Arkansas State Highway Commission v. Dean

425 S.W.2d 306, 244 Ark. 405, 1968 Ark. LEXIS 1361

• Court: Supreme Court of Arkansas
• Decided: March 18, 1968
• Docket: 5-4269
• Status: Published

Opinions

J. Feed Jones, Justice.

This is a condemnation case arising out of the construction of Interstate 40 through Conway, in Faulkner County, Arkansas. By right of eminent domain, the state highway commission condemned a right-of-way across property belonging to appellees on the outskirts of Conway. Judgment was entered by the Faulkner County Circuit Court on a jury verdict of damages in favor of the appellees in the amount of $41,-500.00, and the commission has appealed.

Appellant has designated the following points relied upon for reversal:

“The trial court erred in refusing to disqualify himself, and in refusing to quash the jury panel.

The trial court erred in refusing to give plaintiff’s (Appellant’s) requested Instruction No. 10.

The trial court erred in refusing to give plaintiff’s (Appellant’s) requested Instruction No. 8.”

The record before us reveals the following facts: Prior to 1957, a study was made by the Arkansas Highway Department of a route for Interstate 40 Highway through Faulkner County. A proposed route east of Conway was surveyed and traced on county maps in 1956, and this route was recommended when the study was completed in 1957. In 1958, the proposed highway and the proposed route through Conway were discussed by officials of the highway department with the citizens of Conway at a public Chamber of Commerce meeting. Following this meeting, the Children’s Colony north of Conway requested a change in the proposed alignment of the highway in order to miss some of the improvements at the Colony, and this change was made. The final survey for the alignment of the highway was completed in 1959, and the county and city maps, showing the proposed designated route, were brought up to date. In 1963, strip maps of the proposed highway right-of-way were furnished to Mr. Ott, a title abstracter in Conway, and on the basis of these maps he furnished requested title information to the highway department on land along the proposed route. About February 1, 1964, the highway department started gathering sales information and making actual appraisals of the property to he condemned. The center line stakes for Interstate 40 ivere finally set by the highway department in February 1965, and actual negotiations for the purchase of right-of-Avay from the owners along this route were commenced in May 1965.

When the highway department actually started negotiating with property owners for the purchase of rights-of-AYay, other negotiations had already been under way for some time for highway frontage along the same route staked out by the highway department. On January 21, 1965, Continental Oil Company had taken three separate options to purchase nine lots adjacent to the right-of-way for the total price of $85,000.00. In January or February 1965, appellees were negotiating for the purchase of 47 acres of the land involved in this case from C. T. Bay, and Mr. Ott was their chief competitor. Mr. Ott was successful in obtaining an option to purchase this land for $137,500.00. On March 11, 1965, Pure Oil Company took an option to purchase from Mr. Ott, 12.9 acres of this land extending 1185 ft. along the right-of-way line of Interstate Highway 40, for the purchase price of $110,000.00, and Mr. Ott warranted to the Oil company that the exact description of the land involved was to be as described and as shown on attached strip map prepared by the highway department. Then on March 31, 1965, Mr. Ott exercised his option to purchase from Bay, and on the same day sold this land to ap-pellees for $10,000.00 more than he paid Bay for it. The sale from Ott to the appellees was subject to the option held by the Pure Oil Company.

As to this purchase, appellee Henry testified:

“In either late January or early February, 1965, Mr. Dean and I began negotiating Avith Mr. Bay to buy his property. We were finally successful in buying it, but not from Mr. Ray. We had to buy it from Mr. Bob Ott, because Mr. Ray had sold it to Mr. Ott. In talking to Mr. Ott about it, Mr. Ray told him that we were interested in it too. He told us there was an option on this 13 acres on the west side to Pure Oil 'Company for $110,000.00, that he had signed it and he gave me a copy of it, * * *.

Q. Mr. Henry, do you know anything about the Ott purchase of the Ray property — what has been referred to as the Ray property?

A. Yes, sir.

Q. Did he purchase that under contract first and then get a Deed, or how was it, or do you know?

A. I believe he had an option at first.

Q. To buy it from Mr. Ray?

A. Yes.

# *

Q. Do you know that this option preceded Mr. Ott’s option to Pure Oil?

A. Yes, sir. It did.

Q., And then subsequent to optioning it to Pure Oil, the property was then deeded to him. Is that correct ?

