State Ex Rel. Dept. of Hwys. v. Hy ( 1976 )

No. 12988
I N THE SUPREME COURT O THE STATE OF M N A A
F OTN
1975
THE STATE OF MONTANA, ACTING BY AND THROUGH
THE DEPARTMENT OF HIGHWAYS OF THE STATE OF
MONTANA,
P l a i n t i f f s a d Appellants,
HY -GRADE AUTO COURT, a Dissolved Montana
GLYNOEU J. WHITE,
.t a t u t o r y T r u s t e e s o f
Corpora t i o n ; RONALD C WHITE ; VENETA WHITE ;
as S
t h e Hygrade Auto C o u r t , a Dissolved Montana
C o r p o r a t i o n ; EUTJPH E. MOORE, I N C . ,
Defendants and Respondents.
Appeal from: D i s t r i c t Court of t h e S i x t h J u d i c i a l D i s t r i c t ,
Honorable W. W. L e s s l e y , Judge p r e s i d i n g .
Counsel o f Record:
For Appellants :
D a n i e l J , S u l l i v a n argued and James D r i s c o l l a r g u e d ,
Helena, Montana
F o r Respondents:
H o l t e r , Heath and Kirwan, Bozeman, Montana
Robert M. H o l t e r argued, Bozeman, Montana
B e r g e r , Anderson, S i n c l a i r & Murphy, B i l l i n g s ,
Montana
Richard FJ. Anderson a r g u e d , B i l l i n g s , Montana
Yardley and Yardley, L i v i n g s t o n , Montana
Dan Yardley a p p e a r e d , L i v i n g s t o n , Montana
Huppert and S w i n d l e h u r s t , L i v i n g s t o n , Montana
Arnold Huppert Jr. a p p e a r e d , L i v i n g s t o n , Montana
Submitted: December 8, 1975
Decided : y?;
i'7!r,c , :-',7f
Filed : t -4 ;
Mr. Chief J u s t i c e James T . H a r r i s o n d e l i v e r e d t h e Opinion o f
t h e Court.
T h i s i s a n a p p e a l from a condemnation j u r y v e r d i c t and
judgment e n t e r e d i n t h e d i s t r i c t c o u r t , P a r k County.
Hy-Grade Auto C o u r t , i s a d i s s o l v e d Montana c o r p o r a t i o n
holding f e e t i t l e t o s e r v i c e s t a t i o n property i n Gardiner,
Montana. The s t o c k h o l d e r s and s u c c e s s o r s t o w r a d e a r e Veneta
White, Ronald C. White ( h e r s o n ) and Glynora White ( h i s w i f e ) ,
t h e y w i l l be c o l l e c t i v e l y r e f e r r e d t o h e r e i n a s "Owner". Ralph
E. Moore, I n c . leases t h e s e r v i c e s t a t i o n p r o p e r t y from t h e
Owner, and h a s l e a s e d it f o r many y e a r s . This corporation w i l l
be r e f e r r e d t o a s " L e s s e e " . There i s a s u b l e s s e e who a c t u a l l y
r u n s t h e s e r v i c e s t a t i o n , b u t he i s n o t a p a r t y t o t h i s a c t i o n .
The Montana Department of Highways, (State), filed this
condemnation a c t i o n i n t h e p r o c e s s o f u p g r a d i n g U. S. Highway 89
and t h e b r i d g e c r o s s i n g t h e Yellowstone R i v e r i n G a r d i n e r .
The s u b j e c t p r o p e r t y i s known a s t h e N o r t h g a t e Texaco
s t a t i o n and i s t h e prime s e r v i c e s t a t i o n s i t e i n G a r d i n e r . The
p r o p e r t y i s l o c a t e d on t h e "swing c o r n e r " , meaning it h a s good
v i s a b i l i t y i n a l l d i r e c t i o n s and good access. The highway f o r k s
a t t h e s t a t i o n , o n e f o r k g o i n g t o J a r d i n e , Montana, and t h e o t h e r
c r o s s i n g t h e Yellowstone b r i d g e , and l e a d i n g t o t h e North E n t r a n c e
of Yellowstone N a t i o n a l P a r k . V i r t u a l l y a l l v i s i t o r s t o t h e Park,
e n t e r i n g and l e a v i n g a t G a r d i n e r , p a s s t h e s i t e o f t h e s t a t i o n .
