STATEMENT OF THE CASE
NEAL, Presiding Judge.
Ruby M. Unger, Howard Morris Unger, and Wayne Lewellyn Unger (the landowners) appeal an interlocutory order of the Sullivan Circuit Court overruling their objections to a complaint in condemnation filed by Indiana & Michigan Electric Company, an Indiana Corporation (I & M), and appointing appraisers.
STATEMENT OF THE FACTS
The undisputed evidence discloses that on October 19, 1978, in the course of securing rights of way for I & M's proposed Rockport-Breed 765 KV line, Loren Shaleen, an I & M agent, offered Ruby Unger $2,320 for an easement across the landowners' property. The amount of the offer was determined by reference to a standard schedule maintained by I & M. Shaleen testified on direct examination as follows:
On cross examination Shaleen testified:
The following month Shaleen again offered Ruby Unger $2,320 for the easement. She refused the offer but indicated she would be willing to sell the property outright; she suggested the land was worth $4,000 per acre.
Richard Fohrer, a senior right of way agent for I & M testified that in December of 1978 he offered Ruby Unger $3,782 for an easement across the property. The amount of the offer was determined from a new standard schedule which was to take effect in the very near future. The schedule provided for the payment of $1.25 per lineal foot and $2,000 per tower.
Fohrer testified he is not an appraiser and he did not obtain an appraisal of the Unger property. He stated he had done nothing to determine the value of the landowners' property, in particular; the offer was standard for cultivated land from Rockport to Breed. He further testified, however, he was aware land values in Sullivan and Knox counties had increased 300 per cent over the past ten years.
On direct examination Shaleen was asked what kind of acceptance offers based on the schedule had received in this community or area. The landowners objected on the ground of irrelevance, asserting the degree of acceptance of offers made under threat of condemnation would not indicate fair market value. The court sustained the objection. However, on cross-examination of senior agent Fohrer, the landowners posed the following questions:
On redirect examination Fohrer was asked the degree of acceptance offers based on the schedule had received. The landowners again objected to the admission of such evidence as irrelevant. The court overruled the objection and Fohrer answered that in Sullivan county over ninety per cent of such offers had been accepted.
The landowners state the issues as follows:
Our disposition of the first three issues, involving the good faith effort to purchase, obviates a consideration of those remaining.
DISCUSSION AND DECISION
I & M exercises the power of eminent domain under Ind. Code 32-11-3-1:
Ind. Code 32-11-3-2 provides:
Ind. Code 32-11-3-3 requires the appropriation and condemnation of lands and easements be accomplished pursuant to the
As a condition precedent to the right to maintain an action in condemnation, Ind. Code 32-11-1-1,
The case at bar is an interlocutory appeal from the trial court's denial of objections to the action in condemnation. The critical issue is whether the trial court erred in concluding I & M made a good faith effort to purchase. On appeal the landowners argue:
The landowners assert the evidence in the record clearly and indisputably shows I & M did not make a reasonable effort to determine, or to form an opinion of, the fair market value of their property or the easement across it, and thus failed to make a reasonable and fair offer, which is an essential element of a good faith effort to purchase.
A review of those decisions prior to Ind. Code 32-11-1-2.1 in which good faith efforts to purchase were upheld indicates that, in most cases, the condemnor had based its offer upon an appraisal of the property. Public Service Company of Indiana v. Decatur County Rural Electric Membership Corporation, (1977) 173 Ind.App. 198, 363 N.E.2d 995; Decatur County Rural Electric Membership Corporation v. Public Service Company of Indiana, (1976) 171 Ind.App. 87, 355 N.E.2d 420; City of Greenfield v. Hancock County Rural Electric Membership Corporation, (1974) 160 Ind.App. 529, 312 N.E.2d 867; Wyatt-Rouch Farms, Inc. v. Public Service Company of Indiana, (1974) 160 Ind.App. 228, 311 N.E.2d 441; Blaize v. Public Service Company of Indiana, (1973) 158 Ind.App. 204, 301 N.E.2d 863. Good faith disagreements between condemnors' and landowners' appraisers were insufficient to sustain objections to the proceedings in condemnation. Decatur County REMC, supra; City of Greenfield, supra; Wyatt-Rouch Farms, Inc., supra. Furthermore, we note that prior to 1977 the Supreme Court had held that a single offer based upon an independent appraisal of the subject land would be deemed sufficient. In Murray v. City of Richmond, (1971) 257 Ind. 548, 276 N.E.2d 519, the city filed a condemnation action to acquire certain property under the Redevelopment Act of 1945, Ind. Code 18-7-8-1 et seq. The facts showed that independent appraisals were made on behalf of the city pursuant to Ind. Code 18-7-8-16
The appellants also asserted the condemnor's actions did not constitute a good faith effort to purchase under the eminent domain act. The Supreme Court held:
257 Ind. at 553, 276 N.E.2d 519. Accord Highland Realty, Inc. v. Indianapolis Airport Authority, (1979) Ind. App., 395 N.E.2d 1259.
