Case Title: National Auto Truckstops, Inc. v. State

Citation: 2003 WI 95

Docket Number: 2002AP001384

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2003-07-08T00:00:00Z

Document:
2003 WI 95 
 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
02-1384 
 
 
COMPLETE TITLE: 
 
 
National Auto Truckstops, Inc.,  
 
Plaintiff-Appellant-Petitioner, 
 
v. 
State of Wisconsin, Department of 
Transportation,  
 
Defendant-Respondent. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2003 WI App 14 
Reported at:  259 Wis. 2d 745, 656 N.W.2d 798 
(Ct. App. 2002 - Published) 
 
 
OPINION FILED: 
July 8, 2003   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
May 28, 2003   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
St. Croix   
 
JUDGE: 
Eric J. Lundell   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
ABRAHAMSON, C.J., concurs (opinion filed).   
 
DISSENTED: 
SYKES, J., concurs in part/dissents in part 
(opinion filed) 
WILCOX, J., and PROSSER, J., join the 
concurrence/dissent.   
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the plaintiff-appellant-petitioner there were briefs by 
Diane P. Gerth, Bradley J. Gunn, and Leonard, Street and 
Deinard, Minneapolis, Minnesota, and oral argument by Brady J. 
Gunn. 
 
For the defendant-respondent the cause was argued by Pamela 
Magee, assistant attorney general, with whom on the brief was 
Peggy A. Lautenschlager, attorney general. 
 
 
2003 WI 95 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  02-1384   
(L.C. No. 
98-CV-455) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
National Auto Truckstops, Inc.,  
 
          Plaintiff-Appellant-Petitioner, 
 
     v. 
 
State of Wisconsin, Department of  
Transportation,  
 
          Defendant-Respondent. 
 
FILED 
 
JUL 8, 2003 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed in 
part, reversed in part, and cause remanded.    
¶1 
WILLIAM A. BABLITCH, J.   National Auto Truckstops, 
Inc. (National Auto) petitions this court to review a decision 
of the court of appeals that affirmed the exclusion of certain 
evidence relating to the appropriate amount of compensation for 
a partial taking by the Wisconsin Department of Transportation 
(DOT).1  The DOT condemned a portion of National Auto's property 
as part of a reconstruction project of a highway that abutted 
National Auto's property.  We review two issues: (1) whether the 
                                                 
1 Nat'l Auto Truckstops v. Wis. Dep't of Transp., 2003 WI 
App 14, 259 Wis. 2d 745, 656 N.W.2d 798. 
No. 02-1384   
 
2 
 
circuit court erroneously excluded evidence of alleged damages 
due to a change in access to National Auto's property and (2) 
whether the circuit court erroneously excluded evidence based on 
the "income approach" for valuing the taken property.   
¶2 
We 
conclude 
that 
the 
circuit 
court 
erroneously 
excluded the evidence relating to National Auto's alleged 
damages resulting from the change in access.  The circuit court 
and the court of appeals erred in presuming that a frontage road 
necessarily constitutes reasonable access.  Therefore, we remand 
the issue of whether the change in access was reasonable to the 
circuit court.  If a jury finds that the changed access is not 
reasonable, then National Auto is entitled to just compensation 
for the deprivation or restriction of its right of access.   
¶3 
We further conclude that the circuit court properly 
exercised its discretion in excluding evidence based on the 
"income approach" to valuation since "comparable sales" evidence 
was available.  Therefore, we affirm that part of the court of 
appeals' decision that upheld the circuit court's exclusion of 
income evidence for valuation of the partial taking.  
FACTS AND PROCEDURAL HISTORY 
¶4 
National Auto owns a truckstop near the intersection 
of U.S. Highway 12 and Interstate 94 near Hudson, Wisconsin.  
The truckstop is described as a travel center, providing diesel 
fuel sales, gasoline sales, a restaurant, convenience store, 
diesel truck services, and other related services.  National 
Auto leases the truckstop to Twin City East, which operates and 
manages the facility.  In 1996, the DOT condemned a portion (.27 
No. 02-1384   
 
3 
 
acres) of National Auto's frontage along Highway 12, as part of 
a planned reconstruction of the intersection.  The project 
involved widening Highway 12 to four lanes and building a 
frontage road on the condemned property.  The DOT also acquired 
a temporary easement for use during the construction.  Under the 
award of damages, in which National Auto was compensated for the 
partial taking, the DOT did not explicitly purport to take 
National Auto's right of access to Highway 12. 
¶5 
Prior to the reconstruction, the truckstop had two 
points of direct access on Highway 12——one intended for trucks 
and the other for automobiles.  After the reconstruction, all 
vehicles must enter the truckstop via a new frontage road off of 
Highway 12, which can only be accessed at an intersection north 
of the property.   
¶6 
National 
Auto 
filed 
an 
appeal 
under 
Wis. Stat. § 32.05(11) (1999-2000)2 to the Circuit Court for St. 
                                                 
