Michael Rikon

After 50 years of trying condemnation cases, I have learned there are no easy cases. Something always arises which is unusual. Generally speaking, partial takings present more problems than total takings. The obvious reason is that all you have to deal with in a total appropriation is the value of the property taken. When there is a partial acquisition, however, we first deal with the value of the property as a whole, then with the value of the part taken and finally with the value of the part not acquired, both before and after the acquisition, i.e., consequential damages.

Within the area of consequential damages, we must explore, not only the loss in value suffered by the remaining property, but the possible benefits to that remainder which are the result of the improvement for which the part taken was acquired. To further complicate things, the question arises, do we consider special benefits to the remainder as distinguished from general benefits?

General vs. Special Benefits

First, let us define what is meant by general benefits and special benefits. At least for the purposes of this discussion, general benefits are "… those benefits which result from fulfillment of the public project which necessitated the taking and are common to all lands in the vicinity of the condemnee's property. They are those benefits which accrue to the owners of property within the usable range of the public work." (Nichols on Eminent Domain, Third Ed., §8A.04[2] p. 38). Special benefits are those that "… arise from the peculiar relation of the land in question to the public improvement." (Nichols on Eminent Domain, Third Ed., §8A.04[2] p. 39).

General benefits are not hard to figure out. Virtually all public improvements are supposed to have them or, at least in theory, there would be no public use which would justify the condemnation.

Special benefits are somewhat more difficult. Courts, in fact, have had difficulty in many cases in separating them from general benefits. One court called the distinction, "shadowy at best." (State Hwy. Comm'n v. Koziatek, 639 S.W.2d 86 (Mo. Ct. 1982)). Many states and many courts within states cannot agree on whether a particular benefit is special or general. Frankly, we suspect that some courts have difficulty because they are trying to justify calling general benefits, special. The reasons will be explained below.

Reduced to simple terms, which it should be, if the benefit is shared by a group of properties, it is general. If it is peculiar, by its nature, to one property, it is special. An example of this is a taking for a new road. The road benefits all of the properties in its area and to the extent that it provides access to those properties and the properties served by that road are thereby enhanced in value, there is a general benefit. If that road is built through a property and two new frontages are created on that property and the property is the type that benefits from having additional frontage (e.g., commercial), that benefit is special to that property. In the first instance, the public, or a segment of it, shares in the benefit and it is general. In the second instance, only the one property benefits and it is special to that property.

Courts Divided on Effect

The federal and state courts are divided as to what effect, if any, special and/or general benefits have on partial takings. In Chiesa v. State of New York, 36 N.Y.2d 21, the key modern case on this subject in New York, the Court of Appeals cited Lewis, Eminent Domain (3d ed.), §687, p. 1177 et. seq., a well-regarded treatise, no longer printed or updated in its listing of the five classes of applications: "…first, benefits cannot be considered at all; second, special benefits may be set off against damages to the remaining part, but not against the value of the part taken; third, benefits, both special and general, may be set off against damages to the remaining part, but not against the value of the part taken; fourth, special benefits may be set off against both damages to the remaining part and the value of the part taken; and fifth, both general and special benefits may be set off against both damages to the remaining pare and the value of the part taken."

The majority of states have taken the second of Lewis' position. Most states will consider only special benefits and only as an offset against consequential damages to the remaining property. The federal courts have adopted Lewis' fourth position. They also only consider special benefits, not general, but they not only set them off against consequential damages but, if the remainder is enhanced in value to the extent that it enjoys now, a greater value than it did before, the balance is set off against the value of the part taken.

As we stated above, New York has adopted the position held by a minority of the states. It has adopted Lewis' third position. New York has not distinguished general from special benefits but it only sets them off against consequential damages, not against the value of the property taken.

In 1907, in Matter of City of New York (Consolidated Gas Co.), 190 N.Y. 350, the New York State Court of Appeals specifically rejected the rule in Bauman v. Ross, 167 U.S. 548 (1897) which held that all benefits could be offset from direct and consequential damage. The court pointed out that the earlier New York cases involved takings where the statute provided for an assessment against properties partially taken and wholly untaken, for the cost of the public project on the basis that they were benefitted by that project. (In Bauman, although not determinative of the case, there was also an assessment for benefit). It distinguished the earlier New York cases on the ground that they were concerned with statutes which authorized the concurrent exercise of the powers of eminent domain and taxation.

As the case under review did not have a special assessment statute which would assess all benefitted properties regardless of whether there was a partial taking, the Court of Appeals held, in that circumstance, "that in no case should an award be made for less than the value of the property actually taken by condemnation."

It based its decision on two reasons. First, there was no assurance that the use which conferred the benefit would be continued and, second, the municipality could not select, arbitrarily, only the owner whose property was partially taken to bear even a part of the cost of the public improvement.

In 1970, the state of New York appropriated 22 acres of land out of 193 owned by Catherine Chiesa in order to build a new interchange on the New York State Thruway. The appraisers for both sides agreed that the fact that the remainder of the property was near the new interchange enhanced its value. The Court of Claims made an award for the value of the property taken but made no award for severance because the enhancement offset whatever factors might have caused consequential damage.

In a move that, to us, constitutes official chutzpah, the state appealed and argued that the enhancement should be set off against the award for the property taken to the extent that no award should have been made. In other words, they wanted to take 22 acres of land from an owner, against her will, not pay for it, and have the court sanction it. The Court of Appeals, in Chiesa v. State of New York, 36 N.Y.2d 21, said:

Applying the holding enunciated above to the case at bar, we recognize that it is unlikely that the New York State Thruway will be relocated in the near future; and, therefore, it is improbable that an owner whose property is partially taken will be unable to realize the benefit accruing to his remaining property by its proximity to the public improvement. However, we are also mindful of the fact that claimant's adjoining and neighboring property owners have likewise been benefitted by the public improvement without having been specially assessed for the public improvement. Thus, offsetting the general and special benefits to the claimant's remainder against the value of the 22 acres actually taken from her would be, in effect, an arbitrary discriminatory exercise of the State's power of taxation such as was specifically proscribed in Matter of City of New York (Cons. Gas Co.), 190 NY 350, 83 NE 299.

Thus, the law in New York does not allow an offset against direct damage but a special benefit may offset consequential damages. But the condemnor must still show that it is appropriate to apply special benefits to a particular home or property. They must be peculiar and pertain to the remainder property.

Michael Rikon is a partner of Goldstein, Rikon, Rikon & Houghton.