A. Yes, sir.

Q. And on that very same day he deeded it to you and Mr. Dean?

A. Yes, sir.

* # #

Q. Did you know how much Mr. Ott had paid for the property when you purchased it?

A. Yes, sir, we sure did.”

The Bay property, which appellees purchased from Ott, lies on both sides of the right-of-way line for Interstate 40. The main body of this tract is square in shape and was landlocked except for a strip containing eight or nine acres, less than two city blocks in width and about two blocks in length, extending south from the southwest corner of the main body to Highway 64. All of this strip is west of Interstate 40 right-of-way. Immediately east of the main body of the Ray tract, Helen R. Collier owned a 39 acre tract of land. This land lies in an approximate square shape and joins the Ray tract along the west side of the Collier tract. The Collier tract lies north and east of the Interstate 40 right-of-way and north of Highway 64. It was landlocked by the Ray tract on the west and by other land on the other three sides and was without access to Highway 64. The interchange-right-of-way from U. S-. 64 to Interstate 40 cuts across the southwest corner of the Collier tract and the right-of-way continues from where it crosses (overpasses) Highway 64 in a northwesterly direction and diagonally through the Ray tract.

Prior to March 1965, the highway department started negotiating a contract for the purchase of this right-of-way from Helen L. Collier. The contract was first made for the purchase of this right-of-way on May 11, 1965, and although this contract was dated February 16, 1966, it was proofread on March 2, 1965. On April 5, 1965, following the purchase of the 48 acre tract from Mr. Ott by appellees, Mrs. Collier offered to sell to ap-pellees for $500.00 (later raised to $600.00) per acre that portion of her 39 acre tract which she had not already agreed to sell to the highway department. On this point Mr. Henry testified:

“A. ***TWe went out there and talked to her, and she told us what she would sell us and what she would sell it to us for.

Q. And what did she say?

A. She said, ‘I’ll sell yon the back part, everything that’s north of the highway stakes.’

Q.. Everything that’s north of the hig’hway stakes for Interstate 40?

A. Yes.”

Appellees purchased this Collier tract for $600.00 per acre and the deed was delivered on May 14, 1965. Negotiations for purchase of rights-of-way were suspended by the highway department on May 13, 1965, and the landowners weré advised of the suspension on May 14. The highway department later resumed negotiations for the purchase of right-of-way and finally closed the transaction with Mrs. Collier on March 2, 1966, by paying her $62,150.00 for .8.15 acres actually taken for right-of-way.

As to appellant’s first point, there was some evidence in the record to the effect that the trial judge owned an interest in property subject to condemnation for Interstate 40 right-of-way in' a separate action, and appellant contends that he should have disqualified in the trial of the case at bar. There also was some evidence that newspaper articles had been published pertaining to the trial judge’s interest in similar litigation in another case in which he did disqualify, and appellant contends that the jury panel should be quashed. There was no evidence, or anything else, on either of these points abstracted by the appellant, as required by Rule 9 (d) of this court, so we find no error in the trial judge refusing to disqualify in the present case and in refusing to quash the jury panel.

We dispose of appellant’s third point, as to its instruction No. 8, before considering its second point. Appellant’s requested instruction No. 8 is as follows:

“You are instructed that the defendant had a duty to minimize the damages that they might sustain by virtue of the taking hy the Highway Commission, and to that end yon are instructed that if you find that certain acts could have been done, or certain arrangements could have been made by the defendants that would have lessened the damages suffered by the defendants, then they are not entitled to claim those elements today, and you will disregard any element of damages claimed by these defendants for such items as they might have corrected or eliminated.”

In connection with their proof on severance damages, appellees offered evidence that the cost of extending a sewer line across the right-of-way from appellees’ property on the west and south side of Interstate 40 to their property north and east of Interstate 40, would be considerably more ($540.00 per acre) since the construction of Interstate 40 than it would have been before actual construction, and this evidence was submitted to the jury along with the other evidence of damage. This additional cost was in connection with driving or “jacking” a conduit under the highway without interfering with the use of the highway. There was also evidence offered by appellant that the Children’s Colony did, and the appellees could have, mitigated this cost by constructing the conduit for a sewer across the right-of-way after it was acquired and before actual construction was begun, thus greatly mitigating their damages on this item. We conclude that under the evidence on this point, appellant’s instruction No. 8 should have been given and that the trial court erred in refusing it.