2 All references to the Wisconsin Statutes are to the 1999-
2000 version unless otherwise indicated.  
Wis. Stat. § 32.05(11) provides, in relevant part:  
Waiver of hearing before commission; appeal to circuit 
court and jury.  The owner of any interest in the 
property condemned named in the basic award may elect 
to waive the appeal procedure specified in sub. (9) 
and instead, within 2 years after the date of taking, 
appeal to the circuit court of the county wherein the 
property is located. . . .  The sole issues to be 
tried shall be questions of title, if any, under ss. 
32.11 and 32.12 and the amount of just compensation to 
be paid by condemnor.  It shall be tried by jury 
unless waived by both plaintiff and defendant.  
No. 02-1384   
 
4 
 
Croix County, Judge Eric J. Lundell, presiding, seeking an 
increased amount of compensation for the condemned property than 
the DOT had paid pursuant to the award of damages.  In support 
of its appeal, National Auto retained two appraisers, who 
evaluated the condemnation damages at approximately $1 million.  
The State of Wisconsin (State) brought a motion to exclude these 
appraisals because they, in part, (1) took into account damages 
for the truckstop's change in access and (2) were partly based 
on the "income approach" to valuation.  The circuit court 
granted the State's motion to exclude these appraisals, and the 
appraisers revised their valuations to reflect the court's 
order.  By not using the "income approach" to valuation, the new 
appraisals valued the taken property at $350,000 and $12,550.  
The higher appraisal took into account the on-site impact of the 
reconstruction project (e.g. loss of parking, etc.), whereas the 
lower appraisal only considered the value of the land taken.   
¶7 
At trial, the circuit court prevented National Auto 
from introducing any evidence based on the "income approach" to 
valuation, reasoning that "there is ample evidence of comparable 
sales . . . the property here is not so unique that comparable 
sales are unavailable."  The circuit court also excluded any 
evidence of damages regarding the change in access, concluding 
that the change in access was unrelated to the partial taking 
and that "[t]here is no property right to flow of traffic and 
[that] the control of highway traffic is subject to the police 
power of the State of Wisconsin," citing Narloch v. Dep't of 
Transp., 115 Wis. 2d 419, 340 N.W.2d 542 (1983) and Schneider v. 
No. 02-1384   
 
5 
 
State, 51 Wis. 2d 458, 187 N.W.2d 172 (1971).  In addition, the 
court instructed the jury not to consider damages resulting from 
the change in access and denied National Auto's proposed jury 
instruction on the income approach to valuation.  The jury 
awarded National Auto $275,000.  Both parties brought motions 
for a new trial, which the circuit court denied.  National Auto 
appealed, and the court of appeals affirmed the judgment and 
order of the circuit court.   
¶8 
At the court of appeals, National Auto argued that it 
had a legal right to recover damages related to the change in 
access.  National Auto claimed that the DOT's project deprived 
it of its right of access to Highway 12, which is compensable 
under Wis. Stat. § 32.09(6)(b).3  National Auto conceded that 
                                                 
3 Wis. Stat. § 32.09 provides, in relevant part: 
In all matters involving the determination of just 
compensation 
in 
eminent 
domain 
proceedings, 
the 
following rules shall be followed: 
 . . . . 
(6) In the case of a partial taking of property 
other than an easement, the compensation to be paid by 
the condemnor shall be the greater of either the fair 
market value of the property taken as of the date of 
evaluation or the sum determined by deducting from the 
fair market value of the whole property immediately 
before the date of evaluation, the fair market value 
of the remainder immediately after the date of 
evaluation, assuming the completion of the public 
improvement and giving effect, without allowance of 
offset for general benefits, and without restriction 
because of enumeration but without duplication, to the 
following items of loss or damage to the property 
where shown to exist: 
 . . . . 
No. 02-1384   
 
6 
 
§ 32.09(6)(b) permits the State to restrict or deny access 
without compensation, but only if it is done pursuant to a valid 
exercise of its police power.  National Auto argued that the 
only valid exercise of police power in this case would be if the 
State had declared Highway 12 a controlled-access highway 
pursuant 
to 
Wis. Stat. § 84.25(6),4 
which 
the 
State 
has 
admittedly not done.   
¶9 
The court of appeals disagreed, stating that National 
Auto "misunderstood" its right of access.  The court stated that 
the "existing right of access" under Wis. Stat. § 32.09(6)(b) is 
the right of an abutting property owner to "ingress and egress," 
emphasizing that a property owner's right is to "access," not to 
specific access points.  Nat'l Auto Truckstops v. Wis. Dep't of 
Transp., 2003 WI App 14, ¶8, 259 Wis. 2d 745, 656 N.W.2d 798.  
Because the State did not completely remove National Auto's 
right of ingress or egress to Highway 12, the court concluded 
                                                                                                                                                             
(b) Deprivation or restriction of existing right 
of access to highway from abutting land, provided that 
nothing herein shall operate to restrict the power of 
the 
state 
or 
any 
of 
its 
subdivisions 
or 
any 
municipality to deprive 
or restrict such 
access 
without 
compensation 
under 
any 
duly 
authorized 
exercise of the police power. 
4 Wis. Stat. § 84.25(6) provides:  
Abutting 
owners.  
After 
the 
designation 
of 
a 
controlled-access highway, the owners or occupants of 
abutting lands shall have no right or easement of 
access, by reason of the fact that their property 
abuts on the controlled-access highway or for other 
reason, except only the controlled right of access and 
of light, air or view. 
No. 02-1384   
 
