Opinion
6 Div. 908.
May 28, 1942. Rehearing Denied June 30, 1942.
Appeal from Circuit Court, Jefferson County; Richard V. Evans, Judge.
Proceeding by the Housing Authority of the Birmingham District to condemn real estate of J. B. Abney and Mrs. J. S. Abney, upon which Title Guarantee Loan Trust Company holds an unsatisfied mortgage. From a judgment fixing the valuation of the property condemned, petitioner appeals.
Reversed and remanded.
The following charges were refused to petitioner:
"X. The Court charges the Jury that the cost of the property in 1925 is not a proper factor in determining the market value of the property in June 1940."
"1-A. The Court charges the Jury that the test of the market value of the property is what it would have reasonably sold for in the market in June, 1940 and under the conditions then existing."
"4. The court charges the Jury that the test for determining the amount of compensation to which the owners of the property are entitled is the reasonable market value of the property at the time of the taking."
"6. The Court charges the Jury that the amount of compensation to be awarded is to be determined by the fair market value of the property."
The witness Whatley testified in effect that he knew what the property was worth after the subdivision, and was asked "What is your opinion?" The overruling of objection to this question is made the basis of the 9th assignment of error.
On cross-examination this witness was asked: "With a willing purchaser and a willing seller in June 1940, the value would have been $4500 to $5000, is that right?" Sustaining objection to the question forms the basis of assignment 10.
Respondents propounded this question to witness Smith: "How much loan did you make on the property on the 12th of April, 1927; the amount of the loan in other words?" The overruling of objection to this question is made the basis of assignment 12.
Petitioner's objection to the following statement of respondents' counsel in argument to the jury (assignment 13) was overruled: "It was common experience that mortgage companies lending money would not lend unless the property was worth fifty or sixty per cent above this value."
These charges were given at respondents' request:
"11. The court charges the jury that if you are reasonably satisfied from the evidence that the owner of the property involved in this proceeding could probably have sold it in June, 1940, but that the price at which the owner could probably have sold the property would not justly compensate him for his property, and that in order to justly compensate him for the property taken, it would be necessary for you to go beyond the probable sale price, and award a sum sufficient to put the owner in as good a position pecuniarily as the owner would have occupied, if the property had not been taken, then the court charges you that you should go beyond the probable sale price, and award such sum as would justly compensate the owner for the property taken."
"13. The court charges you that your duty under the law is to award the owners of the property involved in this case just compensation for the property taken, and, if after a fair consideration of all the evidence you are reasonably satisfied that just compensation calls for a larger sum than any probable sale price of the property in June, 1940, then you award just compensation, and do not confine or limit yourselves to any probable sale price of the property."
Exum Whitmire, W. H. Sadler, Jr., and Wm. L. Clark, all of Birmingham, for appellant.
The cost of property in 1925 is not a proper factor in determining either the market or real value in 1940. State v. Bienville Water-Supply Co., 99 Ala. 325, 8 So. 54; Illinois Cent. R. Co. v. Stewart, 265 Ill. 35, 106 N.E. 512; Lanquist v. City of Chicago, 200 Ill. 69, 65 N.E. 681; Davis v. Penn R. Co., 215 Pa. 581, 64 A. 774, 7 Ann.Cas. 581; Sullivan v. Missouri, K. T. R. Co., 29 Tex.Civ.App. 429, 68 S.W. 745; Harraway v. Harraway, 136 Ala. 499, 34 So. 836; Pratt Consol. Coal Co. v. Morton, 14 Ala. App. 194, 68 So. 1015. Where the entire tract is taken in eminent domain proceedings, the measure of compensation is the market value. Alabama Power Co. v. Carden, 189 Ala. 384, 66 So. 596; Dean v. County Board of Education, 210 Ala. 256, 97 So. 741; Jones v. New Orleans S. R. Co., 70 Ala. 227. Neither the desire of petitioner to condemn nor unwillingness of owner to part with the property is to be considered as an element of value. Alabama Power Co. v. Herzfeld, 216 Ala. 671, 114 So. 49; Central Georgia Power Co. v. Mays, 137 Ga. 120, 72 S.E. 900. It is error to admit evidence of the amount loaned, with mortgage as security, in 1927 on the issue of value of property in 1940. Alabama Great Southern R. Co. v. Loveman Compress Co., 196 Ala. 683, 72 So. 311; New York Underwriters Ins. Co. v. Mullins, 244 Ky. 788, 52 S.W.2d 697; Manning v. McClure, 168 Mo. App. 533, 154 S.W. 803. The value of land for a use to which it is not presently devoted may be considered on the question of market value but cannot be considered as the measure of compensation in eminent domain proceedings. Alabama Cent. R. Co. v. Musgrove, 169 Ala. 424, 53 So. 1009; Alabama Power Co. v. Berry, 222 Ala. 20, 130 So. 541; U.S. v. First Nat. Bank, D.C.Ala., 250 F. 299. Evidence that there was no market value for certain real estate does not justify the substitution of some rule pertaining to intrinsic value as distinguished from market value. De Moville v. Merchants Farmers Bank, 233 Ala. 204, 170 So. 756.
