Opinion ID: 1389692
Heading Depth: 1
Heading Rank: 2

Heading: just compensation and the valuation of property

Text: Article I, § 22 of the Utah Constitution provides that [p]rivate property shall not be taken or damaged for public use without just compensation. The constitutional requirement of just compensation derives as much content from the basic equitable principles of fairness as it does from technical concepts of property law, when the State takes private property for the public welfare. United States v. Fuller, 409 U.S. 488, 490, 93 S.Ct. 801, 803, 35 L.Ed.2d 16 (1973). For compensation to be fair and just, it must reflect the fair value of the land to the landowner. Just compensation means that the owners must be put in as good a position money wise as they would have occupied had their property not been taken. State v. Noble, 6 Utah 2d 40, 43, 305 P.2d 495, 497 (1956). A number of factors may affect the value of property taken pursuant to condemnation proceedings, including the nature of the legal procedures established for taking private property. A critical factor is the date fixed for valuing property in relation to when the condemnor acquires title, or in this case, when entitlement to condemn is established. A substantial interval between the date of valuation and the latter date may call in question the fairness of the valuation, especially when the value of the property has been substantially affected in the period between valuation and the actual taking. Because an extraordinary delay occurred in the instant case after the statutory date fixed to value the Friberg property and the State established its right to condemn, the initial issue to be determined, assuming at this point that defendants did not cause the delay, is whether U.C.A., 1953, § 78-34-11 requires the valuation to be determined as of the date of service or whether it may allow valuation at some time other than when process was served. Section 78-34-11 states that the right to compensation and the date for assessing compensation shall be deemed to accrue as of the date of service of summons: For the purpose of assessing compensation and damages, the right thereto shall be deemed to have accrued at the date of the service of summons, and its actual value at that date shall be the measure of compensation for all property to be actually taken, and the basis of damages to property not actually taken, but injuriously affected, in all cases where such damages are allowed, as provided in the next preceding section [78-34-10]. No improvements put upon the property subsequent to the date of service of summons shall be included in the assessment of compensation or damages. [Emphasis added.] All the cases that have heretofore been decided under this section or its predecessor have relied upon the date of service of summons in determining valuation. E.g., City of South Ogden v. Fujiki, Utah, 621 P.2d 1254 (1980); State ex rel. Road Commission v. Wood, 22 Utah 2d 317, 452 P.2d 872 (1969); State ex rel. Engineering Commission v. Peek, 1 Utah 2d 263, 265 P.2d 630 (1953); Oregon Short Line Railroad Co. v. Jones, 29 Utah 147, 80 P. 732 (1905). In none of these cases, however, was the delay in any degree comparable to the instant case. [6] We are, of course, constrained to construe § 78-34-11 within the limitations of constitutional requirements. When valuation is fixed at a date prior to the actual taking and the value of the property increases during a prolonged condemnation proceeding so that the valuation does not reflect a fair valuation of the property and does not therefore constitute just compensation, the statute fixing the time of valuation is unconstitutional as applied. Orono-Veazie Water District v. Penobscot County Water Co., Me., 348 A.2d 249 (1975). Accord State v. Griggs, 89 Ariz. 70, 358 P.2d 174 (1960); Sanitary District of Chicago v. Chapin, 226 Ill. 499, 80 N.E. 1017 (1907). [7] A leading treatise in the area of eminent domain law, 3 Nichols on Eminent Domain § 8.5[2], 8-108 to 8-111 (3d ed. 1981), states: In several states it is held that the filing of the petition to condemn, being the first actual step toward devoting the property to a public use, marks a point of time that is as fair and just to both parties for fixing the value of the property as any that could be selected, and it has, consequently, been adopted as the established date as of which damages are assessed. In such jurisdictions, however, if a corporation unreasonably delays the prosecution of its petition while the land is advancing in value, the application of the rule would work great wrong and injustice to the owner, and the petitioner would be able to acquire the property at much less than its value at the date of the taking... . Where the statute provides for the date of valuation at the initial step in the acquisition process, such as upon the passage of a resolution authorizing the condemnation, and then permits a protracted period of time for the prosecution of the proceeding, during which time the value of the property may rise or fall, the statute is unconstitutional as conflicting with the constitutional concept of just compensation. To