District of Columbia Redevelopment Land Agency v. Thirteen Parcels of Land in Squares 859, 912, 934 & 4068

534 F.2d 337, 175 U.S. App. D.C. 135, 1976 U.S. App. LEXIS 12745

• Court: Court of Appeals for the D.C. Circuit
• Decided: February 23, 1976
• Docket: No. 74-1644
• Status: Published

Opinions

Opinion for the Court filed by Circuit Judge TAMM.

Dissenting opinion filed by Circuit Judge MacKINNON.

TAMM, Circuit Judge:

The District of Columbia Redevelopment Land Agency (“DCRLA”) filed a declaration of taking, condemning appellant’s three lots located at 1424 Florida Avenue, N.E.¹ After a trial, compensation was fixed at $64,600. This figure was the highest estimate given by DCRLA’s expert witness, who testified that the land was worth $60,200 or $64,600, depending upon which of two methods of valuation was used. The trial court refused to permit the landowner to testify as to his opinion of the reasonable value of the property insofar as it was based in part on his purchase for $120,000 of another piece of property located on Bladensburg Road, which the court found to be not comparable.² The landowner appeals, contending that this personal testimony as to value, so based, should have been admitted. We conclude that the landowner should have been permitted to testify as to the value of his property even though his opinion was based in part on his experience with the Bladensburg Road property. We believe that differences between the two pieces of property properly go to the weight of the owner’s testimony, not to its admissibility. Accordingly, we reverse and remand for a new trial.

As a general principle, “just compensation” for property taken by the government is compensation “sufficient to make good the loss to the owner . [The owner is] entitled to the full money equivalent of the property taken, and thereby to be put in ‘as good a position pecuniarily as it would have occupied, if the property had not been taken.’ ” 1 L. Orgel, Valuation Under the Law of Eminent Domain § 46 at 222 (2d ed.1953), quoting United States v. New River Collieries Co., 262 U.S. 341, 343, 43 S.Ct. 565, 566, 67 L.Ed. 1014, 1016 (1923). Unfortunately, value is a subjective concept, and there is often a substantial gap between value to the owner and value to others — the government, a hypothetical buyer, or the public at large. Courts thus have adopted market value as a rough equivalent of value to the owner, but have disregarded certain personal aspects of the loss to the owner, including “sentimental losses,” and “incidental damages.” In short,

the “value” of the property is visualized as something distinct from the injuries which its taking will impose on the owner, although it is closely associated with its injuries. The conceptual mythical distinction between a (positive) value on the one hand, and a (negative) summation of damages on the other hand, pervades nearly all judicial opinions.

Id. at 223.

At least in part because of the difficulty of arriving at one “value” equivalent to “just compensation” for property taken, condemnation proceedings have been characterized by liberal applications of the rules of evidence.³ Often witnesses are allowed to testify as quasi “experts despite their lack of specialized knowledge or training respecting the market value of land. See generally, 1 Orgel, supra, § 132 at footnotes 43-45 and cases cited therein.

As a general rule, the opinion of a landowner as to the value of his land is admissible without further qualification because of his close relationship with the land.⁴ Others may be qualified as experts, but an owner is usually not required to so qualify. In hornbook terms,

[a]n owner of property is always entitled to testify as to its value, and to express an opinion as to its value in condemnation proceedings. An owner does not have to qualify as an expert, nor be engaged in buying and selling real estate.

1 Orgel, supra, § 132 at 567-68 n.46, quoting Provo River Water Users' Ass'n v. Carlson, 103 Utah 93, 133 P.2d 777, 781 (1943). See also Kinter v. United States, 156 F.2d 5 (3d Cir. 1946); Bateman v. Donovan, 131 F.2d 759 (9th Cir. 1942). See generally 3 Wigmore on Evidence §§ 714, 716 (Chadbourn rev.1970); 32 C.J.S. Evidence § 546 (120) at 470-72.

