It is simple enough to say that the amount of damages in a land condemnation case involving a partial taking is the difference between the fair market value of the entire tract immediately before the taking and the remainder of the tract after the taking (Chapter 136 cases) and the “greater of” rule of damages in Chapter 40A cases. But what constitutes the “entire tract”? In many if not most cases, no such issue arises because there is only one owner and one parcel of land. But in some cases, what constitutes the affected tract of land can be significant. The question becomes: the before and after value of what?
I. The Three Unities: Barnes, et. al. v. North Carolina State Highway Commission
The Barnes case [250 N.C. 378, 109 S.E. 2d 219 (1959)] is the most cited and most relied upon case for virtually all issues relating to a determination of the property affected in a land condemnation action. This case involved the taking of 12.19 acres within the municipal limits of the city of Winston-Salem for the East-West Expressway which became part of Interstate Highway 40 through Winston-Salem. The property owners owned 46.86 acres before the taking (subject property) and their land lay on both sides of Knollwood Street, a north-south city street that crossed the property. A paved road 20’ wide lay within a 40’ easement and ran from Knollwood Street east to Thruway Shopping Center which adjoined the property to the east (the “easement”). The portion of the property west of Knollwood Street contained 15.92 acres (tract 1). The area east of Knollwood Street and north of the easement contained 24.22 acres (tract 2) and the portion east of Knollwood Street and south of the easement contained 6.72 acres (tract 3). The expressway runs under Knollwood Street at the intersection and a series of ramps give Knollwood Street its only access to the Expressway. The property adjoining the subject property to the north and west was developed as residential subdivisions. The property to the east of the subject and north of the Expressway was also residential but south of the Expressway was a fast growing business area to the east and south of the property. The southern border of the subject property has 468 feet of frontage on South Stratford Road. At the time of the taking, all of the subject property was zoned for single family development except: (1) along South Stratford Road for a depth of 200’ it was zoned for business, and (2) along the western boundary and south of the Expressway, it was zoned to allow single family and multi family use.
The initial issue for the Court in this case was whether the 6.72 acre tract 3 should be included in assessing damages and off-setting benefits. In this case the Highway Commission wanted tract 3 included because of the benefits the project gave to that tract, and the property owners wanted tract 3 excluded.
Holding 1: “Ordinarily the question, whether two or more parcels of land constitute one tract for the purpose of assessing damages for injury to the portion not taken or offsetting benefits against damages, is one of law for the court. However, where the doubt is factual, depending upon conflicting evidence, the court may submit issues to the jury under proper instructions.”
Holding 2: “There is no single rule or principle established for determining the unity of lands for the purpose of awarding damages or offsetting benefits in eminent domain cases. The factors most generally emphasized are unity of ownership, physical unity and unity of use. Under certain circumstances the presence of all three unities is not essential. The respective importance of these factors depends upon the factual situations in individual cases. Usually unity of use is given greatest emphasis.”
This is the general rule most cited in later cases that involve these issues. The courts do tend to pay a great deal of attention to unity of use, but they also hold that unity of ownership is a “threshold” requirement, and if the other unities are present, the courts are pretty flexible in finding physical unity.
Unity of Ownership
In the very next paragraph after stating the general proposition set out in Holding 2 above, the Barnes Court states that “The parcels as a single tract must be owned by the same party or parties.” Then the Court modifies its previous absolute statement and says that “there must be a substantial unity of ownership.” (emphasis added). “It is not a requisite for unity of ownership that a party have the same quantity or quality of interest or estate in all parts of the tract. But where there are tenants in common, one or more of the tenants in common must own some interest and estate in the entire tract.” (citing Tyson v. Highway Commission, 249 N.C. 732, 107 S.E. 2d 630). The Court noted that if the land is acquired in a single transaction, it will strengthen the claim of unity, but is not essential. However, different owners of adjoining tracts cannot unity them as one tract to show greater damages.