The s t a t i o n pumped o v e r t w i c e a s much g a s a s any o t h e r s t a t i o n i n
Gardiner.
A f t e r t h e t a k i n g , t h e l a n d l e f t a v a i l a b l e t o t h e Owner
would n o t be s u f f i c i e n t n o r s u i t a b l e f o r a s e r v i c e s t a t i o n s i t e .
A l l improvements on t h e p r o p e r t y were t a k e n by t h e S t a t e , e i t h e r
a s right-of-way, o r f o r t h e c o n s t r u c t i o n easement.
L e s s e e had l e a s e d t h e p r o p e r t y from t h e Owner s i n c e 1964,
i n f a c t , s i n c e it was b u i l t i n 1948 (under t h e p r e s e n t owner and
and i t s p r e d e c e s s o r i n i n t e r e s t ) . The lease i n e f f e c t a t t h e
t i m e of t h i s a c t i o n was d a t e d F e b r u a r y 1, 1968,and p r o v i d e d
f o r a t e n y e a r p r i m a r y t e r m w i t h two a d d i t i o n a l f i v e y e a r re-
newal t e r m s . A t t h e t i m e o f t r i a l , t h e l e a s e had 1 4 y e a r s t o
run.
L e s s e e a l s o o p e r a t e s a s a d i s t r i b u t o r f o r Texaco. It
s e r v i c e s N o r t h g a t e Texaco and e i g h t o t h e r Texaco s e r v i c e s t a t i o n s
i n t h e Livingston-Gardiner area.
P r i o r t o t h e jury t r i a l , t h e S t a t e requested a bifurcated
t r i a l , t h a t i s , i n t h e S t a t e ' s view, t h e j u r y would f i r s t d e c i d e
t h e t o t a l v a l u e of t h e p r o p e r t y t a k e n ( a s though owned by o n e p e r -
s o n ) , subsequently receiving evidence as t o t h e value of each
i n t e r e s t i n t h e whole; d e c i d i n g t h i s q u e s t i o n i n a s e p a r a t e d e l -
iberation. The d i s t r i c t c o u r t conducted a s i n g l e t r i a l , p e r m i t t e d
t h e i n t r o d u c t i o n o f e v i d e n c e on t h e t o t a l v a l u e of t h e p r o p e r t y ,
and t h e v a l u e s of t h e two i n t e r e s t s . The j u r y was i n s t r u c t e d t o
a r r i v e a t a t o t a l v a l u e f i r s t , and t h e n a p p o r t i o n t h a t award be-
tween Owner and L e s s e e , a l l d u r i n g o n e d e l i b e r a t i o n .
A t t r i a l defendants' expert witnesses t e s t i f i e d t o t h e
t o t a l v a l u e o f t h e p r o p e r t y , r a n g i n g i n t h e i r e s t i m a t e s from a
h i g h o f $135,000 ( a n estimate by t h e L e s s e e ) t o a low of $100,000
( a n e s t i m a t e by a Texaco l a n d a p p r a i s e r ) . The two a p p r a i s e r s
t e s t i f y i n g f o r t h e S t a t e g a v e e s t i m a t e d v a l u e s of $41,200 and
The j u r y r e t u r n e d t h i s v e r d i c t :
"We t h e J u r y , d u l y i m p a n e l l e d , r e a c h o u r v e r d i c t
i n t h e a b o v e - e n t i t l e d Cause, a s f o l l o w s :
"1. For t h e v a l u e o f t h e l a n d and b u i l d i n g s
a c t u a l l y t a k e n , t h e sum o f $100,000
"2. For t h e damage t o t h e l a n d r e m a i n i n g a f t e r
c o n s t r u c t i o n , t h e sum o f $
" 3 . T o t a l owing t o b o t h D e f e n d a n t s ( t o t a l of t h e
above Two ( 2 ) f i g u r e s , t h e sum of $100,000
"Out of t h e t o t a l compensation awarded t o b o t h
D e f e n d a n t s , a s above s t a t e d , w e f u r t h e r b r e a k
t h e award down between t h e D e f e n d a n t s , a s f o l l o w s :
"1. To Defendant, Ralph E . Moore, I n c . , a s Lessee,
t h e sum of $ 50,000
"2. To Defendant, Hy-Grade Auto C o u r t
t h e sum o f $ 50,000"
Judgment w a s e n t e r e d on t h e v e r d i c t October 4 , 1974.
