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COURT OF APPEALS OF WISCONSIN
PUBLISHED OPINION
Case No.:                                                              96-1835
†Petition for Review Filed
Complete Title
of Case:
FLOYD J. VAN ASTEN AND IRENE M. VAN ASTEN,
PLAINTIFFS-RESPONDENTS-CROSS-
APPELLANTS, †
V.
STATE OF WISCONSIN DEPARTMENT OF
TRANSPORTATION,
DEFENDANT-APPELLANT-CROSS-
RESPONDENT.
Opinion Filed:                                                         October 8, 1997
Oral Argument:                                                         September 16, 1997
JUDGES:                                                                Snyder, P.J., Brown and Anderson, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYS:                                                             On behalf of the defendant-appellant-cross respondent, the cause was
submitted on the briefs of James E. Doyle, Attorney General, and
Kathleen M. Ptacek, Assistant Attorney General.  Oral argument was
by Kathleen M. Ptacek.
Respondent
ATTORNEYS:                                                             On behalf of the plaintiff-respondents-cross appellants, the cause was
submitted on the briefs of David J. Van Lieshout of Van Lieshout Law
Offices of Little Chute and Benjamin Southwick of Richland Center.
Oral argument was by Benjamin Southwick.




COURT OF APPEALS
DECISION
NOTICE
DATED AND FILED
This opinion is subject to further editing. If
published, the official version will appear in the
bound volume of the Official Reports.
October 8, 1997
A party may file with the Supreme Court a
                                                                              Marilyn L. Graves                        petition  to  review  an  adverse  decision  by  the
                                                                              Clerk, Court of Appeals                  Court of Appeals.  See § 808.10 and RULE 809.62,
                                                                              of Wisconsin                             STATS.
No.                                                                           96-1835
                                                                              STATE OF WISCONSIN                       IN COURT OF APPEALS
FLOYD J. VAN ASTEN AND IRENE M. VAN ASTEN,
PLAINTIFFS-RESPONDENTS-
CROSS APPELLANTS,
V.
STATE OF WISCONSIN DEPARTMENT OF
TRANSPORTATION,
DEFENDANT-APPELLANT-
CROSS RESPONDENT.
APPEAL and CROSS APPEAL from an order of the circuit court
for Winnebago County:   WILLIAM E. CRANE, Judge.   Reversed.
Before Snyder, P.J., Brown and Anderson, JJ.
ANDERSON, J.                                                                  The State  of  Wisconsin Department of
Transportation appeals and Floyd J. and Irene M. Van Asten (the Van Astens)




No. 96-1835
cross-appeal from an order awarding postverdict litigation expenses to the Van
Astens under  §  32.28(3)(e), STATS.    Because we agree with the Department’s
argument that the jury verdict of $600,000 failed to exceed by at least $700 and at
least 15% the $525,000 jurisdictional offer or the $525,000 highest written offer
for the property condemned, thus requiring denial of the motion for litigation
expenses under § 32.28(3)(e), we reverse the order.1
The Van Astens owned property in Winnebago county that was used
as a trucking facility.    The Van Astens leased the property to Rollins Leasing
Corp., by assignment, for a lease term of January 1, 1989 to July 31, 2000.   The
Van Astens’ lease contained a condemnation clause.   The clause provided:
If the entire leased premises  … shall be taken under the
exercise of the power of eminent domain … this lease shall
terminate as of the date of such taking; and in that event the
LESSOR will reimburse the LESSEE for twelve months
rent.   If the leased premises are so taken, and this lease is
terminated,  the  LESSOR  shall  receive  the  entire  award,
including all amounts paid for the taking of the land, the
taking    or    damage    to    the    buildings    or    other
improvements….
The Department commenced this eminent domain acquisition of the
Van Astens’ property, in its entirety, for the construction of the Highway  10
interchange.   The Department’s highest offer and jurisdictional offer were each
$525,000.   The jurisdictional offer was made to the Van Astens, F&M Bank and
Rollins Leasing.   The amount included the land, improvements and fixtures.   The
Van Astens rejected the offer.
1    Our reversal of the trial court’s order disposes of the Van Astens’ arguments on cross-
appeal regarding the alleged evidentiary errors committed by the court.   See Sweet v. Berge, 113
Wis.2d 61, 67, 334 N.W.2d 559, 562 (Ct. App. 1983) (if a decision on one point disposes of an
appeal, we will not decide other issues raised.)