The Barnes Court states that “The general rule is that parcels of land must be contiguous in order to constitute them a single tract for severance damages and benefits.” But then the Court states that there may be exceptions. Citing Illinois and Massachusetts cases, the Barnes Court states that where parcels of land are separated by an established city street, in use by the public, the parcels are separate as a matter of law. Undeveloped paper subdivisions with unbuilt streets would not defeat the unity of the land. Likewise a tract divided by an easement to another would remain a single tract where the owner maintains title to the underlying fee.
Unity of Use
Quoting a Minnesota case, Barnes states “. . . there must be such a connection or relation of adaptation, convenience, and actual and permanent use, as to make the enjoyment of the parcel taken reasonably and substantially necessary to the enjoyment of the parcel left, in the most advantageous and profitable manner in the business for which it is used.” Most importantly, “The unifying use must be a present use. A mere intended use cannot be given effect. If the uses of two or more sections of land are different and inconsistent, no claim for unity can be maintained. But the mere possibility of adaptability to different uses will not render segments of land separate and independent.”
Applying the Law to the Facts in Barnes
Having outlined the law, the Barnes Court held that the entire 46.86 acres, including the 6.72 acre tract 3 should be considered as one tract for the purpose of assessing damages and off-setting benefits. There was stipulated unity of ownership. The property was acquired in a single transaction. There was physical unity between tracts 2 and 3 because they were divided only by an easement. There was unity of use because all of the property was being held for future sale. Note that even though Tract 1 was separated by Knollwood Street, the unity of use was sufficient to overcome the lack of physical unity.
Other Holdings in Barnes
The Barnes case is a treasure house of holdings that are relevant and give guidance in many condemnation cases. Included are the following:
1) A highest and best use map showing a hypothetical development of the property before the taking is not admissible as substantive evidence, but is admissible to illustrate and explain the testimony of the witness.
2) In determining the value of the property, the issue is what is the property worth in the market, viewed not merely with reference to the uses to which it is at the time applied, but with reference to the uses to which it is plainly adapted. The jury should take into consideration all the capabilities of the property, and all the uses to which it could have been applied or for which it was adapted.
3) “The application of the concept of fair market value does not depend upon the actual availability of one or more prospective purchasers, but assumes the existence of a buyer who is ready, able and willing to buy but under no necessity to do so.” (citing Gallimore v. Highway Commission, 241 N.C. 350, 354, 85 S.E. 2d 392)
4) While the highest and best capabilities of the property should be considered, “The measure of compensation is not, however, the aggregate of the prices of the lots into which the tract could be best divided, since the expense of cleaning off and improving the land, laying our streets, dividing it into lots, advertising and selling the same, and holding it and paying taxes and interest until all the lots are disposed of cannot be ignored and is too uncertain and conjectural to be computed.”
5) The Barnes Court approved the concept of allowing testimony concerning the reasonable probability that a part of the subject property would be rezoned to permit a higher use and found no fault with the jury instruction that read: “In arriving at your verdict as to the fair market value of the property you may take into consideration the reasonable probability of a change of the zoning ordinance in the near future and the influence that that circumstance might have on the value of the land.”
6) On the issue of comparable sales, “It is within the sound discretion of the trial judge to determine whether there is a sufficient similarity to render the evidence of the sale admissible.”
7) Prices paid by settlement for other tracts in the project, even if proceedings have not yet begun are inadmissible, and cross-examination as to those prices is improper.
II. Chapter 40A Condemnation Proceedings
Chapter 40A establishes the procedures for condemnation by all private condemnors such as utilities and all local public condemnors such as municipalities and counties. N.C.G.S. 40A-67, enacted in 1981, provides a statutory definition for what constitutes the entire tract affected by the condemnation: 40A-67. Entire Tract
For the purpose of determining compensation under this Article, all contiguous tracts of land that are in the same ownership and are being used as an integrated economic unit shall be treated as if the combined tracts constitute a single tract.