comport with constitutional requirements in a particular case, it is necessary, therefore, to consider whether the protraction of judicial proceedings and other circumstances that affect the value of the land have had such an effect as to make a valuation as of a statutorily determined date unfair. In Uvodich v. Arizona Board of Regents, 9 Ariz. App. 400, 453 P.2d 229, 235 (1969), the court, construing a statute similar to Utah's, addressed the issue of the fairness of valuing property that had depreciated as a result of the taking: State v. Hollis [93 Ariz. 200, 379 P.2d 750 (1963)] recognizes that arbitrary application of A.R.S. § 12-1123 [setting the valuation date of condemned property at the time of service of summons], is not required where application of the statute would result in unjust compensation to the property owner. The logical conclusion, therefore, is that the time as of which the evaluation of the property should be made must comport with the peculiar facts and circumstances of the case so as to assure the property owner compensation which is just, as contemplated by the Arizona Constitution. See also State v. Hollis, 93 Ariz. 200, 379 P.2d 750 (1963). In a similar vein, Board of County Commissioners of Garfield County v. Delaney, 41 Colo. App. 548, 592 P.2d 1338 (1978), held that a statute requiring the determination of valuation as of the date of the order of possession could not be construed strictly when the result would be fundamentally unfair to the expropriated landowner. Cf. State v. Griggs, 89 Ariz. 70, 358 P.2d 174 (1960). See generally Annot., 36 A.L.R.3d 751 (1971). In determining whether a valuation date fixed by statute would result in unjust compensation, a court may have to consider numerous factors that influence value. Uvodich v. Arizona Board of Regents, supra . Experience teaches, for example, that the announcement of an area-wide redevelopment plan by a government agency, prior to the initiation of any condemnation proceedings, may result in severe depreciation in land values long before the condemnation proceedings commence. Thus, once judicial proceedings are commenced to condemn a limited number of parcels in a large project involving numerous parcels, there may be a substantial adverse impact on the value of the remaining properties not initially included in the project. In City of Cleveland v. Kacmarik, 17 Ohio Op.2d 135, 177 N.E.2d 811, 813 (Ct.C.P. 1961), the court observed: As houses begin to come down, tenants in nearby homes move out, the neighborhood deteriorates or is deserted, vandalism often sets in, appearances and values depreciate with the result that frequently the property owner is greatly handicapped in presenting his case to the jury by the time his land gets into court. The important and fundamental right protected by Article I, § 22 of the Utah Constitution cannot be made subject to undue protraction or manipulation of the condemnation process or to the effect of legal rules or procedures that take no account at all of the numerous factual variables that affect fair values. A failure to take into account a loss of value caused by the condemnation process itself in determining just compensation would result in an expropriation of the value of private property. To avoid such results, courts have set valuation dates prior to the service of summons when the value of condemned property, not initially included in the area to be condemned, has been diminished by the condemnation of nearby properties pursuant to the planned condemnation of a large area. Klopping v. City of Whittier, 8 Cal.3d 39, 104 Cal. Rptr. 1, 500 P.2d 1345 (1972); 1 L. Orgel, Valuation Under the Law of Eminent Domain, § 105 at 447 (2d ed. 1953). Cf. United States v. Virginia Electric and Power Co., 365 U.S. 624, 81 S.Ct. 784, 5 L.Ed.2d 838 (1961). See generally Note, The Condemnor's Liability for Damages Arising Through Instituting, Litigating, or Abandoning Eminent Domain Proceedings, 1967 Utah L.Rev. 548. By the same token, a valuation date later than that established by statute may be required when a delay in the condemnation proceedings results from causes for which the condemnee is not responsible and the delay would result in a nonrecognition of value in the award of compensation. [8] Therefore, if § 78-34-11 requires the valuation of the Fribergs' property as of the date of service of summons irrespective of all circumstances that affect value and even though the value of their property had substantially appreciated by the time the State established its right to condemn, § 78-34-11 would be unconstitutional as applied under Article I, § 22. See Klopping v. City of Whittier, 8 Cal.3d 39, 104 Cal. Rptr. 1, 500 P.2d 1345 (1972); Board of County Commissioners of Garfield County v. Delaney, 41 Colo. App. 548, 592 P.2d 1338 (1978); Orono-Veazie Water District v. Penobscot County Water Co., Me., 348 A.2d 249 (1975). See generally State v. Hollis, 93 Ariz. 200, 379 P.2d 750 (1963). However, the language of § 78-34-11 admits of a more flexible construction than that placed on it by the State. The statutory term deemed to have accrued does not mandate that the date of service of summons