7 
 
that the State did not take National Auto's right of access.  
The court of appeals reasoned that National Auto still had 
access to Highway 12 through the frontage road, that a frontage 
road provides reasonable access to and from a landowner's 
property, and that an alleged diminution in value is not 
compensable 
merely 
because 
the 
State 
makes 
access 
more 
circuitous.  Thus, the court concluded that the circuit court 
did not err in excluding evidence relating to National Auto's 
claim for damages due to the change in access resulting from the 
DOT's reconstruction project. 
¶10 With respect to the exclusion of evidence based on the 
"income approach" to valuation, the court of appeals concluded 
that the circuit court did not erroneously exercise its 
discretion in excluding the evidence.  Reviewing the relevant 
case law, the court observed that "income evidence is never 
admissible where there is evidence of comparable sales."  
Leathem Smith Lodge, Inc. v. State, 94 Wis. 2d 406, 413, 288 
N.W.2d 808 (1980).  The court also noted that there is no 
dispute as to whether evidence of comparable sales was available 
in this case.  Although the court admitted that the case law is 
"somewhat 
confusing 
and 
inconsistent 
in 
this 
area," 
it 
determined that income evidence is generally disfavored as a 
method of valuation.  Nat'l Auto, 259 Wis. 2d 745, ¶12.  
Consequently, the court of appeals concluded that "the trial 
court did not erroneously exercise its discretion when it 
excluded 
the 
income 
evidence 
given 
the 
availability 
of 
comparative sales evidence . . . ."  Id., ¶17. 
No. 02-1384   
 
8 
 
¶11 National Auto petitioned this court for review of the 
following issues: (1) whether the circuit court erred in 
excluding evidence relating to National Auto's claim for damages 
for the change in access and (2) whether the circuit court erred 
in excluding evidence based on the "income approach" to 
valuation.  This court granted National Auto's petition for 
review on February 19, 2003.        
STANDARD OF REVIEW 
¶12 Questions regarding the admissibility of evidence are 
within the circuit court's discretion.  Grube v. Daun, 213 
Wis. 2d 533, 541-42, 570 N.W.2d 851 (1997) (citing State v. 
Pharr, 115 Wis. 2d 334, 342, 340 N.W.2d 498 (1983)).  "Where 
this court is asked to review such rulings, we look not to see 
if we agree with the circuit court's determination, but rather 
whether 'the trial court exercised its discretion in accordance 
with accepted legal standards and in accordance with the facts 
of record.'"  Id. at 542 (quoting Pharr, 115 Wis. 2d at 342). A 
circuit 
court 
properly 
exercises 
its 
discretion 
when 
it 
considers the relevant facts, applies the correct law, and 
articulates a reasonable basis for its decision.  In re Marriage 
of Krebs v. Krebs, 148 Wis. 2d 51, 55, 435 N.W.2d 240 (1989).  
Therefore, this court will affirm a discretionary decision by a 
circuit court as long as the court did not erroneously exercise 
its discretion.  State v. Davis, 2001 WI 136, ¶28, 248 
Wis. 2d 986, 637 N.W.2d 62.   
¶13 In order to properly exercise its discretion, a 
circuit court must "apply the correct standard of law to the 
No. 02-1384   
 
9 
 
facts at hand."  State v. Margaret H., 2000 WI 42, ¶32, 234 
Wis. 2d 606, 610 N.W.2d 475 (citations omitted).  This court 
will reverse a discretionary decision if the circuit court's 
exercise of discretion "is based on an error of law."  Marten 
Transp. v. Hartford Specialty, 194 Wis. 2d 1, 13, 533 N.W.2d 452 
(1995).    
ANALYSIS 
A. CHANGE IN ACCESS 
¶14 Neither party disputes that Highway 12 is not a 
controlled-access highway.  Nevertheless, the State argues that 
the change in access to the truckstop was an exercise of its 
police power and is therefore not compensable.  We disagree.   
¶15 It is undisputed that the DOT acquired the portion of 
National Auto's property pursuant to Wis. Stat. § 84.09.5  As we 
have previously stated, "the Wisconsin statutes specifically 
provide that compensation shall be paid when there is a partial 
taking of premises, such as access rights under the power of 
eminent domain."  Hastings Realty Corp. v. Texas Co., 28 
Wis. 2d 305, 
312, 
137 
N.W.2d 79 
(1965); 
see 
also 
Crown 
Zellerbach Corp. v. Milw. City Dev. Dep't, 47 Wis. 2d 142, 149-
50, 177 N.W.2d 94 (1970).  Similar to this case, Hastings did 
                                                 