City of Winston-Salem v. Yarbrough et. al.,
117 N.C. App. 340, 451 S.E.2d 358 (1994)
In Yarbrough, the Court dealt with the issue of whether the statutory provisions of N.C.G.S. 40A-67 had displaced the traditional Barnes test for private condemnors and local public condemnors. Although it is not entirely clear from the statement of facts in the case, apparently Mr. Yarbrough owned one portion of the property and Mrs. Yarbrough owned another portion of the property. The City opposede combining the tracts, contending that mere spousal interests under N.C.G.S. 29-30 were not sufficient to constitute an interest and estate in land for the purposes of unity of ownership. In addition, the City argues that the statute said nothing of “substantial” ownership – – the language of the Barnes case. The Court concluded that N.C.G.S. 29-30 preserves the benefits of the former rights of curtesy and dower and that a person’s inchoate dower interest in his spouse’s real property is “some quality” of interest. Consequently, the defendants each had some interest in the other’s land. The Court further held that “substantial” unity of ownership as set out in Barnes was implied in the statute. Since the unity of use and geographic unity were present, the statutory requirements were met and the taking involved all of the property.
III. Other Unity of Ownership Cases
The Barnes case dealt with a group of owners who owned the entire subject property as tenants in common. Other cases have dealt with a number of issues that arise out of different fact situation related to ownership. Many of those cases also dealt with other unity issues, and this manuscript will discuss the other unity issues in the cases in the appropriate sections.
Board of Transportation v. Martin et. al.
296 N.C. 20, 249 S.E. 2d 390 (1978)
This case involves the taking by the Board of Transportation of property to be used for an interchange between I-40 and the Raleigh Beltline on the southwestern side of Raleigh. Defendant David Martin owned fee simple title to the subject land on both the north and south sides of the Beltline. The property adjoining Martin’s property on the southwest was owned by South Hills Shopping Center, Inc. and was developed as a shopping center. Martin was the sole stockholder of South Hills Shopping Center, Inc. Both the shopping center parcel and Martin’s remaining adjoining parcel were conveyed to Martin as a single tract in 1961. Martin developed the shopping center in stages, and after the completion of stage one, he transferred the shopping center tract to the corporation for the purpose of obtaining financing (higher interest rates could be charged for corporate loans and no funding was available for an individual loan at a lower rate.) Martin had intended to expand the shopping center into his additional lands and had extended water and electrical utility service to the property. Prior to the date of taking, South Hills Shopping Center, Inc. became involved in Chapter X Bankruptcy proceedings and a trustee was appointed and was serving at the time of the condemnation.
The trial court concluded as a matter of law that the parcel owned by South Hills Shopping Center, Inc. and the parcel owned by Martin constituted a unity of ownership for the purposes of determining damages. The Supreme Court disagreed and held that
“ . . . a parcel of land owned by an individual and an adjacent parcel of land owned by a corporation of which that individual is the sole or principal shareholder cannot be treated as a unified tract for the purpose of assessing condemnation damages.” “In the case before us there is no difference in the quantity and quality of the estate claimed in the two parcels, but a different party owns each of them.”
Department of Transportation v. The Nelson Company
127 N.C. App. 365, 489 S.E. 2d 449 (1997)
This 1997 Court of Appeals case distinguishes the Martin case on the issue of unity of ownership. NCDOT brought this action against the Nelson Company, a North Carolina General Partnership (“Nelson”). Nelson owned Creekstone Office Park which consisted of (1) a day care owned by a national day care operator, (2) an undeveloped site owned by the Nelson Company, and (3) a lot with an office building located on it, owned by Riverbirch Associates, a North Carolina General Partnership. All eleven partners of Nelson were partners in Riverbirch and Riverbirch had two additional partners. Nelson contended that the Riverbirch parcel should be included in the land affected by the taking. The trial court disagreed and ruled in favor of NCDOT. The Court of Appeals reversed the trial court decision and held that this case could be distinguished from Martin because “ . . . in the instant case, each general partner has an ownership interest in partnership property along with the other partners.”
City of Winston-Salem v. Tickle et.al.
53 N.C. App. 516, 281 S.E. 2d 667 (1981)
The City of Winston-Salem initiated this action to condemn a portion of defendants’ land for use as a landfill. Defendants owned 156.91 acres and 42.657 acres was being taken. The City wanted to limit the land affected to the land taken. Defendants contended that the entire 156.91 acres was one tract and was impacted by the taking. (The physical unity and unity of use issues in this case will be addressed in later sections of this paper, but the facts of the case will be set out here.)