be the date for valuation in all cases and without regard to the facts of the particular case. In the first place, a fundamental principle of statutory construction is that a statute should be construed as a whole, and its terms should be construed to be harmonious with each other and the overall objective of the statute. Cannon v. McDonald, Utah, 615 P.2d 1268 (1980); Crist v. Bishop, Utah, 520 P.2d 196 (1974). Moreover, we are constrained to construe statutory terms to avoid an unconstitutional application of the statute. State v. Wood, Utah, 648 P.2d 71 (1982); In re Boyer, Utah, 636 P.2d 1085 (1981). The Legislature's use of nonmandatory language indicates a policy of flexibility. That conclusion is emphasized by the provision of § 78-34-11 that no improvements placed upon the property subsequent to service of process shall be included in the assessment of compensation and damages. That provision would be redundant if the prior sentence flatly required assessment of compensation and damages in all cases as of the date of service of summons. Furthermore, the statutory phrase deem to have accrued imports a degree of flexibility into the valuation scheme of § 78-34-11. The policy of flexibility is demonstrated particularly by the word deem. The meaning of the term must of course arise from its statutory context, see 11A Words & Phrases 181-87 (1971), as well as its constitutional environment, especially when the validity of a statute and its application are so closely dependent upon conformity to strict constitutional requirements. In a somewhat different context, we have held that the term deem is to be construed in light of the purpose to be accomplished by the statute. In Brimm v. Cache Valley Banking Co., 2 Utah 2d 93, 269 P.2d 859 (1954), the Court stated that the term deem may be construed to establish either a conclusive or a rebuttable presumption, depending on the context in which it is used. Under the statutory scheme then under consideration, the Court held that the term shall be deemed should be construed to impose a rebuttable presumption. The varying factors that may affect the determination of just compensation, the necessity of a practicable and reasonably predictable rule of procedure, and the language of § 78-34-11 lead us to conclude that the term deem as used in § 78-34-11 creates a rebuttable presumption that the date for determining valuation shall be the date of service of process. To rebut that presumption, the unfairness of valuing property as of that date must be evident and the difference in value must not be insignificant. In the vast majority of cases, the date of service of summons will be the appropriate date for determining valuation, and no judicial time need be expended in determining whether another date would be more advantageous to one party or the other to some small degree. We do not mean to imply that slight violations of constitutional rights should be overlooked. The perimeters of a constitutional right are not to be slowly constricted by a series of slight, but ever encroaching, violations. However, the right to just compensation is unlike any other constitutional right; it depends on a fair and reasonable estimate of money value. By necessity, such a valuation does not turn on physically ascertainable facts or even on a more or less precise formula for defining value, but rather on variable and imprecise judgments made by reasonable persons who generally, if not always, come to different conclusions. Neither the constitutional right of the landowner or the right of the State to fairness would find root in firmer ground if the statutory language were construed so loosely as to permit the service of summons date to be regularly challenged on the basis of appraisals that, at most, might result in minor differences in the valuation. On the contrary, the constitutional right and the interests it protects, both directly and indirectly, are accorded greater protection by a substantial degree of certainty, which will reduce the cost of litigation and promote the expeditious disposition of condemnation suits, thereby allowing the condemnee to adjust with as little disruption as possible to the impact of the condemnation. Since in any given case the number and type of factors that affect value and the weight to be accorded each factor will vary, it is not possible to formulate a precise guideline for when a court should adhere to the service of summons date and when it should depart from it; the nature of the problem simply does not permit greater precision. Suffice it to state that valuation as of the service of summons date will be the rule, and departure from that rule will be the exception. Finally, it should be noted that the presumption established by § 78-34-11 may be rebutted either by the State or by a property owner by a showing that a valuation as of the date of service of summons would result in an award that would not provide just compensation to a landowner or be fair to the State. It follows that the burden to rebut the presumption established by § 78-34-1 is on the party which asserts that valuation as of the date of service of summons would be unfair. [9]