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State v. Sun Oil Co.

Decided: June 8, 1978.


Dwyer, J.s.c.


The State of New Jersey by the Commissioner of Transportation (State), appealed from the award of the Condemnation Commissioners in the amount of $52,700 for the taking of a portion of a gasoline service station owned by Sun Oil Company (Sun) together with a construction easement, on the ground that the award was excessive. Sun cross-appealed on the ground that the State's acquisition required awarding direct damages for property taken, severance damages for destroying the use of the remainder as a gasoline station because the remainder no longer complied with the municipal zoning ordinance for gasoline stations, with the further result that consequential damages had to be allowed for machinery and equipment; hence the award was not sufficient. The matter was heard by the court without a jury.

Four basic questions are presented:

1. On an appeal from an award of the commissioners in condemnation, under R. 4:9-2 may the State amend the complaint in accordance with the evidence?

2. In connection with a highway construction program, may the State replace existing sewer and water pipe laterals beyond the public easement, relocate electric lines beyond the public easement, and replace an underground gasoline storage tank where the cost for such work is less than the diminution in market value of the remainder of the parcel rather than pay damages in cash?

3. Will the remainder not comply with the municipal zoning ordinance for continued use as a gasoline station so that the State is required to compensate Sun as if there were a total taking of the gasoline service station, with credit for the remainder value of the land and structure?

4. What is the amount of compensation?

The basic facts are not disputed. The date of valuation is December 3, 1971. On that date Sun owned in fee simple a gasoline service station at the corner of Lyons Avenue and Schley Street in the City of Newark. Pursuant to an

arrangement with Sun, an independent operator ran the station and bought gasoline from Sun.

Lyons Avenue intersected Schley Street at the grade. The station was located at the northwest corner with a frontage of 88.05 feet on Lyons Avenue and 114.78 feet along Schley Street. It contained 9,456 square feet, with ingress and egress on both streets. The other property lines were interior lines.

The station consisted of a one-story cinder block building with a metalized front containing two bays facing Lyons Avenue, an office and display area facing Lyons Avenue, two lavatories at the rear end of the side of the building facing Schley Street, and a furnace room. The station building is about three feet from the eastern property line. Behind, and outside of, the middle of the rear, or northern, wall of the station's building is an underground 500-gallon waste oil, or slop oil, tank and a 1,000-gallon fuel oil tank for the furnace.

The only pump island is on the southern, or Lyons Avenue, side of the station. It is supplied by two 3,000-gallon gasoline storage tanks and one 4,000-gallon gasoline storage tank. Another underground tank near Lyons Avenue was not in service.

The sewer line from the lavatories for the station connected with a sanitary line under Schley Street. The electric lines were carried over the portion of the subject premises closest to Schley Street. The water line for the station connected to a line on Schley Street.

The highway project was the construction of Interstate 78 (I-78) which, under applicable federal law, requires that no access be given across the right of way.

The project called for the abandonment of Schley Street and the construction of a roadbed of I-78 at the bottom of a cut to be dug along the former roadway of Schley Street. The project also called for the construction of a bridge across I-78 to carry Lyons Avenue over I-78, with a ramp from

Lyons Avenue down to I-78 running around the southwest corner of the subject premises.

The complaint, as filed on December 7, 1971, sought to take 3,450 square feet as shown on an attached map, together with the owner's right of direct access to and from I-78, subject to all existing recorded and unrecorded public utility easements.

The map attached to the complaint showed that a Sunoco sign, the unused underground tank near Lyons Avenue and a portion of the 4,000-gallon underground tank in use near Lyons Avenue would be taken.

The first amendment to the complaint was filed April 19, 1973 and sought to take in addition to the property described in the complaint:

ALSO the right to construct and maintain a diversionary road, utility facilities and appurtenances at the location shown on the aforesaid maps, for use during the construction of the bridges and highway. Said right to terminate when the new bridges and highway are completed and open to traffic, at which time the land will be graded and seeded; all other items, including trees, shrubs, etc. will be restored * * *.

The area of the easement was outlined on an attached map. It included all the frontage on Lyons Avenue to a depth depicted by an irregular line starting at the southeast corner of the property line, extending around the interior side of the pump island and terminating at the proposed right-of-way line along the Schley Street side of the station. It embraced 1,533 square feet. Significantly, Exhibit G, which set forth the text of the easement, at the end contained the following: "The above described premises are color coded on Exhibit 'H' in the following manner: Red -- Parcel Area; Brown -- Temporary Slope and Diversionary Road ". (Emphasis supplied).

