Case Title: Arkansas State Highway Commission v. Elliott

Citation: 353 S.W.2d 526

Docket Number: 5-2563

State: arkansas

Court: Arkansas Supreme Court

Date: 1962-02-12T00:00:00Z

Document:
353 S.W.2d 526 (1962) ARKANSAS STATE HIGHWAY COMMISSION, Appellant, v. Catherine ELLIOTT, Appellee. No. 5-2563. Supreme Court of Arkansas. February 12, 1962. Dowell Anders and H. Clay Robinson, Little Rock, for appellant. *527 Floyd Sharp and Cooper Jacoway, Little Rock, for appellee. HARRIS, Chief Justice. The Arkansas State Highway Commission, appellant herein, filed an eminent domain action in the Pulaski County Circuit Court against certain land located in Pulaski County, for the purpose of acquiring right-of-way needed for Interstate Highway No. 40. Since an issue as to the ownership of the property was raised, the cause was transferred to the Pulaski County Chancery Court, where ownership of the land, consisting of one-half block in the Sandefur and Waters Addition to the city of North Little Rock, was resolved in favor of Catherine Elliott, appellee herein. The case between the Department and Mrs. Elliott then proceeded to trial on the sole question of compensation due Mrs. Elliott for the property which had been taken. At the conclusion of the testimony, the Pulaski Chancery Court entered a decree finding that Mrs. Elliott should have judgment in the amount of $5,000, plus interest on the amount of $2,875, at the rate of six per cent (6%) per annum from July 24, 1959, until paid.[1] From this decree, appellant brings this appeal. It is asserted by the Highway Department that there was no admissible evidence presented to support a larger judgment than $2,125, and the Court's finding that Mrs. Elliott was due $5,000 is against the preponderance of the evidence. The central argument in the brief relates to the evidence of Jimmy Green, owner of the North Little Rock House Wrecking Company. Mr. Green testified that he had been buying, selling, and moving houses for approximately ten years. He stated that he had been familiar with the Elliott property for several years, and that in 1957, he had viewed the property with the thought of purchasing it. The witness testified that he made an offer to purchase same in the amount of $5,000. His letter, dated March 11, 1957, and directed to Mrs. Elliott, was offered in evidence over the objections of appellant. The letter advised appellee as follows: Green testified there was no improvement on the land at the time he made the offer, and that he contemplated placing four houses on the property, which would be re-sold. He also testified that he knew there was gravel on the property, and that he could see outcroppings close to the surface. Green stated that he owned dump trucks and loading machines, and could obtain around $15 for a load of gravel (about five yards to a load); that it would cost him about $1.00 to load the gravel, and no more than $2 or $3 to haul the load, since he contemplated short hauls to improvements being built in the community. The witness did not estimate the amount of gravel that could be obtained, other than to indicate there was enough to prevent his losing any money on the $5,000 purchase price. "There's lots of building going on right in that vicinity. Within a mile, mile and a *528 half, and with my dump truck and loading machines, it's close to my office and all, I could haul gravel. I mean where there is building going on there's always a sale for gravel." Appellant objected to all of this testimony as improper in reaching the fair market value of the land in litigation. When asked the highest and best use for the property before the condemnation, Green replied: Subsequently, he stated that the highest and best use would be for homesites. We are definitely of the opinion that the Court erred in admitting the letter. This is really a case of first impression. In only one Arkansas case, Jonesboro, Lake City & Eastern Railroad Co. v. Ashabranner, 117 Ark. 317, 174 S.W. 548, has this type of evidence been mentioned, and a determination of the admissibility of same being unnecessary to a determination of that lawsuit, the Court passed over the question, saying: The great weight of authority is to the effect that such evidence is inadmissible. In 7 A.L.R.2d 785, we find: A number of cases are cited supporting the majority view, including cases wherein the testimony relative to the offer of purchase was given by the person who actually made the offer. There are a few states which admit this evidence to some extent, primarily Illinois, but even there, the admission of the evidence is somewhat limited. The rule in that state under which offers to purchase may be introduced is succinctly set forth in the case of City of Chicago v. Harrison-Halsted Building Corporation, 11 Ill. 2d 431, 143 N.E.2d 40: It is apparent that even under the Illinois rule, Green's offer to purchase would not be admissible. In the first place, it was not a cash offer, but rather, involved only the payment of $2,000 in cash, with the balance of $3,000 to be paid in monthly payments. It also appears that Green's offer was based on a particular need that would not be applicable to the average buyer. At any rate, we hold that the evidence of an offer to purchase is not admissible to establish the fair market value of particular property. But, says appellee, even excluding the letter, and Green's testimony relative to the purchase offer, the testimony is still sufficient to justify the amount awarded in the judgment. It is contended that Green, as a qualified lay witness justified his appraisal; that