### No. 81-36 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981

EARLE AND HAZEL KNIGHT, et al., Plaintiffs and Appellants,

THE CITY OF BILLINGS, a municipal corporation, Defendant and Respondent.

Appeal from: District Court of the Thirteenth Judicial District, In and for the County of Yellowstone Honorable Robert Wilson, Judge presiding. Counsel of Record: For Appellants: Pedersen, Herndon, Harper,Munro & 

### Hartman, Billings,

Montana Rodney Hartman argued, Billings, Montana For Respondent: Peterson Law Offices, Billings,Montana K. D. Peterson argued, Billings, Montana

Submitted: November 30, 1981 Decided: February 25, 1982

### Mr. Justice John C. 

### Sheehy delivered the Opinion of the Court.
This is an appeal from a judgment by the District Court, Thirteenth Judicial District, Yellowstone County, finding no inverse condemnationby the City of Billings of residentialproperties owned by the plaintiffs. Plaintiffs are individualhomeowners who own residences

on the west side of 24th Street West between Lewis and Broadwater Avenues in Billings. They purchased their properties in the years between 1954 and 1976. Twenty-fourth Street West is a major arterial street in Billings. Itprovides substantial "desire-line" access from

a large portion of the Billings environs to a substantial mall, high school, church, and commercial area, located south of these residences. 

### A part of the commercial area extends along 24th Street West itself. The residences are all located within the Lillis Subdivision which was created in 1954. Lillis Subdivision was not in the City of Billings at the time of its creation. The land in Lillis Subdivision is subject to private deed restrictions which allow only single family dwellings until the year 2000. The portion of 24th Street West involved in this case was annexed to the City in 1959. Before that, in 1953,Yellowstone County had restricted the speed limit on 24th Street West to 35 miles per hour, and had installed stop signs for traffic entering the street from the east and west at 

### intersections. Until 1972, 24th Street West was a two lane roadway with on-street parking. The first traffic lights

on the street were installed at the intersection of Grand Avenue in 1970. The second followed in 1971 and there are at least four traffic lights now in existence at intersections along 24th StreetWest.In 1972, 24th Street Westwas widened toprovide four lanes of traffic and the residences here involved lost their on-street parking rights orprivileges. Rimrock Mall, now Montana's largest shopping center,



### was opened in 1975 on 24th Street

### West, south of plaintiffs' properties. There 

### are also along the 

### street two large discount stores, a supermarket, a hardware store, a minimall, two conveniemstores, and several officebuildings. Another supermarket 

### ispresently under construction on 24th Street

### West near plaintiffs' properties. The arterial also provides access to an interstatehighway from the city proper. Traffic development, 

### as shown by trafficcounts on 24th StreetWestindicates: inApril 1966, an averagedaily vehicular traffic flow of 6,330 vehicles; inAugust 1970, 9,684 vehicles; on July 15, 1975, a traffic count of 17,040; and in 1979, an average daily traffic count of 18,018. Projections for theyear 2000 range from 23,350 to 36,850 average daily vehicles. In 1976, theCity of Billings held public meetings concerning a possible condemnation procedure on 24th Street West, and thereafter, widened the arterial by condemning real property exclusivelyon the east side. No 

### real property

was taken from the

### west sideof 24th StreetWest, where the plaintiffs have their properties. The DistrictCourt found that 

### no changes on 24th StreetWest

### were undertaken by theCity until conditions existed which indicated that anadjustment 

### wasnecessaryto handle thetraffic already there. Plaintiffs

## ' proper&s 

### a subject to

### a zoning ordinance whichwas adopted in 1972. The zoning ordinance followedextensive public hearings and an election. The properties

on which plaintiffs have their residences 

### were zoned R-7200, which zoning classification 

### still applies toplaintiffs' properties. An R-7200 classificationpermits single family dwellings, and alsoduplexes if the lots involved encompass

more than 9,600 square feet. None of the lots owned by plaintiffs 

### meet the 

### area specification necessary for duplex properties. Allof theplaintiffs' properties here involved

are single family dwellings and have been during allof the 

### timethat the plaintiffs have occupied the 

### same, through the events that arebeing recounted here. In 1978, after the condemnation of the property from the east sideof 24th StreetWest, the 