The property was located north of Winston-Salem along U.S. Highway 52. A map of the property can be found on the following page. Ziglar Road, a two-lane public road cut through the center of the subject property in a north-south pattern. Highway 52 crossed the property from northwest to southeast. The entire property was owned by the late James Ziglar, Sr. until his death in 1958. Ziglar Sr. had farmed the land. He devised his land to his widow, Katie Ziglar (later Tickle) for life with the remainder to his son James Ziglar, Jr. Ziglar, Jr. had operated a cattle farm on the property since the early 1960s.
Parcel A was the land taken. It was owned by Ziglar, Jr., with Katie Tickle having a life tenancy and Ziglar, Jr.’s wife, Barbara Ziglar, holding a statutory interest in her husband’s remainder. About half of the land was woodland and the other half pasture for the cattle operation. In 1976 Parcel B, consisting of 2.06 acres, was deeded to Ziglar, Jr. and Barbara as tenants by the entirety and that tract was their home, but a good portion of the 2 acres was in pasture and used for grazing the cattle. Parcel C was owned in the same manner as Parcel A and contained the home place where Mrs. Tickle lived as well as a barn, several sheds, and pasture used in connection with the cattle operation. Parcel D was a wooded tract containing 9.24 acres and was owned in the same manner as parcels A and C. Parcel D also contained a four-unit apartment building and appeared not to be used in connection with the cattle operation. Parcels E1, E2, E3, and E4 were owned by Ziglar, Sr. and his wife (now Mrs. Tickle) as tenants by the entirety and passed to Mrs. Ziglar (now Tickle) when Ziglar, Sr. died. Parcel E was also used in the cattle operation as pasture and for growing hay. Parcels F1 and F2 were held in the same manner as Parcel A and C, and were in the process of being cleared and converted to pasture. Parcels F3, F4, and F5 were owned the same as Parcels A and C and were used as hayfields or pasture. The trial court ruled the entire 156.91 acres was one tract and met the unity tests.
The Court of Appeals ruled that there was unity of ownership. The Court held that only “substantial unity of ownership” was required. “The test of substantial unity of ownership appears, then, to be whether some one of the tenants in the land taken owns some quantity and quality of interest and estate in all of the land sought to be treated as a unified tract.” The Court went on to say that “ . . . the significant factor is that the party who owns an interest and estate in the parcel he seeks to include in the whole for purposes of computing damages must also own an interest and estate in the tract taken, although the two interests and estates need not be of the same quality or quantity.”
All of the parcels taken were owned in the same manner as the parcel taken except Parcel B and Parcels E1-E4, so those are the only ones the Court needed to examine. Since Ziglar, Jr. owned a remainder in the property taken and a fee simple interest in Parcel B, the Court concluded that the only difference was quantity and quality, so Parcel B should be included. Likewise, Mrs. Tickle owned a life estate in the property taken and a fee simple in Parcels E1-E4- the only difference being quantity and quality. Thus, there was unity of ownership for the entire 156.91 acre tract.
Department of Transportation v. Doris B. Bradsher
No. COA97-718 (1998)
This is an unpublished opinion in a case originating in Wake County. In 1995, NCDOT condemned 32.98 acres out of a 316 acre tract for construction of the Raleigh Outer Loop. The entire tract was owned by Doris Bradsher in fee simple. Shortly before trial DOT moved to include an additional 2.54 acre tract in the land to be considered when determining damages. This tract had previously been conveyed by Doris Bradsher to her son and his wife as tenants by the entirety and they had built a house, were residing on that parcel, and operated a soils business out of their home.
