State ex rel. Missouri Highway & Transportation Commission v. McDonald's Corp.

896 S.W.2d 652, 1995 Mo. App. LEXIS 390, 1995 WL 94997
Missouri Court of Appeals·Decided March 7, 1995·No. No. 64948·Published·Cited by 2 cases

Opinion

CRANE, Presiding Judge.

The Missouri Highway and Transportation Commission [Commission] appeals an award in favor of owners in a highway condemnation case, asserting evidentiary errors. We affirm.

The Maudell A. Breeden Revocable Living Trust, Maudell A. Breeden, Trustee; The Revocable Living Trust Agreement Dated August 20,1985, Eugene C. Keeven, Trustee; Norbert P. Sandbothe; and Marian E. Sand-bothe (hereinafter collectively referred to as Owners) owned a parcel of land at the intersection of Clarkson and Manchester Roads in St. Louis County with two commercial build-[653] mgs, one facing Manchester Road which was used as a pizza restaurant, and the other facing both Clarkson and Manchester roads which was used as a strip shopping center. On April 1, 1991 the Commission filed a condemnation petition for 4,122 square feet of this property for the widening of Clarkson Road. The taking included some of the shopping center’s parking spaces. The Commission also requested a temporary construction easement of 2,748 square feet. The court appointed Commissioners who awarded Owners $503,000. The Commission paid this amount into court on November 8, 1991. Owners filed exceptions to the Commissioner’s award. After a jury trial on those exceptions, the jury awarded Owners $400,000 in damages. The Commission appeals, asserting errors in the admission and exclusion of evidence with respect to the land’s after value.

I.

For its first point the Commission contends that the trial court erred in admitting the valuation testimony of Norbert Sand-bothe, one of the property’s owners, on the after value of the shopping center because his opinion of the after value was founded on an “income approach.” The Commission asserts this method is improper because the Missouri Supreme Court has held that the capitalization of income method of appraisal may apply in complete takings, but does not apply to partial takings. Shelby County RIV School District v. Herman, 392 S.W.2d 609, 613 (Mo.1965); State ex rel. State Hwy. Comm’n v. Mann, 624 S.W.2d 4, 10 (Mo. banc 1981).

At trial Owners called four witnesses including Norbert Sandbothe, an owner, and Eugene Jefferson, an appraisal expert. Sandbothe testified without objection to the before value of the shopping center using a capitalization of rental income approach. He testified that prior to the taking the shopping center generated an average of fifteen dollars a square foot in rent. He multiplied that amount by the number of square feet in the shopping center, subtracted ten percent for vacancy, and divided that figure by a ten percent capitalization rate to obtain a before value for the shopping center in the amount of $1,647,000. He testified that after the taking he had to reduce rents to less than five dollars per square foot because of the parking loss. At this point the transcript reflects the following:

Q. (by Mr. Denlow) What is the fair rental value in the after situation?
A. Well, the fair rental value, I guess, is what I’m able to rent it for, and that is less than five dollars a square foot.
Q. Okay. For a strip shopping center at five dollars a square foot, what did you conclude to be what an investor would pay for such a shopping center?
MISS WHALEY: Your Honor, I object. He’s asking for determination of an income approach on a partial taking on an after condition.
MR. DENLOW: I asked him his opinion based on his knowledge and experience.
THE COURT: Overruled.
A. (by the witness) My opinion of the value of the shopping center, excluding the Pizza Hut, is about five hundred fifty thousand.

“Admission or exclusion of evidence in land cases is within the discretion of the trial court and errors in such determination will not ordinarily result in reversal unless there is a substantial or glaring injustice.” State ex rel. Mo. Hwy. Comm’n v. Kuhl-mann, 830 S.W.2d 569, 571 (Mo.App.1992). Even if we accept both of the Commission’s propositions, first, that Sandbothe testified to a value based on a capitalization of income approach,1 and, second, that Shelby County and Mann apply to capitalization of rents, we do not find that the trial court prejudicially erred in overruling the Commission’s objection to the question or the motion to strike the answer.

[654] Owners’ expert Jefferson testified without objection to a value based on an income analysis of the shopping center after the taking. He took actual rents and estimated market rents, factored in a ten percent vacancy to reach net income, and divided by a capitalization rate of 10% to find a value of $445,790. He then determined that the after value of the land without the shopping center was $794,421. Because this figure was higher than the value of the land with the shopping center, he determined that the highest and best use of the property was as vacant land. He calculated damages of $691,769 based on the after value of the land as vacant except for the pizza restaurant.

Commission’s expert Don Roach also testified that the highest and best use of the property was as vacant land. He determined the property’s value after the taking was $1,124,000.

Under these circumstances the Commission was not prejudiced. The jury was instructed to calculate damages according to MAI 9.02 which states:

You must award defendants such sum as you believe was the difference between the fair market value of defendants’ whole property immediately before the taking on November 8, 1991, and the value of defendants’ remaining property immediately after such taking, which difference in value is the direct result of the taking and of the uses which plaintiff has the right to make of the property taken.

The court also defined “fair market value”:

The phrase “fair market value” as used in these instructions means the price which the property in question would bring when offered for sale by one willing but not obliged to sell it, and when bought by one willing or desirous to purchase it but who is not compelled to do so.
In determining fair market value you should take into consideration all the uses to which the property may best be applied or for which it is best adapted, under existing conditions and under conditions to be reasonably expected in the near future.

MAI 16.02 (emphasis added).2

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State ex rel. Missouri Highway & Transportation Commission v. McDonald's Corp., 896 S.W.2d 652, 1995 Mo. App. LEXIS 390, 1995 WL 94997 (Mo. Ct. App. 1995).

896 S.W.2d 652 (State ex rel. Missouri Highway & Transportation Commission v. McDonald's Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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