The second amendment to the complaint involved matters not germane to the issues. The third amendment reduced the permanent taking to 2,870 square feet and depicted some

outside lights to be taken, as well as the area for the temporary slope rights and diversionary road covered in the easement. This was filed on May 10, 1974. Sun did not object to the foregoing amendments. The commissioners filed their report on November 20, 1975, and had all the foregoing amendments before them.

After the taking, the site will have a frontage of 78 feet on Lyons Avenue, a frontage along the westerly side facing, but without access to, the right-of-way for I-78 of 119+- feet, and 37+- feet along the northerly boundary. The western line just misses the end of the station building and effectively precludes legal means of access to the rear of the station building on that side. Access to the rear will be available by means of the three-foot area between the station building and the eastern boundary line unless a door is cut into the rear of the station building. The remainder is irregular in shape, aggregating 6,580 square feet.

Sun contends that under the zoning ordinances of Newark the premises will no longer be usable for a service station because it will lack the requisite square footage for an interior lot and will violate certain set-back requirements. The State contends that the station will still be a corner lot and will meet the zoning requirements.

Sun's position is that the State's taking is so extensive that the subject premises' highest and best use will no longer be that of a gasoline service station. In addition, Sun contends that in respect to matters pertaining to activities of the State's contractor during construction, which the parties learned about during trial, the State should be treated as if it condemned the whole because of its taking of water and sewer line laterals.

The court will resolve issues 1 and 2 which arose out of surprise testimony at trial. The court then will resolve the other issues in the order stated.


At the hearing an enlargement of the map attached to the complaint depicting the right-of-way acquisition and the easement across the front was introduced without difficulty or objection. The State had to call its resident engineer for the project to get the construction plans and specifications into evidence.

During the initial phase of his testimony two problems developed. The first problem related to the duration of the diversionary road easement. Sun objected to any testimony as to a date of completion for the bridge to carry Lyons Avenue over I-78. Counsel for Sun contended then, and now, that the description of the easement is so vague that it amounts to a permanent taking of that area. In part, Sun predicates its contention on the fact that the ability to use the remainder as a service station is destroyed because this easement must be considered permanent for purposes of valuation. The second problem related to the activities of the State's contractor during construction. The engineer testified that the contractor had entered the station and severed the sanitary and water lines to Schley Street on permission from the operator. All parties claimed surprise. This generated another problem, because the resident engineer also testified that the new sanitary line was located in the right-of-way for I-78 where Sun could not be given access to service it.

With consent of all parties, an adjournment was granted to permit the parties to explore the problem of what existed in the field. At the end of the adjournment it was established that Sun never consented to the entry for the severance of the lines or relocation thereof. The State had obtained permission from the operator of the station. It was established that the water line was located within the boundary lines of the subject premises in a trouble-free area and was connected to the water line in Lyons Avenue.

It was further established that the sanitary line was located in the I-78 right-of-way and connected to a line on Lyons Avenue. If this is moved, the new line will have to run between the present underground gasoline tanks and the one pump island to a connection in Lyons Avenue.

In oversimplified terms, the State then moved on the record to formally limit the period of the easement to August 1976, to delete the references to seeding and grading and to substitute restoration of black top paving, sidewalks, curbs and curb cuts, and installation of substitute utilities as specified in its construction specifications as well as relocation of one underground tank. The testimony of the resident engineer was that the State does not know in advance of being on site for construction in highly developed areas where all underground utilities are. It provides in its contract specifications for the construction of highways that the contractor relocate connecting laterals that are disrupted on written orders signed by state engineers. It also requires utility companies to relocate utility services.

Except for deletion of the grading and seeding language which is appropriate for open spaces, Sun objected to all amendments on the ground that the State was lessening the taking as set forth in the easement in the third amended complaint and was attempting to lessen its obligation to pay for the damage to the remainder of the property in respect to the water and sewer lines and the underground tank by partially shifting to a cost-to-cure approach or, more accurately, a replacement in kind to cure approach.

Although the problem in respect to the sewer and water lines and the underground storage tank which was found to be in the right-of-way conceptually might be ignored in this matter and treated either as an action for trespass against the contractor and State in a separate action or an inverse condemnation, this court concluded that considering the surprise element to all parties, the opportunity to fully explore the problem by all parties, and the opportunity to present evidence concerning costs in this matter, it was better

to deal with the question in this action for reasons hereinafter stated.