Transcending this level of generality quickly leads to divided opinions and conflicting authorities, however. One line of authority, most notably represented by Wigmore, supra, apparently takes the position that an owner is per se qualified, and that any lack of knowledge goes only to the weight of his testimony.⁵ Other authorities adopt the slightly different rule that ownership establishes a presumption of knowledge which, if rebutted, renders the testimony inadmissible.⁶ Cofflin v. State, 230 Md. 139, 143, 186 A.2d 216, 219 (1962). This distinction may become important where a court must confront the question whether an owner is permitted to testify as- to the value of his land qua owner, or is merely granted a presumption which, if not rebutted, entitles him to take the stand to testify as an “expert” on his own behalf. In the former case, the testimony of the owner logically would require no basis for its admissibility other than the mere fact of ownership, and the facts upon which the owner bases his opinion should be left to the jury in weighing the evidence; in the latter, admissibility would depend upon whether the opinion rested upon some independent competent and relevant basis, such as experience in buying or selling land, general knowledge of land values in the area or sales of comparable land, or some particular knowledge relating to the land in question.⁷

In the ease of an expert witness who bases his testimony on improper and incompetent grounds, the rule is clear that the testimony should not be admitted. See, e. g., Commonwealth, Dep’t of Highways v. Darch, 374 S.W.2d 490 (Ky.1964); San Diego Land & Town Co. v. Neale, 88 Cal. 50, 25 P. 977 (1891). This is so because the probative value of such expert testimony, stripped of its claim of expertise, is very low, while the likelihood that it will confuse the trier of fact is very high. In these matters, the trial judge has considerable discretion. See, e. g., District of Columbia Redevelopment Land Agency v. 61 Parcels of Land, 98 U.S.App.D.C. 367, 235 F.2d 864 (1956). Other courts have gone farther, and have applied the expert basis rule to owners’ testimony. See, e. g., Commonwealth, Dep’t of Highways v. Fister, Ky., 373 S.W.2d 720, rehearing denied, 376 S.W.2d 543 (Ky.1963). In these instances, however, we believe the discretion of the trial judge must be tempered by another factor — the policy in favor of permitting owners to testify as to the value of condemned property.

It is axiomatic that a landowner has more leeway in fixing values than does an expert. We said in Arkansas State Highway Comm. v. Fowler, 240 Ark. 595, 401 S.W.2d 1 (1966): “It is not necessary to show that he was acquainted with the market value of such property or that he is an expert on values. He is deemed qualified by reason of his relationship as owner to give estimates of the value of what he owns. The weight of his testimony is, of course, affected by his knowledge of the value.”

Arkansas State Highway Comm’n v. Mullens, 255 Ark. 796, 797, 502 S.W.2d 626, 627 (1973). See also Arkansas State Highway Comm’n v. Russell, 240 Ark. 21, 398 S.W.2d 201 (1966) (disclosure of questionable basis for owner’s testimony affects the weight of the testimony). The owner does not testify as just another expert, but from his unique position as the individual who stands to gain or lose the most from the tribunal’s determination of the value of his property. The owner is draped with no cloak of expertise; the jury is aware of the owner’s interests and free to evaluate his testimony, even to discard it altogether, in weighing the evidence. Although courts have excluded owners’ testimony based on such factors as personal or sentimental value⁸ or speculation as to business profits,⁹ the right of the owner to testify is based, at least in part, on the recognition of the subjective nature of value. Opinions as to value differ, and the owner has a right to place all evidence pertaining to the value of his condemned property before the trier of fact.¹⁰ Turning now to examine the particular testimony sought to be introduced in this case, we find that under either standard the owner’s testimony should have been admitted in this case.

As the dissent correctly states, the issue here is not merely a matter of testimonial qualification. Appellant did in fact take the stand and testify. The issue is thus more correctly viewed as one of admissibility. In determining whether appellant’s testimony should have been admitted, we must look both to the traditional rules of evidence, liberally applied, and to the special nature of eminent domain proceedings, especially the unique position of the owner of the condemned property. See generally, 1 Orgel, supra, § 133; 5 Nichols on Eminent Domain, § 18.4[2] (rev. 3d ed. 1975).