The judgment a l l o w e d i n t e r e s t , t o Owner and L e s s e e , from t h e
d a t e o f t h e p r e l i m i n a r y o r d e r of condemnation, J u n e 1 9 , 1973.
The S t a t e a p p e a l s from t h e j u r y v e r d i c t and judgment.
Three i s s u e s a r e p r e s e n t e d by t h e S t a t e f o r r e v i e w :
1. I n a n eminent domain a c t i o n , what i s t h e p r o p e r pro-
c e d u r e t o be f o l l o w e d a t t r i a l t o conform t o t h e s t a t u t o r y re-
q u i r e m e n t s of s e c t i o n 9 3 - 9 9 1 2 ( 5 ) , R.C.M. 1947?
2. Whether b o t h t h e l e s s o r and t h e lessee of t h e p r o p e r t y
b e i n g condemned a r e e n t i t l e d t o i n t r o d u c e t h e i r r e s p e c t i v e income
f i g u r e s a s f o u n d a t i o n f o r t h e income a p p r o a c h t o d e t e r m i n e t h e
v a l u e of t h e property being taken?
3. I n a n eminent domain a c t i o n , d o e s t h e i n t e r e s t on
t h e judgment r u n from t h e d a t e of t h e p r e l i m i n a r y o r d e r of con-
demnation o r from t h e d a t e p o s s e s s i o n of t h e p r o p e r t y t o condemnor
i s g r a n t e d by t h e c o u r t ?
W e consider t h e t h i r d i s s u e f i r s t . S e c t i o n 93-9913,
R.C.M. 1947, p r o v i d e s :
" * * * I f a n o r d e r be made l e t t i n g t h e p l a i n t i f f
i n t o p o s s e s s i o n * * * t h e f u l l amount f i n a l l y
awarded s h a l l draw l a w f u l i n t e r e s t from t h e d a t e
on which t h e p r o p e r t y owner s u r r e n d e r s p o s s e s s i o n
of t h e property i n accordance with t h e terms of
such o r d e r . * * * "
The o r d e r and judgment of October 4 , 1974, s e t i n t e r e s t
from J u n e 1 9 , 1973, t h e d a t e o f t h e p r e l i m i n a r y o r d e r of condem-
nation. This d a t e i s c l e a r l y erroneous, a s t h e S t a t e d i d not take
a c t u a l p o s s e s s i o n o f t h e p r o p e r t y u n t i l e a r l y 1974. The o r d e r ,
s i g n e d by Judge Shanstrom, g r a n t i n g t h e S t a t e p o s s e s s i o n o f t h e
p r o p e r t y was d a t e d F e b r u a r y 11, 1974.
W e d i r e s t t h e d i s t r i c t c o u r t t o c o r r e c t t h e o r d e r and
judgment o f October 4 , 1974, t o i n d i c a t e i n t e r e s t on t h e award
r u n n i n g from F e b r u a r y 11, 1974 p u r s u a n t t o s e c t i o n 93-9913,
R.C.M. 1947.
The S t a t e a s k s t h i s C o u r t t o i n t e r p r e t t h e p r o c e d u r a l
r e q u i r e m e n t s f o r eminent domain p r o c e e d i n g s a s s e t f o r t h i n
s e c t i o n 93-9912 ( 5 ) , R.C.M. 1947 :
"5. Where t h e r e a r e two ( 2 ) o r more e s t a t e s o r
d i v i d e d i n t e r e s t s i n p r o p e r t y s o u g h t t o be con-
demned, t h e p l a i n t i f f i s e n t i t l e d t o have t h e
amount of t h e award, f o r s a i d p r o p e r t y f i r s t
d e t e r m i n e d , a s h e r e i n b e f o r e s t a t e d , a s between
p l a i n t i f f and a l l d e f e n d a n t s c l a i m i n g any i n t e r -
e s t s t h e r e i n ; t h e r e a f t e r i n t h e same p r o c e e d i n g
t h e r e s p e c t i v e r i g h t s o f e a c h of s u c h d e f e n d a n t s
i n and t o t h e award s h a l l be d e t e r m i n e d by t h e
commissioners, under s u p e r v i s i o n and i n s t r u c t i o n
of t h e c o u r t , and t h e award a p p o r t i o n e d a c c o r d i n g l y . "
T h i s p r o v i s i o n i s made a p p l i c a b l e t o j u r y t r i a l s on a p p e a l s from
a condemnation commissioners' r u l i n g by s e c t i o n 93-9915, R.C.M.
