Court Opinion

ID: 9546016
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:23:41.508116+00
Date Added: 2024-06-11T15:15:53.948830
License: Public Domain

*111PHELPS, Justice
(dissenting).
The following dissent was written by Justice LEVI S. UDALL, upon slight collaboration with me. His untimely death prevented his signature hereto. I concur with it and adopt it in its entirety.
I am unable to agree with the majority in affirming the judgment of the lower court, as it is my firm opinion that a bad precedent is being established as to the admissibility of evidence in fixing damages. Admittedly it is a difficult task to adjust the rigid rules of law to the requirements of justice and indemnity in condemnation cases such as this. It is my view, however, that the courts must be realistic and not visionary in the judicial ascertainment of truth. For the reasons hereafter stated, I would unhesitatingly reverse the judgment with directions to grant a new trial.
To make my position clear it is necessary to better orient oneself with the existing facts in the area with which we are here concerned. The subject properties lie on the plateau just east of the Cochise-Pima County line on the Tucson-Benson Highway (U.S. 80). The small town of Benson (population 2,500) is some 7 or 8 miles to the East, and the large city of Tucson is approximately 40 miles to the West; and there are no “built up areas” in between.
These two defendants (Getzwiller and Jay Six) own a total of 6,360 acres in fee in their separate parcels; and Jay Six-controls an additional 3,000 acres on State leases. The total area taken from the two defendants in this highway condemnation action is 39.88 acres, comprising a narrow strip along the entire highway frontage of both defendants. As the majority has noted, there will be some impairment of access to the remaining land. The total award was $95,000.
Under the decision reached by the majority, defendants—the owners of these vast tracts of virtually unimproved ranch lands in an area where the highest existing use is an occasional service station, truck stop, or roadside tavern—are being allowed damages for the taking of some two and one-half miles of highway frontage on the basis of a front foot valuation for “investment” purposes (i.e., for ultimate commercial use). Also, damages for lands far removed from the highway have been granted on the theory that such lands have a-realizable value as residential homesites, this in spite of the fact that the only current occupants of the countryside are range cattle and a few ranchers and ranch hands.
How, we may ask, is such a result arrived at ? The answer is simple: several witnesses for the defendants were permitted, over the State’s vigorous objection, to declare their estimates of the selling price of the lands based on value for business and residential purposes. In reaching for the fair market value of the condemned property—properly based on the highest and *112best use for which it could be sold on the date of the commencement of the condemnation action—defendants’ witnesses were allowed to assume a present market for commercial and residential land in the area. If the assumption adopted by these witnesses is accepted, then exorbitant verdicts are inevitable. Neither the trial court nor the majority of this court questioned the assumption; the feeling seems to have been that if these experts said it was so, it must be so. From there, it was an easy and obvious step to admit evidence of value on a front foot basis as if there were a present market for this land on such terms.
In dissenting from this approach, it is my contention that the rules of admissibility of such evidence should be more strictly applied, for the protection of the condemner. All agree that a condemnee is entitled to receive compensation based upon the fair market value of his land for its then highest and best use. There is also unanimous endorsement of the proposition that the condemnation award may not be based on remote or speculative values. My point of difference with the majority is as to the means by which these two somewhat conflicting concepts may be distinguished, or, more specifically, as to how the jury may be given evidence of the highest and best use and still be kept insulated from speculative considerations. This is why the courts are required to warn the jury of “speculative yalqes”—to prevent it from taking witnesses’ predictions as if they were realities. In the instant case witnesses testified as to value for “investment” purposes. Considering the facts of this case, I take it that “investment”, in this context, is simply a euphemism for “speculation.”
At the trial below, witnesses for defendants were allowed to testify that the highest and best use of this two and one-half miles of highway frontage was for commercial “investment” purposes, and that for such purposes its market value was some $10 per front foot (estimates ranged from $5 per front foot for the less desirable frontage to $15 per front foot). Counsel for the State objected to the admission of such testimony and later moved that it be stricken. I believe that the trial court erred in denying such motions.
It should be noted that there were no sales anywhere in the area on a front foot basis, nor was there shown to be such a demand. ■All recorded sales were on an acreage basis. It is my understanding of the law that before evidence of “front foot” values could be admitted it would be necessary to first show that there was a market or present demand for such sites, or to show circumstances from which present market or demand could be reasonably inferred. In my opinion these requirements were not even remotely met; hence the expert witnesses called by the defendants to give their opinions as to values on a front foot basis were resting it upon nothing but spec*113illation and conjecture. The objection to this testimony should have been sustained; its admission certainly “tainted” the verdicts.
