Baylin v. State Roads Commission

COUCH, Judge. This appeal involves the question of the measure of compensation to be applied where approximately 30 years elapses between the initial design of a highway project and the ultimate taking of private property for a substantially enlarged public project. The issue now before the Court is whether evidence of enhanced value, under the circumstances present here, may be introduced at a jury trial on the issue of just compensation. We granted certiorari prior to ⁴ consideration by the Court of Special Appeals to address this issue of first impression in Maryland.

(I) The Facts In 1948, Baltimore County requested that the State Roads Commission develop a plan for construction of a limited access highway to service the corridor between Liberty Road and Reisterstown Road. This project (relocating U.S. Route 140, which was later termed the Northwest Expressway) was budgeted as of July 1, 1954 in the State Roads Commission’s twelve year road construction and reconstruction program, published in 1952. As of 1954 the state was committed to build the Northwest Expressway which was then scheduled for completion between 1962 and 1965. In 1957, the alignment of the Northwest Expressway was approved by the State Roads Commission.

The alignment established the location of the centerline or median of the highway. Construction drawings, ground surveys, and right-of-way plats were prepared in the late 1950’s and early 1960’s. The construction drawings showed the location of the Northwest Expressway through appellants' property and an interchange with then existing Painters Mill Road, all of which would have required a taking of 19.32 1 acres from appellants’ property, which was a small part of the entire tract. These plans were consistent with the interchange design and location as shown on the 1957 Baltimore County Zoning Map.

The location of the Northwest Expressway was approved by the State Roads Commission and the Bureau of Public Roads in 1960. In order to permit landowners to determine if and how the proposed Northwest Expressway would affect their property the state superimposed the proposed taking on a ⁵ plat and furnished this to landowners. Appellants’ predecessor in title received such a plat showing the location of the Northwest Expressway in 1963. The taking indicated on the plat was consistent with previous construction drawings requiring 19 acres of appellants’ land.

However, the state noted in an accompanying letter and on the plat itself that the plans and proposed right-of-way were “TENTATIVE AND SUBJECT TO REVISION.” At about this time a federally funded study was undertaken to consider construction of the Northwest Rapid Transit line. The study was completed in 1965. One suggestion was to locate the northwest line in the median of the proposed Northwest Expressway. Subsequent studies, published in 1968 and 1970, considered this alternative favorably.

Appellants acquired the property which is the subject of this appeal in 1965. They engaged an engineer to plan the site for a regional shopping center, together with residential and industrial uses. In 1967, the engineers obtained copies of the state’s tentative construction drawings for the Northwest Expressway. The plans still showed the project alignment going through appellants’ property, requiring 19 acres.

The state informed the engineers at that time that the plans dated back to 1959 and were very tentative. They also indicated that the Northwest Expressway and its interchange at Painters Mill Road were “under restudy and subject to change based on traffic needs, latest design criteria, and B.P.R. 1M-21-6-66.” 2 Construction of the Northwest Expressway did not begin as originally planned because funds for the project were transferred to the Patapsco Freeway in the late 1960’s. Before funds could be reappropriated several things occurred affecting the construction of the Northwest Expressway. The National Environmental Policy Act was implemented in 1969.

The Act subjected highway projects to ⁶ new developmental processes, including the preparation of environmental documents and the necessity for public hearings. New safety standards for highways were also adopted. In 1971 the state requested federal funding for the Northwest Expressway project. Additionally, the Mass Transit Administration was established and there were preliminary plans for the joint development of the highway project with a rapid transit facility.

The 1970 Alternative Transit alignments recommended placing the rapid transit line in the median of the Northwest Expressway, with stations at Milford Road, the Beltway, McDonogh Road, and Owings Mills near Dolfield Road. This was an extension of previous work undertaken by the Metropolitan Transit Authority in 1964-1966. As a result of these events new project planning studies were commissioned in 1971. The transit line appeared in the 1972 Consolidated Transportation Program combining a segment of the Northwest Line of the Mass Transit Administration’s rapid transit facility with the Northwest Expressway.

In 1973 the first public hearing required under the National Environmental Policy Act was held in connection with the preparation of an environmental impact statement; a preliminary draft of this impact statement was available at the hearing. There were several alternatives considered for the Northwest Expressway. Alternates 1 and 2 of the statement were the same alignment of the Northwest Expressway with the interchange at Painters Mill Road which had been previously planned, requiring 19 acres of appellants’ property. The other two alternates considered were to improve Reisterstown Road, including a full interchange at the Beltway, or do nothing.

The draft impact statement also considered proposals for a Rapid Rail Facility of the Mass Transit Administration. Several possible alternate routes were considered for the transit line as well as alternates for the parking facilities. Two of the alternates would have involved the taking of approximately 60 acres of appellants’ property. Because of ⁷ public concerns neither alternate was adopted and the state prepared two additional alternates.

