Town of Dandridge v. Patterson

827 S.W.2d 797, 1991 Tenn. App. LEXIS 893
CourtCourt of Appeals of Tennessee
DecidedNovember 13, 1991
StatusPublished
Cited by11 cases

This text of 827 S.W.2d 797 (Town of Dandridge v. Patterson) is published on Counsel Stack Legal Research, covering Court of Appeals of Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Town of Dandridge v. Patterson, 827 S.W.2d 797, 1991 Tenn. App. LEXIS 893 (Tenn. Ct. App. 1991).

Opinion

OPINION

GODDARD, Judge.

Town of Dandridge (“Dandridge”), Plaintiff, appeals the Circuit Court of Jefferson County’s grant of a motion for summary judgment1 in favor of Jefferson County (“County”) and L.D. Patterson, et al., Defendants, denying the Plaintiff’s condemnation petition. The Plaintiff seeks to exercise its power of eminent domain to condemn an easement over the Patterson’s property which the owner had granted an option to the County to purchase for the purpose of constructing and operating a solid waste landfill.

Dandridge insists the Trial Court committed reversible error in holding that the County’s unexercised option created such an interest or property right as to allow the County to invoke the intergovernmental immunity doctrine precluding the condemnation action. By its issues on appeal Dan-dridge contends that the unexercised option to purchase real property does not create any legal or equitable property interest and that its power of eminent domain is superi- or to any right which may have been conferred upon the County.

FACTS

In November 1988, the County executed an irrevocable option contract to purchase for the sum of $350,000 certain property owned by the Pattersons, which is the subject of this litigation.2 The option contract gave the County the right to enter upon the property to conduct tests to determine the suitability of the site for a solid waste landfill. All parties agree that the option contract is presently in full force and effect with an expiration date of December 31, 1991.

The option contract was duly recorded in the Register’s Office for Jefferson County on August 7, 1990. However, Dandridge had been aware of the option contract since [799]*799its inception. Further, Dandridge has been aware of the County’s continuing investigatory tests.

In May 1989, the County decided to purchase the property provided the engineering work indicated it was feasible to locate a landfill upon the property. The County subsequently expended approximately $126,000 in landfill development activities on the property. After completing the engineering work, the County, on November 21, 1990, applied for a landfill permit from the Tennessee Department of Health and Environment. In March 1991, the State Department issued a tentative or draft permit approving the landfill site “pending consideration of any adverse technical information received during the public comment period” ending on April 29, 1991.

During the interim Dandridge conducted their own geologic survey at an estimated cost of $125,000. The results of the geologic tests found that a landfill located on the Patterson’s property would threaten or possibly cause irreparable harm to the ground water supply for the Town of Dan-dridge’s waterworks system. On February 6, 1991, Dandridge filed its condemnation petition seeking to condemn an easement over the Patterson property that would prevent the County from “constructing or operating ... a solid waste landfill upon the[] property”. Dandridge concedes the sole purpose for condemning the easement is to prevent the County from locating a landfill site upon the property.

LAW

As stated by the Trial Court, the issue presented for the Court to decide is “not where, when, or if a landfill is to be located on the subject property. The only issue for this Court is whether a condemnation action under the facts and circumstances of this case is proper."3 As such, the Court held that the option contract possessed by the County is a legally protected contractual right creating a property interest which is not subject to condemnation by another governmental entity. For the reasons set forth below, we affirm.

The parties stipulated to the general rule of law that one public entity has no power to condemn the property of another public entity devoted to a public use unless such power has been specifically conferred upon the condemning governmental entity by the Legislature. Atlanta, K. & N. Ry. Co. v. Southern Ry. Co., 131 Fed. 657 (6th Cir.1904). The rule is commonly referred to as the doctrine of intergovernmental immunity. The State Legislature has not granted a specific power upon Dandridge to condemn the property of another public entity. Therefore, the dispositive issue is whether the unexercised option contract possessed by the County constitutes such a property interest to permit the County to invoke the doctrine of intergovernmental immunity.

Dandridge contends that the general rule followed in the majority of American courts is that an unexercised option to purchase real property does not result in a legal or equitable interest in the property. See generally, Hirlinger v. Hirlinger, 267 S.W.2d 46 (Mo.1954); Phillips Petroleum Co. v. Omaha, 171 Neb. 457, 106 N.W.2d 727 (1960). Dandridge further contends that Tennessee specifically adopted this rule. In Sager v. Rogers, (an unpublished opinion of this Court, filed at Knoxville February 20, 1987), 1987 WL 6718, the question was posed whether an unexer-cised option to purchase real estate contained in a franchise agreement has priority over a subsequent sales contract concerning the same property. In reaching its holding, the Court recognized the principle that an option creates no interest in land. Id. The Court found where the purchaser had no actual or constructive notice of the [800]*800option provision the rights of the purchaser are superior.

Most of the pertinent Tennessee cases cited by the litigants concern the equitable interests of purchasers who have acquired real property subject to a lease and option to purchase held by a third party. In these cases the Courts have struggled with the question of whether the purchaser had actual or constructive notice of the unexer-cised option to determine which competing interest should prevail. See Sager v. Rogers, supra; Texas Co. v. Aycock, 190 Tenn. 16, 227 S.W.2d 41 (1950). The question here is not to resolve the dispute between competing equitable interests. Rather, the issue is whether the County has an equitable interest protected from a condemnation suit via the intergovernmental immunity doctrine. Therefore, these cases are not applicable.

Neither Dandridge nor the County has provided, nor has this Court found, any Tennessee precedent specifically addressing the property interest of the holder of an unexercised option to purchase real property involved in a condemnation proceeding. This is a case of first impression in this Court.

Although an option to purchase might not create a present interest in land under some of the cases cited by Dandridge, see, e.g., Lynch v. Burger, 26 Tenn.App. 120, 168 S.W.2d 487 (1942), it is such an interest or right which would preclude Dandridge from proceeding with its condemnation suit.

The County has had the option contract since November 1988. Dandridge had been aware of the contract since its inception.

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Bluebook (online)
827 S.W.2d 797, 1991 Tenn. App. LEXIS 893, Counsel Stack Legal Research, https://law.counselstack.com/opinion/town-of-dandridge-v-patterson-tennctapp-1991.