DOT wanted this parcel included because it had access to U.S. Hwy 401 near the interchange with the outer loop and would, according to DOT, give Mrs. Bradsher additional access to her property from U.S. 401 and thus mitigate her damages. In the alternative, DOT moved that it be allowed to return to Mrs. Bradsher a portion of the property taken in the action to give her back some of the access DOT had taken. The trial court denied DOT’s motions and the Court of Appeals affirmed. “Doris Bradsher has absolutely no ownership interest in the 2.54 acre tract she conveyed in fee simple to her son and his wife long before the institution of this action.” “Absent unity of ownership, the two parcels of land cannot be regarded as a single tract for the purpose of determining a condemnation award.”
(This case also stands for the proposition that “ . . . when a complaint, declaration of taking and notice of deposit are filed in the superior court, title vests in the plaintiff at that time.” “The memorandum notifies the public of the change of ownership and has the same effect as a deed to property. The right of the landowner to just compensation also vests at that time.” The Court went on to hold that DOT could not give back a portion of the property it had taken and thereby reduce the damages. Likewise, DOT cannot simply decide it doesn’t want the property and take a nonsuit years after filing the complaint. See North Carolina State Hwy Com’n v. York Indus. Center, Inc. 263 N.C. 230, 232, 139 S.E. 2d 253, 255 (1964).)
IV. Physical Unity
Under Barnes, physical unity requires that parcels be contiguous, but remember Barnes said there may be exceptions and this appears from the case law to be the most flexible of the requirements. N.C.G.S. 40A-67 requires that the tracts must be contiguous, but the Court wrote “substantial” into the statute to conform to Barnes.
Board of Transportation v. Royster
40 N.C. App. 1, 251 S.E. 2d 921 (1979)
Defendants husband and wife were the owners of two tracts of land on Cary-Macedonia Road. Defendants’ residence was on one tract (Tract “A”) and their other tract was across the Cary-Macedonia Road (Tract “B”). The condemnation action as filed described Tract B and $62,500 was deposited by Plaintiff and withdrawn by Defendant. Four months later, the Board of Transportation filed a second action also describing Tract B and $625 was deposited as the Plaintiff’s estimate of just compensation. A series of motions and amendments followed whereby Plaintiff sought to obtain possession of Tract A. Finally, Plaintiff filed an amended complaint in the initial case that correctly described both parcels and an additional deposit of $3,075 was made. Defendants’ motion to strike was denied. The Court of Appeals affirmed the trial court and held that a single condemnation action may include more than one tract of land, and the proceeding may be amended to add additional land to the taking provided the required memorandum of action is filed and the sum estimated for just compensation is increased. “The condemnation statutes do not require that multiple tracts be contiguous in a condemnation proceeding.”
City of Winston-Salem v. Tickle, et. al.
53 N.C. App. 516, 281 S.E. 2d 667 (1981)
This is the landfill cattle farm case discussed earlier. This case also has physical unity issues because the parcels are separated by two roads, railroad tracts, and by natural boundaries. The City contended that Barnes specifically states that “parcels of land separated by an established city street, in use by the public, are separate and independent as a matter of law.” But the Court noted that Barnes stated that there is an exception to that rule. “’[I]f a tract of land, no part of which is taken, is used in connection with the same farm, . . . part of which was taken, it is not considered a separate and independent parcel . . . even if the two tracts are separated by a highway, railroad, or canal.’” The Tickle Court went on to hold that “physical unity requires only that the parcel of land taken and the parcel sought to be included be contiguous with the whole of the land similarly used.” “Moreover, the Barnes court noted that contiguity requirements may be relaxed ‘where there is indivisible unity of use.” It was important to the Court that “ . . . a single unbroken line could be drawn along the boundary of the farm so that no truly separate parcel need be included.” So as in Barnes, the unity of use in Tickle was sufficient to overcome the physical separation of the tracts by the roads and railroad tracks.
City of Winston-Salem v. Davis, et. al.
59 N.C. App. 172 (1982)
In 1975, Defendants purchased property consisting of three parcels, separated by paved roads. The largest parcel had an old building on it and that building was renovated and converted into a garage and body shop. Beside the large parcel was a small circular tract that the owners fenced and graveled. The third parcel (the condemned parcel) was vacant and the owners had erected a billboard on this parcel. The Court held that there was no physical unity because the paved road divided the three parcels.