Notwithstanding the prevalence of, and preference for, offers based upon appraisals, in at least one case our Supreme Court upheld an offer to purchase based upon previous successful offers to purchase adjacent lands of the same owner. In Wampler, supra, the interlocutory appellants objected to the taking of their land, an entire lot in fee, on the ground the condemnor had not made a good faith effort to purchase. They argued the condemnor had not offered what they believed to be fair market value. The appellants relied upon a Michigan decision, In re Rogers, (1928) 243 Mich. 517, 220 N.W. 808, in which the condemnor offered $300 and $500 per acre for land, the lowest value of which placed upon it at the hearing on objections was $2,500 per acre. In Rogers, supra, the Michigan court stated:
220 N.W. at 811. However, its holding that the condemnor failed to make a good faith effort to purchase appears to have been based upon a finding that the offer of $300 per acre "constituted no real effort to purchase; was perfunctory only, for it negatived any purpose to negotiate." 220 N.W. at 811.
Our Supreme Court determined the circumstances in Rogers, supra, varied so widely from the circumstances in Wampler, supra, that the former was not controlling. Thus, in reply to the appellants' assertion that a good faith effort to purchase entailed an offer to purchase at fair market value our Supreme Court stated:
241 Ind. at 456-457, 172 N.E.2d 67. Applying the law to the facts before them the court stated:
241 Ind. 456, 172 N.E.2d 67. The Supreme Court held:
241 Ind. 458, 172 N.E.2d 67. See Chambers, supra; Dahl v. Northern Indiana Public Service Company, (1959) 239 Ind. 405, 157 N.E.2d 194.
It is important to note Wampler, supra, involved a challenge to a taking in fee; the factors of damages to the residue and construction damages do not appear to have been relevant. The court narrowly held that when attempting to purchase a fee simple interest in property, the value of which is in dispute, the condemnor need not offer, i.e., the landowner cannot successfully challenge the good faith of the effort to purchase by presenting contrary evidence of, fair market value. The condemnor was obligated only to tender a reasonable offer honestly and in good faith.
In 1977 the General Assembly added Ind. Code 32-11-1-2.1 to the eminent domain act. In subsection (2)(d) the statute provides a Uniform Land or Easement Acquisition Offer. In pertinent part the uniform offer states:
The landowners argue our legislature intended to require a condemnor to form an opinion of the fair market value of the property interest sought and to tender an offer based upon that opinion. They further argue that a condemnor's failure to form such an opinion renders its offer unreasonable and undercuts the good faith of the effort to purchase.
A consideration of these arguments begins from the proposition that private property may not be taken for public use without just compensation. Indiana Constitution, Article 1, § 21; Indiana Toll Road Commission v. Jankovich, (1963) 244 Ind. 574, 193 N.E.2d 237, cert. dismissed, 379 U.S. 487, 85 S.Ct. 493, 13 L.Ed.2d 439. The fundamental purpose of the eminent domain act is to ensure landowners receive just compensation for property taken for public use. Gradison v. State, (1973) 260 Ind. 688, 300 N.E.2d 67. The act establishes four successive procedures which may be followed in fulfilling that purpose.
Upon notification of the filing of the complaint the defendant landowner may file objections to the action in condemnation, asserting the court lacks subject matter jurisdiction, the condemnor has no right to exercise the power of eminent domain for the land sought, or for any other reason disclosed in the complaint or set up in such objections, e.g., the condemnor failed to make a good faith effort to purchase. Ind. Code 32-11-1-5.
Following a hearing on the matter, if any objection is sustained, the condemnor may amend the complaint or appeal the decision. If the objections are overruled the court appoints appraisers pursuant to Ind. Code 32-11-1-4. The landowner may appeal this interlocutory order, as has been done in the case at bar. Ind. Code 32-11-1-5.
Whenever it becomes appropriate, the court instructs the appraisers in their task:
Ind. Code 32-11-1-6. The appraisers' award is based upon the relevant factors. The condemnor and the landowner have twenty days to file written exceptions to the appraisers' report and thereby to set the stage for a trial on the matter. Ind. Code 32-11-1-8. However, if neither party files an exception to the report, the award is made by judgment entry. It is assumed the appraisers have properly determined, and landowner has accepted what he believes to be, just compensation for the property rights to be taken.
Prior to the trial on the exceptions there is a final opportunity for the condemnor and landowner to reach an agreement upon just compensation. Ind. Code 32-11-1-8.1 (Supp. 1980) provides in pertinent part:
Finally, at the trial on the exceptions the landowner bears the burden of proving damages; the jury decides the matter of just compensation. In reaching its decision the jury hears evidence regarding, and determines the amount of the award upon, the five factors listed above in Ind. Code 32-1-1-6.
As submitted by the court appointed appraisers or determined by the jury, just compensation can be no less than the fair market value of the land at the time of the taking. Ind. Code 32-11-1-6 generally instructs the appraisers to determine and report: (1) the fair market value of the property sought, (2) the fair market value of the improvements located thereon, (3) damages to the residue, (4) construction damages, and, in certain cases, (5) benefits to the residue. Ind. Code 32-11-1-6 then provides:
Jahr, Eminent Domain § 107 et seq. (1953).