Horace C. Wilkinson, of Birmingham, for appellees.
Just compensation, as used in the constitution, is equivalent to the value of the property taken determined as of the time of the taking. If there is no market value, then the actual value may be proved. Orgel on Valuation, §§ 1, 10, 17, 18, 36, 37, 38, 45, pp. 1, 2, 3, 45, 60, 62, 121, 146; Monongahela Nav. Co. v. U.S., 148 U.S. 312, 13 S.Ct. 622, 37 L.Ed. 463; Seaboard Air Line Ry. Co. v. U.S., 261 U.S. 299, 43 S.Ct. 354, 67 L.Ed. 664; U.S. v. New River Collieries Co., 262 U.S. 341, 43 S.Ct. 565,
67 L.Ed. 1014; Cooney v. Pullman Palace-Car Co., 121 Ala. 368, 25 So. 712, 53 L.R.A. 690; So. Exp. Co. v. Owens, 146 Ala. 412, 41 So. 752, 8 L.R.A., N.S., 369, 119 Am.St.Rep. 41, 9 Ann.Cas. 1143; Birmingham Ry., Light Power Co. v. Hinton, 157 Ala. 630, 47 So. 576; Bromberg Co. v. Norton, 208 Ala. 117, 93 So. 837; Buerger v. Mabry, 15 Ala. App. 241, 73 So. 135; 2 Jones on Evi. 1318, § 703; 18 Am.Jur. 877, § 242; Elbert v. Brown, 16 Ga. App. 834, 86 S.E. 651, 652; Howell v. State Highway Dept., 167 S.C. 217, 166 S.E. 129, 130; Harrisburg, C. C. Turnpike Road Co. v. Cumberland Co., 225 Pa. 467, 74 A. 340, 341; State v. Suffield Thompsonville Bridge Co., 82 Conn. 460, 74 A. 775, 778. The cost to the owner is evidence of value. Warrant Warehouse Co. v. Cook, 209 Ala. 60, 95 So. 282; De Moville v. Merchants Farmers Bank, 233 Ala. 204, 170 So. 756; Kates Transfer Warehouse Co. v. Klassen, 6 Ala. App. 301, 59 So. 355. The existence of a fair market value is a question of fact on which opinions are not competent. 13 Ency.Evi. 510, § B; Cleveland v. Wheeler, 8 Ala. App. 645, 62 So. 309; Morris v. State, 25 Ala. App. 494, 149 So. 359. Conclusions of appellant's witnesses as to market value is shown to be without any basis in fact, and their testimony upon existence of a market value or price being without foundation constitutes testimonial nonentity. Cleveland v. Wheeler, 8 Ala. App. 645, 62 So. 309; Cincinnati, N. O. T. P. R. Co. v. Vredenburgh Saw Mill Co., 13 Ala. App. 442, 69 So. 228; Morris v. State, 25 Ala. App. 494, 149 So. 359; Curjel Co. v. Hallett Mfg. Co., 198 Ala. 609, 73 So. 938; Hoyle v. State, 23 Ala. App. 130, 122 So. 183; Peters v. So. R. Co., 135 Ala. 533, 33 So. 332; Hicks v. Burgess, 185 Ala. 584, 64 So. 290; Stockburger Bros. v. Aderholt, 195 Ala. 56, 70 So. 157; Aetna Explosives Co. v. Schaeffer, 209 Ala. 77, 95 So. 351; Hill Grocery Co. v. Ligon, 231 Ala. 141, 164 So. 219. There was no testimony that there was a willing purchaser or willing seller in 1940. Hypothetical questions having no basis in the evidence should not be permitted. Knowlton v. Central of Georgia R. Co., 192 Ala. 456, 68 So. 281; Zimmern v. Standard Motor Car Co., 205. Ala. 580, 88 So. 743. Alabama Great Southern R. Co. v. Cornett, 214 Ala. 23, 106 So. 242. Evidence that the property had never been placed on the market was pertinent. Howell v. State Highway Dept., 167 S.C. 217, 166 S.E. 129, 130. In this case loan value was provable. 22 C.J. 176, § 117; 2 Jones Evi., 2d Ed., § 701.