Department of Transportation v. Rowe, et. al.
138 N.C. App. 329 (2000)
The Rowe case received a great deal of attention when the Court of Appeals held that the special benefits provisions in N.C.G.S. 136-112(1) were unconstitutional. The North Carolina Supreme Court reversed that decision in 353 N.C. 671, 549 S.E. 2d 203 (2001) and the United States Supreme Court denied the petition for writ of certiorari.
Rowe also had physical unity and unity of use issues as well. NCDOT condemned 11.411 acres of 18.123 acres owned by Mr. and Mrs. Rowe and Mr. and Mrs. Pruitt. After the taking, the defendants were left with four small tracts identified as tracts A, B, C, and D totaling 6.712 acres. Before the taking, tract A was connected to the easternmost part of the property taken and tract B was connected to the westernmost part of the property taken. The parties agreed that a 70’ strip of land owned by the City of Hickory separated tract B from tracts C and D and a strip of land 60’ wide owned by the City of Hickory separated tracts C and D from each other. The City of Hickory intended to construct streets on the 70’ and 60’ strips, but no streets had been constructed as of the date of taking.
The trial court held that there was geographic unity between all of the tracts and the jury concluded that the general and special benefits to tracts A, B, C, and D outweighed the damages for the taking of 11.411 acres, awarding zero damages. The Court of Appeals, quoting from Black’s Law Dictionary, pointed out that “contiguous” means “[t]ouching at a point or along a boundary.” The fact that defendants did not retain any interest in the strips of land owned by the City of Hickory tended to support a finding of no physical unity between tracts C and D and tracts A and B. In the following sections, we will see how the court dealt with unity of use and how that related to the geographic unity issue.
V. Unity of Use
In Barnes v. Highway Commission, supra, the Court stated: “There is no single rule or principle established for determining unity of lands for the purpose of awarding damages or offsetting benefits in eminent domain cases. The factors most generally emphasized are unity of ownership, physical unity and unity of use. Under certain circumstances, the presence of all three of these unities is not essential. The respective importance of these factors depends upon the factual situations in individual cases. Usually, unity of use is given greatest emphasis.” There are a number of cases that focus on what is really meant by unity of use.
Board of Transportation v. Martin, et. al.
296 N.C. 20, 249 S.E. 2d 390 (1978)
In the Martin case, the parcel of land owned by the corporation had been developed as a shopping center and the corporation was in bankruptcy. The adjacent tract owned by the Martins was not developed but water and sewer lines had been extended to it and there had been some grading. The Court held that even if unity of ownership had been proven, “it would still be necessary to show unity of use.” In this case, the parcel owned by the Martins “was not presently being used in a manner which made its continued use essential to the enjoyment of the tract owned by South Hills. The intended future development of the Martin tract for use in conjunction with the South Hills tract is not adequate to support a finding of unity of use.”
City of Winston Salem v. Tickle, et. al.
53 N.C. App. 516, 281 S.E. 2d 667 (1981)
This landfill and cattle farm case also has interesting unity of use issues since a portion of the property was used as a residence for Mrs. Tickle, a portion was used as a residence for Dr. and Mrs. Ziglar, a portion was used for raising cattle and hay, a portion was used as a four unit apartment building, and a portion was not being used for any present purpose.
Dr. Ziglar testified that each parcel of land was used in the cattle operation. The wooded parcel was being timbered so grass could be planted for pasture. “The only portions of the property not in grassland (or in the process of being transformed into grassland) were the portions devoted to his residence, his mother’s residence, the apartment house lot, the portions of certain tracts which he had not yet had the opportunity to clear, and areas that were ‘not level enough to negotiate.’” Although the City contended that there were clearly five different uses, the Court held that all of the uses except the apartment house lot were “consistent with land devoted to the operation of a cattle farm, and noted in passing that it would be difficult indeed to find a farm in North Carolina which did not encompass at least some wooded area.” Moreover, the Court noted that “It would be absurd to say that the house in which the farmer lives is not devoted to farm use unless there are cattle in the yard and hay stored in the living room.”