1947.
The S t a t e s u g g e s t s C a l i f o r n i a case l a w f o r c o n s t r u c t i o n
o f t h e Montana s t a t u t o r y p r o v i s i o n . C a l i f o r n i a Code o f C i v i l
P r o c e d u r e 81246.1 i s s i m i l a r t o s e c t i o n 9 3 - 9 9 1 2 ( 5 ) , R.C.M. 1947,
w i t h any d i f f e r e n c e s i r r e l e v a n t t o t h e i s s u e a t hand. T h i s Court
h a s l o n g h e l d t h a t where a s t a t u t e i s s i m i l a r t o o n e i n a s i s t e r
s t a t e , w e w i l l g i v e c o n s i d e r a t i o n t o t h e c o n s t r u c t i o n p l a c e d on
t h a t s t a t u t e by t h e c o u r t s o f t h e s i s t e r s t a t e ; b u t s u c h con-
s t r u c t i o n i s n o t b i n d i n g upon t h i s C o u r t . Cahill-Mooney C o n s t .
Co. v . Ayres, 1 4 0 Mont. 464, 373 P.2d 703.
S e c t i o n 93-9912(5), R.C.M. 1947, was e n a c t e d , i n i t s
p r e s e n t form, by Chap. 234, Laws o f 1961. For 1 4 y e a r s t h e
c o u r t s o f Montana have c o n s t r u e d t h e s t a t u t o r y p r o v i s i o n t o mean
t h e award of a l l t h e p a r t i e s must be d e t e r m i n e d b e f o r e any a p p o r t i o n -
ment i s made among t h e p a r t i e s . T h i s p r o c e d u r e , used i n t h e i n s t a n t
c a s e , was a p p l i e d by t h e c o u r t and j u r y , w i t h o u t r e v e r s a l o r
modification, i n these cases: S t a t e Highway Comm'n v . McGaffick,
1 4 4 Mont. 76, 394 P.2d 174; S t a t e Highway Comm'n v . C i t y S e r v i c e
Co., 142 Mont. 559, 563, 385 P.2d 604; S t a t e Highway Comm'n v .
Crow, 1 4 2 Mont. 270, 384 P.2d 273; S t a t e Highway Comm'n v . K e n e a l l y ,
142 Mont. 256, 384 P.2d 770. A l l o f t h e s e cases c o n c e r n e d v a l u -
a t i o n o f l e a s e h o l d e s t a t e s , and a l l concerned s e r v i c e s t a t i o n l e a s e s ,
e x c e p t Crow.
C a l i f o r n i a c o u r t s have c o n s t r u e d t h a t s t a t e ' s e q u i v a l e n t
of s e c t i o n 93-9912(5), R.C.M. 1947, a s r e q u i r i n g a b i f u r c a t e d
t r i a l with t h e jury f i r s t deciding t h e t o t a l value of t h e property
b e i n g t a k e n ; t h e n , i n a s e p a r a t e p r o c e e d i n g , t h e j u r y , o r a second
j u r y , a p p o r t i o n i n g t h e award among t h e p a r t i e s . P e o p l e v . Lynbar,
Inc., 62 C a l . R p t r . 320, 326, 253 Cal.App.2d 870; Redevelopment
Agency o f C i t y of F r e s n o v . P e n z n e r , 87 C a l . R p t r . 1 8 3 , 8 Cal.App.3d
417. On t h e o t h e r hand, C a l i f o r n i a c o u r t s r e c o g n i z e t h e s t a t u t o r y
p r o v i s i o n i s e n t i r e l y " p r o c e d u r a l and n o n s u b s t a n t i v e . " P e o p l e v.
