Ark. State Highway Comm. v. McNeill

381 S.W.2d 425, 238 Ark. 244, 4 A.L.R. 3d 1121, 1964 Ark. LEXIS 563

• Court: Supreme Court of Arkansas
• Decided: June 1, 1964
• Docket: 5-3274
• Status: Published

Opinions

George Rose Smith, J.

This is a suit by the appellees, Troy McNeill and his wife, to enjoin the State Highway Commission from constructing a cloverleaf interchange upon a highway near the McNeills’ home, unless the Commission first files a bond to secure any damages that the McNeills may suffer as a result of the construction.” The Commission contends that the presence of the completed interchange will not cause any legally compensable damage to the plaintiffs. The chancellor, rejecting this defense, granted the injunction but withheld any determination of the McNeills’ damages until the principal question has been decided by this court.

The McNeills own a residence in Crestview Estates, .an addition to Fort Smith. The Crestview bill of assurances provides that property in the addition shall be used only for residential purposes. The highway department does not propose to take any of the appellees ’ land. It is, however, acquiring a tract that is comprised of eleven lots within the addition and that abuts the appellees ’ north boundary line. When the interchange is completed the area behind the McNeills’ home will be a busy highway instead of a quiet residential district. Expert witnesses testified that this transition will diminish the value of the plaintiffs’ property by $10,000 or more.

In their complaint the McNeills bottomed their right to damages upon two separate grounds: First, the value of their property would be reduced by the presence of the highway, with its attendant noise, dust, fumes, glaring-lights, and vibration. Secondly, the value of their property would be reduced by the highway department’s violation of the residential restriction contained in the bill of assurances. The chancellor rejected the first count in the complaint but upheld the second count.

There is no appeal from the trial court’s denial of compensation upon the first count. In fact, in the oral argument counsel for the landowners candidly conceded that this count does not state a cause of action. Despite the fact that the merits of the first count are not now in issue we think it best to begin our discussion by considering this count, for our decision upon the main question is really based upon the lack of merit in the first count.

It is well settled in Arkansas that a landowner whose land is not being- taken is not entitled to compensation for damage of the same kind as that suffered by the public in general, even though the inconvenience and injury to the particular landowner may be greater in degree than that to others. Hot Springs R. R. v. Williamson, 45 Ark. 429, aff’d 136 U. S. 121, 34 L. Ed. 335, 10 S. Ct. 955; Little Rock & H. S. W. R. R. v. Newman, 73 Ark. 1, 83 S. W. 653. On the other hand, a compensable injury occurs when there is a special damage to the plaintiff, as by a change in the grade of the street abutting his property or by a destruction of his access to a public street. Campbell v. Ark. State Highway Comm., 183 Ark. 780, 38 S. W. 2d 753.

It cannot be doubted that the first count in the McNeills’ complaint does not state a cause of action. They merely assert that after the project has been completed their back property line will border a public highway rather than a privately owned residential lot. Such an inconvenience is of the same nature as that suffered by the public in general whenever a highway is built in a residential district. There is no cause of action in the landowner for the resulting diminution in the value of his property.

We turn to the principal issue: Does the fact that the proposed interchange will violate the restrictive covenant render the appellant liable for the decrease in the market value of the McNeills’ property? This problem has arisen in some twenty jurisdictions, with the decisions about equally divided between the allowance of compensation and its denial. The cases are discussed in Nichols, Eminent Domain (3d Ed.), § 5.73, and in a Comment, 53 Mich. L. Rev. 451. When compensation is allowed it is ordinarily measured by the diminution in market value. U. S. v. Certain Land in the City of Augusta, D. C. Maine, 220 F. Supp. 696; U. S. v. 11.06 Acres, D. C. Mo., 89 F. Supp. 852; Town of Stamford v. Vuono, 108 Conn. 359, 143 Atl. 245; Johnstone v. Detroit, G. E. & M. R. R., 245 Mich. 65, 222 N. W. 325. The American Law Institute indicates that compensation may be proper in some instances, but it refuses to express any opinion about the correct measure of damages. Restatement, Property, § 566.

Many of the decisions denying compensation are discussed in Anderson v. Lynch, 188 Ga. 154, 3 S. E. 2d 85. The courts seem to have had some difficulty in finding a sound basis for refusing an award, some saying that the plaintiff has no property interest in the land being taken, others that the restrictive covenant does not confer a property right, and still others that the public power of eminent domain should not be impaired by private contract.

We have no quarrel with an award of compensation if, as in Missouri, the same award would have been made if there had been no restrictive covenant. Peters v. Buckner, 288 Mo. 618, 232 S. W. 1024, 17 A.L.R. 543. But, as we have seen in considering the first count in the appellees ’ complaint, that is not the law in Arkansas. Any cause of action asserted by the McNeills must rest solely upon the breach of the restriction.

In those jurisdictions where, as here, compensation would be denied in the absence of a restriction, the decisions approving an award on the basis of the restriction alone are, in our opinion, demonstrably wrong. We need not, however, adopt the somewhat dubious reasons that have been given for the denial of compensation. We think the problem is essentially a simple one in causation.

It seems almost too plain for argument that the reduction in the value of the McNeills’ property is attributable not to the breach of the restriction but rather to the fact that a highway is about to pass through a residential district. Suppose, for example, that this addition, Crestview Estates, had been developed in exactly the same way that it was actually developed, as a residential district, but without any such restriction in the bill of assurances. If the interchange had then been constructed the McNeills’ damage, as far as the pleadings and proof indicate, would have been the same to the penny as if the restriction had existed. Yet it would not have been compensáble. Thus it is illogical to permit a recovery upon the theory that the breach of covenant is the proximate cause of the injury.

Another illustration to demonstrate the fallacy in the decisions allowing compensation: Assume the existence of a purely residential area that is in part restricted and in part unrestricted. If a highway should be constructed just within the restricted section the landowners on that side of the highway would receive compensation while those on the other side, although suffering identical damage, would be without a remedy. Under such a rule it is evident that whenever the owners of property in an unrestricted neighborhood learn that a throughway is coming in their direction it is to their advantage to enter into an agreement imposing restrictions. In that way, by merely signing a piece of paper which they may destroy at will, they are able to pluck valuable causes of action from the thin air.

We do not deny the existence of a property right in the appellees. It may be that the restrictive covenant gave added value to their land when they bought it. But it is not the breach of the covenant alone that is causing their damage. This same tract, instead of being taken for a highway, might have been condemned by the city as a site for a public park. That too would have involved a breach of covenant, but the value of the appellees’ property might actually have been enhanced. Thus there is no logical basis for attributing the appellees’ present damage to the naked breach of covenant. Even without the restriction their injury would still have occurred. We cannot permit an irrelevant clause in the bill of assurances to create a fictitious cause of action.

Reversed and dismissed.

McFaddin, J., dissents.