These were presented at public hearings in 1974. Under both of the new alternates, the interchange and major transit station were shifted to appellants’ property. However, location of the parking facility for the transit station was different. In one alternate the parking was located on appellants’ property; in the other the parking was located off appellants’ property.

An area included within these two alternate proposals qualified as a Historic District in 1975. This led to the inclusion of a third alternate plan, which reduced the land required from the Historic District, along with the two original alternates in the draft Environmental Statement, which was prepared and circulated in 1975. This third alternative plan required location of the parking facility on appellants’ property. This final plan was recommended for approval by the state in 1976 and was accepted by the federal government in 1977.

This new plan recommended that a new road, to be known as Owings Mills Boulevard, was to be constructed through appellants’ property; the major interchange of the Northwest Expressway was shifted to appellants’ property so that it would intersect with this new road; the major transit station was to be located on appellants’ property; the parking facilities were to be located on appellants’ property; and the Northwest Expressway was shifted 900-1,000 feet to the west as it traversed appellants’ property. In 1981, the state commenced condemnation proceedings against 137.341 3 acres of appellants’ property for the construction of the Northwest Expressway and the Mass Transit facilities. There had been no prior acquisition of appellants’ property, although other property was acquired as early as 1955 and a substantial part of the right-of-way for ⁸ the Northwest Expressway had been obtained from other property owners by 1972. Prior to trial of this case, in the Circuit Court for Baltimore County, appellants filed a motion to determine a question of law.

Appellants contended that all but 19 acres of the land taken should be valued at a value enhanced by the Northwest Expressway, since only 19 acres were required at the time the state became committed to the project. The state, on the other hand, contended that in valuing all 137 acres, any enhancement caused by the Northwest Expressway had to be excluded. The trial judge ruled that the state became committed to build the Northwest Expressway in 1954 and from that time until the actual taking in 1981 there was one ongoing project. The court further ruled that expert opinion testimony on the value of the property could not include any enhancement attributed to the proposed Northwest Expressway.

At the conclusion of the trial the court instructed the jury as follows: “The Court instructs you that you must exclude any increment in value proximately caused by the public project for which the property condemned is needed. This means that you must consider the property as if no Northwest Expressway or mass transit facilities such as involved in these proceedings, were even contemplated by the State.” The jury instruction and the ruling on opinion testimony necessarily followed from the trial court’s conclusion that this was one project. After carefully examining all of the testimony presented and reviewing the numerous exhibits, we have concluded that the trial court was in error in reaching this conclusion. Our review of this record has convinced us that the construction of the Northwest Expressway and the construction of the Mass Transit facility and adjacent parking areas were in fact two separate projects for the purpose of determining just compensation. ⁹ (II) In a condemnation proceeding the landowner is entitled to compensation equivalent to the market value of property according to the highest and best use of the property.

The statutory definition of “fair market value” is set forth in Maryland Code (1974, 1981 Repl.Vol.), Real Property Article, § 12-105(b), which states: “The fair market value of property in a condemnation proceeding is the price as of the valuation date for the highest and best use of the property which a vendor, willing but not obligated to sell, would accept for the property, and which a purchaser, willing but not obligated to buy, would pay, excluding any increment in value proximately caused by the public project for which the property condemned is needed. In addition, fair market value includes any amount by which the price reflects a diminution in value occurring between the effective date of legislative authority for the acquisition of the property and the date of actual taking if the trier of facts finds that the diminution in value was proximately caused by the public project for which the property condemned is needed, or by announcements or acts of the plaintiff or its officials concerning the public project, and was beyond the reasonable control of the property owner.” This Court has consistently stated, in accordance with § 12—105(b), that the fair market value of property condemned cannot include or take into account any increment in value which may be proximately caused by the public project for which the property is being taken. Dodson v. Anne Arundel County, 294 Md. 490, 495 , 451 A.2d 317, 320 (1982); State Roads Commission v. Parker, 275 Md. 651, 683 , 344 A.2d 109, 127 (1975); King v. Mayor of Rockville, 249 Md. 243, 251 , 238 A.2d 898, 903 (1968). In the instant case neither party challenges that rule of law; it is the application of that rule to the facts of this case that is in question.