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No. 96-1835
On March  8,  1994, the title passed from the Van Astens to the
Department.   The Department awarded the Van Astens $525,000.   In accordance
with the condemnation clause in their lease, the Van Astens paid Rollins Leasing
$40,274.33 for twelve months rent in return for Rollins’ release of all claims to the
condemnation award.
In  October  1994,  the  Van  Astens  appealed  from  the  amount  of
compensation recorded by the Department under its powers of eminent domain.
See  § 32.05(11), STATS.   Following a jury trial, the Van Astens were awarded
$600,000 as compensation for the acquisition of the commercial property.
The Van Astens subsequently filed postverdict motions seeking, in
part, litigation expenses under  § 32.28, STATS.   This portion of the postverdict
motion  was  granted  by the  trial  court  in  an  order  dated  June  4,  1996.    The
Department appeals.
Initially, we  highlight some of  the aspects of  the law governing
condemnation actions.   “‘[W]hen a tract of land is taken by eminent domain … the
compensation awarded is for the land itself and not for the sum of the different
interests therein.…’”   Green Bay Broad. Co. v. Redevelopment Auth., 116 Wis.2d
1, 11, 342 N.W.2d 27, 32 (1983) (quoted source omitted).   This rule, the unit rule,
which is designed to protect the condemnor, stems from the common law theory
that anything that was attached to a freehold was annexed to and considered to be
a part of it.   See id. at 11, 12,  342 N.W.2d at 32.   The unit rule requires that
improved real estate be valued in respect to its gross value as a single entity as if
there was only one owner.    See id. at  12,  342 N.W.2d at  32.                           “Buildings and
improvements are not valued in isolation from the market value of the land, but
are  considered  only  to  the  extent  that  they  enhance  the  value  of  the  land.”
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No. 96-1835
Milwaukee & Suburban Transp. Corp. v. Milwaukee County, 82 Wis.2d  420,
448, 263 N.W.2d 503, 518 (1978).   Only after there is a determination of the taken
property’s total value is the award apportioned to the various interests in the
property.   See Green Bay Broad., 116 Wis.2d at 12, 342 N.W.2d at 33.
“‘Under Wisconsin law, a lessee with a lease for more than one year
is a joint owner with the lessor of real property.’”    Maxey v. Redevelopment
Auth.,                                                                                                 94 Wis.2d 375, 388, 288 N.W.2d 794, 800 (1980) (quoting 61 Op. Att’y
Gen. 16 at  18  (1972)); see also  § 32.19,  (4m)(6), STATS.  1993-94.   Because a
lessee has a property interest, the lessee is entitled to compensation when that
interest is completely taken by a condemning authority.   See Maxey, 94 Wis.2d at
400, 288 N.W.2d at 806; see also § 32.19(4m)(b).   A leasehold is normally valued
as the difference between the rental value of the premises at the time of taking and
the rent due the lessors during the unexpired term.2   See Maxey, 94 Wis.2d at 401,
288 N.W.2d at 806.   Compensation is apportioned to the lessor for the taking of
his or her reversionary interest and to the lessee for the taking of his or her
leasehold.   See id.   Where the leasehold is relatively long and rental values have
substantially increased since the inception of the lease term, the lessee’s share may
exhaust the entire award.   See id.
With  these  principles  in  mind,  we  look  to  the  issue  before  us.
Postverdict, the trial court awarded litigation expenses to the Van Astens under §
32.28(3)                                                                                               (e), STATS.   This paragraph awards litigation expenses to the condemnee
2   The RESTATEMENT sets forth a formula to determine the tenant’s share of the lump-
sum award, absent an agreement otherwise.   The tenant is entitled to a proportion of the lump-
sum award equal to “the proportion of the total value of the several interests in the property
condemned, valued separately, that represents the value of the unexpired period of the tenant’s
lease, plus the value discounted to the date of the taking of the payments the tenant is required to
make  to  the  landlord  even  though  the  lease  is  terminated.”    RESTATEMENT  (SECOND)  OF
PROPERTY: LANDLORD & TENANT § 8.2(2)(a) (1977).
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No. 96-1835
if                                                                                          “[t]he jury verdict as approved by the court under s.  32.05(11) exceeds the
jurisdictional offer or the highest written offer prior to the jurisdictional offer by at
least  $700 and at least  15%.”    Section  32.28(3)(e).    The Department’s highest
written offer and jurisdictional offer were each $525,000 and the jury verdict as
approved by the court was $600,000.
