Court Opinion

ID: 7313358
Source: CourtListenerOpinion
Date Created: 2022-07-25 21:03:06.133493+00
Date Added: 2024-06-11T16:19:35.126922
License: Public Domain

Lane, J. A. D.
(dissenting). The State appeals from a condemnation award. The parties stipulated that the highest and best use of the land was for a nursing home on the lands. Before the taking the property owner had obtained construction and permanent mortgage commitments. There was testimony that the commitments were assignable and that the existence of the commitments would increase the value of the land. The trial court allowed the jury to consider the sum of $43,452 which represented part of the property owner’s costs in obtaining the commitments.
I agree that the jury could consider whether the existence of the mortgage commitments enhanced the value of the land and by what amoimt if there was proper evidence of the amount of such enhancement. The issue, however, is whether it was reversible error to allow the jury to consider the costs to the property owner of obtaining the commitments.
The objective of a condemnation award is to indemnify the owner for the loss of the property taken. Generally, the fair market value of the property taken is the basis for such an award. This value is measured by a price which would be agreed upon voluntarily between a hypothetical owner willing to sell and a hypothetical buyer willing to purchase at the *112date of the taking. Although this concept is somewhat indefinite, it has been held that with some flexibility it would best serve to attain the goal in condemnation proceedings of justice and indemnity in each particular case. State v. Gallant, 43 N. J. 583, 587 (1964); State Highway Com’r, State by, v. Burnett, 34 N. J. 280, 288 (1957); Trenton v. Lenzner, 16 N. J. 465, 476 (1954), cert. den. 348 U. S. 973, 75 S. Ct. 534, 99 L. Ed. 757 (1955). A determination of just compensation should reflect “[a]weighing of all of the factors which customarily enter into * * * purchase and sale negotiations.” Id. at 479.
It was not denied by the State’s expert that the value of the commitments would be an incentive to a willing buyer. However, here such value was not shown. Instead, the jury was instructed to consider the cost to the property owner of obtaining the commitments. While it is the property owner’s loss, not the taker’s gain, which is the basis for the measurement of compensation, not all losses suffered by an owner are compensable. United States ex rel. for Use of Tennessee Valley Authority v. Powelson, 319 U. S. 266, 281, 63 S. Ct. 1047, 87 L. Ed. 1390 (1943). Damages or costs of a speculative, uncertain nature are not compensable. Housing Authority, Clementon v. Myers, 115 N. J. Super. 467, 475, 476 (App. Div. 1971).
Excluded from a determination of just compensation are damages or costs incidental to the taking, such as loss to or destruction of goodwill, loss of profits or inability to relocate. The noncompensability of these losses has been justified on the grounds that their value is too speculative, remote and uncertain to accurately measure. Such losses depend upon various factors not attributable to the land. Although undoubtedly they would be considered in a sale, they furnish no reliable criterion for the determination of fair market value. United States v. General Motors Corp., 333 U. S. 373, 379, 65 S. Ct. 357, 89 L. Ed. 311 (1945); State v. Gallant, supra, 43 N. J. at 587; Port of New York Authority v. Howell, 59 N. J. Super. 343, 349 (Law Div. 1960), aff’d *11368 N. J. Super. 559 (App. Div.), certif. den. 36 N. J. 144 (1961). Trees, shrubs, topsoil, underlying stone, sand and gravel are considered component parts of the land but are not compensable separate and apart from the land itself. Separate valuations are collateral and contingent. Ringwood Co. v. North Jersey District Water Supply Comm’n, 105 N. J. L. 165, 169 (E. & A. 1928); Manda, Inc. v. Delaware, L. & W. R. Co., 89 N. J. L. 327, 329 (E. & A. 1916); Port of New York Authority v. Howell, supra, 59 N. J. Super, at 348; Ross v. Commissioners of Palisades Interstate Park, 90 N. J. L. 461, 467 (Sup. Ct. 1917).
Generally, it has been held that costs of moving industrial equipment are not compensable. State v. Gallant, supra, 42 N. J. at 587; American Salvage Company v. Housing Authority, Newark, 14 N. J. 271, 280 (1954); Port of New York Authority v. Howell, supra, 59 N. J. Super, at 349. See 27 Am. Jur. 2d, Eminent Domain, § 293, at 102 (1966); 29A C. J. S. Eminent Domain § 164 at 713 (1965). But see Housing Authority, Clementon v. Myers, supra,, 115 N. J. Super. 467. As an exception to the general rule, costs of reproduction are permitted only where there are no comparable sales available. State Highway Com’r, State by, v. Burnett, supra, 24 N. J. at 292.
The costs incurred by the property owner in obtaining the mortgage commitments were collateral and incidental to the taking of the land. They were highly speculative, depending upon the person making the application, the state of the money market at the time the application was made, the avaiiabilty of funds to the lending institutions and the judgment of the lending institutions as to the project planned The $43,452 represented commitment fees paid to the lending institutions and placement fees paid to the mortgage broker. It is speculative that a willing purchaser at the time of the taking would have sought financing through a broker or would have had to pay commitment fees. In allowing the jury to consider these costs as proof of the value of the mortgage commitments to a willing buyer at the time of the tak*114ing, the trial court allowed it to speculate on the possibility at the time of the taking it would have cost a willing buyer an equal amount to obtain the commitments and that, therefore, such willing buyer would pay that much more for the land. Such costs cannot be said to accurately reflect an increase in the market value of the land. City of Chicago v. Provus, 415 Ill. 618, 114 N. E. 2d 793, 795 (Sup. Ct. 1953).
If the testimony as to the costs of the commitments is properly admissible in this case, logically testimony as to the costs of site improvements installed in a subdivision prior to the taking wojuld be admissible. How far would such a principle extend? Could a property owner offer testimony of attorneys’ fees incurred in clearing title to the property? Where a portion or all of a subdivision is taken, could the property owner offer testimony as to the architectural and engineering fees incurred? I submit that a veritable Pandoras box will be opened by allowing testimony of such costs.
The admission into evidence of the $43,452 costs to the property owner and the charge allowing the jury to consider that figure were reversible errors.
I would reverse the judgment and remand the case for a new trial.