County of Los Angeles v. Faus

312 P.2d 680, 48 Cal. 2d 672, 1957 Cal. LEXIS 219

• Court: California Supreme Court
• Decided: June 21, 1957
• Docket: L. A. 24444
• Status: Published

Opinions

McCOMB, J.

Defendants appeal from a judgment in a condemnation proceeding after a trial by jury which fixed the value of their property to be acquired by plaintiff.

Defendants are the owners of certain elongated strips of realty situated in the cities of Alhambra and San Marino. These strips are portions of an abandoned right .of way in the center of Huntington Drive that formerly provided the streetcar route from Los Angeles northeasterly through the Santa Anita area. The vacant right of way is 60 feet wide and divides Huntington Drive. Parcel 20-2, bounded by Stoneman Avenue, Atlantic Avenue and the two sides of Huntington Drive, is 113.71 feet in length. Parcel 20-3 runs easterly from Stoneman to Granada Boulevard, a distance of 1435.13 feet. The northerly half of each parcel is located within San Marino; the southerly half within Alhambra.

Plaintiff has condemned a 30-foot strip running along the southerly edge of each parcel for the purpose of widening Huntington Drive.

The only witnesses on behalf of plaintiff, Frank C. Wood and J. B. Irvin, testified that they based their estimates of market value of the subject property “primarily” upon prices paid on 12 sales of rights of way, eight of which had been made to government agencies possessing the power of condemnation. Five consisted of strips of land that had no street access whatsoever, unlike the situation existing here. Several of the parcels purchased by government agencies with power of condemnation were in fact situated “15 or 20 miles” from defendants’ property.

At the close of witness Wood’s cross-examination, defendant moved to strike his testimony on the market value of the subject property upon the ground that it was based upon two incompetent considerations, to wit, (1) consideration of incompetent sales to public bodies with power of condemnation, and (2) the witness’ conception that the market value of the property was its value in use to the condemning county and not its highest and best use to the public generally. This motion was denied. A similar motion was not made at the end of witness Irvin’s testimony; however, in view of the previous ruling of the court it is apparent that such a motion would have been futile.

At the end of the trial defendant offered the following instructions, which the trial judge refused:

“You are instructed that the price fixed by an agreement between the owner of property and public corporations, such as the State of California, County of Los Angeles, or municipal corporation, seeking to condemn the land by virtue of eminent domain or having the power so to do, cannot be taken as a criterion of the market value of other land in the vicinity. The prices so fixed by compromise, when there can be no other purchasers, and the seller has no option to refuse to sell and can only elect between the acceptance of the price offered and the delay, uncertainty and trouble for legal proceedings of an assessment, is not a reasonable or fair test of just compensation for the defendant’s property. It is in no sense a sale in the market.

“You are instructed that the price paid by a public corporation such as the State of California, County of Los Angeles, or any municipal corporation, for other property, said party having the right of condemnation by virtue of eminent domain, is not a proper basis for a determination of market value of the property here in question. Such sales are not a fair criterion of value for the reason that they are in the nature of a compromise. The fear of the one party or the other to take the risk of legal proceedings ordinarily results in the one party’s paying more or the other party’s taking less than is considered to be the fair market value of the property. For these reasons such sales are not proper evidence of value in any case, whether in a proceeding by the same condemning party or otherwise.”

These questions are presented for our determination: First: Did the trial court err in refusing to give the instructions requested by defendant set forth, supra?

Yes. In passing upon the contention that two instructions almost identical with the requested instructions in this case were correct and properly given in a condemnation case, this court said in City of Los Angeles v. Cole, 28 Cal.2d 509, 517 [170 P.2d 928] : “Contrary to appellants’ claim, the challenged instructions correctly state the law governing the jury’s determination of the market value problem in the light of evidence adduced. As claimed by respondent, these instructions are in part a paraphrase and in part a precise reproduction of a quotation from Mr. Lewis in his treatise on Eminent Domain (1st ed., § 447 ; 3d ed., § 667) as discussed with approval in the early case of City of San Luis Obispo v. Brizzolara, 100 Cal. 434, 436 [34 P. 1083].”

Based on the foregoing authorities the trial court erred in refusing to give the requested instructions to the jury. - Although we have concluded that these authorities should no longer be controlling for the reasons set forth below, the judgment will be reversed so that the parties herein may try the issue of value according to the rule herein adopted.

Second: In view of the provision in section 53 of the Code of Civil Procedure that “. . . if a new trial be granted, the court shall pass upon and determine all the questions of law involved in the case, presented upon such appeal, and necessary to the final determination of the case, ’ ’ this question is presented: In a condemnation proceeding, is evidence of the prices paid for similar property in the vicinity, including prices paid by the condemner, admissible on (a) direct examination, and (b) cross-examination of a witness who is presenting testimony on the issue of the value of the condemnee’s property?

Yes. Section 1872 of the Code of Civil Procedure provides: “Whenever an expert witness gives his opinion, he may, upon direct examination, be asked to state the reasons for such opinion, and he may be fully cross-examined thereon by opposing counsel.”