5 Wis. Stat. § 84.09 provides, in relevant part:  "(1) The 
department may acquire by gift, devise, purchase or condemnation 
any lands for establishing, laying out, widening, enlarging, 
extending, 
constructing, 
reconstructing, 
improving 
and 
maintaining 
highways 
and 
other 
transportation 
related 
facilities, or interests in lands in and about and along and 
leading to any or all of the same . . . ."  
No. 02-1384   
 
10 
 
not involve a controlled-access highway.  Although the access at 
issue in Hastings was eliminated as opposed to changed, the 
reasoning in Hastings is nevertheless applicable to this case.  
In the case before us the highway has not been 
declared to be access controlled, and it would be 
unlawful for the state highway commission to seize 
access 
rights 
without 
compensation 
and 
without 
following the administrative procedure outlined in 
sec. 84.25, Stats.   
This court in arriving at our decision in this 
case has taken judicial notice of the files of the 
state 
highway 
commission 
in 
regard 
to 
the 
administrative 
proceedings 
declaring 
the 
highways 
controlled access in the cases of Carazalla, McKenna, 
and Stefan Auto Body.  It is apparent from these files 
that the state highway commission does in fact follow 
the administrative procedure of determining after a 
public hearing whether it is "necessary, in the 
interest of the public safety, convenience and the 
general 
welfare 
to 
prohibit 
entrance 
upon 
and 
departure from the highway or street except at places 
specially designated." 
It is apparent that the legislation contemplates 
that the police power of the state shall be exercised 
only after such findings are made.  Sec. 84.25, 
Stats., requires preliminary engineering studies and 
public hearings, which are to be held only after three 
weeks' notice by publication in the county where the 
highway is located.  Witnesses at these hearings give 
testimony showing the necessity of limiting access to 
make travel on the road safer for the general public.  
It is also significant that, with the exception of 
interstate highways, only 1,500 miles of controlled- 
access highways are authorized by the legislature in 
the state——and then only in rural areas.   
 . . . . 
It is evident that the highway commission may 
wish to limit access at particular points, even though 
it is not thought necessary to exercise the powers 
given under sec. 84.25, Stats., and even though a 
No. 02-1384   
 
11 
 
seizure under the police power cannot be justified.  
In such a case the legislature has wisely authorized 
the purchase of access rights as was done in this 
case. (Sec. 32.09(6)(b))  
Hastings, 28 Wis. 2d at 314-16 (emphasis added).  Similarly, we 
reasoned in Crown Zellerbach that "there were no proceedings to 
have West Silver Spring Drive declared a controlled-access 
highway.  . . .  Thus, there has not been any 'duly authorized 
exercise of the police power.'"  Crown Zellerbach, 47 Wis. 2d at 
152.    
¶16 The 
State 
admits 
that 
the 
procedure 
under 
Wis. Stat. § 84.25 was not employed to declare Highway 12 a 
controlled-access highway.  However, it now raises for the first 
time, that the reconstruction project was part of an "interstate 
improvement project;" therefore, the change in access is not 
compensable 
pursuant 
to 
Wis. Stat. § 84.29.6 
 
While 
we 
                                                 
6 Wis. Stat. § 84.29 provides, in relevant part: 
(3) Changes in existing highways and utilities.  
It 
is 
recognized 
that 
in 
the 
construction 
of 
interstate highways in this state to modern standard 
and design, mutually agreed upon by the department and 
the federal agency, to promote the public and social 
welfare, and benefit public travel of the state, and 
meet the needs of national defense, it will become 
necessary for the department to make or cause to be 
made changes in the location, lines and grades of 
existing public highways, railroads and public utility 
transmission lines and facilities. 
(4) Laying new highways for interstate system.  
 . . .   As an interstate highway may be established, 
laid out and constructed as an expressway or freeway 
on and along an existing public highway, reasonable 
provision for public highway traffic service or access 
to abutting property shall be provided by means of 
frontage roads as a part of the interstate highway 
No. 02-1384   
 
12 
 
acknowledge that there was some reconstruction of both Highway 
12 and Interstate 94, it is not clear from the record that the 
reconstruction of Highway 12 was necessarily part of an 
"interstate improvement project" as defined under § 84.29. 
Furthermore, even if the reconstruction project might be 
considered part of an interstate improvement project, National 
Auto is not necessarily precluded from being compensated.  The 
statutory section relied on by the State——§ 84.29(4), states 
that "the right of access . . . shall be acquired [i.e. paid] on 
behalf of the state . . . ." (Emphasis added.)  Thus, based on 
our previous decisions, most notably, Hastings and Crown 
Zellerbach, we conclude that the change in access was not a 
"duly 
authorized 
exercise 
of 
the 
police 
power."  
Wis. Stat. § 32.09(6)(b).       
¶17 Alternatively, the State argues that it was not 
"taking" 
National 
Auto's 
right 
of 
access, 
but 
merely 
"regulating" access pursuant to Wis. Stat. § 86.07(2).7  The 
                                                                                                                                                             
development, or the right of access to or crossing of 
the public highway shall be acquired on behalf of the 
state as a part of the interstate highway improvement 
project.  The occupation or use of any part of an 
existing 
public 
highway 
is 
authorized 
for 
the 
construction of the interstate system.   
7 Wis. Stat. § 86.07(2) provides, in relevant part: 
No person shall make any excavation or fill or install 
any culvert or make any other alteration in any 
highway or in any manner disturb any highway or bridge 
without a permit therefor from the highway authority 
maintaining the highway.  Such permit shall contain 
the statement and be subject to the condition that the 
work shall be constructed subject to such rules and 
No. 02-1384   
 