Appellant attempted to compare his business operations on the two sites in order to demonstrate that the Florida Avenue location was a better site. At oral argument, appellant’s counsel explained that, because of the greater flow of traffic at the Florida Avenue location, that property should be assigned a greater value than the Bladensburg Road location:

[T]here was more road traffic. He had been able to build up at [the Florida Avenue] location in three years what it took him over 20 years to build up at the other location. And therefore this was a better site.

(Transcribed from oral argument).

Appellant thus sought to introduce evidence not of the comparability of two pieces of land, but to demonstrate the comparability of two similar business operations and thus to testify from his experience in operating substantially similar business that the Florida Avenue location was better suited to this particular use.¹¹ The “locational” factors upon which appellant sought to rely do not resemble those of the neighborhood grocery store owner, who claims that his property should command a premium due to the close relationship he has established with his customers over the years, but relate directly to factors determinative of market value — in general, the suitability of the property for a particular use. The factors related not only to what the property was worth to appellant, but to what a hypothetical buyer would be willing to pay for it.

This was a business piece of property, it was a commercial piece of property, and the amount of business a man can do in the place is obviously going to be an influencing factor on what he will pay for it.

There is no indication that appellant sought to introduce other improper considerations, such as customer goodwill or speculative future profits. The testimony was based only in part on a comparison with an incomparable piece of property.¹² The comparison was more directly one of similar business operations inasmuch as their relative success reflected the suitability of the condemned property for a particular use. Were this the testimony of an ordinary witness, we might well conclude that the trial judge, in the exercise of his discretion, was justified in excluding it insofar as it was based in part on an inadmissible element. We believe, however, that owners are entitled to more leeway. The testimony here was not so substantially based on the incomparable piece of property as to override the special rule in condemnation proceedings permitting owners to testify.¹³

Appellant’s counsel inartfully volunteered that the operation and purchase of the Bladensburg Road property “was of necessity a factor that [appellant] took into account.” (Tr. 84-85).¹⁴ If we were to conclude that this demonstrates that appellant “substantially relied” on the value of the incomparable property, it would be doubtful whether an owner of more than one piece of property could testify without carrying the burden of demonstrating that his opinion was formed without substantial reliance on the incomparable property. To establish such a rule would, in our opinion, substantially undermine the principle that an owner is permitted to testify in condemnation proceedings without further qualification.¹⁵

Furthermore, we believe that the improper element, the value of the incomparable piece of property, is conceptually distinct and separable from the suitability of the Florida Avenue site for its particular use as evidenced by the relative success of the comparable business operations.

In these circumstances, we believe that such factors as the differences in size, frontage and location of the two properties go to the weight of the owner’s testimony regarding suitability and not to its admissibility. The trial judge properly could have instructed the jury to disregard the sale price of the incomparable piece of property, while allowing the jury to have the benefit of the owner’s testimony of the value of his condemned property based upon the success of the business operated there.¹⁶ For these reasons, we remand with instructions to grant a new trial.

So ordered.

1 . The lots total 8,964 square feet.

2 . The Bladensburg Road property was approximately twice the size of the Florida Avenue property, consisting of about 17,964 square feet compared with 8,946 square feet. The owner operated similar auto transmission businesses on both properties and leased land adjacent to the Florida Avenue property, bringing the total area used by the owner at both locations to approximately the same size. The parties stipulated that the property was improved by a one-story commercial garage, used as an automotive transmission repair shop, and that the owners had purchased the property in 1968 for the sum of $50,000. Appellant’s Br. at ii-iii.

3 .The proof of the value of property in condemnation proceedings is merely a special case of judicial proof in general and is governed by the rules of evidence developed in other actions at law. But this simple fact is obscured by certain peculiar doctrines that have been developed in condemnation cases. The doctrines [include] the permissible sources of the tribunal’s information

1 Orgel, supra, ch. XI at 543 (emphasis added).

4 . [T]he owner of the land taken is generally held to be qualified to express his opinion of its value merely by virtue of his ownership. He is deemed to have sufficient knowledge of the price paid, the rents or other income received, and the possibilities of the land for use, to have a reasonably good idea of what it is worth. The weight of his testimony is for the jury [to determine] .