The appellant’s second point has given us considerable difficulty and no little concern. Appellant’s requested instruction No. 10 was as follows:

“You are instructed that in your deliberation you are not to consider the property known as the Collier tract, either so far as damages are concerned, or as benefits are concerned, said tract being purchased by the defendants with knowledge of the fact that the possible taldng by the Highway Commission would leave the Collier Tract without access and cut off.”

A great deal of the testimony was directed to the question of whether or not the appellees knew that the highway would be built across their land when they purchased it. They more or less admit that they knew that some of their land would be landlocked by the highway if it was built in the place it was built, but they deny that they Tmew where the highway would be built when they purchased their land.

On this point Mr. Henry testified:

“Q. And when did you say you got the Deed to the Bay property?

A. On March 31, 1965.

Q. Was your transaction with Miss Collier a one day affair, or had you previously agreed to purchase the property from her?

A. It took over a month to wind up the transaction.

Q. So that actually you had agreed to purchase it at some time prior to the actual date the Deed was delivered, is that right?

A. That’s right.

Q. Mr. Henry, in Opening Statement counsel for the Highway Commission stated this property was purchased with your knowledge that the highway would go through there. Will you tell us what knowledge you had at .the time you purchased this property of any location of this Interstate 40?

A. I had no knowledge whatever of any definite location. I knew that a number of surveys had been run, but from general knowledge.”

Common sense is not to be completely abandoned by a trial jury, a trial judge, or this court on appeal, in estimating the extent of knowledge derived from established facts and circumstances.

If Mr. Ott did not know where Interstate 40 would be built when he took his option from Mr. Ray, he obviously thought he knew when he warranted its location in the option he sold to the Pure Oil Company on March 11, 1965, and subsequently assigned to appellees.

Appellee, Ray, testified that he knew there had been other property purchased by the highway department for right-of-way for Interstate 40 both north and south of the property he purchased from Mr. Ott before he purchased the property from Ott. Appellees purchased the Ray tract from Ott subject to the Pure Oil Company option (with the strip map attached). They knew that Mrs. Collier was only selling “everything that’s north of the highway stakes for Interstate 40” when they purchased it. So it is obvious to us, from the record in this case, that if appellees did not know Interstate 40 would cross their land when they purchased it, they were certainly unreasonable if they assumed that it would not.

In the recent case of Arkansas State Highway Commission v. Griffin, 241 Ark. 1033, 411 S. W. 2d 495, we adopted the general rule from Nichols on Eminent Domain, Third Edition, 1962, Volume 4, Section 12.3151, pages 201-204, stated as follows:

“The general rule is that any enhancement in value which is brought about in anticipation of and by reason of a proposed improvement is to be excluded in determining the market value of such land, although there is some authority which, contrariwise, unqualifiedly allows recovery for such enhanced value.”

In the Griffin case we then said:

“While, as pointed out, there is some authority to the contrary, we like the logic of the general rule, and align ourselves with those who have adopted that view.”

In arriving at the true value of land taken and the damages to the land not taken, both sides, the landowner and the condemnor, obtain the services of readily available professional appraisers, all of them well versed in the three appraisal methods, all of them using the same approach, most of them licensed realtors of long experience, and all of them experts in land values.

Appellees argue that by constructing Interstate 40 across the 47 acre tract they purchased from Ott, the appellant has damaged their remaining property outside of the right-of-way in that the part of the 47 acre tract north and east of Interstate 40, and all of the 39 acre tract purchased from Collier, have been severed from that portion of the 47 acre tract lying south and west of Interstate 40, and from access to sewer connection and to Highway 64 at the southwest corner of the 47 acre tract. These were principal elements the expert witnesses took into consideration in arriving at ther conclusions of $91,650.00 overall damage as testified by appellees’ expert, Mr. Barnes, and $44,600.00 enhancement in value as testified by appellant’s expert, Mr. Adams. This leaves a difference between the opinions of these two expert witnesses in the actual amount of $135,250.00 on these two pieces of property purchased for $170,900.00. Such variance in the opinion of experts on the value of real property simply does not make sense, and only points up the unreliable nature of expert opinion on real property appraisals.