The  Department  argues  that  we  need  look  no  further  than  the
condemnation clause to decide this case.   The Department’s position is that by
agreeing  to  the  condemnation  clause,  Rollins  forfeited  its  right  to  any award
proceeds.   Accordingly, a jury verdict of $603,750, at a minimum, was required to
trigger the Van Astens’ eligibility for litigation expenses under  §  32.28(3)(e),
STATS.   Because the jury verdict was  $600,000, the Department maintains, the
trial court erred in awarding litigation expenses to the Van Astens.
The Van Astens contend the Department is merely elevating “form
over substance.”    They posit that the condemnation clause is not a forfeiture
clause; rather, it is a carefully bargained paragraph that clearly defined and clearly
divided this multiple-ownership property—Rollins was to receive $42,600 and the
Van  Astens  were  to  receive  the  remainder.     The  Van  Astens  reason  that
Redevelopment Auth. v. Bee Frank, Inc.,  120 Wis.2d  402,  355 N.W.2d  240
(1984), creates an exception to the unit rule; Bee Frank requires the court to only
look to the portion of the condemnor’s payment and that portion of the jury’s
verdict to which the litigating owner was legally entitled in determining whether
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No. 96-1835
that  owner  is  eligible  for  litigation  expenses  under                                                                                                                              §   32.28(3)   (e),  STATS.
                                                                                                     Following this rationale, the jury verdict exceeded the offers by more than 15%.3
We hold that the condemnation clause is controlling.   Although a
lessee is generally entitled to some portion of the condemnation award, a lessee
may be barred from sharing in the proceeds under the terms of a lease.    See
Maxey, 94 Wis.2d at 401, 288 N.W.2d at 806.   The Maxey court described the
problem as follows:
“It has become customary in drawing leases … to insert a
…  ‘condemnation  clause’—a  provision  that,  upon  the
taking by eminent domain of the whole or a part of the
premises leased, the term shall come to an end.   Under such
a lease the tenant has no estate or interest in the property
remaining  after  the  taking  to  sustain  a  claim  for
compensation, although under some circumstances he  [or
she]  may  be  entitled  to  recover  for  removal  expenses,
fixtures or other improvements.   It has been held that the
law does not look with favor on clauses causing forfeiture
of the lessee’s  interest  on condemnation, hence, a  lease
covenant will be construed not to have that effect if its
language and the circumstances possibly permit.”
Id.  at                                                                                              401-02,  288  N.W.2d  at  806  (quoted  source  omitted;  emphasis  added).
“‘[W]hen the terms of a contract are … indefinite, uncertain, and susceptible of
two  constructions                                                                                   …  the  contract  should  be  construed  as  not  creating  a
forfeiture.’”   Id. at 403, 288 N.W.2d at 807 (quoted source omitted).
The condemnation clause provided in part:
3   We understand the different calculations of § 32.28(3)(e), STATS., 15% rule as follows.
According to the Department, 15% of $525,000 (the Department’s offers) equals $78,750.   The
Van Astens would be entitled to litigation expenses if the jury award exceeded $603,750, which
the Department maintains it did not.
According to the Van Astens’ formula, we should reduce their share of the $525,000
compensation award by the Rollins’ share,  $42,600, equaling  $482,400.    Fifteen percent of
$482,400 is $72,360.   The Van Astens would be entitled to litigation expenses if the jury verdict
exceeded $556,760, which the Van Astens claim it did ($600,000 - $42,600 = $557,400).
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No. 96-1835
If the entire leased premises … [are] taken … [by] eminent
domain … this lease shall terminate as of the date of such
taking; and … the LESSOR will reimburse the LESSEE for
twelve months rent.…                                                                      [T]he LESSOR shall receive the
entire award, including all amounts paid for the taking of
the land, the taking or damage to the buildings or other
improvements.
The supreme court has determined that language such as, “‘[T]he Lessee shall not
be entitled to any part of any award’” is explicit—the lessee is entitled to nothing.
See Maxey, 94 Wis.2d at 402, 288 N.W.2d at 806 (quoted source omitted).   We
conclude that the language of the Van Astens’ condemnation clause—the lessor
shall receive the entire award—is equally explicit; it creates a forfeiture of Rollins’
normal right to share in the condemnation award.   Upon total condemnation, the
lease agreement terminated and Rollins forfeited its leasehold right to any portion
of the condemnation award in exchange for twelve months rent.
We view the condemnation clause as nothing more than a negotiated
reapportionment of risk between a lessor and a lessee.   The condemnation clause
was  a  carefully  bargained  paragraph  whereby  Rollins  agreed  to  abrogate  its
leasehold interest on the date of the taking in exchange for twelve months rent.
The Van Astens, in turn, accepted the risk that the jury award would exceed the
condemnor’s jurisdictional and written offers.