Lynbar , I n c ., s u p r a .
The Montana p r o c e d u r a l r u l e h a s d e v e l o p e d , t h r o u g h 1 4
y e a r s o f u s a g e , d i f f e r e n t from t h a t d e v e l o p e d by C a l i f o r n i a c o u r t s .
W w i l l n o t o v e r t u r n t h e d e v e l o p e d Montana r u l e u n l e s s p r e j u d i c e
e
i s shown by t h e p a r t i e s .
The p r o c e d u r a l r e q u i r e m e n t s of s e c t i o n 9 3 - 9 9 1 2 ( 5 ) , R.C.M.
1947, have been l i b e r a l l y implemented, a s i n C i t y S e r v i c e Co.,
where t h e j u r y d i d n o t f i r s t d e c i d e t h e whole compensation d u e
b e f o r e a p p o r t i o n i n g t h e award. I n C i t y S e r v i c e Co. t h e C o u r t s t a t e d :
" * * * W e t h i n k it i s c l e a r t h a t t h e awards g i v e n
by t h e j u r y (even t h o u g h l i s t e d s e p a r a t e l y , a n d ,
t h u s , e r r o r a c c o r d i n g t o t h e S t a t e ) w e r e n o t ex-
c e s s i v e , a r e s u p p o r t e d by s u b s t a n t i a l e v i d e n c e ,
and do n o t r e f l e c t a n i n c r e a s e i n v a l u a t i o n due
solely to a distribution in t i t l e . To send t h i s
c a s e back f o r a new t r i a l s i m p l y b e c a u s e t h e j u r y
d i d n o t f i r s t e x p r e s s t h e damage i n o n e sum would
be t h e h e i g h t o f s h o r t s i g h t e d n e s s and a n u t t e r
waste of t i m e . "
I n t h e i n s t a n t c a s e , t h e j u r y d i d d e t e r m i n e a t o t a l award,
t h e r e a f t e r a p p o r t i o n i n g t h e award among t h e p a r t i e s . The
award w a s s u p p o r t e d by t h e e v i d e n c e and d o e s n o t a p p e a r e x c e s -
sive. The S t a t e d o e s n o t show p r e j u d i c e d u e t o t h e p r o c e d u r e
used i n t h e d i s t r i c t c o u r t .
The j u r y w a s p r o p e r l y admonished t o f i r s t a s c e r t a i n t h e
e n t i r e award a s though t h e p r o p e r t y w e r e owned by o n e p e r s o n ,
t h e n t o a p p o r t i o n t h i s sum among t h e p a r t i e s . This Court has
r e p e a t e d l y i n d i c a t e d t h a t it " w i l l presume t h a t t h e j u r y , i n
reaching i t s v e r d i c t , followed t h e i n s t r u c t i o n s t h a t w e r e given
t o it by t h e t r i a l judge." S t a g g e r s v . U.S.F. & G. Co., 159
Mont. 254, 259, 496 P.2d 1161; Welsh v . Roehm, 125 Mont. 517,
The S t a t e a r g u e s e v i d e n c e a s t o t h e v a l u e o f t h e l e a s e -
h o l d e s t a t e must n o t be i n t r o d u c e d p r i o r t o a s c e r t a i n i n g a v a l u e
f o r t h e p r o p e r t y , under t h e u n d i v i d e d f e e r u l e , t h e r e f o r e a
b i f u r c a t e d t r i a l must o c c u r t o e x c l u d e s u c h e v i d e n c e from t h e
c o n s i d e r a t i o n of t h e j u r y i n a r r i v i n g a t t h e t o t a l v a l u e o f t h e
p r o p e r t y a s though owned by o n e p e r s o n . The j u r y w a s i n s t r u c t e d
i n t h e u n d i v i d e d f e e r u l e , which g o v e r n s t h i s c a s e , b u t t h e r u l e