The City also argued about the differences in zoning of portions of the property, but the Court pointed out that Barnes requires that “The unifying use must be a present use . . . [T]he mere possibility of adaptability to different uses will not render segments of land separate and independent.” Dr. Ziglar testified that for as long as he could remember, tenants had lived in the apartment house and helped with the farm. However, the Court held that the apartment house tract, tract D, “is presently being used to support a multi-family dwelling unrelated to the farming operation.” It was held to be the only parcel not unified with the tract taken by the City.
City of Winston Salem v. Davis, et. al.
59 N.C. App. 172 (1982)
In this case, a paved road divided three parcels, “indicating there is no physical unity.” Unlike Tickle, the Court found that there was also no unity of use with one parcel being used as a garage, a second as a parking lot, and the condemned parcel being used only as a billboard location. The Court held that there was no unity of use.
North Carolina Department of Transportation v. Kaplan, et. al.
80 N.C. App. 401, 343 S.E. 2d 182 (1986)
The property involved in this action was located at the southwest intersection of Kirk Road and Jonestown Road in Winston Salem. DOT included two tracts in the taking, a large inverted L-shaped parcel fronting on Kirk Road upon which a building and parking lot are located, and a smaller rectangular parcel located south and east of the larger parcel that fronts on Jonestown Road. A part of the taking included a control of all access on Jonestown Road. There were no issues of unity of ownership or physical unity, so the sole issue was unity of use. The Kaplans contended that the two parcels were separate and distinct and should be treated separately for the purpose of assessing damages. In support of their position, they showed that the parcels were acquired as separate tracts at different times, they considered them to be separate tracts, and put them to different uses. Prior to the taking, neither tract was necessary to the use and enjoyment of the other. The trial court held that the parcels were separate tracts and should be considered separately for the purpose of determining damages. The larger tract was leased to Kaplan’s School Supply, Incorporated and the smaller tract was vacant. The lease agreement made no mention of the smaller tract. The Court of Appeals affirmed the trial court and pointed out that “ . . . defendants acquired the two tracts as separate tracts at different times, considered them to be separate tracts, and put them to different usages. As of the date of the taking, neither tract was necessary to defendants’ use or enjoyment of the other.”
City of Winston-Salem v. Yarbrough, et. al.
117 N.C. App. 340, 451 S.E. 2d 358 (1994)
Defendants owned seven tracts of land in Winston-Salem and this action was brought to condemn three of them for a new public road. Defendants moved to have the other four tracts added to the action contending that all seven tracts were an integrated economic unit which would be adversely affected by the taking. This action was brought under Chapter 40A so the measure of damages was the greater of the value of the land taken or the difference between the before and after values of the entire tract. The trial court found that all of the parcels were zoned for multi-family development and were at the time of the taking “being held for development under a common plan or scheme.” The City contended that the tracts could not be considered as “unified in use” because they weren’t being used at all, and Barnes held that “The unifying use must be a present use. A mere intended use cannot be given effect.” The Yarbrough Court, citing Barnes, ruled that “holding property for anticipated development is a present use.”
Department of Transportation v. The Nelson Company
127 N.C. App. 365, 489 S.E. 2d 449 (1997)
In Nelson Company NCDOT took part of an office park in Durham that was partially developed. Although the action was brought under Chapter 136, the Court looked to N.C.G.S. 40A-67 for guidance on the unity of use test: “The legal standard for unity of use is whether the tracts of land ‘are being used as an integrated economic unit.’” The Court held that “It is patently clear that had Creekstone Office Park been completed, it would have been considered as ‘integrated economic unit,’ thereby meeting the unity of use requirement. Thus, the only remaining question is whether a partially-completed office park still meets the unity of use requirement. We hold that it does.”
