Court Opinion

ID: 8292858
Source: CourtListenerOpinion
Date Created: 2022-10-17 10:51:17.891635+00
Date Added: 2024-06-11T16:43:55.054164
License: Public Domain

Gardner, Judge
(dissenting):
I respectfully dissent from the majority opinion insofar as damages are concerned and concur only in the result of the remaining part of the decision.
The better rule and the rule I believe required by the law of this state is that in cases of the condemnation of a leasehold *155interest, the measure of damages is the market value of the unexpired term of the lease and that the market value can be determined by the capitalization of income method.
There is an annotation entitled, “Eminent Domain: Measure and Elements of Lessee’s Compensation for Condemnor’s Taking or Damaging of Leasehold” contained in 17 A.L.R. (4th) at page 338 (1982). This is a lengthy annotation involving 131 pages.
I quote from the summary and comment.
§ 2. Summary and comment
[2] Generally
When property which is being condemned is subject to a leasehold interest, although the right of the lessee to compensation is generally well established, questions arise about what the measure and elements of any such compensation should be.
An examination of the cases concerning the condemnation of a leasehold interest reveals that there is considerable confusion, if not respecting the actual measure to be applied to such a leasehold, then at least respecting the terminology to be used in describing that measure. Generally, the courts, especially in older opinions, have summarily declared the market value of the leasehold taken to be the measure of damages for the taking (§ 3[a], infra). One frequent definition of market value is that price which would be agreed upon at a voluntary sale between an owner willing to sell and a purchaser willing to buy (§ 3[a], infra). However, the courts have frequently refined this broad standard by seeking to set out with more precision what the concept of “market value” entails. Thus, either as a definition of market value or without reference to that term, some courts have expressed the measure of a lessee’s damages for a leasehold as the economic rent or fair rental value of the leasehold less the rent reserved under the terms of the lease (§ 3[b]), infra). Still another form which the market value standard has taken in the reported cases describes the measure of damages as the market value of the unexpired term of the lease over and above the rent stipulated to be paid (§ 3[c], infra). Since courts, even within the same jurisdic*156tion, often seem to use a variety of market-value concept definitions, sometimes without apparently distinguishable results, it remains unclear to what extent these different expressions are reflections of real differences. Id.
Note that the lessor is not a party to this inverse condemnation action either by pleading, testimony, or by motion to join the owner as a party to the action. This is not an apportionment action. No question of apportionment was raised. The lease in this case was assignable. I would submit that the only fair measure of damages would be the market value based upon the best use of the property and determined by what the jury believed a willing buyer would pay and a willing seller would accept for the leasehold interest regardless of the market rent. The jury, in this case, was instructed to consider both the formula for damages set forth in Hamilton and also to consider the usual rule in South Carolina for determining the market value of the leasehold interest, i.e., what a willing buyer would give and a willing seller would take based upon the highest and best use for the property. The jury returned a verdict for $162,000. There is adequate evidence of record to support this verdict.
My brothers argue, citing J. Sackman, 5 Nichols on Eminent Domain, § 19.01, p. 19-8, that while it is permissible to utilize the capitalization of earnings method, it is the earnings from the property that must be capitalized, not the earnings from the business. This is contra to the law of South Carolina. In this state, “when land is occupied by a lessee, as in this case, the law of property regards the lease as equivalent to a sale of the premises for the term of the lease. In the absence of an agreement to the contrary, the lessor surrenders possession and control of the land to the lessee.” Byerly v. Connor, — S.C. —, —, 415 S.E. (2d) 796, 798 (1992). My brothers misinterpret South Carolina State Highway Department v. Bolt, 242 S.C. 411, 418, 131 S.E. (2d) 264, 267 (1963). I quote:
Accordingly, the better reasoned cases hold that, although the value of a business which is being conducted upon the real property condemned may not ordinarily be added to the market value of the realty as damages for the taking, the fact that a given business is in operation *157on the property should be taken into consideration in determining the market value of the real property if in truth it is a factor in establishing that market value — if, that is, the use of the real property for that purpose enhances the value of it. Quoting Housing Auth. of City of Bridgeport v. Lustig, 139 Conn. 73, 90 A. (2d) 169, 171 (1952). [Emphasis added.]
When Byerly v. Connor and South Carolina State Highway Department v. Bolt are read together, the meaning is clear. Although the loss of a business cannot be added to the market value of the realty as damages for the taking, evidence of the use of the property can be taken into consideration in determining the market value of the property if the use of the property for that purpose enhances the value of it. The emphasized portion of Bolt clearly establishes this. Bolt is clear authority for the proposition that the market value of a leasehold interest in land can be determined, among other methods, by the capitalization of income method of appraisal. Bolt specifically holds that injury to the business being operated on the property taken may properly be considered in determining the fair market value before and after the taking.
In the present case, the trial judge correctly charged the jury as follows:
I charge you that where a leaseholder estate is taken or damaged for — for public use, the major damage to the lessee is the depreciation and value of the leasehold interest or in other words the difference between the value of the leasehold immediately before and immediately after the public improvement for which the land is allegedly taken. [Emphasis added.]
I would hold that the trial judge correctly charged the jury that one method of determining the value of a leasehold interest in this case was the economic rent less the actual rent theory advanced by the majority in this case but that another method would be the fair market value based upon the highest and best use of the property. This would include capitalization of income as a method of evaluating the market value of the property taken.
There is evidence of record to support the verdict awarded by the jury. I would affirm.
*158ORDER

Per Curiam:

A motion for rehearing was granted in this case, and the rehearing was held on December 7,1992. Having considered the petitions for a rehearing, the authorities brought to this court’s attention by the parties, and the arguments of counsel, we reject the grounds advanced in both petitions, being unable to discover that any material fact or principle of law has been either overlooked or disregarded in our original opinion. It is therefore ordered that the majority opinion heretofore rendered in this case shall constitute the final opinion of this court.
It is so ordered.
Bell and Cureton, JJ., concur.