d o e s n o t p r e v e n t i n t r o d u c t i o n of e v i d e n c e as t o t h e v a l u e o f
t h e whole. The r a t i o n a l e f o r a d m i t t i n g s u c h e v i d e n c e p r i o r t o
t h e d e t e r m i n a t i o n of t o t a l v a l u e , i s w e l l s t a t e d by t h e C a l i f o r n i a
c o u r t i n P e o p l e v. Lynbar, I n c . , 62 C a l . R p t r . 320, 328:
" I n t h i s state, as i s g e n e r a l l y t r u e elsewhere,
t h e c o n s t i t u t i o n a l r e q u i r e m e n t of j u s t compen-
s a t i o n f o r t h e t a k i n g o f p r o p e r t y i n eminent domain
i s n o r m a l l y s a t i s f i e d by t h e payment by t h e condemnor
t o t h e condemnee o f t h e market v a l u e o f t h e p r o p e r t y
taken. This market value i s t h e h i g h e s t p r i c e
which t h e p r o p e r t y would b r i n g , i f exposed f o r sale
i n t h e open m a r k e t by a w i l l i n g s e l l e r t o a w i l l i n g
buyer w i t h b o t h p a r t i e s t o t h e t r a n s a c t i o n b e i n g
f u l l y informed o f a l l t h e u s e s and p u r p o s e s t o
which t h e p r o p e r t y i s r e a s o n a b l y a d a p t a b l e and
a v a i l a b l e . * * * t o a r r i v e a t t h i s v a l u e one must
t a k e i n t o c o n s i d e r a t i o n a l l t h o s e t h i n g s upon which
s u c h p a r t i e s , d e a l i n g w i t h e a c h o t h e r i n t h e open
m a r k e t , would r e a s o n a b l y r e l y . * * * For t h i s
p u r p o s e t h e p r o p e r t y , t o g e t h e r w i t h a l l o f i t s com-
p e n s a b l e a t t r i b u t e s , must be v a l u e d a s t h e condem-
nor f i n d s i t , i n c l u d i n g w i t h o u t l i m i t a t i o n t h e r e b y ,
t h e s t a t e o f i t s t i t l e , and i n t h i s c a s e , t h e * * *
leasehold. * * * W e say t h i s because t h i s very
v a l u a b l e l e a s e h o l d i s one o f t h e t h i n g s which s u c h
a buyer and s e l l e r would c o n s i d e r i n t h e open m a r -
k e t i n f i x i n g t h e p r i c e a t which t h e ownership o f
t h e p r o p e r t y would be t r a n s f e r r e d . To s a y t h a t t h e
e x i s t e n c e of such a lease s h o u l d be i g n o r e d by
r e s o r t i n g t o t h e l e g a l f i c t i o n and l e g a l p r e t e n s e
o f a s i n g l e owner i s t o i g n o r e t h e r e a l i t i e s o f t h e
market place. I f compensation i s t o be j u s t and
i f t h e p r o p e r t y owner i s t o b e made whole f o r t h e
involuntary l o s s of h i s property t o t h e s t a t e , t h i s
c a n n o t be p e r m i t t e d t o happen."
As Mr. J u s t i c e Holmes s a i d i n Boston Chamber o f Commerce
v . Boston, 217 U.S. 189, 3 0 S.Ct. 459, 54 L.Ed. 725, 727:
" * * * And t h e q u e s t i o n i s , What h a s t h e owner
l o s t ? n o t , What h a s t h e t a k e r g a i n e d ? "
I n i t s second i s s u e , t h e S t a t e q u e s t i o n s t h e u s e o f t h e
income c a p i t a l i z a t i o n method t o compute t h e v a l u e of t h e p r o p e r t y
being taken.