Appellants concede that the fair market value of 19 acres should not be determined at a value enhanced by the ¹⁰ Northwest Expressway, since this is the project that the property was taken for. However, they contend that they were entitled to have the land taken for the Mass Transit facility and Owings Mill Boulevard appraised at a value enhanced by the pre-existing commitment of the state to build the Northwest Expressway. ■ Appellee contends that in valuing all 137 acres any enhancement caused by the Northwest Expressway should be excluded, because all of the land was taken for one project. (A) A legal test has been devised to determine this situation. This test, known as the “scope of the project” rule, is simply stated: “If the condemned land was probably within the scope of the governmental project for which it is being condemned at the time the Government became committed to that project, then the owner is not entitled to any increment in value occasioned by the Government’s undertaking the project.” United States v. 320 Acres of Land, 605 F.2d 762, 781-82 (5th Cir.1979).

The “scope of the project” rule was fully articulated by a unanimous court in United States v. Miller, 317 U.S. 369 , 63 S.Ct. 276 , 87 L.Ed. 336 (1943), wherein a condemnee was denied enhancement value because the property was likely to have been taken for the project at the time the government became committed to it. However, the Court stated that if, after the government became committed to the project, the government had decided to take this land as part of a subsequent enlargement, then the condemnee would be due the enhancement value. In other words, if the land was not within the scope of the original project “the subsequent enlargement of the project to include [it] ought not to deprive the [landowner] of the value added in the meantime by the proximity of the improvement.” Miller, 317 U.S. at 377 , 63 S.Ct. at 281 , 87 L.Ed. at 344 . ¹¹ The Supreme Court reaffirmed the “scope of the project” rule and refined it in United States v. Reynolds, 397 U.S. 14 , 90 S.Ct. 803 , 25 L.Ed.2d 12 (1970). The Court stated that although the rule was clear, application to a particular set of facts required discriminating judgment. “The rule does not require a showing that the land ultimately taken was actually specified in the original plans for the project.

It need only be shown that during the course of the planning or original construction it became evident that land so situated would probably be needed for the public use.” Reynolds, 397 U.S. at 21 , 90 S.Ct. at 807-08 , 25 L.Ed.2d at 18 . (i) Appellants unsuccessfully argued to the trial court that the principle of just compensation required a finding that the “scope of the project” rule was applicable to the facts of this case; and if applied would result in a finding that the project was subsequently enlarged, and the value of the property taken was entitled to enhancement. Appellee argued below and on appeal that the “scope of the project” rule is not constitutionally required and is inappropriate under Maryland law. The basis of this argument is that section 12—105(b) of the Real Property Article provides sufficient statutory guidance for valuation in condemnation cases.

Article III, § 40 of the Maryland Constitution and the Fifth Amendment of the United States Constitution mandate just compensation for private property which is taken for public use. It is true that neither contains mention of the “scope of the project” rule or, for that matter, the principle of highest and best use. However, both concepts have been utilized by courts in order to determine “just” compensation. Although Maryland has not as yet expressly adopted the “scope of the project” rule, other secondary rules have been incorporated into condemnation law.

Dodson, 294 Md. at 495 , 451 A.2d at 320 . ¹² Federal law provides for basically the same measure of compensation in condemnation cases as Maryland law. Consequently, federal cases have been held to be applicable precedents to Maryland condemnation law. Bureau of Mines v. George’s Creek Coal & Land Co., 272 Md. 143 , 321 A.2d 748 (1974). As early as Kerr v. South Park Commissioners, 117 U.S. 379 , 6 S.Ct. 801 , 29 L.Ed. 924 (1886), and Shoemaker v. United States, 147 U.S. 282 , 13 S.Ct. 361 , 37 L.Ed. 170 (1893), the Supreme Court has held that property taken for a public project is not entitled to any enhancement from that project.

This rule has been reaffirmed in Reynolds, supra, and Miller, supra, wherein the “scope of the project rule” was propounded as a secondary rule. This rule has since been applied in numerous federal and state condemnation cases. 4 After a thorough review of the case law on this issue we do not find the “scope of the project” rule to be in conflict with the Maryland Real Property Article. We observe that the statute itself, § 12-105(b), specifically refers to “public project,” meaning, of course, a defined project. The “scope of the project” rule is a means to determine whether the property taken was probably within the contemplation of the parties from the date the government entity became committed to the project.

If it was, then no enhanced valuation is permitted; this is in accord with the Maryland statute. If it was not, then enhanced valuation is permitted; this is also in accord with the Maryland statute. In either instance the property is not being enhanced by the project for which it is being condemned. The determination of value will still be based on the requirements of our general condemnation statutory law. ¹³ “Courts have had to adopt working rules in order to do substantial justice in eminent domain proceedings.” Miller, 317 U.S. at 375 , 63 S.Ct. at 281 , 87 L.Ed. at 344 ; see also 320 Acres of Land, 605 F.2d at 781 .

The constitutional requirement of just compensation requires that enhancement in value be taken into consideration in certain instances, “since fair market value is generally to be determined with due consideration to all available economic uses of the property at the time of the