The reasons in support of the admissibility of such evidence are stated by Professor Wigmore in his treatise on the law of Evidence (3d ed. 1940), volume 2, section 463, pages 503 et seq., as follows: “When the conduct of others indicating the nature of a salable article consists in offering this or that sum of money, it creates the phenomena of value, so-called. Por evidential purposes, Sale-Value is nothing more than the nature or quality of the article as measured by the money which others show themselves willing to lay out in purchasing it. Their offers of money not merely indicate the value; they are the value; i.e. since value is merely a standard or measure in figures, those sums taken in net potential result are that standard.

“But the evidential question is not concerned with the many subsidiary principles of the law of Damages, or standard of value, that come into play. Whether an unaccepted offer of purchase at a certain figure may be looked to as determining value, or whether the price of a sale or the cost of making may be looked to, — these are questions which arise because value is a test formed by averaging results and because it is necessary to define the range over which the true idea of value permits the estimate to go. That is not an evidential process, but a process of average calculation. So, too, the question whether the value of the article at another time or another place may be resorted to depends on whether, in defining the range of data, it is fair for the purposes in hand to allow marketability at another place or time to be considered; there the process is still one of defining the range of the value-idea. . . .

‘1 There is, however, one question indirectly involving a rule of Evidence, — the question whether the value of another article is receivable in order to show the value of the article in issue. As the price at a sale is, by the law of Damages, conceded to be an element in the test of value (except perhaps in forced sales), this question is usually presented in the form, whether a sale of other property is admissible as evidence of the value of the property in question.

“In answering this question, it is found that the two leading principles already expounded come into joint application, — the principle of Relevancy and the principle of Auxiliary Policy. According to the former, the value or sale-price of the other property is relevant only when the property is substantially similar in conditions; according to the second, it may be excluded, though relevant, if it involves in the case in hand a disproportionate confusion of issues and loss of time.

"

“It is enough to note (1) in answer to the argument from Relevancy, that since value is a money-estimate of a marketable article possessing certain definable qualities, the value of other marketable articles possessing substantially similar qualities is strongly evidential and is so treated in commercial life; all the argument and protestation conceivable cannot alter the fact that the commercial world perceives and acts on this relevancy; (2) in answer to the argument from Auxiliary Probative Policy, it may be noted that this objection may or may not exist in a given instance, and that the rational and practical way of meeting it is to allow the trial Court in its discretion to exclude such evidence when it does involve a confusion of issues, but otherwise to receive it. . . .

“Except in a few jurisdictions, this class of evidence is received.” (See also note II, 118 A.L.R. 870; note II, 174 A.L.R. 387.)

The following excerpt from McCormick on Evidence (1954), section 166, page 348, is here pertinent: “Other Sales of Similar Property as Evidence of Value. In case of ordinary personal property, where market value is sought, of course the most obvious resort is to evidence of what other similar property, whether wheat, shoes, horses, or what not, currently sold for on the market at that place. . . .

“Any tract of land is considered unique, and consequently it is in cases of land valuation, and especially in condemnation cases, that the question of admissibility of evidence of prices paid on other sales is most frequently discussed. A few states have been unwilling to admit such evidence save in exceptional circumstances. This seems to put too heavy a strain on opinion evidence and the general knowledge of the jurors, and the view of the majority of courts which admits such evidence, within safeguarding limits, seems preferable. These safeguards are the following: The sales of the other tracts must have been sufficiently near in time, and the other land must be located sufficiently near the land to be valued, and must be sufficiently alike in respect to character, situation, usability, and improvements, to make it clear that the two tracts are comparable in value and that the price realized for the other land may fairly be considered as shedding light on the value of the land in question. Manifestly, the trial judge in applying so vague a standard must be granted a wide discretion.

“Since the market value sought is the estimate of what a willing [buyer] would have paid a willing [seller], prices on other sales of a forced character are inadmissible. . . . [E]vidence of the price paid [by the condemner] should come in if the condemner can satisfy the judge that the price paid was sufficiently voluntary to be a reasonable index of value. In any event, the sale must be genuine, and the price must be actually paid or substantially secured.” (See also dissenting opinion of Carter, J. in City of Los Angeles v. Cole, 28 Cal.2d 509, 523-524 [170 P.2d 928].)

In taking this position it is recognized that we are overruling a line of decisions in this state that announce a contrary rule. The former rule was contrary to logic, unrealistic, and followed in only a few other states. It was merely a rule of procedure. Therefore, it becomes our duty not to follow decisions that we are convinced are erroneous and obsolete. (See Traynor, J., People v. La Macchia, 41 Cal.2d 738, 754 [264 P.2d 15]; Carter, J. and Schauer, J., Heimann v. City of Los Angeles, 30 Cal.2d 746, 760 [185 P.2d 597] ; Ashburn, J., County of Los Angeles v. Faus, (Cal.App.) 304 P.2d 257, 270.)

The rule of stare decisis is not so imperative or inflexible as to preclude a departure therefrom in any ease, but its application must be determined in each instance by the discretion of the court. Previous decisions should not be followed to the extent that error may be perpetuated and that wrong may result.