At trial the court received a statement of the proposed amendment and the proof to be offered thereunder, and requested the parties to brief the issues after trial.

Sun does object to any further amendment because N.J.S.A. 20:3-30 requires in relevant part:

Just compensation shall be determined as of the date of the earliest of the following events: * * * (b) the date of the commencement of the action * * *.

It further urges that under Ridgewood v. Sreel Investment Corp. , 28 N.J. 121 (1958), the State must pay for the rights that it stated in its relevant pleadings it was taking and could enjoy in the subject property. Sun urges that the State may not at trial, and a fortiori not on an appeal, show that its actual taking was less than what it claimed in the pleadings. It cites 6 Nichols, The Law of Eminent Domain , ยง 26.21, n. 55 (3 ed. rev. 1976), which states:

Where it is sought to amend the petition by adding to or detracting from the property originally described in the petition it has been consistently held that such application must be denied.

Sun contends that the complaint as amended by the first three amendments sets no terminal date for the easement but refers to the period as that "for the construction of the bridges and highway"; hence the period is speculative and must be construed as a permanent taking for there is no date at which the State must vacate. It referred the court to Wolfe v. State of New York , 22 N.Y. 2d 292, 292 N.Y.S. 2d 635, 239 N.E. 2d 517 (Ct. App. 1968); Spinner v. State of New York , 4 A.D. 2d 987, 167 N.Y.S. 2d 731 (App. Div. 1957).

The State urges that the proposed amendment was at most a clarification of what was intended to be, and is, a temporary easement. It further contends that it was proper

to submit the plans for construction of the project on appeal, Packard v. Bergen Neck Ry. , 54 N.J.L. 553, 563 (E. & A. 1892), aff'g 54 N.J.L. 229 (Sup. Ct. 1892), subject to the right of the trier of fact to assess damages on the basis of the most injurious use consistent with those plans. In Packard the Court of Errors and Appeals stated:

When a plan for the use of the condemned land is announced upon the trial of an appeal, the trial judge may properly require it to be entered upon the record by amendment of the issue or otherwise. [ Id. ]

Finally, the State urges that the Sreel case has no applicability to this case.

The Appellate Division has held that an amendment to a complaint in condemnation may be made in the sound discretion of the trial court. In State v. Applegate , 107 N.J. Super. 159 (1969), the Appellate Division reversed the denial of a motion to amend the complaint on appeal, but before trial on the appeal, to show that access to a street from a gas station would be permitted under the construction plans although not clearly stated in the complaint. In State v. Bakers Basin Realty Co. , 138 N.J. Super. 33 (App. Div. 1975), aff'd 74 N.J. 103 (1977), it is stated:

The State may be permitted some latitude in amending a condemnation complaint. [Citation omitted]. The amendment here merely increased the amount of frontage along which access was permitted, from 25 feet to approximately 72 feet. This modest change corrected an error on the State's map and permitted access to both an existing telephone facility and an existing dirt road used to service adjoining landowners. Certainly, this amendment is not sufficient to support a change in the date of valuation. [at 43-44]

The language of the easement for the diversionary road explicitly states that it is for the period of construction and sets forth the objective event by which its termination can be judged. As noted above, the construction easement was also referred to as a "temporary easement." Any ambiguity

that exists arises from the reference to "bridges" and "highway open to traffic." Sun suggested that refers to the bridges on that section of I-78 which included a number of bridges and several miles of highway. Sun also pointed out that the resident engineer admitted strikes had delayed progress beyond the construction timetable originally set.

The construction plans and the testimony establish that when the bridge carrying Lyons Avenue over I-78 is complete, there is no need for a diversionary road and the contractor must restore the sidewalk, curb and curb cuts. When the complaint is construed with the preexisting construction plans, only the bridge carrying Lyons Avenue over I-78 is relevant. The court concludes that the amendment in this respect is a clarification, not an addition or deletion of property to be taken.

Neither Spinner nor Wolfe, supra , is similar to the facts in this case. In Spinner the easement stated it was permanent; hence the State had the power in the future to cut off all access to the property. In Wolfe the condemnee owned 156 acres, with 51 feet of access to one street and 4100 feet of frontage on another street. Immediately behind the 4100 frontage on the subject property was a ravine 80 feet deep and 200 feet wide. In 1962 the condemnor took the first right of access in fee and a permanent easement across the second right of access for drainage subject to the right of the condemnee to use the area for uses which do not, " in the opinion of the Superintendent of Public Works * * * interfere with or prevent the [State's] user in exercise of the rights hereinbefore described." (Emphasis in original). In 1965 the Appellate Division of the New York Supreme Court, in reviewing an award for total loss of access, stated that the condemnor should be allowed to stipulate that the owner would have the right to build a bridge over the ravine. It remanded the matter to the trial court.

