No. 13599 IN THE SUPREME COURT OF THE STATE OF MONTANA 1977

THE STATE OF MONTANA,ACTING BY AND THROUGH THE STATE HIGHWAY COF@TISSION OF THE STATE OF MONTANA, Plaintiff and Appellant,

HAZEL MARSH, Defendant and Respondent.

Appeal from: District Court of the Third Judicial District, Honorable Robert J. Boyd, Judgepresiding. Counsel of Record: For Appellant: Daniel J. Sullivan argued, Helena,Montana For Respondent: Mulroney, Delaney, Dalby and Mudd, Missoula,Montana Dexter L. Delaney argued, Missoula,Montana

submitted: November 30, 1977 ~ecided 

## :JAN

## 20

## 1970Mr. JusticeFrank I. Haswell delivered the Opinion of the Court. This is an appeal from a judgment rendered ina condemnation action involving the acquisition of property by the state forthe purpose of interstate highway construction. This case came before thisCourt previously on an appeal brought by the landowner, Hazel Marsh, from thejudgment rendered inthe original District Court trial, StateHwy Comm'n v. Marsh (1974), 165Mont. 198, 527 P.2d 573. In that case we ordered a

new trial, holding that the District Court committed reversible

error innot allowing the landowner toexpress an opinion on the value of her land. The land condemned by the state consists of 152.5 acres in 13different parcels of irregular shape. The parcels range in sizefrom .04 acre to 113.53 acres. As a resultof the "take", 46.08 other acres arelandlocked and the landowner is totally deprived of the use of this land. The total "take" is therefore 198.58 acres. The parcels of land taken are immediately adjacent to4-1/2 milesof Clark Fork River frontage inGranite County, Montana.This casewas retried toa jury inApril, 1976. Attrial the landowner testified astoher ownership of the land inquestion and that the land was being used asa cattleranch. She testified thather ranch consisted of some 7,000 acres of deeded land along with 1,860 acres of leased land. The landowner expressed her familiaritywith theboundaries and terrain of both her ranch intoto and the condemned land. She testified that the portion of her ranch which abuts the Clark Fork River is the most valuable portion because it contains rich cropland, water forher livestock, and inaddition, recreational potential. The carrying capacity of the ranch was 450 animal units prior tothe taking and as a directresult of the taking the capacity has been decreased by approximately 125 animal units.The landowner was allowed totestify astoher opinion of the value of the taken land. She placed the value of the 198.58 acres at$800 per acre. The record clearlyreflects that the basis for thisopinion was a comparison of her land with land involved inthree salesof small tractsof river frontage located inthe immediate area. Two of these tracts were sold forrecreational uses and the third for a use unrelated to cattleranching. Thereafter, the landowner's appraiser, Roy Rodenberger, testified that the highest and best use of the property inquestionwas asan operating cattleranch with the strongpotential forriver frontage tracts. Rodenberger valued the property according to "the animal unitmethod". Under thismethod the total ranch value was computed by multiplying the market price per animal unit asderived from similar ranch operations by the total carrying capacity. The decrease incarrying capacity directly attributable tothe take, 123 animal units, was then multiplied by market value per unit inorder todetermine the losstothe total ranch operation caused by the take. Rodenberger alsotestified as toother salesof small parcels of river frontage of which he was aware. He compared theprice per acrepaid inthe other saleswith his lossper acre calculated from the animal unitmethod asa cross check. The loss per acre calculated from the animal unitmethod was computed by

use of the following formula: animal units lost 

### x value of an animal unit number of acres taken A figureof $732 per acrewas determined by use of this formula and Rodenberger testified that this figure compared fairlywith the amounts paid per acre for similarproperties. On April 23, 1976, thejury returned a verdict for the landowner for $92,096. The landowner then moved for an additionalaward of $32,312.23 to be included in the judgment. This amount represented her alleged necessary expenses of litigation. At the hearing onher motion, the District Court took oral argument and received various affidavits in support of the expenses she claimed. The record does not reveal whether oral testimony or exhibits other than affidavits supporting the expenses were presented. On May 18, 1976, the ~istrict Court entered judgment awarding the landowner,Hazel Marsh, $104,726.70. This amount represented the balance of the verdict which shehad not previously withdrawn, plus 

### LO percent intereston that balance from the date the state took possession of the property in question, plus $32,312.23 as her necessary expenses of litigation. The state appeals. Four issues are before this Court on appeal: 1. Whether the District Court erred in refusing to strike the landowner's appraisal when said appraisal was based on a valuation derived from the sale of three small tracts of land whose use was different than that of landowner's ranch? 2. Whether the District Court erred in admitting the testimony of Rodenberger, the landowner's appraiser, relative to the valuation of the landowner'sproperty for a recreational use in small tracts rather than as a whole? 3. Whether the District Court erred in allowing the landowner her necessary expenses of litigation based on a record which did not include oral testimony nor exhibits other than the affidavits presented here? 4. Whether the District Court properly computed the rate of interest to be paid upon the judgment? Both parties agree that Statev. Marsh, supra,and the

cases cited therein are controlling in the resolution of appellant'sfirst issue. In Marsh, quoting in part from Alexander v. State (1963),142 Mont. 93, 110, 381 P.2d 780,we stated: "'Wenow restate the rule to be that an owner, upon prima facieproof of ownership, shall be qualified to estimate in a reasonable way the value of his property for the use to which he has been putting it. Such owner is not qualified by virtue of ownership alone to testify as to its value for other purposes unless he possess, as any other witness as to value, "somepeculiar means of forming an intelligent and correct judgment as to the value of the property in question beyond what is presumed to be possessed by men generally"'. "It should be noted that as stated, this basic landowner-witness rule consists of two parts: "(1) The landowner on prima facie showing of ownershipmay testify as to value so long as: "(a) His testimony is 'reasonable',and 

