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Leeco Gas & Oil Company v. County of Nueces

    Brief Fact Summary. Nueces County received a gift of land from Leeco Gas with the possibility of reversion in Leeco should the land ever be used for any purpose other than a public park. Nueces County sought to condemn the reversion interest of Leeco.

    Synopsis of Rule of Law. When a governmental entity seeks to condemn a reversionary interest held by the grantor of land under a gift deed, the proper amount of damages is determined by compensating the grantor in an amount which represents the difference between the unrestricted fee and the restricted fee.

    Facts. In 1960 Leeco Gas gift deeded fifty acres to Nueces County for the purpose of “constructing and actively maintaining a public park,” and that if the county should fail to do so, the Leeco, as grantor, would have a reversionary interest in the property. The county did in fact construct and maintain a park on the property which was on Padre Island. In 1983, however, the county began proceedings to condemn Leeco’s reversionary interest. The county commissioners awarded Leeco $10,000 for the reversionary interest. Leeco appealed to the county court at law and the trial court granted summary judgment against Leeco resolving all issues but the amount of damages. Experts testified that the land was worth between $3,000,000 and $5,000,000, but the trial court awarded Leeco nominal damages of $10. Leeco appealed to the intermediate appellate court which affirmed the trial court. Leeco appealed from the intermediate appellate court’s decision.

    Issue. The issues are stated in two parts.
    Was the county estopped from seeking to condemn Leeco’s reversionary interest by its acceptance of the deed containing the reversionary interest?
    What is the proper measure of damages?

    Held. Judgment of the appellate court reversed and remanded to the trial court for a determination of damages.
    The Court finds that the actions of the county in seeking to have Leeco’s reversionary interest condemned is a governmental action. When a governmental unit is exercising its powers to act as a governmental unit, no estoppel may be claimed against the governmental unit.
    The Court notes the general rule that under the Restatement of Property Section:53 comment b (1936), a mere possibility of reverter has no ascertainable value when the event which would have to occur to cause the reversion is not probable within a reasonably short period of time. The Court cited other cases which held that the value of a possibility of reverter was so speculative to be nominal only. The Court noted that the intermediate appellate court found that the county did not intend to breach the condition necessary to trigger reversion in favor of Leeco so long as Leeco held such an interest. However, the Court found that such a conclusion was not the determining factor of the case.
    The Court cited evidence that the county was seeking to condemn the reversion interest of Leeco for the purpose of freeing the title to the land such that the county might consider changing the use of the land to operate at a profit. In this case the Court found that the evidence of the county’s intentions indicated that there was more than a remote possibility of the reversion interest being triggered, if the county could condemn Leeco’s interest. This fact allowed the Court to distinguish this case from the general rule.
    The Court found that there was a constitutional requirement to adequately compensate Leeco for the county’s condemnation. The Court found that ten dollars as damages for losing a reversion interest in a multimillion dollar piece of property was inadequate as a matter of law. The Court held that the proper amount of damages could be determined by ordering the county to pay compensation in an “amount by which the value of the unrestricted fee exceeds the value of the restricted fee.” This required the case to be remanded to the trial court for a determination of damages.
    Concurrence. The concurrence agrees with the result but would announce a rule that when a government entity has accepted a gift by deed and seeks to condemn the reversion interest, the government entity should be held to have renounced the gift.

    Discussion. This case illustrates the inherent difficulty in determining the value of interests which may, but have not yet, been triggered. Consider the trial court’s difficulty in determining the potential value of the land if the reversion was condemned.


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