Summary of a Recent
Judicial Development in
Agriculture and Urbanization

Valuation of Farm Equipment
Allowed in Takings Action

M. Elizabeth Skinner
National AgLaw Center Graduate Assistant

In an action brought by a regional water authority to condemn a tract of land so that it could construct a city water project, the North Carolina Court of Appeals has ruled that expert testimony regarding the value of certain farming equipment located on the property was properly allowed and that the jury verdict with respect to just compensation for the taking was not an unlawful compromise or quotient verdict. Piedmont Triad Regional Water Authority v. Lamb, 564 S.E.2d 71, 72-74 (N.C. Ct. App. 2002).

On May 25, 1999, the Piedmont Triad Regional Water Authority notified the landowner-defendants "that it intended to institute condemnation proceedings to acquire a tract of land owned by defendants to construct the Randleman Lake Project." Id. at 72. The declaration of taking issues by the Water Authority stated, in part, that the defendants could not remove any "timber, buildings, structures, permanent improvements, or fixtures situated on or affixed to the property." Id.

There were two chicken houses on the land "which had not been used since 1995, along with various pieces of equipment situated in and around the chicken houses." Id. at 73. The equipment included "feed silos, mist cooling systems, egg conveyor systems, drinkers, automatic chicken feeders, and egg laying nests." Id. at 72-73.

At trial, the Water Authority presented testimony from two real estate appraisal experts who did not include the farm equipment in their valuation of the property. See id. at 73. One of the experts valued the property taken at $87,300.00, and the other valued it at $75,500.00. See id. The defendant landowners also presented testimony from two experts who considered the farm equipment "as part of the improvements to the property in making their appraisals." Id. One of these experts valued the property taken at $222,625.00, and the other valued it at $252,900.00. See id.

The only matter for the jury to consider was what constituted just compensation for the taking. See id. The jury determined that just compensation for the taking of the defendants' property was $158,500.00. See id. The Water Authority appealed this decision to the North Carolina Court of Appeals. See id.

The Water Authority argued that "the trial court erred in admitting testimony regarding the value of the equipment located on the property." Id. It asserted that N.C. Gen. Stat. § 40A-2(7) limits property subject to takings to real property, and because the farm equipment was personal property, "it [was] not subject to taking and evidence of its value [was] inadmissible." Id. Section 40A-2(7) defines "property" as "'any right, title, or interest in land, including leases and options to buy or sell. 'Property' also includes rights of access, rights-of-way, easements, water rights, air rights, and any other privilege or appurtenance in or to the possession, use, and enjoyment of land.'" Id. (citation omitted).

The Water Authority relied on City of Durham v. Woo, 497 S.E.2d 457 (1998), a case in which the appeals court held that certain personal property was not subject to taking, to assert that the defendant-landowners' farm equipment was not subject to taking. See id. The appeals court explained, however, that in Woo, it "relied on the fact that the City gave notice to the owners that the equipment was not part of the taking and it specifically gave the owners an opportunity to remove the equipment." Id. Only after the owners in Woo failed to pick up their personal property did the court rule that the items were deemed abandoned and their value not to be included when determining just compensation for the taking. See id. at 74.

In the present case the court noted that the Water Authority's declaration of taking prohibited the defendants from removing "'any timber, buildings, structures, permanent improvements or fixtures situated on or affixed to the property.'" Id. It also noted that there was "nothing in the complaint nor in the record which indicated what property defendants were entitled to remove." Id. In addition, the court noted that "[t]he trial court gave instructions on the amount of just compensation due defendants for the taking of 'property.'" Id. at 73-74. It stated that

[T]here was no request for instructions regarding whether this equipment was included in the definition of "property." There was no objection by plaintiff to the trial court's jury instructions. The jury was to determine whether the equipment was included within the definition of "property." Since the record does not indicate that plaintiff ever excluded it from the taking, we conclude that the trial court did not abuse its discretion in allowing defendants' witnesses to include the equipment in their determination of the value of the property taken.

Id. at 74.

The Water Authority also argued that "the trial court erred in denying its motion for a new trial because the jury reached an unlawful compromise or quotient verdict." Id. The court explained that "'[a] compromise verdict is one in which the jury answers the issues without regard to the pleadings, evidence, contentions of the parties or instructions of the court.'" Id. (citation omitted). It also explained that "'[i]t is the well-established law of North Carolina that no quotient verdict exists unless the jurors reach a prior agreement to be bound by the average of the amount each submits as damages.'" Id. (citations omitted). It added that the dollar amount of the verdict by itself is not sufficient to set aside a verdict as either an unlawful compromise or a quotient verdict. See id.

The court stated that "the only indication of an unlawful compromise or a quotient verdict was that the jury's dollar amount for just compensation approximated the average of the valuations presented by the four experts." Id. It concluded that because the Water Authority "has failed to establish that the jury's verdict was an unlawful compromise or quotient verdict, we find that the trial court did not err in denying plaintiff's motion for a new trial." Id.

The case was decided on June 4, 2002; this summary was posted April, 2003