5 Nichols on Eminent Domain § 18.4[2] at 106-07 (rev. 3d ed. 1975).

5 . See, e. g., State ex rei. Herman v. Lopez, 8 Ariz.App. 61, 63, 442 P.2d 884, 886 (1968) (cross-examination of owner about how he arrived at valuation affects weight but not competency); McCaffery v. Northern Pacific Ry. Co., 22 N.D. 544, 134 N.W. 749, 750 (1912) (admissibility under North Dakota rules does not rest on actual knowledge or on a presumption of knowledge).

6 . Southwick v. Massachusetts Turnpike Authority, 339 Mass. 666, 668, 162 N.E.2d 271, 274 (1959) (“whether the witness has the necessary knowledge about his property to enable him to express an opinion as to its market value is a preliminary question of fact for the judge”).

7 . In this sense, it would appear that courts have reached differing results on evidentiary questions because of a general confusion over exactly why it is that an owner is permitted to testify.

The fallacy of [the presumption rule] is that it is based upon a mistaken assumption in law that the right of an owner of property to testify depends upon some presumption of fact arising from the ownership qualifying him as an expert to testify; whereas his qualification to testify does not depend upon presumption, but upon the principle that an owner is, in law, qualified to testify, and his testimony is, because of his relationship as owner, competent and admissible on the question of value of his property.

McCaffery v. Northern Pacific Ry. Co., 22 N.D. 544, 546, 134 N.W. 749, 750 (1912).

8 . See, e. g., Brown v. Town of Eustis, 293 F. 197, 198 (S.D.FIa.1923).

9 . Cf. United States ex rel. T.V.A. v. Powelson, 319 U.S. 266, 281-83, 63 S.Ct. 1047, 1055-1056, 87 L.Ed. 1390, 1401-1402 (1943); A.G. Davis Ice Co. v. United States, 362 F.2d 934, 936 (1st Cir. 1966); Stipe v. United States, 337 F.2d 818, 821 (10th Cir. 1964).

. [N]ot all losses suffered by the owner are compensable under the Fifth Amendment. In absence of a statutory mandate the sovereign must pay only for what it takes, not for opportunities which the owner may lose.

319 U.S. at 281-82, 63 S.Ct. at 1056, 87 L.Ed. at 1401 (citations omitted).

10 .Clark v. United States, 155 F.2d 157 (8th Cir. 1946).

In eminent domain proceedings the rule is that all facts which an ordinarily prudent man would take into account before forming a judgment as to the market value of property he contemplates purchasing is [sic] relevant and material. The landowner should be allowed to state and to have his witnesses testify to every fact concerning the property which he would normally or ordinarily be disposed to put forth in order to place it in an advantageous light if he were attempting to negotiate a sale of it to a private individual.

Id. at 162.

11 . The Government witness agreed that use as an auto repair shop constituted the “highest and best use of the property,” a proper consideration for valuation in condemnation proceedings. See Olson v. United States, 292 U.S. 246, 255, 54 S.Ct. 704, 708, 78 L.Ed. 1236, 1244 (1934). See generally 1 Orgel, supra, § 30 and cases cited therein.

12 . See generally Nichols on Eminent Domain, supra, § 18.42[1],

It has been held that, though a court may properly strike from the record testimony of value which is based upon an erroneous theory of value, this ruling should not be made when a portion only of the testimony of the witness is improper. In such case a motion should be directed to that portion of the testimony which is objectionable.

Id. at 18-184, 18-185 (citations omitted).

13 .Relevancy and competency traditionally have been viewed liberally with respect to “expert” testimony in condemnation proceedings.

