Transportation Comm, MS v. National Bk of Commerce ( 1994 )

IN THE SUPREME COURT OF MISSISSIPPI
NO. 94-CA-00604-SCT
MISSISSIPPI TRANSPORTATION COMMISSION
v.
NATIONAL BANK OF COMMERCE AS TRUSTEE OF
THE ESTATE OF J. BAYARD SNOWDEN,
DECEASED, AND ROBERT GALLOWAY SNOWDEN;
MAY SNOWDEN TODD; JOHN BAYARD SNOWDEN;
FLORENCE S. REYNOLDS; THOMAS HARDY
TODD, III; BAYARD SNOWDEN TODD; ROBERT
CARROLL TODD AND ROBERTA T. ANDERSON AS
BENEFICIARIES OF THE TRUST
DATE OF JUDGMENT: 05/24/94
TRIAL JUDGE: HON. MILLS E. BARBEE
COURT FROM WHICH APPEALED: DESOTO COUNTY SPECIAL COURT OF
EMINENT DOMAIN
ATTORNEYS FOR APPELLANT: MICHAEL T. LEWIS
PAULINE S. LEWIS
ATTORNEY FOR APPELLEES: TAYLOR BUNTIN
NATURE OF THE CASE: CIVIL - EMINENT DOMAIN
DISPOSITION: REVERSED AND REMANDED - 8/14/97
MOTION FOR REHEARING FILED: 9/11/97
MANDATE ISSUED: 2/23/98
BEFORE SULLIVAN, P.J., PITTMAN AND BANKS, JJ.
PITTMAN, JUSTICE, FOR THE COURT:
¶1. This case arises out of the Desoto County Special Court of Eminent Domain. The appellant, the
Mississippi Transportation Commission ("the Commission"), filed its original petition of
condemnation on August 27, 1993. The petition requested acquisition of land on Goodman Road in
Desoto County. The purpose of the acquisition was to expand Goodman Road from a two-lane
blacktop into five lanes to accommodate the projected growth of Desoto County. The total
acquisition consisted of 8.65 acres along the northern boundary of the property, which in whole
consists of 733-742 acres. The land in question is held in trust by National Bank of Commerce, as
trustee for the Snowden estate. The Commission filed a Statement of Values claiming damage to the
landowners in the amount of $62, 720. The landowners filed their Statement of Values claiming
damages of $623,777. The jury rendered a verdict in favor of the landowners in the amount of $192,
000, upon which judgment was entered. The Commission appealed assigning the following as error:
I. WHETHER THE TRIAL COURT ERRED IN ALLOWING THE LANDOWNER'S
EXPERT, ALLEN, TO STATE HIS OPINION OF THE VALUE OF THE
CONDEMNED PROPERTY AS IF REZONING WAS AN ACCOMPLISHED FACT,
IN VIOLATION OF THE HOLDING IN MISSISSIPPI STATE HIGHWAY
COMMISSION V. WAGLEY, 231 SO. 2D 507 (MISS. 1970).
II. WHETHER THE TRIAL COURT ERRED IN REFUSING JURY INSTRUCTION P-
7, WHICH WOULD HAVE INSTRUCTED THE JURY THAT IT SHOULD NOT
VALUE THE PROPERTY AS IF REZONING WAS AN ACCOMPLISHED FACT
PURSUANT TO WAGLEY, SUPRA.
III. WHETHER THE TRIAL COURT ERRED IN GRANTING JURY INSTRUCTION
D-10, WHICH INCORRECTLY STATED THE WAGLEY RULE.
IV. WHETHER THE TRIAL COURT ERRED IN REFUSING JURY INSTRUCTION
P-8, WHICH WOULD HAVE INSTRUCTED THE JURY TO DISREGARD
APPRAISER ALLEN'S TESTIMONY.
STATEMENT OF FACTS
¶2. The subject property is owned by the beneficiaries of the testamentary trust of J. Bayard
Snowden, who is deceased. The trust is administered by National Bank of Commerce. Prior to the
taking, the property consisted of approximately 733-742 acres, and was primarily zoned Agricultural-
Residential (AR) which allows low-density residential use. All of the commercially-zoned area was
located in the northern portion of the property adjacent to Goodman Road. The property condemned
by the Commission consisted of between 8.65 and 8.89 acres, of which 5.18 acres were zoned AR
and approximately 3.70 acres were zoned commercial.
