Court Opinion

ID: 7818398
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:44:53.20663+00
Date Added: 2024-06-11T16:30:39.999052
License: Public Domain

John A. Fogleman, Justice, concurring. Once again I feel compelled to say, as I did in my concurring opinion on the first appeal, that the court is applying an improper standard in determining substantiality of expert opinion evidence on the market value of real estate. What I said in that opinion on this score I reiterate. Little involved on this appeal can be said to be controlled by the law of the case on the first appeal. The witness whose testimony was then treated did not testify at the second trial. Pearce used entirely different references to arrive at the opinion he expressed on this trial. The expert witnesses dutifully avoided consideration of sales which this court said were not comparable as a matter of law. One of these was on Highway 65, but this court said in the earlier opinion that the purchase was speculative. The others were eliminated because they were located in a small area that had already been developed to commercial use along another highway where traffic was nearly double that on Highway 65, upon which appellees’ property is located. A new approach to comparable sales was taken by Pearce and by Judge Roberts in the second trial. James Larrison, who testified at the second trial, did not testify at the first one. He did give regard to the inhibitions of the majority opinion on the first appeal. These witnesses endeavored to use other sales and to show in what respects the lands differed and the adjustments necessary to compensate for the differences. Unless the witnesses are permitted this latitude this case will never be terminated or the compensation due the property owner never determined unless he agrees to accept some arbitrary figure at which we may arrive with even less substantial foundation than the testimony of any of the witnesses. The reason is that no witness has yet produced a valuation based upon a sale of lands actually comparable under the strict test of similarity being imposed by the majority. It is strange to me that the majority can concede, as it does, that, strictly speaking, Judge Roberts is correct in his statement that, on the date of taking, this property was the only property in the city limits relative to size, topography, location and utilities that could be developed in the manner stated as its highest and best use, i. <?., commercial development .along the highway and multifamily residential on the rear, and then apply such a strict rule in testing the basis of expert opinion evidence. The same strict test would totally eliminate from consideration sales of those tracts the majority finds almost in the same category. Those tracts were similar only in size and proximity in one case and proximity only in the other. Yet, for valuation purposes they might as well have been miles away. The Berry to McCracken and Wilson sale involved property just across the highway from the subject property. Neither Pearce nor Larrison considered it because both considered the sale date of November 30, 1961, too remote. Is the majority saying this qualified expert is wrong as a matter of law? Time of sale is one of the important considerations in determining pertinence of sales date. See Annot. 118 A. L. R. 869, 887 (1939); 85 A. L. R. 2d 110, 149 (1962); 27 Am. Jur. 2d 33Í, Eminent Domain, § 429. Larrison testified that, while there is other land all along the highway, it would be difficult to develop because the terrain varies so sharply, and in addition it was not similarly situated as to availability of utilities. Utilities were admittedly not available to the Berry tract at the time of the sale. It consisted of 16 acres, not ten. Property south of the highway dropped off so sharply in elevation it was said to be difficult to develop. Every one of these dissimilarities would inevitably result in a much, much lower market value than that which would otherwise prevail. I am astounded that, under the strict standards stated by the majority, it can say that the adjoining 10-acre tract is almost in the same category as the property involved. Perhaps this treatment arises from its considering the property as if it were “on Highway 65.” The nearest any witness comes to placing this tract on this highway is the statement that it “corners” on the highway, which I submit may or may not be true when all the testimony and exhibits are considered. It fronts on a gravel street. It does not take an expert to know that, insofar as value for commercial development is concerned, it might as well be at least a mile away. Appellant’s expert admitted the importance of highway frontage for commercial development. One of appellant’s witnesses called this sale very comparable “to a degree.” There is a conflict in the testimony as to whether that property has been zoned. There is at least some question as to whether true consideration for the sale is shown when a developer trades a house or other building for land. In other words, the builder might be willing to forego his profit (and the potential tax liability) in order to obtain land for which he might well be willing to pay an even higher cash price. But, as I see it, these similarities and differences are matters that should be determined: first, by experts whose knowledge, training and experience qualify them to have opinions in such matters; second, by the trial judge who must exercise discretion in deciding the appropriate latitude to be allowed the experts in comparing sales under conditions prevailing in the vicinity of the property and the nature, characteristics and highest and best use of the property involved; and, third, by a jury properly selected and impaneled. This court should engage in weighing “comparability” by viewing similarities and dissimilarities and their effects only when there has been a clear abuse of the trial court’s discretion. In spite of the esteem in which I hold my brethren and the great respect I have for them and their many talents and great knowledge, I do not feel that any of us is as well positioned to make these determinations as are the experts who actually live in the real estate market place, the trial judges who have the responsibility for determining the qualifications of the experts and the latitude which must be. given them under prevailing market conditions in the particular locality or the jury, which is to judge weight and credibility. If this court progressively eliminates from consideration sales we decide are not comparable it will soon be demonstrated that there are no sales of lands comparable to appellees’ under such strict standards. I would refer the majority to a statement appropriate to this particular situation in 4 Nichols on Eminent Domain, Third Edition, 94, § 12.311[3], where it is said: It must be remembered, howevei, that the comparison is made with lands which are similar to the land taken. Of