In general, unless the testimony of the witness is such as to show a complete misconception of the proper method of determining value, or ignorance of the subject matter, his

testimony will be admitted; and the insufficiency of his information, or the basis of his opinion will affect the weight of his testimony.

1 Orgel, supra, § 133 at 576-77 (citations omitted).

We believe that the special rule permitting owners to testify in condemnation proceedings demands an even greater deference to the owner’s testimony.

14 . The admissibility of appellant’s testimony was argued outside the presence of the jury. The argument proceeded in pertinent part as follows:

APPELLANT’S COUNSEL: May I address the Court?

THE COURT: Yes.

APPELLANT’S COUNSEL: As Your Hon- or knows, I in no way want to trangress any ruling of Your Honor. I had anticipated asking this gentleman ultimately the key question as to what he thought this particular piece of property is worth. And there is no way on earth that he can answer, if he is asked, without replying to the question: Did you take Bladensburg Road into account in any fashion. In reaching that figure, he has got to answer “yes”.

Now if that is Your Honor’s ruling, then he can’t testify another word.

THE COURT: That is the Court’s view on the matter. He is not a real estate expert.

APPELLANT’S COUNSEL: I understand that.

THE COURT: He is limited in his testimony as to the value of this property being taken, giving his opinion as to that. But he can’t go into other real estate values. That is the opinion of the Court. Is that the position of the government?

GOVERNMENT COUNSEL: Yes, Your Honor.

THE COURT: ... I have ruled on it.

APPELLANT’S COUNSEL: I’m sorry. Your Honor knows I had not anticipated this ruling, and I am trying to see how to proceed. This is sort of a body blow to my case.

THE COURT: I think the testimony of a property owner is of necessity when he is testifying as a property owner when he gives his view of the value of his own property— for whatever value that opinion is worth.

THE COURT: But I am not going to let him [go in] to [sic] into the value of other real estate.

THE COURT: Does the government agree with that form?

GOVERNMENT COUNSEL: He can go ahead and ask the questions, Your Honor. I strongly suspect that I am going to move to strike the testimony.

THE COURT: He is not going into the Bladensburg property at all. You are limiting him to the Florida Avenue property. Right?

APPELLANT’S COUNSEL: That’s all I am going to ask; yes, in light of Your Honor’s ruling.

THE COURT: His opinion as to its value?

APPELLANT’S COUNSEL: Yes, Your Honor.

THE COURT: Can’t he give that?

GOVERNMENT COUNSEL: Yes, Your Honor, if he has something to substantiate it.

THE COURT: Now wait a minute. The minute you say that he will try to substantiate it by showing what he paid for this property on Bladensburg Road and what he thinks that is worth.

GOVERNMENT COUNSEL: Your Honor, I would cite United States versus Sallards [sic], referring to Sowards v. United States, 370 F.2d 87 (10th Cir. 1966)] which stands for the proposition that there has to be some substantiation to the land owner’s testimony of value. The citation of this particular case is 370 Fed.2d 87.

THE COURT: You are not helping me very much. What do you mean by substantiation?

GOVERNMENT COUNSEL: Perhaps he can give testimony as to what he paid for it—

THE COURT: What difference is it going to make as to what his testimony is going to be if he is competent to testify? If he says the property is worth $100,000.00, you say that is not competent, I suppose. But if he says it is worth $60,000.00, you would say it is competent. Is that what you are trying to say?

GOVERNMENT COUNSEL: Well, I certainly wouldn’t argue if he said the value was $60,000.00, Your Honor. I don’t think we would be here.

THE COURT: I don’t think you would either. What is it you propose to do . . . ?

I am as confused as anybody in the courtroom.

APPELLANT’S COUNSEL: That’s what bothers me. My understanding of the law was that the owner was entitled to testify as to value, and that he was also entitled to say upon what he based that opinion of value. If he is wrong on it, it is amply demonstrated and the jury can then disregard it.

THE COURT: No; I don’t think he can testify as an expert.

APPELLANT’S COUNSEL: Yes, Your Honor. . . .