13 
 
State claims that National Auto should not have had any 
reasonable expectation or right to assume that its access to 
Highway 12 would remain the same.  The State points out that the 
backside of a driveway permit, which was issued as required by 
§ 86.07(2), provided that the DOT had the right to make changes 
to National Auto's driveway as was necessary to facilitate the 
relocation, reconstruction, widening or maintenance of the 
highway or to protect life and property on or adjacent to the 
highway.  However, even if National Auto's access is regulated 
pursuant to § 86.07(2), National Auto must nevertheless be 
compensated if its right of access was taken, as provided under 
Wis. Stat. § 32.09(6)(b).  We have previously held that:   
This section [§ 86.07(2) and Wis. Admin Code § Trans 
231.01] does not deny the right of access but 
regulates access in the interests of public safety and 
convenience.  The trial court properly instructed the 
jury on this point and it was for the jury to 
consider . . . the weight to be given to the testimony 
of the value of the property so affected. 
                                                                                                                                                             
regulations as may be prescribed by said authority and 
be performed and completed to its satisfaction, and in 
the case of temporary alterations that the highway or 
bridge shall be restored to its former condition, and 
that the permittee shall be liable to the town or 
county or state, as the case may be, for all damages 
which occur during the progress of said work or as a 
result thereof.  Nothing herein shall abridge the 
right of the department or the county board or its 
highway committee to make such additional rules, 
regulations and conditions not inconsistent herewith 
as may be deemed necessary and proper for the 
preservation of highways, or for the safety of the 
public, and to make the granting of any such permit 
conditional thereon.   
No. 02-1384   
 
14 
 
Bear v. Kenosha County, 22 Wis. 2d 92, 96, 125 N.W.2d 375 
(1963).  
¶18 In addition, the State notes that when the DOT 
acquired the property, the award of damages did not purport to 
take any access rights from National Auto.  Nevertheless, it is 
undisputed that there was indeed a change in access to and from 
National 
Auto's 
truckstop 
and 
that 
the 
deprivation 
or 
restriction of an existing right of access is compensable under 
Wis. Stat. § 32.09(6).  Therefore, we turn to whether the 
changed access constitutes a "deprivation" or "restriction" of 
National Auto's right of access.      
¶19 We have stated that "a person who owns property 
abutting a public street has a right of access, or right of 
ingress or egress, to and from the street.  Although this right 
is subject to reasonable regulations in the public interest, it 
is a property right, the taking of which requires compensation."  
Narloch, 115 Wis. 2d at 430 (citing Schneider, 51 Wis. 2d at 
463; Stefan Auto Body v. State Highway Comm'n, 21 Wis. 2d 363, 
370, 124 N.W.2d 319 (1963)).  We have clarified that the 
"deprivation or restriction that sec. 32.09(b)(b) specifically 
refers to is that of an 'existing right of access,' not 
'existing 
access 
points.'" 
Id. 
(emphasis 
in 
original).  
Consequently, "[d]eprivation of direct access to a highway does 
not constitute a taking of property provided reasonable access 
remains."  Schneider, 51 Wis. 2d at 463 (emphasis added) (citing 
McKenna v. State Highway Comm'n, 28 Wis. 2d 179, 135 N.W.2d 827 
(1965)).     
No. 02-1384   
 
15 
 
¶20 In Schneider, it was undisputed that the change from 
direct access to access via a frontage road was adequate and 
therefore reasonable.  Id.  Thus, the court in Schneider 
concluded that "[s]ince the state provided reasonable access to 
and from the Schneider property by a frontage road there was no 
taking requiring compensation."  Id.  The court of appeals in 
the present case erred in interpreting this language to mean 
that "[a] frontage road [always] provides reasonable access to 
and from a landowner's property."  Nat'l Auto, 259 Wis. 2d 745, 
¶9.  A frontage road might not always constitute "reasonable" 
access, even though it may in some cases, such as Schneider.  
Therefore, whether there is reasonable access depends on the 
specific facts in a case.   
¶21 The essential inquiry is whether a change in access is 
"reasonable."  Thus, the fact that National Auto has access to 
Highway 12 via a frontage road does not resolve whether that 
access is reasonable.  Rather, this is a question for a jury.  
See, e.g., Narloch, 115 Wis. 2d at 433-34; Bear, 22 Wis. 2d at 
96.  As summed up by the Supreme Court of Iowa, "'No hard and 
fast rule can be stated as to whether an abutting property owner 
has been denied access that is reasonable . . . .  In most 
instances the question is one of fact, not of law, and its 
determination 
depends 
largely 
upon 
the 
evidence 
in 
the 
particular case.'"  Wilson v. Iowa State Highway Comm'n, 90 
N.W.2d 161, 167 (Iowa 1958) (citation omitted); see also 
Seefeldt v. Dep't of Transp., 113 Wis. 2d 212, 220-21, 336 
N.W.2d 182 (Ct. App. 1983) ("Because the reasonableness of 
No. 02-1384   
 