It is undoubtedly the law that a condem-’' nee may introduce evidence to prove that his property is then available for a higher . use than that to which he has devoted it—if the probability of such higher use has actually affected the fair market value of the condemned land. However, as a condition precedent to the admission of evidence of the value of the property for such higher use, the condemnee should be required to lay a foundation which will establish the competency of such evidence. This foundation is essential in order to exclude witnesses’ abstract notions of value and to limit the testimony to acutal market value.
The tenor of the testimony of these witnesses for the defense was that the highest and best use of the condemned property was for commercial purposes. I submit that this position is patently incredible. No witness testified that—at the time of the condemnation—anyone contemplated the actual erection of a commercial structure along that or other proximate areas of the highway. No witness suggested that, if the highway program had not intervened, an owner of frontage land in that area could —at that time or in the foreseeable future— have operated a remunerative business thereon. There is not the slightest showing that portions of this land far removed from the highway had a high use value for residential purposes then or ever. It seems clear that, whoever owned the land, it would remain unimproved for the foreseeable future, until such time as it became ripe for commercial exploitation. It is certainly unrealistic to award damages to defendant based on a two and one-half mile frontage when none of the evidence even suggests a use for commercial purposes except for occasional service stations located at intervals of several miles. This is speculation, pure and simple, and is no proper basis for a’ condemnation award. Having wholly failed to establish a current “highest and best use” of the land other than for ranching purposes, defendant should not have been allowed to introduce value testimony for other uses.
I Orgel on Valuation under Eminent Domain, 2d edition, § 31, “Speculative and Potential Uses and Values”, gives an excellent dissertation on the problem. I quote two excerpts therefrom, viz.:
“The courts have been at considerable pains to exclude from consideration those mere possibilities which they regard as so remote and unlikely that they could hardly enhance the price at which the property could have been sold down to the date of the trial.
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*114“The courts draw the line at the point where it can be said that a purchaser would actually buy the property for the use in question. An appraiser must be prepared to show that the uses which he considered could actually command a price in the market. íjí ‡ ‡ if
A reading of the following cases indicates the requisites of the foundation which should be laid, prior to admission of evidence of value for a higher use. Olson v. United States, 292 U.S. 246, 54 S.Ct. 704, 78 L.Ed. 1236; Hall v. Delaware, L. & W. R. Co., 262 Pa. 292, 105 A. 98; Whitcomb v. City of Philadelphia, 264 Pa. 277, 107 A. 765; A. D. Graham & Co. v. Pennsylvania Turnpike Comm., 347 Pa. 622, 33 A.2d 22; State v. Thompson, Tex.Civ.App., 290 S.W.2d 319; Arkansas State Highway Comm. v. Watkins, Ark., 313 S.W.2d 86; People v. Marblehead Land Co., 82 Cal.App. 289, 255 P. 553; City of Redding v. Diestelhorst, 15 Cal.App.2d 184, 59 P.2d 177; People v. La Macchia, 41 Cal.2d 738, 264 P.2d 15; Pruner v. State Highway Comm., 173 Va. 307, 4 S.E.2d 393; Sacramento Southern R. Co. v. Heilbron, 156 Cal. 408, 104 P. 979. The foundation should consist of a prima facie showing of:
(a) availability of the property for the higher use;
(b) adaptability to such use;
(c) reasonable foreseeability of such development ;
(d) a present demand for property devoted to such use in the area of the condemned property.
Measured by this yardstick, the evidence objected to in the instant case is fatally defective in that a showing of the fourth element—a present demand—is lacking.
The requirement of proof of demand is in accord with common sense and with the accepted practices of expert appraisers. We may, perhaps, take judicial notice of the fact that Arizona today is undergoing a significant expansion in population, commerce, and industry, as a result of which land speculation is rife. Under these circumstances, almost any land development or appreciation in value may seem “reasonably foreseeable” to some people. However, until an actual demand for the higher use of property appears—until the land becomes ripe for such development—the appreciation can only be speculative; and condemnation awards must not be based upon speculation.
The expert witness Klafter, who ap- . peared on behalf of the State, gave the following explanation for his refusal to take front foot valuation into account and for insisting that the lands in question be appraised as ranch property:
“Well, I have been taught in my appraisal and real estate experience, I *115have learned that property sells on an acreage basis when other property in the area sells on an acreage basis, and when an appraiser finds that other property sells on an acreage basis, he values the property he is appraising on an acreage basis. Appraisers don’t make value. Appraisers merely reflect what they find in the market place after searching the record to find out what other people have paid for property, supposedly informed buyers and sellers, and when property is— other property sells on a plot basis, like sometimes residential lots sell on a so much per lot or plot, appraisers value similar land on a plot or lot basis, and when an appraiser goes into the market place and he finds that other informed buyers and sellers are buying property on a per front foot basis, then he values property that he is appraising, if it is similar property selling on a front foot basis, then he values the property on a front foot basis in that area.”