This view finds support in our own decisions. Mr. Justice Sloss, in San Pedro, L. A. & S. L. R. Co. v. City of Los Angeles, (Cal.) 179 P. 390 [2], accurately states the rule: “On the appeal in L.A. No. 4600 we are, however, at liberty to consider the appellant’s contention that the former decision of this court was erroneous, and that it should not be followed. That decision has, to be sure, the persuasive force attaching to any deliberate expression of the court. No property rights appear, however, to have been acquired on the faith of the ruling, and if, upon further consideration, we should feel satisfied that a wrong conclusion was reached, it is right and proper that we should so declare, to the end that the true rule, as we now see it, should be established and enforced.” The foregoing rule is applicable in the instant case.

The reason given for excluding evidence of sales of similar property in the early case of Central Pac. R. R. Co. v. Pearson, 35 Cal. 247, is not persuasive, is specious, and should no longer be followed. The court (p. 262) stated its reason for excluding evidence as to particular transactions as follows: “But, while the opinions of witnesses thus qualified by their knowledge of the subject are competent testimony, they cannot, upon the direct examination, be allowed to testify as to particular transactions, such as sales of adjoining lands, how much has been offered and refused for adjoining lands of like quality and location, or for the land in question, or any part thereof, or how much the company have been compelled to pay in other and like cases—notwithstanding those transactions may constitute the source of their knowledge. If this was allowed, the other side would have a right to controvert each transaction instanced by the witnesses, and investigate its merits, which would lead to as many side issues as transactions, and render the investigation interminable. ’ ’

Any statements in the following cases contrary to the rule we now approve are overruled: People v. La Macchia, 41 Cal.2d 738 [264 P.2d 15]; Heimann v. City of Los Angeles, 30 Cal.2d 746 [185 P.2d 597]; City of Los Angeles v. Cole, 28 Cal.2d 509 [170 P.2d 928] ; City of Los Angeles v. Hughes, 202 Cal. 731 [262 P. 737]; City of San Luis Obispo v. Brizzolara, 100 Cal. 434 [34 P. 1083]; Spring Valley Water Works v. Drinkhouse, 92 Cal. 528 [28 P. 681]; Central Pac. R. R. Co. v. Pearson, 35 Cal. 247.

Statements in the following cases contrary to the rule announced in this decision are disapproved: City of Los Angeles v. Frew, 139 Cal.App.2d 859 [294 P.2d 1073]; People v. Union Machine Co., 133 Cal.App.2d 167 [284 P.2d 72] ; Atchison etc. Ry. Co. v. Southern Pac. Co., 13 Cal.App.2d 505 [57 P.2d 575] ; City of Los Angeles v. Deacon, 119 Cal.App. 491 [7 P.2d 378] ; Los Angeles Gas & Elec. Corp. v. Etienne, 83 Cal.App. 645 [257 P. 123] ; Reclamation Dist. No. 730 v. Inglin, 31 Cal.App. 495 [160 P. 1098].

Third-. Should the law as now established by this court be given retrospective or prospective effect?

The law is settled that there is no constitutional objection to an appellate court’s making a choice for itself, in overruling an earlier decision, whether the new rule declared by it shall operate prospectively only or apply retrospectively. (Great Northern Ry. Co. v. Sunburst Oil & Refining Co., 287 U.S. 358, 363 et seq. [53 S.Ct. 145, 77 L.Ed. 360, 85 A.L.R. 254] ; cf. Traynor, J., Sutter Basin Corp. v. Brown, 40 Cal.2d 235, 249 [253 P.2d 649] ; People v. Ryan, 152 Cal. 364, 369 [92 P. 853] ; People v. Maughs, 149 Cal. 253, 263 [86 P. 187] ; 17 Minn.L.Rev. 811; 28 Ill.L.Rev. 277; 11 N.C.L.Rev. 323.)

The determination by the court is dependent upon the equities in each case. It is the general rule that a decision of a court of supreme jurisdiction overruling a former decision is retrospective in its operation and that the effect is not that the former decision was bad law but that it never was the law.

A well-recognized exception to this general rule is that, where a constitutional provision or statute has received a given construction by a court of last resort and contracts have been made or property rights acquired under and in accordance with its decision, such contracts will not be invalidated nor will vested rights acquired under the decision be impaired by a change of construction adopted in a subsequent decision. Under those circumstances it has been the rule to give prospective, and not retrospective, effect to the later decision. (7 RC.L. (1915), Courts, § 36, p. 1010.)

Applying the foregoing principles to the facts in the instant case, it is apparent that it was tried by the trial judge and attorneys for both parties upon a theory of law heretofore announced by this court that we are now overruling. It is also evident that neither contract nor property rights have vested in either party by virtue of our previous decisions oh the points here involved. Therefore, this ease falls within the general rule set forth above and not within the exception. The rule now announced is available to both parties upon a retrial.

The judgment is reversed and a new trial is ordered.

Carter, J., Traynor, J., and Schauer, J., concurred.