### streetwas widened by the addition of a fifthlane situated inthe middle of the other four lanes, toprovide for left-hand turns from 24th StreetWest. Also in 1978, the City created 

### a lighting maintenance district toprovide lighting for the arterial. The lights used 

### were of a higher intensity than normally found on a residential street. Several of theplaintiffs protested the proposal for the lighting district, but their protest 

### was denied 

### as insufficient when numbered against all of the properties that

### were included inthe lighting maintenance district. Also in 1978, the plaintiffs petitioned the City Council of Billings for 

### a zoning change which would permit plaintiffs' properties tobe reclassified residential professional. However, a protest from the remaining property owners in LillisSubdivision, located on streets other than 24th StreetWest, triggered the application of section 76-2-305, MCA. Section 76-2-305 provides that 

### a proposed zoning change that isprotested shall not become effective except by a

### favorable vote of three-fourths of all the members of the city council. In this case, the proposed zoning change was defeated because only six of the ten council members, not the required three-fourths, voted in favor of the change. In consequence, plaintiffs' properties remain zoned R-7200 for residential purposes only. After the failure of their petition for a zoning change, the plaintiffs filed this action against the City of Billings charging inverse condemnation of their properties. At trial, plaintiffs' witnesses characterized the changes that had occurred on 24th StreetWest. Formerly it

was relatively quiet, and had but two traffic lanes. The front yards of the residences were suitable for family or social gatherings. Residents or their guests could park their cars on the street. There was no difficulty getting in and out of driveways. Sidewalkswere safe from passing traffic. Noise and pollutant levels were low and not distracting

or harmful. Therewas no undue refuse. Family pets were safe. There was no noticeable vibration from passing traffic and the areawas quiet at night. After the 1976-78 

### condemnation project on 24th Street West was completed, conditions changed. There is now no free

access into driveways, but instead long waits in the fifth lane for passing traffic. Free access to and from the driveways is nearly impossible. There have been traffic accidents in front of the residential properties, and sometimes upon their properties. Children and pets are not safe in the front yards and pedestrian traffic along the sidewalks a few feet from passing vehicular traffic is dangerous. Average traffic flows at 22 miles per hour past their houses. Rocks and rubbish from passing traffic are thrown upon their lawns

### and intotheirhouses. The sidewalks areconstantly filthy, especially inwinter. The noise from the passing traffic 

### is

so loud that front doors must be closed for conversation to be heard inside. Trafficnoise 

### is loud and aggravating at night. The houses cannot be ventilated from the east side because of dust and exhaust fumes. The houses and contents

areconstantly subject tovibrations. One of the residents testified that she had totape her windows toavoid the bright light from the high intensity sodium vapor lighting thatwas installed. There appears tobe general agreement that the houses

areunsuitable forresidential living. A 

### local realtor testified that 

### it 

### was "inappropriate" that the properties be zoned single family residential. The former city engineer, though testifying for the City, stated that he would "not want tolive inone of those houses." The City Planning Department representative testified that he does not consider 

### it appropriate tohave residential housing along that section of 24th StreetWest. The City Zoning Commission in fact recommended the zoning change which 

### was denied by the City Council. The District Court said: "By reason of changed conditions on 24th Street 

### West, said properties areno longer desirable for residential use and cannot be put tothe highest and best use without 

### a change in zoning restrictions and regulations." The District Court, however, found that the conditions

on 24th StreetWest 

### werenot caused by the City but by persons using business establishments situated on 24th Street West; 

### that the widening project of 1978

### merely accomodated the existing traffic ina "more efficient, more safe, less noisy

manner and with less pollution potential;" that the deed restrictions

### weremore restrictive than the R-7200 

### zoning;that the plaintiffs' real properties 

### were less valuable in theirpresent situsthan they would be in a different neighborhood, but thatnevertheless the value of their real properties had not been sufficiently lessened to constitute 