¶3. In the course of discovery for this trial, the Commission propounded an interrogatory to elicit
from the landowners the testimony of their expert appraiser, Allen. The Commission moved in limine,
at trial, to exclude Allen's testimony based on his answers to the interrogatory. The Commission
argued that Allen's testimony should be excluded because he had valued the property as if rezoning
had already occurred, in violation of this Court's holding in Mississippi State Highway Comm'n v.
Wagley, 231 So. 2d 507 (Miss. 1970). The trial court overruled the motion in limine. The
Commission maintained and preserved a continuing objection to Allen's testimony, which was
overruled by the trial court. Allen's testimony is the primary source of contention on appeal. The
Commission argues that the testimony should have been excluded, and that its admittance by the trial
court was reversible error.
¶4. The court, at trial, also refused jury instruction P-7, submitted by the Commission, and admitted
jury instruction D-10, submitted by the landowners. The Commission argues that D-10 incorrectly
stated the rule set out in Wagley, and that P-7 correctly stated it.
ISSUE I AND ISSUE IV
¶5. Issue I and Issue IV are discussed in conjunction with one another, as they both pertain to the
testimony of Allen, the landowners' expert appraiser.
¶6. The admission of expert testimony is committed to the sound discretion of the trial judge.
Mississippi State Highway Comm'n v. Terry, 288 So. 2d 465, 466 (Miss. 1974). However, "[w]
here the court has exercised its discretionary authority against a substantial misperception of the
correct legal standards, our customary deference to the trial court is pretermitted, Burkett v. Burkett,
537 So. 2d 443, 446 ( Miss. 1989); Gibson v. Manuel, 534 So. 2d 199, 204 (Miss. 1988), for the
error has become one of law." Boggs v. Eaton, 379 So. 2d 520, 522 (Miss. 1980); S & A Realty Co.
v. Hilburn, 249 So. 2d 379, 382 (Miss. 1971).
¶7. The Commission bases its argument on the Wagley case and contends that the trial judge
improperly applied the rule set out in that case. In that case, Cynthia Wagley was the owner of a tract
of land in the City of Jackson located east of Terry Road. Wagley owned frontage of 125.6 feet on
Terry Road. The property was unimproved and was zoned residential as of the date of condemnation.
At trial, the Commission's appraiser valued the property as residential and did not consider that its
highest and best use was commercial. The Commission's appraiser explained that the property was
zoned residential and only four years before, the City Commission had denied an application by
Wagley to rezone the property. Therefore, in his opinion, a zoning change could not be expected in
the near future.
¶8. Wagley's two appraisers both testified that, although the property was zoned residential, its
highest and best use was commercial. The jury rendered a verdict in the amount of $25,000 for the
taking of 1.3 acres and the Commission appealed. In reversing and remanding for a new trial, this
Court said:
Where . . . there is the possibility or probability that the zoning restriction may in the near future
be repealed or amended so as to permit the use in question, such likelihood may be considered
if the prospect of such repeal or amendment is sufficiently likely as to have an appreciable
influence upon present market value. It follows from the foregoing that such possible change in
the zoning regulations must not be remote or speculative. An important caveat to remember in
applying the rule is that the property must not be evaluated as though the rezoning were already
an accomplished fact. It must be evaluated under the restrictions of the existing zoning and
consideration given to the impact upon market value of the likelihood of a change in zoning.
Mississippi State Highway Comm'n v. Wagley, 231 So. 2d 507, 509 (Miss. 1970).
¶9. The Court found in Wagley that the appraiser for the Commission had valued the property based
on its being zoned residential, and had given no consideration to the fact that the highest and best use
may have been commercial. On the other hand, the Court found that the landowner's appraisers had
valued the property as if it had already been rezoned commercial. The Court reversed and remanded
for a new trial on the issue of damages. Id. at 509-510.
¶10. The Commission asserts that the expert testimony of Allen concerning the highest and best use
of the property should have been excluded because there was no reasonable probability of a zoning
change, and Allen valued the property as if it had already been rezoned.