As I read the requested instruction that these gentlemen submitted to Your Honor— it is instruction 15 [[sic] referring to plaintiff’s requested instruction No. 14], Your Honor — one thing they say in there specifically is that consideration may be given to his testimony as to why he thinks the land is valuable.

And it was on that basis — my impression is that what we are really talking about is the weight that should be given to his testimony. And Your Honor, I think, hit the nail on the head a minute ago when you asked my learned colleague if the man were asked, could he give his reason for his opinion.

GOVERNMENT COUNSEL: And that is why I move to strike his testimony, Your Honor. If he has no basis to give his testimony, which [appellant’s counsel] indicates that he does not, then I would have to move to strike his testimony.

APPELLANT’S COUNSEL: No; I didn’t indicate that at all. I indicated that this was of necessity a factor that the man took into account — that he can’t disregard that which he honestly takes into account. It is one factor. There is no question about it in his mind. If he stood up before Your Honor and said, “My opinion of the value of that land is X dollars; and in reaching that value I am not in any wise [sic] influenced by my operation and my purchase further out the street on Bladensburg Road,” he would not be telling the truth. And he will be telling this Court the truth.

THE COURT: Do you mean he would take into consideration what he paid for the property on Bladensburg Road?

APPELLANT’S COUNSEL: Of course he would — and what he is doing with it and how good it is to him because he is a buyer. He knows the best use of it.

THE COURT: Do you object to it?

GOVERNMENT COUNSEL: Yes, Your Honor. I do object to his testifying as to value if he has no basis for that value.

THE COURT: I’ll substantiate the objection. If he has to rely on the Bladensburg property, I’ll rule that he may not state an opinion as to its value.

APPELLANT’S COUNSEL: Your Honor, I only indicated, and I make a distinction between partial reliance as one influencing factor and not at all.

THE COURT: That is my view of the matter. He is not qualified as an expert, and he is not qualified to base his opinion upon the operation of the Bladensburg Road property.

15 . See, e. g., Arkansas State Highway Comm’n v. Russell, supra.

It is at once apparent that if we sustain the commission’s contention it will hardly be possible in the future for a landowner or an expert witness to give an admissible opinion about the value of the property. In nearly every instance a landowner who has known his land for years, or an expert witness who has acquainted himself with a piece of property, takes into account facts that he knows only by hearsay or that for some other reason would not be admissible as independent evidence upon the examination in chief. If the witness’s candid admission that he has considered such matters destroys his testimony, only a dishonest or an ill-informed witness can give an admissible opinion about the value of property.

398 S.W.2d at 202 (emphasis added). See also United States v. 86.52 Acres of Land, 250 F.Supp. 619 (W.D.Mo.1966) (landowner’s testimony based on facts not established and, in part, on erroneous legal assumptions admissible as exception to expert witness rule requiring support by facts upon which opinion is based).

16 . PLAINTIFF’S REQUESTED

INSTRUCTION NO. 14

The owner of the property involved in this condemnation action is permitted to testify as to his opinion of the fair market value of his property. The testimony of an owner is proper, but the property owner must testify as to the market value of the land and not as to the personal value of the property to such property owner. You should distinguish between his testimony as to facts about his property and his testimony as to his opinion. His testimony as to the fair market value of his property is to be weighed and considered by you in the same manner as that of any other witness expressing an opinion as to fair market value. Consideration may be given to his testimony as to why he thinks the land is valuable; however, the fact that he places some value upon it because of his personal interest in it is not a fair basis for determining market value. If you should decide that the owner has not made a sufficient investigation in order to inform himself about all material facts, not only about his own property but about the market as well, or that his opinion was expressed without sufficient knowledge of all material facts for form [sic] an opinion or if the reasons advanced by him are unsound, you may disregard his opinion entirely, or give to it such weight as, in your judgment, you think it merits after considering all the evidence before you. Furthermore, in deciding what weight to give to such testimony, you may consider the extent to which the interest of the witness in the outcome of these proceedings may have affected his opinion.