### a taking by the City of Billings; that the actions of the City of Billings



### werewithin the proper exercise of the City's police power. Issues raised by the plaintiffs are that (1)the District Court erred inholding there was no inverse condemnation; (2) the District Court erred inholding that the City of Billings actedwithin its police power and that it 

### wasnot liable for damages; (3) the District Court erred in failing totake judicial notice of 

### its own files and decisions in two civil causes involving restrictions on nearby properties; and (4) the DistrictCourt erred inholding that the private deed restrictions precluded any claim for damages for inverse condemnation. The City contends that the only issues on this appeal

arewhether theCity caused the plaintiffs' 

### real properties to be inversely condemned because of changes in the conditions of 24th StreetWestor by failure togrant a zone change or both.We turn firsttoa consideration of whether under the facts of thiscase, an inverse condemnation of plaintiffs' propertksoccurred. The City vigorously contends, and the District Court agreed, that the actions of the City 

### were in response totheburgeoning development of commercial and other enterprises along 24th StreetWest. The City further contends, and theDistrict Court agreed, that the City, inresponding tothose burgeoning pressures, validly exercised its police power inwidening the 

### street, installing high intensity lights, and providing traffic signals to facilitatea greater

### flow of traffic past plaintiffs' properties. In essence, the City is claiming, and the District Court agreed, that it did not create the business growth, itmerely adapted to it. It is probable that there are few, if any, cases of inverse condemnation in which the same argument could not be made. In that area of law where inverse condemnation has most notably expanded--where airports have been constructed in populated areas and the resultant low-flying landing and take-off of jets has disturbed residential properties-- it is certainly true that the airport authorities have merely adapted to changing transportationpatterns from land traffic to air traffic in providing airports. Yet the cases recognize that inverse condemnation has occurred, and recovery is allowed on the principle that an "air easement"has been taken, Griggs v. County of Allegheny, Pennsylvania

(1962), 369 U.S. 84, 82 S.Ct. 531, 7 L.Ed.2d 585; United States

v. Causby (1946), 328 U.S. 256, 66 S.Ct. 1062, 90 L.Ed. 1206;

or upon the theory of nuisance,Thornburg 

### v. Port of Portland

(1962),233 Or. 178, 376 P.2d 100. It is not, however, a complete defense to an inverse condemnation suit that the authoritywas exercising police power. There is no question that here the City of Billings was validly exercising its police power. That fact, however, standing alone, does not prevent an inverse condemnation suit. InMattoon v. City of Norman (Okla. 1980), 617 P.2d 1347, the plaintiff commenced a class action for inverse condemnation against theCity because of the adoption of a flood plain ordinance which operated to take plaintiff's property without dueprocess of law. The city claimed it was validly 

### exercising its police power. The Oklahoma court said:

### "The defendant claims that the Ordinance 

### is a valid exercise of itspolice power through zoning and cannot constitute a governmental 'takinge of property. This 

### isnot the 

### test inOklahoma. We

### have never held that a finding that the exercise of police power 

### isvalid absolutely precludes compensation forproperty taken or damaged by such exercise. In EClting cases], 

### we said: "'It

### is a 

### universal principle thatwherever an individual'

### s right of ownership of property 

### isrecognized in

### a freegovernment, other rights become worthless if the government possesses uncontrollablepower over theproperty of the individual. The constitutional guaranty of the right to own and use property 

### isunquestioned. Thus the claim that particular action 

### is taken under the police power cannot justify disregard of constitutional inhibitions.'" 617 P.2d at1349. Nor is 

### it important that an actual physical taking of the plaintiffs' propertieshasnot occurred. Montana hasa constitutionalprovision, Art. 11, 

### 5 29, which 

### states: "Eminent Domain,. Private property shall not be taken ordamaged for public use without just compensation tothe fullextent of the losshaving been firstmade toorpaid into court fortheowner. Intheevent of litigation, just compensation shall include necessary expensesof litigation tobe awarded by the court when the private property owner prevails." (Emphasis added.) 