¶11. At the trial sub judice, there was much testimony concerning a comprehensive plan to control
planning and land use throughout Desoto County and the City of Southaven that was in the process
of being adopted. The Goodman Road/Getwell Road area, including the subject property, received
detailed treatment as an "intensive planning area" under the plan. The recommended land use for the
subject property included commercial use of the northern portion and medium-density residential use
of part of the central portion. The plan known as "Desoto 2010" was adopted in February 1995 prior
to trial. However, "Desoto 2010" did not change the existing zoning. What it did do was set up a
process by which a landowner would have to submit a preliminary site plan, and next an application
for approval. Finally, a public hearing would have to be held.
¶12. The Commission argues that Allen, in determining that the northern 115 acres of the 733-acre
block had a highest and best use of commercial, valued the property as if it were already zoned in that
way. This, they argue, violates Wagley. The property was zoned AR on the date of the taking.
¶13. The Commission further argues that Allen's testimony failed to establish that there was a
reasonable probability that the property would be rezoned within the reasonably foreseeable future
for a reasonably foreseeable use. At trial, Allen determined, in part based on the Desoto 2010 plan,
that there existed a reasonable probability that the existing zoning could be modified from AR to a
mixture of multi-family residential, office and commercial. However, the Commission argues that the
Desoto 2010 plan did not change the existing use and none of the requirements for rezoning under
Desoto 2010 had been met. Further, it argues that the landowners' only plan for the property was
consistent with residential zoning, and inconsistent with a rezoning. They base this argument on the
fact that in the 1970's Snowden had had a study done concerning turning the property into a
subdivision or a golf course. Snowden testified at trial that the growth in the area made his plan more
feasible. The Commission argues this development would not change the zoning. It would remain
exactly as it was the day of trial, i.e., residential except for the commercial corners.
¶14. Allen admitted at trial that none of the requirements had been met by the landowners which
would be necessary to have zoning changed under Desoto 2010. He also testified that the concept of
"highest and best use" requires, as one of its elements, that the use be "legally permissible." He
further testified that it would not be "legally permissible" to put a commercial establishment on the
AR zone unless the zoning was changed by completing the process set out in Desoto 2010. The
Commission argues that these facts establish that, as of the applicable date, there was no probability
of a zoning change. Therefore, the Commission contends that the trial judge erred in allowing Allen
to state his opinion in violation of the rule in Wagley.
¶15. The landowners argue that the overwhelming proof at trial showed that there was a reasonable
probability that the existing zoning could be modified, that the property would be used within a
reasonable time for the use to which it is adapted, and that Allen did consider the existing zoning,
along with reasonably probable modifications, in reaching his opinion. In his testimony, Allen
discussed his analysis and how he had arrived at his opinion. He did consider the existing zoning, and
testified that he had conversations with the Planning Director of Desoto 2010. He testified that in
discussions with the director, he learned that plans presented that were compatible with Desoto 2010
would "probably be considered favorably by the planning department." He also testified that he
applied the four basic precepts of "highest and best use" which are: physical possibility, legal
permissibility, economic feasibility, and maximum productivity. Allen also physically inspected the
property and made comparisons with other properties. In Allen's opinion, the highest and best use of
the property was a mixture of residential, commercial and office.
¶16. This Court finds that Allen did value the property as if had already been rezoned. The question
then becomes: Was there a possibility or probability that the zoning restriction would be changed in
the near future or was that change remote and speculative? We conclude that a change in zoning was
speculative. As such, the trial judge erred in allowing Allen to state his opinion of the value of the
condemned property as if rezoning was an accomplished fact. This error requires that this case be
reversed and remanded for a new trial on the issue of damages.
¶17. Compounding that error was the trial court's refusal of jury instruction P-8, which would have
instructed the jury to disregard Allen's testimony.
ISSUE II AND ISSUE III
¶18. These assignments of error, raised by the Commission, pertain to jury instructions. The
Commission argues that P-7, offered by the Commission and refused by the trial court, should have
been given because it correctly stated the Wagley rule. The Commission also argues that D-10,
offered by the landowners and given, should have been refused because it incorrectly stated the rule.
