.App.--Tyler 1969, no writ). A different situation arises, how-ever, when the portion of the land taken by the State, considered without reference to the remainder, cannot be considered an in-dependent economic unit reflecting the highest and best use of the property and would thus deprive the land owner of ade-quate compensation for the part taken if considered solely as severed land.
The State contends that it has a right to offer competing evidence of the appropriate economic unit for the jury to consider based on its opposing view of the highest and best use of the land. Wind-ham did not seek damages to part or all of his remainder as such. To the contrary, he contends that the 2.12 acres the State took must be valued based on the per square foot value of a 3.84-acre economic unit he designated.3 This, Windham asserts, is be-cause the highest and best use of the prop-erty cannot be accomplished on the 2.12 acres of condemned property as config-ured, and that the law reserves only to the condemnee the right to designate the eco-nomic unit under these circumstances. The State counters that when the highest and best use of the land is disputed, it is for the jury to decide which use is appropriate, and thus whether the condemnee‘s evidence of valuation is correct, when it determines the market value of the condemned tract. It disagrees that the landowner has the legal right to designate unilaterally an economic unit for valuation purposes that the con-demnor cannot controvert. We agree with the State.
Windham contends that the condemnee has the absolute right to designate the appropriate economic unit to determine the market value of the severed land, relying on Southwestern Bell Telephone Co. v. Ramsey, 542 S.W.2d 466 (Tex.Civ.App.--Tyler 1976, writ ref‘d n.r.e.). But this reli-ance is misplaced. In Ramsey, the con-demnee owned a 320-acre tract used entire-ly for grazing purposes. Id. at 470. The condemnor took an easement to run utility lines measuring 10 x 3,515 feet, or 0.807 acre. The landowners first sought, and the jury awarded, damages for the 10 foot strip taken by the telephone company. Ad-ditionally, the landowners sought, and the jury awarded, severance damages for a part of the remaining land consisting of a 240 foot strip of land adjacent to and run-ning the entire length of the easement, comprising 19.36 acres. By motion in li-mine, the landowners disclaimed any right to damages to the rest of the remaining land. The trial court entered judgment for the landowner based on this theory and the jury‘s findings. Neither party disputed that the highest and best use of the land taken as well as the 240 foot strip of land immediately adjacent to that taken was for commercial or industrial purposes. Id.
On appeal, the telephone company claimed that the exclusive method of valua-tion when the part taken was not a “self-sufficient economic unit,” as both parties agreed the condemned 10 foot wide strip was not, was to consider the average price per acre of the entire remainder. Id. at 470. The court of appeals disagreed. It held that the trial court did not err when it allowed the condemnee to designate a 240 foot strip of land adjacent to the 10’ strip condemned for which it sought remainder damages. The court held:
Ordinarily a landowner has a right to claim severance damages to the entire remainder provided it is contiguous and there is unity of use. (cases cited). This is not to say, however, that a landowner is compelled to claim severance damages to his entire remaining land. In instanc-es where a substantial portion of the remainder is suitable and adaptable to commercial or industrial use, or some other specific use, and the other part of the remainder is not suitable or adapta-ble to the same purpose, the landowner is permitted to claim severance damages to only that portion thereof suitable and adaptable to specific uses. (case cited).
Id. at 472. The Ramsey court noted that when the landowner claimed damages to the remainder, the landowner has the bur-den of proving those damages. And, since the landowner had that burden to prove damages, the Ramsey court found nothing wrong, under the facts of that case, with allowing the condemnee to waive his claim for damages to part but not all of the remainder. Id. at 472. Ramsey, however, is readily distinguished from this case by the fact that Windham claims the right to limit the jury‘s consideration to what he believes to be the appropriate economic unit. Windham did not, like the landown-ers in Ramsey, seek damages for the 2.12 acres the State condemned and additional, remainder damages for part but not all of
Because the trier of fact should be able to consider all competing evidence of valua-tion supported by otherwise admissible ex-pert testimony, the trial court erroneously excluded the State‘s evidence of the eco-nomic unit to be considered by the jury in deciding the market value of the part tak-en4. Because such error obviously sub-stantially affected the jury‘s finding on the only contested issue in the case, we hold that such exclusion was harmful error. See
DOGGETT, J., concurs.
MAUZY, J., dissents.