Witness Barnes testified for appellees that he compared twenty-five comparable sales with appellees’ land and arrived at a value at the time of taking of $265,000.00 and $173,350.00 after the taking, or a difference of $91,-650.00 as just compensation. This figure was broken down to $26,357.00 as the value of the land actually taken and $65,293.00 for damages to the remainder. The residual damage as testified by Mr. Barnes consisted of $1,000.00 per acre severance damages to the residuals consisting of $260.00 for loss of access to Highway 64, $540.00 for additional cost of extending utilities and $200.00 for distortion of plottage.

According to Mr. Barnes’ testimony, the building of the highway left appellees’ property worth only $2,-450.00 more than they paid for it, but $91,650.00 less than it was actually worth. According to his testimony the 39 acres in the Collier tract, which was bounded by Interstate 40 right-of-way when appellees purchased it, had been damaged by the construction of the highway $400.00 more per acre than the appellees paid for it.

Appellee, Dean, valued the property at $265,000.00 before the taking and at $150,704.00 after the taking, leaving a difference of $114,196.00 as damage to the property. According to Mr. Dean’s testimony, the market value of this land when he purchased it was $94,-100.00 more than he paid for it and that its market value was more than half destroyed by building the highway. He estimates that by building the highway his land is now worth $20,196.00 less than he paid for it and $114,-296.00 less than it was actually worth.

Twenty-five comparable sales were used by the expert witnesses in arriving at the value they placed on the land. No one testified as to the dates or amounts of these sales and po questions were asked as to the dates or prices paid, so we accept the land values, including that placed on the Collier tract, as correct. The residual or severance damage to the tract, however, is another matter. It is obvious to us that appellees knew, or certainly believed, that Interstate 40 would be built exactly where it was built when they purchased all of the Collier tract east of the right-of-way, and added that tract to the tract they purchased from Ott.

When appellees purchased the Collier tract, they only purchased ‘ ‘ the back part. . . north of the highway stakes for Interstate 40.” They were bound to have known what portion of this tract Mrs. Collier had agreed to sell to the highway department, and they were bound to have known that the Collier tract was landlocked when they purchased it and would remain so when Interstate 40 was completed across the tract they purchased from Ott.

The Kentucky Court of Appeals had a very similar case before it in Commonwealth v. Raybourn, 359 S. W. 2d 611. In that case Raybourn owned a motel on a .38 acre tract of land abutting on old Highway No. 60. They learned that the highway was to be changed and they purchased a 1.72 acre tract contiguous to their first tract and through which the new highway was to pass. Right-of-way was taken across the second tract by eminent domain. Treating the two tracts as a unit, the trial court awarded damages in the amount of $5,000.00 for the right-of-way taken in fee and $32,500.00 resulting damages to the remainder. In reversing the judgment of the trial court, the court of appeals said:

“We therefore hold that when it has been proven that the owner of property, on which land is being taken by the power of eminent domain, has purchased such property with knowledge of that fact, he is not entitled, for the purpose of assessing damages, to have it considered a part of other property previously acquired by him.”

There is no substantial evidence in the record before us that the Collier tract of land purchased by the ap-pellees east and north of Interstate 40 was damaged at all by the construction of Interstate 40. We conclude that appellant’s instruction No. 10 should have been given under the evidence submitted at the trial of this case, but since this case must be remanded for a new trial for error in refusing to instruct the jury on minimization of damages as requested in appellant’s instruction No. 8, we are unwilling to say that the Collier tract, as a matter of law, should he completely eliminated from consideration by the jury under proper instructions and under any and all circumstances that may arise at the re-trial of this case. For the errors indicated, this case is reversed and remanded to the Faulkner County Circuit Court for a new trial.

Reversed and remanded.

Bybd, J., not participating. FoglemaN, J., concurs.