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Truck Stop Owner Entitled to Compensation for Closure of Highway Exit in South Dakota

In an interesting case in South Dakota the owners of a truck stop were entitled to compensation for closure of a highway exit ramp when the State closed by condemnation the exit ramp to the property during a project. It is fundamental condemnation law that a government may regulate its streets for public safety and that a property owner is not entitled to compensation for closure of public street. This is referred to as the government’s police power.

As with Oregon, South Dakota state law does not give owners of property a right of access to a new controlled- access highway. What was unique to this factual situation was that when the highway in South Dakota was built in 1961, and the state condemned the right of way for the highway, it condemned a portion of the Truck Stop property. The exit ramp’s benefit to the remainder of the property was calculated into the 1961 assessment of severance damages. The property owner’s agreement to the acquisition and the amount of compensation the property owner received for the acquisition was based on the freeway ramp being available.

What is interesting about the South Dakota case is that goes a step beyond the Oregon Court of Appeals holding in State ex rel. Dept. of Transp. v. Hanson, 162 Or.App. 38, 987 P.2d 538. In that Hanson, the property owners had acquired property in Bend Oregon that had specific access by deed onto the highway. This access was specially defined and was the result of a 1951 judgment between the State of Oregon and the Grubbs (previous property owners) for land to build the highway. The state paid compensation to the Grubb’s and “reserved” access to the highway. In 1991 state closed the access by condemnation stating it could do so without compensation pursuant to the State’s police power because the property had reasonable access to a local county road.

As with the case in South Dakota, the Oregon Court disagreed stating that by the 1951 agreement the landowners were entitled to direct access to the highway in both northbound and southbound lanes. This direct access was a matter controlled by contract, and it was a matter quite distinct from limiting access under the police power. The court held that the State's authority to regulate common-law access to public highways without providing just compensation does not apply to a reservation of an easement of access to a public highway at a specific location. The South Dakota case appears to follow the contractual relationship that is created by condemnation deeds and extends this interpretation - that a bargain is a bargain - to a highway access ramp that is not on the property owner’s property.

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We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.
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