DOGGETT, Justice, concurring.
I concur in today‘s judgment because of my confidence in the jury system. In this case, the jury should be able to consider evidence of a common value between the portion of property taken and that not tak-en. In State v. Meyer, 403 S.W.2d 366 (Tex.1966), a valuation based on the worth of the entire property was rejected because “it is beyond dispute that the land being condemned had, at the time of the taking, a significantly higher per acre market val-ue than the land not being condemned....” Id. at 375 (emphasis in the original). Here, the State seeks to offer evidence that all of the property, the taken as well as the un-taken, shared an equal value. See 803 S.W.2d at 340. Whether that evidence sup-ports a finding of a shared value is proper-ly determined by a jury. See City of Rich-ardson v. Smith, 494 S.W.2d 933, 938-39 (Tex.Civ.App.--Dallas 1973, writ ref‘d n.r.e.).
MAUZY, Justice, dissenting.
The court today legitimizes a mechanism that dramatically enhances the State‘s pow-er to deprive Texas landowners of their property without full compensation. At is-sue is whether a landowner has the right to designate an economic unit reflecting the highest and best use of property con-demned by the State. Because today‘s opinion compromises that right, I dissent.
The Texas Constitution prohibits the State from taking property for public use without “adequate compensation.”
Since Buffalo Bayou, courts have en-forced the constitutional guarantee of ade-quate compensation by allowing the land-owner to choose the method by which the value of the land taken is determined. Un-der one such method, recognized and ap-proved in State v. Meyer, 403 S.W.2d 366, 374 (Tex.1966), the landowner may waive all severance damages and seek an apprais-
The law as developed in Meyer and Ramsey recognizes the landowner‘s right to fo-cus the jury‘s attention exclusively on the part taken, or on a designated area sub-suming that part. This approach is consis-tent with the axiom of State v. Carpenter: the landowner‘s compensation for the part taken is to be determined without reference to the remainder.
The law was thus clear on this point until 1983, when the Texas Legislature, appar-ently dissatisfied with Carpenter, decided to change this basic rule. With its enact-ment of
With today‘s opinion, the court effective-ly resurrects the statute held unconstitu-tional in Enterprise and Roberts. Even when a landowner waives damages to the remainder, a court will now be obligated to allow evidence concerning the remaining land whenever the State offers a land valu-ation theory based on the whole tract. This approach undercuts the protections ar-ticulated in Meyer and Ramsey, and effec-tively deprives the landowner of the right to choose a method of valuation.
The method chosen by the landowner in this case is essentially the same as the method chosen by the landowner in Ramsey.2 In both cases, the condemned land abutted a highway, and was thus substan-tially more valuable than the rest of the tract. In both cases, the land condemned was too small to be a self-sufficient eco-nomic unit, so the landowner designated a larger area subsuming the part taken for the purpose of determining a fair per-acre value. And in both cases, the trial court properly excluded any evidence concerning the remaining land.
This time, though, this court steps in to change the rules. No longer will a land-owner have the right to choose an appropri-ate economic unit for the highest and best use of his or her own property. Nor will the landowner be able to prevent the ad-mission of evidence concerning the entire remainder. All the State need do is assert that the highest and best use of the prop-erty would result in a constant value per acre throughout the tract, and the trial court will be obligated to admit evidence that clearly would have been inadmissible under Meyer and Ramsey.
Notes
From a preponderance of the evidence, what do you find was the market value of the 2.12 acre (92,347 square feet) strip of land con-demned for highway purposes on February 28, 1986, considered as severed land?
Answer in dollars and cents.
ANSWER: 138,520.50 ($1.50 sq. ft.)
Windham contends that this section of the Property Code is unconstitutional in reliance on State v. Enterprise Co., 728 S.W.2d 812 (Tex. App.--Houston [14th Dist.] 1986, writ ref‘d n.r.e.). Because of our disposition of this case we do not reach this issue. We will not pass on the constitutionality of a statute when the case may be decided on independent, alternative grounds. Baptist Hosp. of Southeast Texas, Inc. v. Baber, 714 S.W.2d 310, 310 (Tex.1986); San Antonio General Drivers, Helpers Local No. 657 v. Thornton, 156 Tex. 641, 647, 299 S.W.2d 911, 915 (1957) (orig. proceeding).