16 
 
access has been placed at issue in this case, the appellants are 
entitled to present evidence to the jury on the question of how 
reasonable their access will be after the highway project is 
completed.")        
¶22 Accordingly, we 
conclude 
that the 
circuit 
court 
erroneously excluded evidence 
relating 
to 
National 
Auto's 
alleged damages from the change in access.  Therefore, we remand 
this issue to the circuit court for a jury to determine whether 
the change in access is reasonable.  If the jury finds that the 
changed access is reasonable, then no compensation is to be 
awarded to National Auto due to the change in access.  However, 
if the jury finds that the changed access is not reasonable, 
then National Auto is entitled to just compensation for the 
deprivation or restriction of its right of access.    
B. INCOME APPROACH TO VALUATION 
¶23 There are three primary methods for appraising the 
value 
of 
commercial 
property——the 
"income 
approach," 
the 
"comparable sales approach," and the "cost approach."  In 
essence, the "income approach" focuses on the income generated 
by a property, the "comparable sales approach" compares the 
sales price of comparable properties, and the "cost approach" 
involves the cost of replacement.   
¶24 National Auto argues that the circuit court erred in 
excluding evidence that valued the condemned property using the 
income approach to valuation.  Specifically, National Auto 
requests that this court declare that the income approach to 
valuation should be routinely admissible at trial, or at least 
No. 02-1384   
 
17 
 
that income evidence should be allowed in this case.  In light 
of our prior decisions that have upheld the exclusion of income 
evidence where comparable sales evidence is available, we 
conclude that the circuit court did not erroneously exercise its 
discretion in excluding the income evidence offered by National 
Auto. 
¶25 In Leathem, this court reasoned that income evidence 
is ordinarily inadmissible to establish property values because 
business income depends on too many variables, such as an 
owner's skill and talent, and is therefore not reliable as a 
guide to fair market value.  Leathem, 94 Wis. 2d at 413.  In 
other 
words, 
"[e]vidence 
of 
net 
income 
is 
ordinarily 
inadmissible for purposes of establishing property values in 
condemnation cases involving commercial enterprises because 
income is dependent upon too many variables to serve as a 
reliable guide in determining fair market value."  Rademann v. 
State Dep't of Transp., 2002 WI App 59, ¶28, 252 Wis. 2d 191, 
642 N.W.2d 600.  The court in Leathem noted three exceptions to 
this rule: (1) when the character or the property is such that 
profits are produced without the labor and skill of the owner; 
(2) when profits reflect the property's chief source of value; 
and (3) when the property is so unique that comparable sales are 
unavailable.  Leathem, 94 Wis. 2d at 413.  However, "[a]s a 
starting point, . . . Wisconsin law holds that income evidence 
is never admissible where there is evidence of comparable 
sales."  Id.  (emphasis added) (citing Rosen v. Milwaukee, 72 
Wis. 2d 653, 662-63, 670-71, 242 N.W.2d 681 (1976); Lambrecht v. 
No. 02-1384   
 
18 
 
State Highway Comm'n, 34 Wis. 2d 218, 227, 148 N.W.2d 732 
(1967)).      
 
¶26 National Auto argues that income evidence should be 
allowed in this case because it is based on non-speculative 
evidence, namely, rental income.  In support, National Auto 
notes that it is not an owner-managed property, and that the 
income from the property is rental income; therefore, the income 
is derived from the real estate itself.  Notwithstanding 
National Auto's arguments, we are bound by our prior case law, 
deeming that "income evidence is never admissible where there is 
evidence of comparable sales." Leathem, 94 Wis. 2d at 413.  In 
Leathem, this court stated that "[b]ecause there was evidence of 
market value based on comparable sales, for that reason alone 
the trial court was justified in holding valuation based on 
income to be inadmissible."  Id. at 415-16. 
 
¶27 As noted by the court of appeals in this case, it is 
undisputed that evidence of comparable sales was available in 
this case.  Nat'l Auto, 259 Wis. 2d 745, ¶10.  The court of 
appeals concluded that prior case law dealing with the exclusion 
of income evidence "all stand for the proposition that income 
evidence is generally disfavored as a method of measuring 
property values and that it is within the trial court's 
discretion to admit or exclude this evidence."  Id., ¶17.  We 
agree with the reasoning and the conclusion reached by the court 
of appeals.  Accordingly, we conclude that the circuit court did 
not erroneously exercise its discretion in excluding evidence 
based on the income approach to valuation.  
No. 02-1384   
 
19 
 
¶28 In sum, we conclude that the circuit court erroneously 
excluded evidence relating to National Auto's alleged damages 
due to the change in access.  Consequently, we remand the issue 
of whether the changed access is reasonable to the circuit 
court.  If a jury finds that the changed access is not 
reasonable, then National Auto is entitled to just compensation 
for the deprivation or restriction of its right of access.  We 
further conclude that the circuit court properly exercised its 
discretion in excluding evidence based on the "income approach" 
to valuation since "comparable sales" evidence was available. 
By the Court.—The decision of the court of appeals is 
affirmed in part, reversed in part, and remanded to the Circuit 
Court for St. Croix County for further proceedings consistent 
with this opinion.    
 
