Missouri Heritage Value statute declared constitutional; family awarded $2 million in eminent domain proceeding

by Gary Taylor

St. Louis County v. River Bend Estates HOA
(Missouri Supreme Court, September 10, 2013)

The Missouri Heritage Value statute (statute) was adopted by the Missouri legislature in 2006.  It provides for additional compensation for the exercise of eminent domain over homesteads, and properties held within the same family for 50 or more years.  If a property has been owned within the same family for 50 or more years, “just compensation” is determined by statute to be fair market value plus an additional 50 percent (“heritage value”), thus equaling 150 percent of fair market value.

St. Louis County condemned 15 acres of property for a highway extension project.  The property was deeded to Arthur Novel in 1904, who farmed it with his wife until their deaths in 1968.  It stayed in the family and was owned by the Novels’ descendents until the condemnation proceedings.  The condemnation court awarded the descendents $320,000 for acquisition of the property, and an additional $160,000 for heritage value, resulting in a total award of $480,000.  The descendents appealed, and at trial the jury awarded them $1.3 million, to which the court added $650,000 for heritage value for a total award of approximately $2 million (including interest).  The county appealed.  Because the challenge was to the constitutionality of the statute the appeal went directly to the Missouri Supreme Court.

The bulk of the opinion addressed numerous evidentiary and procedural issues, but the Court did eventually address the County’s  three constitutional challenges: (1) the statute impermissibly altered the judicial definition of “just compensation” by permitting the addition of heritage value to fair market value; (2) the statute requires condemning authorities (in this case, the County) to expend public funds without a public purpose in violation of the Missouri Constitution; and (3) the statutory requirement that a judge compute heritage value invades the province of the jury to determine just compensation – also in violation of the Missouri Constitution.

Definition of “just compensation.”  The Missouri Constitution declares that “private property shall not be taken or damaged for public use without just compensation.” The US Supreme Court has interpreted “just compensation” to mean the fair market value of the property at the time of the taking.  The County argued that constitutional interpretation is the province of the judiciary, not the legislature.  The Court did not disagree; noting, however, that the statute does not alter the definition of “just compensation,” but rather “provid[es] additional benefits to certain property owners whose real property is taken for public use.” It cited US Supreme Court cases that “support the proposition that a legislature may compensate losses and damages beyond those traditionally included in its interpretation of ‘just compensation.'”  “‘Just compensation’ is a minimum measure that must be paid, not a maximum one.”

Expenditure of public funds.  Missouri Constitution Article III, Section 38(a) states that the legislature “shall have no power to grant public money or property …to any private person, association or corporation….”  The County asserted that compensation payments beyond the constitutional minimum serve no public purpose and are therefore unconstitutional.  To determine whether there is sufficient public purpose behind a grant of public money the Missouri courts have employed the “primary effect” test.  This test allows expenditures whose primary object is to serve a public purpose, even if it involves as an incident an expense which, standing alone, would not be lawful.  The Court determined that the primary purpose of the expenditure was to acquire property for a public purpose, and that the payment for heritage value is merely incident to that public purpose.

Computation by judge of heritage value.  Missouri Constitution Article I, Section 26 requires that just compensation “be ascertained by a jury.”  The Court quickly dismissed this argument by noting its previous declaration that heritage value is a payment in addition to “just compensation” – not part of the just compensation calculation.

The Court upheld the roughly $2 million jury award.

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