The S t a t e a l l e g e s t h e L e s s e e ' s s o u r c e of income p r i n c i p a l l y
came from s e l l i n g p r o d u c t s t o t h e p e r s o n a c t u a l l y c o n d u c t i n g
b u s i n e s s on t h e p r o p e r t y a s t h e s u b l e s s e e . The e v i d e n c e i n d i c a t e s
otherwise. The Lessee r e a l i z e d income d u e t o i t s c o n t r o l of t h e
p r o p e r t y under t h e l e a s e and c o n t r o l of t h e f l o w of p r o d u c t s t o
t h e s t a t i o n operator pursuant t o t h e sublease. The L e s s e e a l s o
r e c e i v e d r e n t a l based on t h e g a l l o n s o f g a s o l i n e s o l d a t t h e
station. Without t h e l e a s e , t h e Lessee c o u l d n o t have c o n t r o l l e d
t h e f l o w o f g a s o l i n e , t i r e s , b a t t e r i e s and a c c e s s o r i e s t o t h e
station. I f t h e r e l a t i o n s h i p of t h e Lessee t o t h e s t a t i o n operator
was: m e r e l y a s a s u p p l i e r , t h e o p e r a t o r c o u l d go e l s e w h e r e f o r
p r o d u c t s , i f he d i d n o t wish t o d e a l e x c l u s i v e l y w i t h Lessee.
I n t h i s case, t h e Lessee had t h e r i g h t t o t e r m i n a t e t h e s u b l e a s e ,
i f t h e o p e r a t o r s o l d any p r o d u c t s n o t approved and/or s u p p l i e d
by L e s s e e . T h i s p r o f i t a b l e l e g a l r i g h t w a s t e r m i n a t e d by t h e
t a k i n g of t h i s p r o p e r t y .
The u s e o f t h e c a p i t a l i z e d income a p p r o a c h t o v a l u a t i o n
i s appropriate i n t h i s instance. A t t r i a l , t h e a l t e r n a t i v e methods
of v a l u a t i o n were d i s c u s s e d . R e p r o d u c t i o n c o s t was r e j e c t e d by
a l l appraisers a s inapplicable. The comparable sales a p p r o a c h
was q u e s t i o n e d when t h e S t a t e c o u l d n o t p r e s e n t t r u l y comparable
recent sales.
A s s t a t e d i n S t a t e Highway Comm'n v . B e n n e t t , 162 Mont.
386, 390, 513 P.2d 5:
" I t h a s been g e n e r a l l y h e l d t h a t t h e b e s t method o f
a r r i v i n g a t m a r k e t v a l u e i s r e c e n t sales of compar-
a b l e property. * * * But where t h e r e a r e no compar-
a b l e s a l e s , e v i d e n c e based upon r e v e n u e and v a l u -
a t i o n based i n p a r t t h e r e o n i s competent and admis-
sible. "
When t h e income c a p i t a l i z a t i o n method e n t a i l s l e s s con-
j e c t u r e and u n c e r t a i n t y t h a n a l t e r n a t i v e methods, i t i s t h e
a p p r o p r i a t e v a l u a t i o n method, w i t h a p p r o p r i a t e n e s s n e c e s s a r i l y
h i n g i n g on t h e f a c t s of t h e c a s e b e i n g t r i e d . S t a t e Department
o f Highways v . O l s e n , Mont . , 531 P.2d 1330, 32 St.Rep.
110. I n t h e i n s t a n t c a s e , t h e income c a p i t a l i z a t i o n a p p r o a c h
proved p r e f e r a b l e , r e s u l t i n g i n a n award which was r e a s o n a b l e i n
l i g h t of t h e record. There was no e r r o r on t h e p a r t o f t h e d i s -
t r i c t c o u r t i n p e r m i t t i n g v a l u a t i o n by t h i s method.
W e f i n d s e c t i o n 9 3 - 9 9 1 2 ( 5 ) , R.C.M. 1947, d o e s n o t r e q u i r e
a b i f u r c a t e d t r i a l i n eminent domain p r o c e e d i n g s . The income
c a p i t a l i z a t i o n method o f v a l u a t i o n i s p e r m i s s i b l e i n a p r o c e e d i n g
s u c h a s t h i s , when it p r o v i d e s f o r t h e l e a s t c o n j e c t u r e and un-
certainty. I n t e r e s t on condemnation awards r u n s from t h e d a t e of
t h e order of possession of t h e property t o t h e S t a t e .
The o r d e r and judgment of t h e d i s t r i c t c o u r t i s a f f i r m e d ,
w i t h t h e e x c e p t i o n of t h e p r o v i s i o n f o r i n t e r e s t on t h e award, which
s h a l l be changed a s d i r e c t e d i n t h i s opinion. .
Chief J u s t i c e
W e concur:
................................
Justices