Bee Frank does not change the analysis.   In Bee Frank, the supreme
court awarded litigation expenses to a lessee who owned immovable fixtures in a
building owned by a separate party.   See Bee Frank, 120 Wis.2d   at 415-16, 355
N.W.2d at  246-47.    The court held that an award made by the condemnation
commission exclusively for a tenant’s immovable fixtures constitutes a separate
award for the purposes of applying § 32.28(3)(d), STATS.   See Bee Frank, 120
Wis.2d at 413, 355 N.W.2d at 245.   The court further concluded that the unit rule
does not prohibit the court from granting litigation expenses to the party who has
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No. 96-1835
successfully litigated its divisible interest.   See id. at  415,  355 N.W.2d at  246.
Because the condemnation commission awarded Bee Frank a separate award for
its divisible interest, the immovable fixtures, the strictures of § 32.28(3)(d) were to
be applied to that separate award.   See Bee Frank, 120 Wis.2d at 415, 355 N.W.2d
at 246.
Bee Frank is distinguishable from the case before us.   The lessee,
Bee  Frank,  unlike  Rollins,  the  lessee  here,  had  a  divisible  interest  in  the
property—the immovable fixtures.   Under the terms of the condemnation clause,
Rollins had no estate or interest in the property after the date of the taking to
sustain a claim for compensation.                                                          (Rollins did agree to twelve months rent as
compensation.)   Instead, the Van Astens retained the entire interest in the property;
no divisible interests remained after the date of the taking.
It is evident that the crucial difference between this case and Bee
Frank is that Bee Frank did not involve an agreement, i.e, condemnation clause,
allocating ownership of the right to take a risk in the case of condemnation.   Each
party maintained control of its separate, divisible property.   Such is not the case
here.   Rollins no longer had a divisible interest in the property as of the date of the
taking.   The Van Astens retained the entire interest in the property and Rollins was
made whole under the terms of the lease.
The fact that the Department named all of the parties with an interest
in the property as payees on the award check does not change this result.   The
condemnor is required to “name all persons having an interest of record in the
property taken and may name the other persons” on the condemnation award.
Section 32.05(7)(a), STATS.   On or before the date of the taking, a check “naming
the parties in interest as payees” must be mailed as well.   See § 32.05(7)(d).
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Finally, we do not interpret Bee Frank as creating an exception to
the unit rule.   Rather, Bee Frank flows from previous decisions harmonizing the
unit rule and the apportionment of the various interests of the property.    The
Milwaukee & Suburban Transport court upheld multiple-question verdicts as
long as the first question asked the fair market value of the property taken and the
remaining questions asked what value considerations had gone into the jury’s
determination of the total value.   See Milwaukee & Suburban Transp., 82 Wis.2d
at 450, 263 N.W.2d at 519.
Next, the Maxey court made clear that under ordinary circumstances,
a lessee is entitled to some portion of the condemnation award.   See Maxey, 94
Wis.2d at 401, 288 N.W.2d at 806.   Although the lease at issue in Maxey was not
sufficiently clear,  see  id. at                                                       402,  288  N.W.2d at  807,  the  court  stated that a
properly drawn lease provision explicitly set forth in a condemnation clause, for
instance,  may bar a  lessee from sharing in the proceeds, see  id.  at  401,  288
N.W.2d at 806.
Then in Green Bay Broadcasting, the court held that the unit rule
requires an appellant to appeal from the gross award even if the objection involves
the valuation of a constituent component that went into the gross award.    See
Green Bay Broadcasting, 116 Wis.2d at 14-15, 342 N.W.2d at 33-34.   Following
these  decisions,  the  Bee  Frank  court  held  that  an  owner  of  a  constituent
component of the total property is entitled to litigation expenses if the amount
attributable  to  that  component,  as  determined  in  a  postcondemnation  award,
exceeds that same portion of the jurisdictional offer by the requisite statutory
amount.   See Bee Frank, 120 Wis.2d at 407, 355 N.W.2d at 243.   In order to be
entitled to a particular component of the property, the party must have a legally
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No. 96-1835
recognized,  separate  interest,  i.e.,  fee  simple  ownership  or  tenancy,  in  that
property.
We  conclude  that  under  the  terms  of  the  lease,  the  Van  Astens
acquired the entire condemnation award.   Because the $600,000 jury verdict failed
to exceed by at least 15% the Department’s jurisdictional or highest written offers
of $525,000 for the condemned property, we conclude that the Van Astens are not
entitled to litigation expenses under § 32.28(3)(e), STATS.
Costs denied to both parties.
By the Court.—Order reversed.
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