Opinion ID: 1419385
Heading Depth: 2
Heading Rank: 2

Heading: Cost of Developing Remainder Lands for Highest and Best Use

Text: In Civil No. 17381, Don R. Cowell, the defendants' expert real estate consultant and appraiser, testified that as of August 13, 1965, the date of the taking, the highest and best use of a portion of the Campbell Estate lands situated along the Farrington Highway would be as a subdivision of one-acre farm lots. He further testified that as a result of the taking the remainder property had suffered severance damages in the amount of $255,170, attributable to loss of access to Farrington Highway and the water main running along it and to the unavailability for highest and best use of that remainder land on which a replacement access road would have to be built. These development costs, made necessary by the taking, would have the effect of depressing the market value of the tract as a whole, because [o]bviously, a purchaser buying this acreage to develop it to one-acre farm lots cannot afford to pay as much if he's got to install a road to serve his lots, as when if he had subdivided it right off the highway. Cowell testified that 94% of his severance damage estimate reflected the cost of constructing an access road, a figure which he obtained from an engineer, who was neither identified nor called upon to testify. Counsel for the state objected to the above line of questioning on the grounds that it called for the use of inadmissible hearsay and that it required implementation of the subdivision approach to severance damages, which this court disapproved in Hawaii Housing Authority v. Rodrigues, supra . The circuit court permitted the testimony and denied the state's subsequent motion to strike. Whatever its other defects, Cowell's testimony did not run afoul of the Rodrigues case. In arriving at a measure of severance damage, he merely testified concerning the effect of the taking upon the market value of the remainder property for its highest and best use. In Rodrigues, supra, 43 Haw. at 198, we quoted with approval from State v. Tedesco, 4 Utah 2d 248, 291 P.2d 1028 (1956) as follows: The test is not what the lots will bring when and if ... willing buyers [for each] come alone, but what the tract, as a unit, and as is, platted or not, and in whatever state of completion, will bring from a willing buyer of the whole tract. In State v. Chang, 50 Haw. 195, 436 P.2d 3 (1967), we permitted evidence of a condemnee's development costs to show enhancement of fair market value. There is no reason why we should not permit the use of such testimony to show diminution of fair market value. The fact that the development costs have not yet been incurred and that the subdivision has not been begun are immaterial, since [m]arket value is not limited to the value for the use to which the land is actually devoted, but it may have a potential use value. Hawaii Housing Authority v. Rodrigues, supra, 43 Haw. at 197 (emphasis added). The fact, however, that the defendants could properly introduce evidence relating to potential development costs is not dispositive of the state's claim that the circuit court erroneously permitted Cowell to rely upon the hearsay opinion of an anonymous engineer for 94% of his own opinion concerning severance damages. It is true that `witnesses having the necessary qualifications may give their opinions as to the value of property' and that the extent of such a witness' knowledge goes to the weight to be given such testimony rather than its admissibility. Territory v. Adelmeyer, 45 Haw. 144, 148, 363 P.2d 979, 982-983 (1961); State by Kobayashi v. Heirs of Halemano Kapahi, 48 Haw. 101, 114, 395 P.2d 932, 940 (1964). An expert witness may not, however, serve as a mere conduit for the hearsay opinion, the factual basis of which is not established through evidence, of another expert who does not testify when the expert who does testify lacks the requisite qualifications to render the opinion in his own right. State v. Wineberg, 74 Wash.2d 372, 383-384, 444 P.2d 787, 794 (1968); Dennis v. Prisock, 221 So.2d 706, 711 (Miss. 1969); Arkansas State Highway Commission v. Mahan, 249 Ark. 1022, 1023-1025, 463 S.W.2d 98, 99-100 (1971). [7] To permit Cowell to rely on an engineer's hearsay opinion as to the cost of constructing an access road would violate the rule that an expert's opinion cannot be elicited to supply the substantive facts necessary to support the conclusion. Hubbard v. Quality Oil Company of Statesville, Inc., 268 N.C. 489, 494, 151 S.E.2d 71, 76 (1966); Butcher v. Main, 426 S.W.2d 356, 359 (Mo. 1968). [8] We therefore hold that it was error to permit Cowell's testimony over the state's objection.