### " (b) The value testified to is for the uses to which he is putting the land. "(2) However, if the landowner desires to testify as to value 'asto other purposes', then: "(a) We must have 'somepeculiar means of forming an intelligent and correct judgment

## * * * beyond what is presumed to be possessed by men generally.

### ' " 165 Mont. 203. See also: Alexander v. State Highway Commission, supra; Rauser v. Toston Irrigation District (1977), Mont

# . , 565

The state contends that the landowner has a qualified right to express an opinion as to the value of her property for the purpose to which the property is being used. The state, however, argues that here the landowner lacks the requisite knowledge to enable her to testify as to the value of her land for purposes other than the purpose forwhich it is being used. We disagree. The landowner had lived on the ranch in question for a number of years. She was well aware of the recreational amenities of her Clark Fork River frontage. She carefully studied twosales of small tracts of property for recreational purposes in the area. She participated in the third sale which she used as a basis for her opinion. The sum total of these facts certainly bestowed upon the landowner herein a means of forming an intelligent and correct judgment of the value of her land beyond what ispossessed by men generally. In the second issue the state urges that the District Court erred in allowing the landowner's expert,Roy Rodenberqer, to check his animal unit valuation of the ranch with the price per acre paid forvarious small tracts of recreationalproperty. The basis for this contention is an argument that the property's highest and best use was for a cattle ranch and testimony as to recreationalpurposes was not admissible. Such is not the case. Rodenberger testified on two occasions that the highest and best

use of the property was as an operating cattle ranchwith a strong potential for river frontage tracts. The District Court, in the exercise of its discretion,chose to admit such evidence and we find no reason to overturn its decision. Appellant's third issue concerns the DistrictCourt's award of necessary expenses of litigation. After the verdict, the landowner filed a "Motion for Award of Necessary Expenses of Litigation and Memorandum of Costs and Disbursements"and a "blotionforAward of Necessary Expenses of Litigation and Motion for Judgment for Final Order of Condemnation". The necessary expenses the landowner claimedwere: Appraisal fee of expert appraiser Roy Rodenberger for appraisal and attendance at five days of trial in the above captioned action at $150per day includingmileage,Missoula to Philipsburg; preparation of trial exhibits and othermatters related to appraisal and testimony at trial 

# . . . .$ 3,300.00 Expertwitness fee of James Lackman for testimony at trial and in preparation for trial testimony

# . . . 400.00 Expertwitness fee of Hank Deschenes for testimony at trial and in preparation for trial testimony

# ..

# . 400.00Aerial photographs, Scott Brown Photography 

# ...... 562.70 Evergreen Air Service incident to taking aerial photographs

# .................. 66.00 Appellate costs in State vs. Marsh, including preparation of transcript,printing of brief, and attorney fees incurred by Defendant to Wade Dahood

# ............$2,560.00 Raymond Fox

# ............642.37



# .................... TOTAL .3,202.37



# ................... Attorneyfees 24,138.16 Motel charges, meals and mileage incurred by Dexter L. Delaney in pretrial preparation



# ............ during the period of the trial 243.00 TOTAL $32,312.23 In support of these motions the landowner's attorney filed an affidavit justifying the expenditures. Regarding the attorney fees, affiant stated that the claim represented the amount the landowner owed her attorney under a contingent fee contract in which the landowner's attorneys were to receive 33-1/3 percent of the difference between the verdict received in the previous trial of this cause ($52,000) and the net judgment including interest recovered by the landowner in the new trial. In addition, the landowner filed affidavits from three other attorneys experienced in condemnation litigationwho stated that the 33-1/3 percent contingent fee contract that the landowner had with her attorneyswas the standard fee arrangement in condemnation cases. The District Court allowed the landowner the full $32,312.23 as her necessary expenses of litigation. The state contends that affidavits justifying these expenditures are not sufficient to support their award,but that such an award must be based on other evidence. The landowner contends that because the record does not reveal whether oral testimony or exhibits other than these affidavits were presented, the award of her necessary expenses of litigationmust stand. We have previously consideredwhat kind of evidence must be introduced to support an award of attorney fees. First Security Bank v. Tholkes (1976), 169 Mont. 422, 547 P.2d 1328, 1332, 33 St. Rep. 341; Crncevich v. Georgetown Recreation Corp. (1975), 168 Mont. 113, 119-20, 541 P.2d 56, 59. The reasonableness of the attorney fee claimedmust be shownby evidence. Rauser 