his testimony established the property was worth $5,000, either for homesites or because of the value of the gravel. We do not agree. Green did not claim to have knowledge of the fair market value of real estate in the neighborhood of the Elliott property. He had not bought nor sold property in the area, and he apparently was not familiar with prior sales. He, of course, did not live in the community, and his knowledge of the property seemed to be confined to passing it each day, along with a casual examination of the soil. In Housing Authority of Little Rock, Arkansas v. Winston, 226 Ark. 1037, 295 S.W.2d 621, lay testimony was admitted where the witnesses stated they were acquainted with the general market value of the property in the area, and explained the basis for their opinions. In numerous other cases, qualified laymen have been permitted to give their opinions, but Green's knowledge of the area does not appear to meet the established requirements of a qualified lay witness, and his testimony does not meet the test. As to his evidence in regard to the gravel, it, too, falls short in reaching the market value of the property. Kenneth Schuck, a consultant civil engineer, testifying on behalf of appellee, estimated that the property contained 30,000 yards of gravel that would be desirable in the construction industry; he stated that this gravel was comparable to gravel for which a prior employer of the witness had paid 15¢ per cubic yard. There is no competent evidence in the record relating to the value of the land for gravel development. The rule is well established that one cannot take the yardage of mineral deposits in property, multiply it by unit price, and thereby arrive at the market value of a tract, in an eminent domain action. In Nichols on Eminent Domain (Third Edition), Vol. 4, § 13.22, p. 243, we find: As was stated in Arkansas State Highway Commission v. Cochran, 230 Ark. 881, 327 S.W.2d 733, "As a general rule the market value of a tract of land cannot be determined simply by estimating the amount of stone or other mineral that it contains and then multiplying that estimate by a fixed price per unit." The Highway Commission offered the testimony of Walker Watson, real estate appraiser, and Zack Mashburn, appraiser for the Commission, who had appraised the Elliott property. Each of these witnesses testified that the highest and best use of the property was for residential purposes, and, based on comparable sales, the condition of the sub-division, and the possible sub-division development in the area, Watson stated the fair market value of the property, prior to the date of taking, was $2,125. Mashburn gave the figure of $2,000. Russell Newsom, civil engineer in the materials and tests division of the Arkansas State Highway Department, testified that he had viewed the property, and the gravel referred to was "clay gravel" rather than "sand gravel", and was not select material. He stated that the Highway Department would not use this type of gravel in highway construction, because it was below the required grade. The witness further testified that it had no special value for other commercial purposes, though he admitted it could possibly be utilized in some undertakings. He also stated that he had never made a test on this particular property, and his acquaintance with it was limited to visual examination. In reply to the question on cross-examination, "So by test you don't know whether this meets the standards or not?", Newsom replied, "Not positively, but I'm willing to stick my neck out and say it would not." We do not feel that the proof in this case has been developed to the extent that we can really determine whether the amount awarded in the judgment was proper for the taking of the property. Of course, a land owner is entitled to be paid for the market value of his property in its highest and best use, but we are unable to ascertain from this record the highest and best use that could have been made of the Elliott land before the taking by the Department, i. e., we cannot determine whether it was more valuable for residential purposes or as a source of commercial gravel. The Department presented two witnesses who gave their opinions as to the value of the property for residential purposes. Watson stated that he found six or seven sales in the addition, but described only two; Mashburn mentioned three sales, but testified to only one, and this was one of the two described by Watson. The Department presented no testimony in regard to the value of the lands as a gravel source, and as shown by the quoted testimony of Mr. Newsom, made no tests whatsoever. Appellee's testimony was insufficient in both respects. While normally, we determine Chancery cases on the record before us, this Court will occasionally remand a case for further development. As stated in Wear v. Boydstone, 230 Ark. 580, 324 S.W.2d 337: See also Mabrey v. Millman, 208 Ark. 289, 186 S.W.2d 28, and Hymes v. Bickford, 208 Ark. 688, 187 S.W.2d 542, where we reversed, and remanded for the purpose of permitting the proof to be more fully developed in the trial court. Accordingly, the decree is reversed, and the cause remanded with directions to permit both appellant and appellee to offer *531 further proof of the market value of the property here in litigation, relative to its highest and best use. It is so ordered. JOHNSON, J., dissents. BOHLINGER, J., not participating. [1] The Commission had filed the suit and its Declaration of Taking on July 24, 1959, and had deposited the sum of $2,125 as estimated just compensation for the property.