This is a condemnation proceeding instituted by petitioner, the Housing Authority of the Birmingham District (appellee here), against J. S. Abney and his wife seeking to condemn real estate owned by the respondents, a lot 50 feet by 190 feet situated in Birmingham, Alabama. Title 19, § 1 et seq., Code 1940; Title 25, §§ 4, 5, Code 1940, General Acts 1935, pp. 85 and 126.
Upon the trial of the cause in the Circuit Court the jury fixed the valuation at $7,350. Petitioner, insisting that the sum, from the evidence, was excessive, has prosecuted this appeal.
It was agreed between the parties that compensation was to be fixed as of June, 1940, and the only questions here presented relate to the matter of valuation, as the right of condemnation under the statute is unquestioned. Housing Authority of Phenix City v. Harris, 241 Ala. 419, 3 So.2d 54; Housing Authority of Phenix City v. Stillwell, 241 Ala. 420, 3 So.2d 55.
Petitioner insists the only rule applicable to this case on the question of "just compensation" was that which entitled the respondents to the reasonable market value of the property as of the month of June, 1940. As is well understood this is a general rule in cases of this character. "As a general rule the value of the property taken affords the measure of compensation. 'Value,' as used in this connection, is a relative term whose meaning depends on the circumstances; it ordinarily means market value, and hence the owner of the property taken is entitled to its market value, or the owner of property taken is entitled to its cash market value, fair market value, or fair cash market value, all of which expressions are substantially synonymous." 29 C.J.S., Eminent Domain, § 136, pp. 969, 970; 18 Amer.Jur. 875; Orgel on Valuation pp. 55-58.
Most generally our own Court has used the yardstick "reasonable market value". De Moville v. Merchants Farmers Bank, 233 Ala. 204, 170 So. 756, 761; Alabama Power Co. v. Herzfeld, 216 Ala. 671, 114 So. 49; Dean v. County Board of Education, 210 Ala. 256, 97 So. 741; Jones v. New Orleans S. R. Co., 70 Ala. 227. The expression "fair market value" appears to find favor in United States v. New River Collieries Co., 262 U.S. 341, 43 S.Ct. 565, 567, 67 L.Ed. 1014. But as above indicated such expressions are considered as substantially synonymous.
Petitioner offered a number of witnesses duly qualified as experts in real estate valuation whose testimony tended to show that this particular lot had a market value in June, 1940, and that its valuation was estimated between $3,500 and $4,200. Though upon cross-examination the testimony of these witnesses may show no sales of real estate in that particular block in which this lot is situated or perhaps the adjoining block, yet the proof indicates sales in that area which may properly form a basis by way of comparison for the market value of the property here involved. The suggestion of counsel for respondent, therefore, that the evidence of these witnesses may be treated as in the nature of a "testimonial non-entity" referred to in some of our cases (Hicks v. Burgess, 185 Ala. 584, 64 So. 290; Stockburger Bros. v. Aderholt, 195 Ala. 56, 70 So. 157) is inapplicable to the facts as here presented.
The property here in question was purchased in 1925 and since held by the respondents as original purchasers. The proof shows, and indeed it is a matter of common knowledge that during that period very high prices prevailed for real estate. The purchase price was $15,000 and the assumption of a $900 improvement assessment. Upon consideration, therefore, the matter of reasonable market value we think it appropriate that the Court should have charged the jury as requested in petitioner's refused charge "X", to the effect that this original cost of the property in this remote period was not a proper factor in determining the market value of the property in June, 1940. State v. Bienville Water-Supply Co., 89 Ala. 325, 8 So. 54. Likewise charge 1-A was improperly refused to petitioner. Dean v. County Board of Education, supra. We do not mean to indicate a reversal of the cause could properly be rested upon refusal of these two charges in the light of the oral charge of the Court. But we think it proper charges of this character should be given.
Nor does it require any argument or citation of authority to demonstrate the inadmissibility of testimony tending to show the valuation of the property as enhanced by the contemplated improvement as a consequence of the condemnation proceeding.