The Court distinguished Martin by saying that in Martin, the shopping center and been completed and was fully functional and the undeveloped tract would expand the existing shopping center. In this case, “ . . . the plan for the use of both the Nelson and Riverbirch parcels was conceived and approved before any actual construction began. Thus, the undeveloped Nelson parcel is presently being used in the same manner as the developed Riverbirch tract – – it is part of the continuing implementation of an original, pre-existing office park development scheme.” The Court went on to point out that “Concluding that no unity of use exists here would overlook the inherent reality of commercial development, namely that it is typically completed in phases.” Future developers would have to begin construction on all phases at once, which is impractical from the standpoint of the developer and the commercial creditor who finances the construction.
Department of Transportation v. Rowe, et. al.
138 N.C. App. 329, 539 S.E. 2d 836 (2000)
In Rowe, the Court of Appeals stated that the General Assembly “codified the Barnes rule in 1981” in N.C.G.S. 40A-67. This is another decision that applies Chapter 40A provisions to a Chapter 136 condemnation action. Citing Kaplan, the Court said that “where the uses of the tracts in question are independent of the portion which is taken rather than a part of the integrated economic unit, the tracts cannot be included as part of the area affected by the taking.
In this case, the defendants held the four remaining tracts for commercial development, but they were not being held under a common plan or scheme as in Yarbrough. Therefore, the use and enjoyment of tracts C and D were not related to or affected by the area taken and were not a part of the area affected by the taking. Notice that the Court in Rowe makes the unity of use argument in relation to the four parcels remaining after the taking as opposed to the property as it existed before the taking.
It passing, it should be pointed out that the determination of the property affected by the taking should be and is generally determined in a “108 hearing” under N.C.GS. 136-108 for DOT condemnations and under N.C.G.S. 40A-47 for Chapter 40A condemnations. In Rowe, the property owners failed to appeal from the adverse 108 ruling and would have lost that issue had the Court of Appeals not reversed for a new trial on other grounds. Citing Highway Commission v. Nuckles, 271 N.C. 1, 155 S.E. 2d 772 (1967), the Court in the first Rowe appeal ruled that because the defendants had not appealed from the adverse 108 hearing ruling, that appeal was not properly before the court. 131 N.C. App. 206, 505 S.E. 2d 911 (1998).
In condemning a portion of the property owner’s lands, the condemning authority should carefully look at the unity issues. The declaration of taking in a Chapter 136 proceeding must include a description of the entire tract or tracts affected by the taking sufficient for the identification thereof. Since the condemning authority can determine what property to take and when to take it, an analysis of the unity issues should be done before the action is initiated.
In many condemnation cases, the issue of combining separate tracts for determining what property is being condemned and what remains is critical to the amount of compensation ultimately received. When portions of the property owner’s lands are taken, the property owner’s lawyer must determine whether there are unity issues, should raise those issues in the answer, and should attempt to have those issues resolved at an early stage of the proceedings. Interestingly, in highway cases, sometimes the property owner wants to combine tracts, and sometimes it is the condemning authority seeking to extend benefits to additional tracts or to use additional tracts to provide the landowner with access.
Unity of ownership is the threshold question – without some overlapping ownership interest, separate tracts cannot be combined in a condemnation proceeding. Physical unity is the least important, and given sufficient unity of use, courts will even ignore this prong of the test. Unity of use is often the key factor. When disparate tracts are clearly part of a common economic scheme or use or development, then (if there is unity of ownership) the courts will typically require them to be considered as one for condemnation purposes. Remember that these issues are generally questions of law for the court and adverse decisions must be appealed prior to trial.
Finally, clients frequently ask for advice about the implications of a possible condemnation proceeding prior to any action being filed. In many cases, landowners know a new road is going to be built over or near their property but the precise corridor has not been determined and no corridor protection map has been filed. Local jurisdictions frequently will delay or deny development permits because of the pending street or highway project. Prospective purchasers shy away from buying land because of the uncertainties of the possible project. What can the property owners do when their property has been “embargoed” by a condemning authority? Certainly it makes sense for the property owner to have the property zoned for its highest and best use. Perhaps a subdivision map should filed. If there are multiple owners, perhaps they should divide the property. In rendering advise, the attorney should be familiar with the cases cited in this manuscript and what implications the law relating to unity of ownership, geographic unity and unity of use have for the ultimate condemnation action.