Case Title: City of Manhattan v. Kent

Citation: 228 Kan. 513, 618 P.2d 1180

Docket Number: 51,077

State: kansas

Court: Kansas Supreme Court

Date: 1980-11-01T00:00:00Z

Document:
228 Kan. 513 (1980)
618 P.2d 1180
In the Matter of the Condemnation of Land for Municipal Purposes. CITY OF MANHATTAN, KANSAS, Appellant,
v.
REX J. KENT and EMMA J. KENT; STEVENSON SIGN SERVICE, INC.; THOMAS SIGN SERVICE and THE FEDERAL LAND BANK OF WICHITA, Appellees.
No. 51,077

Supreme Court of Kansas.
Opinion filed November 1, 1980.
Charles D. Green, of Arthur, Green, Arthur & Conderman, of Manhattan, argued the cause and was on the brief for the appellant.
Howard W. Harper, of Harper & Hornbaker, Chartered, of Junction City, argued the cause and was on the brief for appellees Kent.
Thomas P. Fay, of Fay & Fay, of Manhattan, was on the brief for the appellee-cross-appellant Thomas Sign Service.
The opinion of the court was delivered by
McFARLAND, J.:
The City of Manhattan instituted proceedings in eminent domain for a total taking of a 71.43-acre tract of land for airport expansion purposes. Thomas Sign Service leases, for sign purposes, a 50-foot by 2,300-foot strip of the tract adjacent to the Kansas Highway 18 right-of-way. The appraisers' report found the total value of the tract to be $258,650 and, in an *514 advisory report, stated that $21,000 of said value was attributed to the signs. The City and the landowners, Rex J. and Emma J. Kent, appealed to the district court.
A dispute arose in district court as to the proper extent of the lessee's participation in the upcoming jury trial. The City maintains: (1) Lessee has no right to participate in the jury trial wherein the fair market value of the land as a unit is determined; and (2) the lessee could only participate in a post-trial proceeding pursuant to K.S.A. 26-517 for division of the award. The landowners and lessee maintain: (1) Lessee has the right to unlimited participation as a separate party thereto; (2) lessee is entitled to introduce evidence as to the specific dollar value of its leasehold interest; (3) the jury should be instructed to determine the value of the leasehold, separate and distinct from the value of the unencumbered whole; and (4) any limitation on the lessee's participation at trial would deny it due process of law.
The district court determined that the lessee would be afforded limited participation at trial and set guidelines for the lessee's participation. The court held inter alia that evidence could not be admitted concerning the specific value of the leasehold interest and that the leasehold interest could only be considered as a factor in arriving at the fair market value of the tract.
The condemner, landowners, and lessee were dissatisfied with the interlocutory order and this appeal was duly perfected pursuant to K.S.A. 60-2102(b). The case before us is on transfer from the Court of Appeals. Inasmuch as the landowners and the lessee have identical positions on the single issue on appeal, for simplification we will henceforth refer only to the lessee.
The sole issue on appeal is the propriety of the district court's determination of the extent of the lessee's participation in the jury trial, including the exclusion of evidence as to the specific value of the leasehold interest.
The appealed-from interlocutory order provides:
Without burdening this opinion with an exhaustive review of the law of eminent domain, some basic principles need to be stated.
A person may not be deprived of his property without due process of law. If his property is taken by exercise of the power of eminent domain, the procedure must be adequate to provide just compensation. Within these boundaries the legislature may determine the mode of exercising the right of eminent domain. These concepts were expressed in 27 Am.Jur.2d, Eminent Domain § 376, pp. 241-243, in relevant part as follows:
A lessee is an owner of the property and is entitled to just compensation if his leasehold is damaged from the exercise of eminent domain. Eisenring v. Kansas Turnpike Authority, 183 Kan. 774, 332 P.2d 539 (1958). See also eminent domain procedure act, K.S.A. 26-501 et seq., which speaks of "interest to be taken," "parties in interest," "damages to all interest [interests]," etc.
The states have developed a variety of procedures to determine just compensation to the owners of various interests in one tract of land. See Annot., Condemnation Proceedings  Bifurcated Trial, 94 A.L.R.3d 696, which discusses the various means employed. Some states have procedures for determining the total value and the value of separate interests, all in one proceeding. Others separate the determination of total value from the determination of damages to particular interests in accordance with procedures prescribed by statute or judicial construction.
Statutorily, Kansas has a bifurcated procedure. K.S.A. 26-508 provides:
*517 K.S.A. 26-513(d) provides in relevant part:
K.S.A. 26-517 provides:
When K.S.A. 26-508 speaks of just compensation for the land or right therein taken it is referring to what the condemner is taking  the fee or a lesser taking, such as an easement.