As we read the record the 9th assignment of error dealing with the question propounded to the witness Whatley on his further direct examination calls for such an opinion of valuation as a consequence of the subdivision.
The question asked by petitioner which forms the basis of assignment of error No. 10 addressed on cross-examination to the witness Whatley should have been permitted. It related to a proper factor to be considered in the matter of opinion valuation concerning market value, "a willing purchaser and a willing seller". 29 C.J.S., Eminent Domain, § 137, p. 974; 18 Amer.Jur. 876.
Nor do we think the respondent, J. S. Abney, should have been permitted to state that he had never placed the property on the market. Neither petitioner's desire to condemn nor the owner's unwillingness to part with the property is a proper subject matter of consideration. Alabama Power Co. v. Herzfeld, supra; Central Georgia Power Co. v. Mays, 137 Ga. 120, 72 S.E. 900; 18 Amer.Jur. 878.
It would appear from this record that the only effective purpose of this testimony was to show the owner's unwillingness to part with his property. Nor do we think the respondents should have been permitted to show by the proof and argue the question to the jury (assignments of error 12 and 13) that in 1927 the Title Guarantee Loan and Trust Company made a loan on this property of $8,000. By analogy the case of Alabama G. S. R. Co. v. Loveman Compress Co., 196 Ala. 683, 72 So. 311, is in point and sustains this conclusion.
Counsel for petitioner insist that under the evidence in this case the reasonable market value in June, 1940, is the only rule by which the jury can be guided in fixing "just compensation" to the owners. In the statement of their case, however, it appears to be conceded that evidence offered by respondents was to the effect there was no fair market for the property in June, 1940, and that the actual or intrinsic value was from $12,500 to $20,000. A careful reading of the record sustains this view.
Witness Whatley for the respondents, with many years of experience in real estate stated on his direct examination that it was his opinion there was "no market value at all for anything up in that section. That is my opinion and experience, and personal knowledge". True when this witness was afterwards recalled his cross-examination indicated his opinion that the market value in June, 1940, was $4,500 or $5,000 and rendered less effective his original testimony on this question. Yet a consideration of his testimony was for the jury and the witness M. G. Abney, a brother of respondent J. S. Abney and the agent who negotiated the sale, testified in effect that this property and property in that section had no market value. He stated "that the property did not have a fair market value at that time". There was, therefore, supporting evidence for the jury's consideration to the effect that this property was without reasonable market value in June, 1940.
Upon the theory of no market value, therefore, other elements are to be taken into consideration, such as original cost, improvements on the property, the rents, the adaptability for future use and enjoyment and the opinion of witnesses in position to have a correct judgment as to value. De Moville v. Merchants Farmers Bank, supra; Orgel on Valuation §§ 37 and 38; United States v. New River Collieries, supra; State v. Bienville Water-Supply Co., supra; 29 C.J.S., Eminent Domain, § 136, p. 972.
Upon the theory of no market value respondents were entitled to show the original cost of the property, the rental, the improvements including the street improvement assessment assumed by the purchaser, and the actual or intrinsic value of the property to the owner in the light of his anticipated use in connection with the business he had been operating elsewhere for years.
Objections to this character of proof (assignments of error 1 through 9) were not well taken. In view of this theory of the case charges 6 and 4 requested by petitioner (assignments of error 16 and 19) were properly refused. But charges 11 and 13 given for respondents (assignments of error 21 and 22) were erroneous and should have been refused.
When it is considered that the owners of this property paid $15,000 for the lot in 1925 and that this fact, in connection with other expenditures, was properly before the jury upon the theory of no market value, we think these charges were properly interpreted by the jury as instructing them to reimburse the owners, at least in a large part, for their outlay notwithstanding the property had a reasonable market value. In short, as we view these charges, they authorize the jury to disregard the proof that this property had a reasonable market value.
But as we have observed, if the jury was of the opinion the property had a market value, these elements of original cost and the like were to be left to one side, and were to be considered by them only in the event their finding was to the effect there was no market value. The two theories were to be kept separate and distinct and the first duty of the jury was to determine the pivotal question as to whether or not in June, 1940, the property had a market value. Under the evidence, therefore, charges of this character which ignored the theory of a market value were prejudicially erroneous.
What has been said should suffice for another trial of the cause.
For the errors indicated the judgment must be reversed.
Reversed and remanded.
THOMAS, BROWN, and FOSTER, JJ. concur.