1. EMINENT DOMAIN — Proceeding — Determine Property Value — Not Establish — — Value of Leasehold — Not Entitled — Separate Award. In condemnation proceeding to determine value of property taken, holder of leasehold interest is not entitled to establish the value of its leasehold interest independently of the value of the entire property and is not entitled to a separate award by the state for the value of its leasehold.
Opinion by JUDGE PIERCE.
In October of 1970, the State Department of Highways and the City of Sterling (Petitioners) filed a petition in condemnation in the District Court of Logan County, Colorado, to acquire a parcel of land in the city for a highway right-of-way. The parcel of land sought to be condemned by this proceeding consists of a strip of land bordering a city street.
The owner of this land is a corporation, Plains Investment Company. Prior to the condemnation petition, it had leased portions of this land to, among others, Montgomery Ward Co., (Wards) who operated a catalog store and auto repair garage at this location. Both Plains Investment Company and Wards were made respondents to the condemnation petition. It is undisputed that the condemnation of this land would render Wards' leasehold unusable and that it would be necessary for it to relocate its store in Sterling.
Wards filed an individual answer to the condemnation petition, claiming that the lease it held on the property was advantageous to it and that it would suffer compensable damages. Thereafter, petitioners filed a motion to dismiss Wards' answer, contending that it was a counterclaim, and that Wards, as lessee, was not entitled to counterclaim against the condemnors for damages it might receive as a result of the condemnation. The petitioners contended that Wards would be entitled to an apportionment of the total award equal to the value of their leasehold in a subsequent hearing for that purpose. Wards countered by filing with the court a formal offer of proof outlining the evidence it intended to introduce to establish the value of its leasehold.
The court rejected Wards' offer of proof, but ruled that Wards could present any evidence it desired which would go to the total value of the property being condemned. At the hearing to determine the value of the fee, Wards did not elect to present any evidence and since the fee owner and the condemnors had established a value by prior negotiations, the court determined that there was no issue to be presented to a commission or a jury, C.R.S. 1963, 50-1-1. It is undisputed that Wards was not a party to these negotiations. However, it is clear that the appraisers for the negotiating parties had considered the value of the leasehold in arriving at its figures.
[1] On appeal, Wards contends that it is entitled in the initial proceedings to establish the value of its leasehold interest independently of the value of the entire property and is entitled to a separate award by the State for the value of its leasehold. This contention is rejected on the authority of Vivian v. Board of Trustees, 152 Colo. 556, 383 P.2d 801. In that case, the Supreme Court held that the State was entitled to acquire the entire property upon payment of the reasonable market value of the real estate plus damages to the residue at the time of the taking. This market value is to be ascertained in a gross amount which will thereafter be apportioned between the lessor and the lessee in accordance with their respective interests.
There is only one proceeding to determine the value of the property taken and the damages to the residue. The court did not in any manner deprive Wards of its right to present any evidence that it had as to the value of the fee and damage to the residue. The court did refuse to allow Wards to present evidence bearing only upon the value of its leasehold. This evidence may be presented by Wards at a subsequent hearing, at which Wards can present any relevant and material evidence it might have as to the value of its leasehold. 1967 Perm. Supp., C.R.S. 1963, 50-1-6(3). Vivian v. Board of Trustees, supra.
Since Wards refused to offer the proof allowed under the rule in Vivian, the trial court properly awarded its judgment, based solely on the value as agreed upon by the petitioners and the landowner.
Judgment affirmed.
JUDGE COYTE and JUDGE DWYER concur.