I believe that such an approach must be followed if the integrity of judicial valuation procedures in condemnation cases is to be preserved. Testimony offered without a foundation showing of actual demand for the higher use should not be admitted.
The majority perfunctorily acknowledge that admission of value evidence of this nature requires a showing of demand. However, they fail to recognize the significance of the requirement, and the majority opinion sanctions the admission of such evidence with a wholly inadequate foundation. The purpose of the requirement is to exclude evidence of value which is purely conjectural, to limit the jury’s considerations to present realities. By their failure to exact compliance with this rule, the court below and the majority of this Court have allowed the jury to be sadly misled in their quest for “fair market value.” The majority suggest that a present demand for commercial highway frontage was established as a matter of fact by means of statements made by the witnesses in the course of their testimony. Such statements were incompetent for any purpose; they included: repetition of unsubstantiated and unaccepted offers to buy at $10 per front foot (specifically condemned in our unanimous decision in State v. McDonald, 87 Ariz. -, 352 P.2d 343; reference to inquiries having been made as to the availability of such land in the area (hearsay, and of no probative value whatever) ; allusions to tentative attempts to purchase land in the area (hearsay, and completely irrelevant since it does not appear that prospective buyers contemplated purchase on anything other than an acreage basis) ; and reference to out-of-court statements of builders and developers as to what *116might eventually have been done with the land had it not been for the condemnation (hearsay, and entirely conjectural). The majority take the position that, although direct evidence on each of these points is clearly inadmissible, still, they say, an expert may testify as to value with these assumptions as the sole basis for his conclusion of present demand. The logic of such an approach escapes me.
It has been held that an expert may not express his opinion unless he has facts to support his position. Board of Regents etc. v. Cannon, 86 Ariz. 176, 342 P.2d 207. It goes without saying that such facts must be capable of competent proof. An opinion of an “expert” which is supported only by rumor, hearsay, and other matters not admissible in a court of law should not be presented to the jury. The expert is accorded a favored position in the eyes of the law. He, and he only, is allowed to express his opinion on certain matters within the area of his expert knowledge. The rationale of this axiom is that the expert—due to his training and experience—is peculiarly well qualified to weigh the particular facts and to synthesize the knowledge of his field. However, where, as here, the “expert” opinion has no relation to provable facts, the justification for the admission of such testimony falls.
It is clear from the record that the jury must have based its award of damages to some extent upon the speculative evidence before it. Only two witnesses refused to indulge in the objectionable front foot valuations. The opinions of both these witnesses—one for the State (Klafter), and one for defendants (Solot)—assessed the damages at sums less than that which the jury returned in its verdict. Obviously, then, that verdict is tainted, and the judgment entered thereon should be reversed.
Aside from the admission of this incompetent evidence of value, another error committed by the trial court, in my opinion, also necessitates reversal and a new trial. The majority admit it was error—although they say it was not reversible—for the trial court to refuse to permit the State to cross-examine the defendants’ principal witness Fraesdorf on the appraisal made by him of the Jay Six property less than five months prior to the trial. To my mind this constituted reversible error, as it was the State’s one possible chance to nullify the damaging evidence of this key witness. In this respect, the majority opinion states:
“ * * * We conclude that such error was merely technical and harmless, however, for the reasons that such evidence, even for purposes of impeachment, was of slight probative force, * * * ” (353 P.2d at page 191.)
I cannot agree with this statement. I fail to see how the majority presumes to weigh the *117probative force of a document, clearly relevant on its face, the contents of which have never been made a matter of record. The relevancy of this appraisal report appears from the following facts: The purpose of this phase of the proceedings was to determine fair market value. It is conceded that the disputed appraisal report—prepared for federal estate and income tax purposes—purports to declare the fair market value of the Jay Six ranch for ranch purposes. The witness Fraesdorf had testified that the value of the Jay Six ranch before the taking was $426,484.50, for investment purposes, and that its fair market value after the taking—for ranch purposes—was $296,900.80. The State’s chief witness testified to the value before ($400,000) and after ($394,750) the taking—for ranch purposes. Thus it is readily apparent that the conflict between these experts revolved around one major point— the value of the Jay Six spread for ranch purposes. If any significant differential appeared between the value reported by Fraesdorf in his written appraisal and that to which he testified on the witness stand, his credibility would have been completely undermined. To deny the State this vital opportunity to destroy defendants’ case was certainly more than “technical and harmless” error. This alone is sufficient grounds for reversal. A new trial should be granted.