 
No.  02-1384.ssa 
 
1 
 
¶29 SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE   (concurring).  
I join only the conclusions set forth in ¶28 of Justice 
Bablitch's opinion. 
 
 
No.  02-1384.dss 
 
1 
 
 
 
¶30 DIANE S. SYKES, J.   (concurring in part, dissenting 
in part).  I agree with the majority's analysis of this case, 
with one exception.  I do not agree that the "essential inquiry" 
in a partial takings case involving a change of highway access 
is "whether the change in access is 'reasonable.'"  Majority 
op., ¶21. 
¶31  It is well-established that "'the right of access to 
and from a public highway is one of the incidents of the 
ownership or occupancy of land abutting thereon.'"  Hastings 
Realty Corp. v. Texas Co., 28 Wis. 2d 305, 310, 137 N.W.2d 79 
(1965)(quoting Royal Transit, Inc. v. Village of West Milwaukee, 
266 Wis. 271, 277, 63 N.W.2d 62 (1954)) (emphasis in original).  
"'[H]ighway-access rights are but one of a bundle of rights 
which appertain to a parcel of real estate.'"  Id. at 311. 
¶32 Prior to the construction at issue in this case, 
National Auto, whose property abuts Highway 12, had access to 
Highway 12 via two driveways providing direct ingress and egress 
into the truckstop.  Both of these direct access points were 
eliminated as a result of the reconstruction of Highway 12.  The 
truckstop is now accessible only via a frontage road off of 
Brakke Road.  Brakke Road is accessible from Highway 12 at an 
intersection to the north of the truckstop.  Thus, National 
Auto's access to Highway 12 has been rerouted to a frontage road 
that can be accessed from Highway 12 only via Brakke Road. 
¶33  As the majority notes, Wis. Stat. § 32.09(6)(b) 
specifies that the compensable items of loss or damage in an 
No.  02-1384.dss 
 
2 
 
eminent domain partial taking of property for public use include 
"[d]eprivation or restriction of existing right of access" to 
the highway.  Majority op., ¶¶17-18; Wis. Stat. § 32.09(6)(b).  
Nevertheless, the majority concludes that if "the jury finds 
that the changed access is reasonable, then no compensation is 
to be awarded to National Auto due to the change in access."  
Majority op., ¶22.  The majority further states that "if the 
jury finds that the changed access is not reasonable, then 
National 
Auto 
is 
entitled 
to 
just 
compensation 
for 
the 
deprivation or restriction of its right of access."  Id. 
¶34  Even assuming that the elimination of National Auto's 
direct 
access 
to 
Highway 
12 
in 
this 
case 
is 
properly 
characterized as a mere "change in access," it is not true that 
compensation is owed only if the change in access is "not 
reasonable."  The rule the majority cites, whereby the provision 
of reasonable alternative access obviates the requirement of 
compensation, applies only in partial takings cases involving 
controlled access highways and the invocation of the state's 
police power.  See Schneider v. State Division of Highways, 51 
Wis. 2d 458, 462, 187 N.W.2d 172 (1971); majority op., ¶19.  In 
Schneider this court held that "[w]here access to a highway is 
controlled under the exercise of the police power and reasonable 
access remains, no compensation is required."  Id. 
¶35  The state conceded that this is not a controlled 
access highway, and the majority has correctly concluded that 
this highway project was not otherwise undertaken as an exercise 
No.  02-1384.dss 
 
3 
 
of the police power.  Majority op., ¶¶14-18.  Accordingly, the 
Schneider rule does not apply. 
¶36  Thus, even assuming that this elimination of access is 
a mere change of access, compensation is owed regardless of 
whether the change of access is reasonable.  Highway access 
rights are property rights, and the eminent domain statute 
specifically provides that compensation shall be paid for 
"[d]eprivation or restriction of existing right of access" to 
the highway.  Wis. Stat. § 32.09(6)(b).  The reasonableness or 
efficacy of the alternative access may have a bearing on the 
amount of damages ultimately awarded for the taking, to the 
extent that the change in access affects fair market value.  But 
the question of whether or not there has been a taking of access 
rights for which compensation is owed does not turn on whether 
the change in access is reasonable. 
¶37  This case is controlled by Narloch v. State Department 
of Transportation, 115 Wis. 2d 419, 424, 340 N.W.2d 542 (1983).  
Narloch was an eminent domain partial takings case precipitated 
by the relocation of Highway 59 in the Town of Eagle.  Four 
property owners with both developed and undeveloped rights of 
access to Highway 59 had compensation claims in connection with 
the project.  The State Highway Department condemned and took 
"all existing future or potential common law or statutory 
easements or rights of access" of the property owners to Highway 
59.  Id. at 424. 
¶38  Because some of the property owners' access rights in 
Narloch were as yet undeveloped and unpermitted, this court 
No.  02-1384.dss 
 