The trial court followed the direction, the condemnor stipulated for the bridge, and the award was reduced. The Court of Appeals reversed on the ground the amendment

should not have been allowed. The condemnor must pay for what it declares it is taking. It distinguished the case before it from others where there was an ambiguity in the language of the declaration of the taking, in the following passage:

The State's reliance upon Jafco Realty Corp. v. State of New York (18 A.D. 2d 74, [238 N.Y.S. 2d 66] affd. 14 N.Y. 2d 556 [248 N.Y.S. 2d 651, 198 N.E. 2d 39]) and Clark v. State of New York (20 A.D. 2d 182, [245 N.Y.S. 2d 787] affd. 15 N.Y. 2d 990 [260 N.Y.S. 2d 10, 207 N.E. 2d 606]) is misplaced. Both involved easements which on their face, as well as by necessary implication, reserved access to the claimants.

In the Jafco case, there was reserved to the claimant a preexisting easement for a right of way to be exercised in a manner that did not "interfere in any way with the Public use" but the pre-existing right of way was permanently assured by the condemnor's construction of its highway on an overpass bridging the claimant's passageway. And, in Clark , awards were made to the claimants for 90% of the value of a strip of land over which the condemnor appropriated an easement for an electric transmission line and there was reserved to the claimants the fee ownership and any use which did not interfere with the condemnor's easement. There was -- as noted by the Appellate Division (20 A.D. 2d, at pp. 189-190 [245 N.Y.S. 2d 787]) -- disagreement between the parties as to the construction and meaning of the written instrument which created the easement. The question in the case was whether the ambiguity might be resolved by findings made by the Appellate Division, and it was so resolved. In both cases, we reached our decision that a permanent right of access and use had been reserved to the claimants under the terms of the original taking and not on the basis of a modification of the appropriation by subsequent concessions or stipulations.

The present case is quite different. No one could reasonably expect that the claimant would build a bridge across the easement taken by the State when the appropriation map made it clear that any right possibly reserved to him was terminable at the will of the State. Without some further grant from the State, the claimant had no reasonable means of gaining access to his remaining land. Indeed, as we have already demonstrated, the Appellate Division was fully aware that the easement taken had cut off the claimant's access and that any right he had to any access was dependent upon what the State might consent to. It was only because the claimant's existing means of access had been destroyed that the court below found it necessary to suggest that the State might be "amenable" to restoring to the claimant, through a stipulation or other agreement,

the access which he had lost. Such a procedure or device clearly offends against our settled rule prohibiting the State from attempting to reduce its damages by a subsequent limitation on its original appropriation. [ Id. , 22 N.Y. 2d at 294-295, 292 N.Y.S. 2d at 639-640, 239 N.E. 2d at 520]

The easement for the diversionary road for the period of construction was not an exclusive easement. Sun and its tenant had the right to use the area for purposes of gaining access to the station as did the customers. The commissioners had this information by reason of the third amendment. In their report they stated that they examined the premises.

In Doremus v. Paterson Mayor and Aldermen , 73 N.J. Eq. 474 (Ch. 1907), the Court of Errors and Appeals had remanded the matter, directing that the city should be allowed to tender compensation to landowners for damages resulting from the city's pollution of the Passaic River instead of being enjoined from polluting the river. Chancery allowed the city to tender a defense that damages should be fixed for the period to the date of hearing and for five years thereafter, because the damages, if any, were temporary due to efforts to build a new sewer and fixed damages on the basis of loss of rental value for that period.

In a later decision between the same parties, Doremus v. Paterson , 81 N.J. Eq. 27 (Ch. 1913), aff'd 82 N.J. Eq. 640 (E. & A. 1914), the court allowed complainants damages for four more years because of difficulties in getting necessary legislation, plans and financing organized for the Passaic Valley Trunk Sewer. At the end of the decision the court stated that there should be a reservation in the decree for future application for damages if the new sewer was not operational by 1915 and the pollution continued:

If it be competent for the court to assess damages at all, it is competent for it to determine when it will assess them, and if there be an obvious propriety in deferring the assessment, in part, until at least some idea can be formed as to what it is likely to be, I see no legal difficulty in the way. The city, by its submission, has given this court power to ...

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