If a landowner's entire property is taken in fee, the fair market value of the land and any improvements thereon from the basis of the award; furthermore, if the land has a higher market value by reason of use or uses to which it may be adapted, but to which it has not been put, the landowner is entitled to the greater value. City of Lafayette v. Beeler, (1978) Ind. App., 381 N.E.2d 1287; Jahr, Eminent Domain §§ 70, 96.
Jahr, Eminent Domain § 96 et seq.
Although this analysis is brief and its scope is limited, we believe it is correct to state that, with possible adjustments in certain cases for construction damages and benefits conferred on the residue, a determination of just compensation must be based upon a determination of the fair market value of the property sought. Having so concluded, we now return to the purpose of the good faith offer to purchase and the language of the uniform offer.
As noted above, the purpose of the good faith effort to purchase is to bring the landowner and condemnor together, if only briefly, to attempt to negotiate a sale and purchase upon favorable terms. Terms proffered and rejected fall by the wayside as appraisers and juries make their determinations, i.e. the parties' dealings have no bearing upon the ultimate award of just compensation. It is settled a good faith effort requires a reasonable offer and a reasonable effort to induce the landowner to accept it. To all this the General Assembly has added the language of the uniform offer regarding the condemnor's opinion of fair market value.
We are of the opinion the General Assembly chose this particular language to indicate its intention to require the condemnor to calculate its offer to purchase upon the same basis as the court-appointed appraisers or the jury must determine their award. We continue to believe the offer need only be reasonable; i.e. the mere fact there exists some disagreement or conflict in opinion as to fair market value will be insufficient to sustain an objection to the complaint in condemnation. However, we hold a condemnor must base its offer upon a stated opinion of the fair market value of the property sought.
Returning to the facts in the case at bar, it is clear I & M based its offer to purchase upon a state- or service area-wide per foot and per tower schedule of payments. The 1969 schedule had provided for $1.00 per lineal foot and $500 per tower; the 1978-9 schedule increased payments to $1.25 per lineal foot and $2,000 per tower. Senior agent Fohrer stated he was aware property values in the landowners' area had increased approximately 300 per cent over the past ten years. The landowners' property was never appraised. In its brief, I & M argues the scheduled offer was reasonable, asserting the evidence shows that such offers met with ninety-five per cent acceptance by Sullivan county landowners. Of course, this is the evidence to the admission of which the landowners objected on the ground of irrelevance.
In Chambers, supra, the appellants argued the trial court had erred in sustaining the condemnor's objections to interrogatories requesting information regarding the names and addresses of all landowners from whom the condemnor had successfully purchased parcels of property, the acreage of said parcels, and the prices paid. Chief Justice Givan stated:
265 Ind. at 341-342, 355 N.E.2d 781. Thus, whether properly admitted in this case, the evidence of the degree of acceptance in Sullivan county of offers similarly based upon the schedule of payments in no way indicated the fair market value of those properties or the instant landowners' property.
In conclusion we observe the following. Real estate is unique. Identical pieces of real estate differently situated can vary widely in value. Therefore a uniform state-wide schedule of values and damages arbitrarily fixed without reference to a particular parcel of real estate is unacceptable to establish a good faith offer to purchase. The mischief of such an arbitrary schedule is demonstrated by the fact that the offer per lineal foot for easements was increased by I & M from $1.00 to $1.25 from 1969 to 1979, while the conceded value of the land rose 300 percent.
Upon these facts, we hold the trial court erred in overruling the landowners' objection that I & M had not made a good faith effort to purchase. The record clearly shows I & M failed to make any reasonable effort to form an opinion of the fair market value of the easement they sought to acquire.
The trial court's order is reversed and the cause is remanded to the trial court with orders to dismiss the complaint in condemnation.
ROBERTSON and RATLIFF, JJ., concur.
The stated requirement that an offer be fair and reasonable refers to the amount of the offer; 27 Am.Jur.2d Eminent Domain § 388 (1966) at 258 cites Annot. 90 A.L.R.2d 204 (1963), § 6, which annotates offers of inadequate sums. The requirement that an offer not be perfunctory pertains to the effort of negotiating a purchase on agreeable terms; 27 Am.Jur.2d Eminent Domain § 388 at 257 cites 90 A.L.R.2d 204, § 3, which annotates, generally, the necessity of good faith negotiation.
The language quoted from Chambers, supra, is only a portion of one sentence excerpted from a brief summary of the law of eminent domain. The complete sentence reads as follows:
265 Ind. at 341, 355 N.E.2d 781.
"The jury, in determining the damages, must find what the `fair market value' of the property was at the time of the taking. Burns' § 3-1706. The `fair market value' is a determination of what the land may be sold for on the date of the taking if the owner were willing to sell. Anything affecting the sale value at that time is a proper matter for the jury's consideration in attempting to arrive at a `fair market value.'"
See State v. City of Terre Haute, (1968) 250 Ind. 613, 238 N.E.2d 459.