course, since, in fact, no two parcels are exactly alike, only such parcels may be compared where the dissimilarities are reduced to a minimum and allowance is made for such dissimilarities. It is, therefore, imperative to consider such differences as may exist in the physical and environmental conditions and a proper allowance made to cover any differential that may exist by virtue of the difference in the time of the sales. It is evident that there may be considerable difference in the size, shape, situation, and immediate surroundings of two estates, and perhaps in other respects, and yet the price which one brought may be of substantial assistance in determining the value of the other. There may be general considerations applicable to both alike which largely affect their value and render it proper that the price paid for one should be considered in arriving at the value of the other, nothwithstanding the differences between them. No useful purpose would be served by my detailing each of the specific similarities and the various factors appellee and his witness enumerated. I think the majority, in declaring sales relied upon by appellee and his witnesses not comparable as a matter of law, has overlooked important evidence in the case, which at least leaves a question of fact having a great bearing upon the proper latitude to be allowed expert witnesses in making comparisons. The highest and best use of the* property is one of these factors. Some othérs of which' there was at least substantial evidence are:. 1. The ability of anyone traveling by automobile to reach any other place in the city within five minutes. 2. The proximity of commercial developments on the highway east of the property. 3. The availability of the property for 110-135 units for multifamily residential purposes. 4. The demand for 360 such units in Conway. 5. The unavailability of other tracts for this use, making this property unique because of zoning, availability of utilities, etc. . Because of these factors it was only natural that value witnesses consider properties that were bought and sold for development for multifamily residence use and for highway commercial use, making appropriate adjustments for dissimilarities. The necessity for making appropriate deductions because of certain dissimilarities in certain sales and appropriate additions because of other dissimilarities in others is so usual and obvious that I cannot see why it should prove confusing in this case. Nor can I understand where there is anything unusual about finding that availability of the back part of the property for multifamily residences added to, or even created a demand for, commercial sites on the highway frontage which would affect its value. It is an obvious fact that suburban and perimeter development property is being purchased and developed on this premise every day in almost every city in America. The desirability of this type of housing in a complex including small shopping centers has even presented a problem to those seeking to preserve downtown business centers. We can’t be blind to this established fact accompanying the urbanization of our society. I will have to agree that the case must be reversed. The witness Larrison virtually admitted that, in his opinion, those sales along Highway 64 to which he gave great weight in evaluation of the Roberts highway frontage were almost exactly like the sales which the court held noncomparable as a matter of law on the first appeal. Under the law of the' case, this deprives his testimony, as to that part of the land, of substantial support. Furthermore, it seems to me that the witnesses once again failed to satisfactorily explain the extent of the effect of various factors upon market value. When a witness says that by making various adjustments for factors which he enumerates, he arrives at a value of $156 per front foot, it is hard to comprehend how he can then arrive at a value of $110 per front foot, as did Pearce, on the property taken. Pearce also failed to explain how he came to the conclusion that the property was worth $148 per front foot, or 88% of the value of the sale by Rogers to Farmers Fire Insurance Company, except to say that it was based on adjustments for time, location, traffic, topography, physical characteristics, utilities, size and shape, highest and best use, access to the property and neighborhood and surrounding property. The fact finders had no way of knowing how much of this difference was attributable to time or any other one of the factors for which he made adjustments, or how he arrived at the adjustment for any one factor. Certainly, the expert witness did allocate some definite figure to ¿ach one of the factors and had some process of reasoning for his allocation. Why did he not come out with 87% or 89%, for instance? The same infirmities appear with reference to sales influencing Pearce’s decision as to value of the remainder of the property. How did he adjust values, e. g., from 54 cents per square foot to 14 cents per square foot, or $750 per unit to $550 per unit, or an average of 49 cents per square foot, or $800 per unit or $26,000 per acre to 14 cents per square foot or $350 per unit or $6,050 per acre? The only explanation I find is that the difference of $450 per unit would “take care of the minuses” by allowing $49,500 (based on 110 units) for street and land work and earth work that would be required on the Roberts property. Yet he does not say how this relates to cost of the work or give any other reason for arriving at the figure of $450. Larrison also said that his difference of $400 per unit would balance out the minuses by allowing $4,500 per acre for site preparation and service drive. Larrison also detailed the dissimilar factors connected with the commercial sales and said that some of these lands were better and some were worse than the Roberts land. He said, “All these percentage factors were added up and applied to the unit value paid for each of the comparable properties and then by multiplying percentage factors by the unit price paid for each of the sale properties, you come up with the adjusted value of the subject property by comparison.” Yet he also failed to explain the percentage used with reference to any factor or to demonstrate how even one such calculation was made. Judge Roberts testified that he used essentially the same sales as were used by his expert witnesses as the basis for his valuation of $129,750. I have reservations about the offer of a remittitur. However extensively the record is examined, there just isn’t any evidence showing a value of 50% of the judgment rendered, nor is there any attempt made by the majority to demonstrate how this figure was reached. Since appellees have an option in the matter, I do not see that they are harmed. Accordingly, I will merely refer to the reservations expressed in my separate opinion in Arkansas State Highway Commission v. Carruthers, 246 Ark. 1035, 441 S. W. 2d 84.