### v. Toston IrrigationDistrict, Supra. A contingent fee contract is not controlling in demonstrating the reasonableness of an attorney fee. Olson v. Carter (1977), Mont

# . I - P.2d 

## , 34 St.Rep. 1539, 1543; Engebretson

v. Putnam (1977), Mont

# . , 571 P.2d 368, 34 St.Rep. 1241, 1247. An award of attorney feesmust be based on a hearing allowing for oral testimony, the introduction of exhibits, and

an opportunity to cross-examine inwhich the reasonableness of the attorney fees claimed is demonstrated. Such an award may not be based solely on a contingent fee contractbetween attorney and client. In eminent domain proceedings inwhich contingent fee contracts are entered into after July 1, 1977, we note that the 1977 legislature specificallyprovided reasonable and necessary attorney fees shall be determined on the basis of evidence demonstrating the customary hourly rate for an attorney's services in the county inwhich the trial isheld and not on the basis of the contingent fee contract. 1977Mont. Laws, Ch. 48, S1

(codifiedat section 93-9921.2, R.C.M. 1947)

# . The state argues that we should extend these requirements to the other items claimed as necessary expenses of litigation. A statutory procedure for such a hearing which allows for taking of oral testimony, introduction of exhibits, and cross-examination already exists. Section 93-8619, 

### R.C.M. 1947.Appellant's final issue concerns the DistrictCourt's award of 10percent interestper annum on the condemnation award. The state initially filed this condemnation suit onApril 29, 1968,and took possession of the property in question some time after that. From that time until July 1,1975, condemnation awards drew "lawful interest" (6percent) from the date on which the property owner surrendered possession of the property. Section 93-9913,R.C.M. 1947 (amended 1975). In 1975 the legislature raised the interest rate payable to 10percent. 1975Mont. Laws, Ch. 534, S1. The jury inMarsh's new trial rendered a verdict after the effective date of this amendment. The state contends that the proper rate of interestpayable in this case is 6percent for the whole period in question and cites in its support the Louisiana case of Long Leaf Lumber, Inc. v. Svolos (1972),La.App., 258 So.2d 121. Itpoints out, however, that New York cases hold that the old interest rate applies up to the date of amendment and the new interestrate applies from that time onward. Board of Education v. Sapsin

(1970),35 A.D.2d 973, 317N.Y.S.2d 918; In Re IncorporatedVillage of Hempstead (1970), 33 A.D.2d 1036, 308 N.Y.S.2d 798. Marsh contends that the amendment of the statute should be applied retroactively in her case and that the proper interest rate payable is 10percent from the date the state took possession of her property. In ourview it ismore equitable to apply the 6 percent interest rate up to the effective date of the amendment and to apply the 10percent interest rate from the effective date thereafter. We are supported by the early Montana case of Stanford V. Coram (1903), 28 Mont. 288, 293-94, 72 

### P. 655. In Stanford the interest rate payable on judgments received prior to 1899was10percent. In 1899 the legislaturedecreased the interestrate payable to 8 percent. The Stanford court held the rateof interest payable was 10percent up tothe dateof amendment and 8 percent thereafter. When interest is allowed by statute, it is given asdamages for delay inpayment of the principal obligation. Although the legislature can change thismeasure of damages, the rate of interestpayable should be that rate current inthe periods during which the delay inpayment has occurred. Stanford v. Coram, supra; People v. Sexton (1940), 284 N.Y. 57,

Marsh argues that although amendments to statutesusually apply only prospectively, the legislature inamending section 93-9913 intended the 10percent interestrate tobe retroactive. She points tothe following statutory language as evidencing that intent: 

### " 

## * * * the fullamount finally awarded shall draw interestatthe rateof ten percent (10%) per annum from the dateon which the property owner surrenderspossession of the property 

## * * 

## *." Section 93-9913, R.C.M. 1947, (Emphasis supplied by Marsh.) "No law contained inany of the codes orother statutes of Montana is retroactive unless expressly so declared." Section 12-201, R.C.M. 1947. Although a statuteneed not say "this statute shallbe retroactive", the intent that it operate retroactivelymust be expressed and unmistakable. Davidson v. Love (1953), 127Mont. 366, 370, 264 P.2d 705. That unmistakable intent does not existhere. The 1975 amendment to section 93-9913 merely substituted "interestatthe rateof ten percent per annum" for "lawful interest". 1975Mont. Laws, Ch. 534, 81. The language which Marsh emphasizes, 

### " 

## * * 

## * from the date on which the property

owner surrenders possession of the property 

## * 

## * *", was already inthe statuteand was leftunchanged. We do not think thisamendment demonstrates unmistakable intent that the 10percent interest rate apply to periods before July 1, 1975. This case must, therefore,be remanded to determine the proper amount of interest due applying the 6percent interest rate from the date the state took possession of the property up to the effective date of the 1975 amendment and applying the 10 percent interest rate thereafter and for determination 

### of reasonable attorney fees. The cause is remanded to the District Court for further proceedings in accordancewith this opinion.