4 
 
addressed the following issue: "Does 'existing right of access' 
in sec. 32.09(6)(b), Stats., mean only access points in use and 
for which the Department had granted permits at the time of a 
condemnation?"  Id. at 422 (emphasis added.)  The Department had 
argued that "the phrase 'existing right of access' . . . mean[s] 
only those access points that are existing or in use at the time 
of the taking, and that became driveways for which the 
Department previously granted permits pursuant to sec. 86.07(2) 
and Wis. Admin. Code ch. Hy 31."  Id. at 429.  We rejected this 
argument, and concluded that "'existing right of access' in sec. 
32.09(6)(b), Stats., includes the right of an abutting property 
owner to ingress and egress, and the right to be judged on the 
criteria for granting permits for access points under sec. 
86.07(2) and Wis. Admin. Code ch. Hy 31."  Id. at 432. 
¶39  We began our analysis in Narloch by observing that "a 
person who owns property abutting a public street has a right of 
access, or right of ingress and egress, to and from the street."  
Id. at 430 (citing Stefan Auto Body v. State Highway Comm'n, 21 
Wis. 2d 363, 370, 124 N.W.2d 319 (1963)).  We also noted that 
"[a]lthough this right is subject to reasonable regulations in 
the public interest, it is a property right, the taking of which 
requires compensation."  Id. (citing Schneider, 51 Wis. 2d at 
463). 
¶40  Each of the property owners in Narloch had suffered 
varying degrees of restriction or deprivation of their right of 
access to Highway 59 through the elimination or relocation of 
No.  02-1384.dss 
 
5 
 
access points on Highway 59 and/or rerouting of access to 
Highway 59 via an adjacent road.  We held that: 
Under 
the 
Department's 
interpretation 
of 
sec. 
32.09(6)(b), Stats., "existing right of access" would 
mean "existing access points that have been improved 
and for which the department had granted permits under 
sec. 86.07(2), and Wis. Admin. Code ch. Hy 31."  This 
construction, however, renders the inclusion of the 
word 
"right" 
superfluous. 
 
The 
deprivation 
or 
restriction that sec. 32.09(6)(b) specifically refers 
to is that of an "existing right of access", not 
"existing access points."  (Emphasis added.)  The 
statute also recognizes that even though the state may 
deprive 
or 
restrict 
access 
without 
compensation 
pursuant to "a duly authorized exercise of the police 
power," when a partial taking occurs, the loss of an 
existing right of access is an item of loss or damage 
to the remaining property that is compensable. 
Id. at 430-31. 
 
¶41  Because the relocation of Highway 59 at issue in 
Narloch involved neither a controlled access highway nor a 
restriction of access pursuant to an exercise of the police 
power, we held that the condemnation and taking of the property 
owners' access rights required compensation.  Id. at 431-32.  
Important to the analysis here, we did not hold in Narloch that 
the requirement of compensation depended upon whether the 
property owners were left with reasonable alternative access to 
Highway 59.  Indeed, the property owners in Narloch retained at 
least some form of access to Highway 59 after the construction; 
their 
right 
to 
compensation 
was 
not 
affected 
by 
any 
determination of the "reasonableness" of what replaced their 
prior access. 
 
¶42  As I have noted, the state conceded that Highway 12 is 
not a controlled access highway, and the majority properly holds 
No.  02-1384.dss 
 
6 
 
that this project was not otherwise undertaken pursuant to the 
state's police power.  National Auto's right of access to 
Highway 12 was fully developed and properly permitted at the 
time of the taking, and there is no dispute that its two 
driveways onto Highway 12 were completely eliminated as a result 
of this highway reconstruction.  While the state has provided a 
form of alternative access——first to a frontage road, then to 
Brakke Road, and only then to Highway 12——the question of 
whether there has been a compensable taking does not depend upon 
a determination of the reasonableness of this alternative 
access.  There has been a "deprivation or restriction of 
existing right of access" under Wis. Stat. § 32.09(6)(b); the 
reasonableness or unreasonableness of the alternative access is 
relevant only perhaps to the amount of damages, not to the right 
to compensation in the first place.  
¶43  Accordingly, to the extent that the majority has 
conditioned the requirement of compensation on a determination 
of the 
reasonableness 
of 
the change 
in 
access, I 
must 
respectfully 
dissent. 
Under 
Narloch 
and 
Wis. Stat. § 32.09(6)(b), there has been a compensable partial 
taking of National Auto's access rights in this case.  The only 
remaining question is the amount of the damages award for the 
taking of those access rights.    
¶44 I am authorized to state that Justices JON P. WILCOX 
and DAVID T. PROSSER, JR. join this concurring/dissenting 
opinion.   
 
No.  02-1384.dss 
 
7 
 
 
 
 
 
No.  02-1384.dss 
 
1