Delta Materials Corp. v. Bagdon

796 N.E.2d 434, 59 Mass. App. Ct. 439, 2003 Mass. App. LEXIS 1018
CourtMassachusetts Appeals Court
DecidedSeptember 26, 2003
DocketNo. 01-P-1629
StatusPublished
Cited by4 cases

This text of 796 N.E.2d 434 (Delta Materials Corp. v. Bagdon) is published on Counsel Stack Legal Research, covering Massachusetts Appeals Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Delta Materials Corp. v. Bagdon, 796 N.E.2d 434, 59 Mass. App. Ct. 439, 2003 Mass. App. LEXIS 1018 (Mass. Ct. App. 2003).

Opinion

Kass, J.

In 1987, Delta Materials Corporation (Delta), which is in the gravel business, brought a petition under G. L. c. 241 to partition real property. The land involved, which is in Sunderland, consists of three noncontiguous undeveloped parcels that contain approximately one acre, thirty-seven acres, and 101 [440]*440acres. Delta Materials Corp. v. Bagdon, 33 Mass. App. Ct. 333, 334 (1992) (Delta I). Delta owns a four-fifths undivided interest in those parcels as a tenant in common with the respondents, David, John, and Richard Bagdon (the Bagdons), who together own the remaining one-fifth interest.

What has driven the controversy over the partition — this is the third appeal — is that the Bagdon family has farmed part of the land since the beginning of the twentieth century and certain members of the Bagdon family desire to continue that tradition. Delta operates a well-established gravel business adjoining the thirty-seven acre parcel and wants to haul gravel from that land and any other it acquires through partition.2 Delta I at 334. Delta acquired its four-fifths interest in 1986-1987 from other members of the Bagdon family who, along with the Bagdons (i. e., David, John, and Richard), had acquired interests in the property on the death of Amelia Bagdon in 1968. She was the grandmother of the Bagdons.

In Delta I, a judge of the Probate Court, after trial, determined that the parcels could not be “divided advantageously,” see G. L. c. 241, § 31, and ordered a sale. On appeal, we decided that the judge should not have reached this conclusion until he had first found the fair market value of each of the parcels that is the subject of the petition for partition. Once those market values had been found, the judge was to address anew the question of an advantageous division. Delta I at 339.

On the basis of further proceedings, which included the taking of additional evidence, the probate judge concluded that an advantageous division of the land could be made. The judge specified the division in kind to be made and ordered Delta to pay to the Bagdons an owelty of $25,400.3 Again, the Bagdons appealed. We decided that the capitalization of net income valuation accepted by the judge was faulty because it was based solely on the gravel that could be mined from the thirty-seven acre parcel and from twenty-five acres of the 101 acre parcel and that the judge had failed to consider the residual value of [441]*441the land after gravel had been removed. Again, we remanded for further proceedings. Delta Materials Corp. v. Bagdon, 43 Mass. App. Ct. 307, 309-311 (1997) (Delta II).

A different judge conducted the third proceeding; the original judge had retired. For purposes of analysis and division, he broke the 101 acre parcel down to a commercial tract, the “plateau” (a fan-shaped parcel north of the thirty-seven acre tract), and a remainder tract of seventy-three acres. Together with the one acre parcel and the thirty-seven acre parcel there were, therefore, five components of the over-all property to consider and value. In considering the evidence he had received, the judge placed the greatest emphasis on the evaluation approaches and opinions of market value from each side’s appraiser. The judge found the methodology of the Bagdons’ appraiser flawed and occasionally self-contradictory. Accordingly, the judge relied more on the opinions of value of the appraiser called by Delta. “Faced with a battle of experts, the fact finder may accept one reasonable opinion and reject the other.” Fechtor v. Fechtor, 26 Mass. App. Ct. 859, 863 (1989). See Delta I at 335.

The judge found that the values of the five components of the property were as follows:

1. The 101 acre parcel
(a) Plateau $705,000
(b) Commercial tract $135,000
(c) Remainder tract $292,000
2. Thirty-seven acre parcel $640,000
3. One acre parcel $ 30,000
Total $1,802,000

Of that total, Delta’s four-fifths interest came to $1,441,600, and the Bagdons’ one-fifth interest came to $360,400. As the value of the thirty-seven acre parcel and the plateau each exceeded $360,400, the judge concluded that advantageous division required those parcels to be awarded to Delta. In addition, both the thirty-seven acre parcel and the plateau were closest to Delta’s existing gravel operation. From the remainder tract in the 101 acre parcel, the judge awarded twenty-four acres that afforded right-of-way access to the plateau.

[442]*442The Bagdons, the judge decided, should receive the one acre residential parcel and the three acre commercial tract that was a component of the 101 acre parcel. Those areas abutted other land the Bagdons possessed. In addition, the Bagdons were to receive forty-nine acres from the 101 acre parcel, a portion that included land on which the Bagdons maintained two or three storage bams. In dollar terms, the division lined up as follows:

To Delta:
Thirty-seven acre parcel $640,000
Plateau (twenty-five acres) $705,000
Twenty-four acres from remainder tract $ 96,000
Total $1,441,000
To the Bagdons:
One acre parcel $ 30,000
Commercial parcel $135,000
Forty-nine acres from remainder tract $196,000
Total $361,000

Since the division came just about to four-fifths and one-fifth, there was no owelty award.

1. Refusal to include enhancement effect in valuation. The valuations that the judge arrived at were based on the highest price that a third party would pay for the land in a free and open market, see Epstein v. Boston Hous. Authy., 317 Mass. 297, 299 (1944), rather than the value of the property to the parties. Delta II at 309. In doing so, the judge acknowledged that Delta might be willing to pay an enhanced price because the thirty-seven acre parcel and the plateau parcel were located in proximity to Delta’s existing extraction equipment and road system so that it could mine gravel in those areas at less cost than a gravel operator who would have to start from scratch in building an extraction infrastructure.

Refusal to consider the enhancement factor, the Bagdons urgently argue on appeal, was an error of law requiring reversal. The particular utility of the adjacent land to Delta, the Bagdons contend, was a market factor, and declining to take it into account produces a windfall for Delta. There is a flaw in this fine of reasoning. Just because the land has special value for Delta does not compel it to pay more than others would pay in a free [443]*443and open market. Persons may covet a property, but if the state of the evidence is that no one else is in a position to pay more than market value, there is no reason for the hypothetical covetous buyer to pay anything more than fair market value, with perhaps a marginal premium. That is the lesson of cases such as Suburban Land Co. v. Arlington, 219 Mass.

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Bluebook (online)
796 N.E.2d 434, 59 Mass. App. Ct. 439, 2003 Mass. App. LEXIS 1018, Counsel Stack Legal Research, https://law.counselstack.com/opinion/delta-materials-corp-v-bagdon-massappct-2003.