Opinion ID: 1783747
Heading Depth: 1
Heading Rank: 3

Heading: the trial court erroneously refused to consider the valuation of defendants' appraisers.

Text: On appeal, the landowners do not challenge the authority of the City to condemn the property. However, the trial court's failure to admit evidence of comparables which would support the landowners' appraiser's opinion regarding valuation is contested. Once admitted into evidence, the court, as fact-finder, could accept or reject the evidence of comparables in resolving the issues. But, in the case sub judice, the trial court, by not allowing the landowners to put the testimony of expert appraisers into evidence regarding sales of lots for single-family residences, thereby prevented the landowners from substantiating their valuation and appraisals with comparables. Consequently, the landowners' evidence, which would have provided an alternative valuation for consideration and which may have refuted the City's valuation testimony which was supported by comparables of distant agricultural sales, was excluded from evidence by the trial judge. Upon deliberation by the trial judge, the competing valuations and the credibility of the evidence supporting them would have been properly considered, resulting in one being accepted and the other rejected by the trial judge. But here, the trial judge restricted the evidence which he should have considered in rendering his decision to only the City's valuation and supporting evidence, resulting in only one valuation choice, based upon the evidence which was admitted at trial. During the trial, the lower court judge simply confused the admissibility of the valuation and supporting comparables of the landowners' appraisers with the credibility of such evidence which should be considered in reaching a decision on the merits.
As to valuation and the considerations inherent in such a determination, we have previously stated: [V]alue is in large part a function of the earnings one might reasonably expect from prudent use, and so future profitability is a major factor our knowing and willing buyer and seller will sensibly consider before settling on a sales price. .... ... In seeking value, we assume that our rational, wealth-maximizing buyer and seller will inform themselves of various uses of the property and will trade by reference to the most profitable use. Potters II v. State Highway Comm'n, 608 So.2d 1227, 1232-33 (Miss. 1992). Furthermore, in establishing and supporting an expert's valuation, and applicable in the case before us, we have observed that: Here two principles are at odds with one another. An expert witness by definition will be familiar with the types of theory and data on which he ought rely in giving his opinion. See Rules 703, 705, Miss. R.Ev. When, as here, an expert witness opines that certain factors have to be considered in order to properly establish fair market value, we necessarily accord the expert substantial discretion. Attacks upon his foundational opinions often confuse admissibility with credibility. Id. at 1234, n. 7. The City offered an expert who used comparables consisting of land outside the city limits, up to eleven miles away, and zoned for agricultural use, not R-2. In contrast, the landowners offered an expert who used comparables of land located within the city limits which was zoned R-2, and which the expert opined was comparable to the land in question. The City complained that the landowners' comparables were in developed subdivisions and in more desirable areas. Without allowing the expert to make appropriate adjustments for location and differences, the court excluded the landowners' comparables.
It has been the long-standing rule in Mississippi that evidence of the sale price of similar property is admissible in eminent domain proceedings. Pearl River Valley Water Supply Dist. v. Wright, 203 So.2d 69, 71 (Miss. 1967). See also Pearl River Valley Water Supply Dist. v. Wood, 252 Miss. 580, 172 So.2d 196 (1965); Mississippi State Highway Comm'n v. Rogers, 236 Miss. 800, 112 So.2d 250 (1959); Mississippi State Highway Comm'n v. Daniels, 235 Miss. 185, 108 So.2d 854 (1959). Further, we have held on prior occasions that parties may properly rely on the use of comparable sales in establishing the value of property, and we do not require the comparable sales to be identical in every respect. Howell v. State Highway Commission, 573 So.2d 754, 757 (Miss. 1990) (citations omitted). At trial, the City's expert testified that, although the property was located within the city limits and it was zoned R-2 for residential use, it was not currently under development. Therefore, according to the City, the highest and best use of the property was for agricultural purposes, not single-family residential use. We have held that the potential for development is a factor to be considered in deriving the value of property. Paulk v. Housing Authority of City of Tupelo, 204 So.2d 153 (Miss. 1967). See also Mississippi State Highway Commission v. Wagley, 231 So.2d 507, 509 (Miss. 1970). And, as stated in 5 Nichols, The Law of Eminent Domain ¶ 18.05[3] (1994), the owner may introduce evidence of the highest and best prospective use even though he has no plans to sell the property or utilize it for that use. Therefore, it was not appropriate for the trial judge to exclude the comparables of developed property from admission into evidence merely on the basis that the landowners' property had not yet been developed. The trial judge erred in excluding the landowners' appraisal and supporting comparables, but that error was compounded by the trial judge's admission into evidence of the City's valuation of the landowners' property. Although the expert for the City testified that about fifty percent of the subject property was unsuitable for farming, the City, nevertheless, based its valuation upon the contention that the highest and best use for the property was for agricultural use. As we have previously stated: [T]he property must not be evaluated as though the rezoning were already an accomplished fact. It must be evaluated under the restrictions of the existing zoning and consideration given to the impact upon market value of the likelihood of a change in zoning. Mississippi State Highway Commission v. Wagley, 231 So.2d 507, 509 (Miss. 1970) (emphasis in original). In admitting the City's valuation, the trial judge ignored the fact that the existing zoning restrictions established the legal parameters for evaluating the property, and that the landowners' property was zoned for R-2, single-family residential use, not for agricultural use. Consequently, since the subject property was zoned R-2, it should have been evaluated under the restrictions of R-2 zoning with consideration given to a potential change in zoning. However, the City's appraisal evaluated the landowners' property as if it had been rezoned for agricultural use.