### This court recognized inverse condemnation without physical invasion of the property inLess v. City of Butte (1903), 28 Mont. 27, 72 P. 

### 140. There the court recognized the words "or damaged" inthe then existing constitution and said:"It

### seemsvery clear tous that this sectionwas drafted inthebroad language stated for the express purpose of preventing an unjust or arbitrary exercise of the power of 

### eminent domain. It 

### overturns the doctrine that one owning cityor town property must continually live indread of the changing whims of successiveboards of aldermen. Constitutions which provide that 'private property shall not be taken forpublic use without just compensation' arebut declaratory of the common law, and contemplate thephysical taking of property only. Under constitutions which provide that property shall not be 'taken or damaged' 

### itis universally held that 

### 'it isnot necessary that there be any physical invasion of the individual's property forpublic use toentitlehim tocompensation." 72 P. at141. The respected former chief judge of the Court of Appeals for the Tenth Circuit, the Hon. Alfred Murrah, proposed this 

### test, though writing in a dissent, for inverse condemnation: "As I reason, the constitutional 

### test in each case 

### is first, whether the asserted interest 

### is one which thelaw 

### willprotect; if so, whether the interference is sufficiently direct, sufficientlypeculiar, and of sufficient magnitude tocause us toconclude that fairness and justice, asbetween the State and the citizen, requires the burden imposed tobe borne by thepublic and not by the individual alone." Batten v. United States (10thCir. 1962), 306 F.2d 580, 587, cert.den., 371 U.S. 955, 83 S.Ct. 506, 9 L.Ed.2d 502. Here the asserted interest of theproperty owners 

### is

one which thelaw 

### willprotect. Certainly the right tothe peaceful possession of residential property is the basisof such cases 

### as Causby and Griggs, supra. The interference withplaintiffs' properties has been direct; 

### it ispeculiar inthesensethat the facts here 

### are unique; and the interference 

### is of sufficient constitutional magnitude since the proof inthis case showed that there had been a 20 to 30 percent reduction inthevalue of the individual residential properties, and that the value of each "as is" is $10,000 to $15,000 

### less than their values if the area 

### were zoned residential professional. Though no physical taking has occurred, the result of the City's actions hasbeen toimpose a servitude,

a limitation upon theuse and marketability of plaintiffs' properties asresidential. Not tobe forgotten 

### is the condemnation by the City of property from one side of the 

### street, and not from the other sidewhere theplaintiffs reside, inthe 1976-78 wideningof 24th StreetWest. The owners on the east side of the 

### street werecompensated either in eminent domain proceedings,

orby agreement with the City. The singling out of one group asagainst another tobear a burden weighed heavily in Branning v. United States .(Ct. C1. 1981)

## , 654 F.2d 88. In that case, trainees at a United StatesMarine Corps Air Station, inpracticing for landings on carrier decks, 

### were required tohold theirjet airplanes with noses up and tails down, and with near maximum power and noise associated with low speed. This exercisewas conducted over the plaintiff's land. The AirCorps could have performed this exercise elsewherebut selected air space over the plaintiff's land for 

### it because alternative locations were deemed more objectionable. The Court of Claims said: "Thus, plaintiff 

### was consciously singled out or selected tobear a burden which defendant also consciously elected not toimpose on others, even others otherwise 

### similarly situated. This 

### is a classic statement of a taking situation." 654'

### F.2d at90. Wetherefore hold and conclude that under the unique facts of this case, the City of Billings, although exercising its police power validly, and validly refusing to amend 

### its zoning ordinance on plaintiffs' petition, nonetheless thereby interferedwith theprivate property interests of the plaintiff

so astoconstitutea "taking" by inverse condemnation. Wecaution that this holding 

### is limited to the situation here, where a physical taking across the 

### street occurred. We turn now toconsider whether the declaration of restrictions of LillisSubdivision limiting the use of plaintiffs' lotstoresidential purposes until the year 2000 prevents recovery through inverse condemnation. On analysis one must concede, 