Urban Renewal Agency v. Naegele Outdoor Advertising Co., 208 Kan. 210, 214, 491 P.2d 886 (1971), discussed at some length the nature of division proceedings authorized by K.S.A. 26-517. The court stated:
The court in Naegele reaffirmed both the right of a tenant to share in the award if damaged by the exercise of eminent domain and the following statement from Phillips Petroleum Co. v. Bradley, 205 Kan. 242, 247, 468 P.2d 95 (1970):
*518 The citation from Phillips is a recognition of the undivided fee rule discussed in 4 Nichols on Eminent Domain § 12.36 [1], pp. 685-687 (3d ed. 1979), as follows:
In Montgomery Ward v. Sterling, 185 Colo. 238, 523 P.2d 465 (1974), the Colorado Supreme Court, in affirming a slight variation of the undivided fee rule, noted two advantages therein: (1) All condemnees are in a united position of seeking to maximize the total award in the first proceeding and only in the subsequent division proceeding do they become adversaries; and (2) the time lag between determination of award and division provides an opportunity for the owners of interests to settle the division among themselves.
In Rostine v. City of Hutchinson, 219 Kan. 320, 323, 548 P.2d 756 (1976), the court discussed the "unit rule" and the "summation method" relative to determining value as follows:
This court again approved the unit rule in Ellis v. City of Kansas City, 225 Kan. 168, 589 P.2d 552 (1979).
*519 The unit rule as to improvements on the property and the undivided fee rule are consistent with each other and in harmony with the statutory requirement that the initial determination must be confined to the fair market value of the land as a unit at the time of the taking. In unusual circumstances, such as where the fee interest is of lesser value than another interest or aggregate of interests, exceptions to the general rule are sometimes made, but this is not the situation herein.
The interlocutory order herein actually deals with two different areas. The exclusion of evidence as to the specific value of the leasehold, but permitting the leasehold to be considered as a factor in determining the market value of the land, relates to the purpose and scope of the trial. The balance of the order deals with the extent of the lessee's participation in the trial.
On the rationale hereinbefore expressed we conclude the district court did not err in excluding evidence of the specific value of the leasehold interest but permitting the leasehold interest to be considered as a factor in arriving at the market value of the tract at the time of the taking.
As we have previously determined, Kansas has a bifurcated procedure wherein the total award is made, either based on the appraisers' report or by court or jury on appeal therefrom. If a dispute arises concerning the division of the total award, the court in a judicial determination pursuant to K.S.A. 26-517 makes the division. In such circumstances a lessee is in a considerably different situation than if total award and the division thereof were to occur in one proceeding. However, inasmuch as the leasehold interest is a factor to be considered in determining the market value of the land, evidence relating to same may properly be presented to the jury. How then is this to be accomplished?
Conduct of condemnation proceedings is discussed in 30 C.J.S., Eminent Domain § 286, pp. 44-45, as follows:
The above C.J.S. citation refers to condemnation trials in general, with no distinction being made between all-inclusive proceedings and bifurcated proceedings. Logically, in bifurcated proceedings the trial court should have broader discretion to limit a lessee's participation in the trial to determine the total award than where all issues will be determined in one trial.
We conclude that in a trial to determine the fair market value of the property taken, a lessee is neither wholly excluded from participation as a matter of the condemner's right nor entitled to unlimited participation therein as a matter of lessee's right. The extent of a particular lessee's participation in the trial is within the broad discretionary power of the court. In making such determination the court should consider the totality of the circumstances. Absent some abuse of that discretion the trial court's determination will not be disturbed on appeal.
We have carefully reviewed the guidelines set by the district court herein, and find no abuse of discretion under the totality of the circumstances. We note the guidelines are flexible and subject to modification as the need may arise.
No error or abuse of discretion having been shown, the interlocutory order is affirmed and the case is remanded for trial.
*521 SCHROEDER, C.J., dissenting:
My views in condemnation matters of this kind were expressed in my dissenting opinion in Moore v. Kansas Turnpike Authority, 181 Kan. 840, 849, 317 P.2d 384 (1957), to which I adhere. As applied to this case the lessee should be permitted to put on its evidence of the specific value of the leasehold interest. I would modify the trial court's order accordingly.