The two instructions read as follows:
P-7.
The court instructs you that in determining compensation, you should consider the zoning of
the subject property as it affects its highest and best use. In making this determination, you must
decide whether there is a reasonable probability of rezoning the property in the near future.
There must be some probability that the land will be used within a reasonable time for the
particular rezoned use. Even if you determine that there is a reasonable probability that the
property would be rezoned commercial in the near future, you may not value the property or
assess just compensation as if the zoning had already been accomplished. Change in the zoning
regulation must not be remote or speculative.
D-10.
In determining the highest and best use of the property you should not consider mere
speculative uses to which the property can be put. However, you may consider not only the
present use of the land, but any use to which it may be reasonably adapted within a reasonable
time. In so doing, you may consider the existing zoning, and any reasonably probable
modifications of the existing zoning.
¶19. The Commission argues that P-7 was a complete statement of the rule set out in Wagley, and
should have been granted. It also argues that D-10 was an incomplete statement of the law because it
failed to instruct the jury that they should not consider the valuation of the property as if the rezoning
was an accomplished fact.
¶20. The landowners argue P-7 was an incomplete statement of the law because it failed to
specifically tell the jury that in fixing its award, it could consider a use which is consistent with a
reasonable probability of rezoning.
¶21. The trial judge has considerable discretion in instructing the jury, and this Court reviews those
instructions as a whole. Splain v. Hinds, 609 So. 2d 1234, 1239 (Miss. 1992). After careful review
of all of the instructions given to the jury in this case, we find that the jurors were at no time
instructed that they were not to value the property as if it had already been rezoned. The Commission
argues, and this Court agrees, that this a key concept laid out in Wagley and the jury should have
been instructed on it. Therefore, since D-10 does not instruct on this, P-7 should have been given
along with D-10. Neither is a perfect instruction, but given together, they would have adequately
instructed the jury by fully stating the rule in Wagley. The trial judge erred in refusing jury instruction
P-7. He did not err in granting jury instruction D-10.
CONCLUSION
¶22. The trial court erred in allowing the landowners' expert to state his opinion as to the value of the
condemned property as if rezoning had already occurred. The Court further erred in denying jury
instructions P-7 and P-8. These errors are cause for reversal. This case is remanded for a new trial on
the issue of damages.
¶23. REVERSED AND REMANDED FOR PROCEEDINGS NOT INCONSISTENT WITH
THIS OPINION.
SULLIVAN, P.J., ROBERTS, SMITH AND MILLS, JJ., CONCUR. BANKS, J., CONCURS
WITH SEPARATE WRITTEN OPINION JOINED BY LEE, C.J., AND McRAE, J.
PRATHER, P.J., NOT PARTICIPATING.
BANKS, JUSTICE, CONCURRING:
¶24. In my view, the question of whether there was a reasonable probability of rezoning was properly
submitted to the jury in this case but the failure to grant P-7 left the jury improperly instructed. While
there is scant evidence from the closing arguments that the jury was in anyway misled as to its task, it
cannot be said that the failure to give the instruction P-7 in combination with D-10 had no effect.
¶25. I do not agree with the conclusion that there was no reasonable probability that the property in
question would be zoned commercial and that any testimony concerning commercial usage was
erroneously admitted. In my view, the land use plan for the county is sufficient to allow the jury to
assess the probability for commercial use of the property. The property owner's appraiser testified
clearly that he considered present zoning as well as the reasonable probability of rezoning in arriving
at his conclusions as to value. In my view, that is all that Mississippi State Highway Comm'n v.
Wagley, 231 So. 2d 507 (Miss. 1970), requires.
¶26. I do not agree that some prospect of immediate rezoning is necessary. What a landowner loses is
property value. Property values are based in part upon potential uses. A property with commercial
potential and a reasonable probability of the removal of a legal impediment to realizing that potential,
such as zoning, has a greater value than property with only agricultural or residential potential. A jury
should be allowed to consider that potential. It is not so allowed where the court precludes testimony
concerning commercial valuation.
LEE, C.J., AND McRAE, J., JOIN THIS OPINION.