### it 

### seems tous, that the presence of theprivate deed restrictions in LillisSubdivisonis a non sequitur asa defense toinverse condemnation here. The restrictions contemplate theuse of plaintiffs' residences for residential purposes. It 

### is not the restrictions that

are damaging plaintiffs' properties; 

### it is the action of the City inmaking theimprovements that 

### ismaking theirproperties nearly unusable and unmarketable for residential purposes. Under section 76-2-305, MCA, the City Council validly refused toamend thezoning ordinance for plaintiffs' properties to reclassify toresidential professional, which would have substantiallymitigated theplaintiffs' losses. The valid refusal of a zoning amendment, which nailed down the servitude imposed on plaintiffs' properties, stands on no higher ground, insofar as inverse condemnation 

### isconcerned, than

a valid exerciseof police power. What remains, above all, after theCity has acted, validly or invalidly, 

### is that plaintiffs' properties, through the actions of the City, have become unsuitable for residential use, and the plaintiffs' right touse their properties ascontemplated by the deed restrictions 

### is limited toa degree of constitutional magnitude. In this connection, plaintiffs asked during the trial that the DistrictCourt take judicial notice of two of its

own files, wherein the same DistrictCourt had held that similar restrictions on nearby properties 

### were void and unenforceable by reason of the changed conditions on and

near 24th StreetWest. While the files

### were certainly relevant under the view taken by the District Court that the deed restrictions prevented plaintiffs' recovery in inverse condemnation, ikisour view that the deed restrictions only contemplate a residential use which cannot now be obtained by theplaintiffs. It 

### istherefore immaterial to our decision that the District Court did not take judicial notice of the offered civilfiles, because the presence of the deedrestrictions isnot a bar toplaintiffs' action for inverse condemnation. The finding of the District Court that the improvement of 24th StreetWest "accomodates the existing traffic in a

more efficient, more safe, 

### less noisy manner and with 

### less pollution potential" is clearly erroneous. Rule 52(a), M.R.Civ.P. The plaintiffs here testified indetail as to the effect of the improvements and the conditions which severely limited the use of their properties for residential purposes. The testimony of the city engineer, on which the District Court apparently relied, was taken from national studies and national guides for improvements, not directly related to plaintiffs' properties. No attempt was made by the City to rebut the testimony of theproperty owners as to noise, traffic and pollution. The District Court, in its findings, 

### set forth the purchase prices paid by the plaintiffs for their residences

ascompared totheir "as is" values after the 1976-78 improvements to24th StreetWest. Ineach instance the price paid for the property 

### is less than the "as is" value. Thus, the District Court apparently found no damages suffered by plaintiffs. In effect, the District Court gave the City the advantage of inflation, which has affected the value not only of property on 24th StreetWest, but of allreal property in Billings. However, the measure of damages in an inverse condemnation case 

### is the difference between the fairmarket value of the property before and after the condemnation. The relevant values in this case are the fairmarket value as residential property before the condemnation, and the fair market value by reason of the depreciation as residential property 

### (see section 70-30-302, MCA), where the property not taken has been injuriously affected.In case 

### it 

### is important after remand, the right to an inverse condemnation remedy does not pass to subsequent purchasers after the inverse condemnation. Williams v. City of Valdez (Alaska 1981), 624 P.2d 820. We therefore remand this cause tothe District Court with directions toenter an order therein that the residential properties of the plaintiffs have been inversely condemned by the City of Billings inmaking theimprovements to 24th Street Westin 1976-78, which order shall serve the office of a preliminary condemnation order asprovided insection 70-30-206(2), MCA; and thereupon totake such further nroceedings under thestatutes relating toeminent domain 

### as shall determine the damages, if any, sustainedby the plaintiffs. /1

We Concur: / 

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Justice 

### ".

\ chief Justice,