Board of Education v. Hughes

Smith, J., delivered the opinion of the Court. In what will be an unsuccessful attempt to obtain a new trial on the issue of damages in a condemnation proceeding, appellant, the Board of Education of Montgomery County (the Board), here objects to testimony of the owner as to what he paid for the whole tract and, also, to testimony of one of the owner’s appraisers relative to what he considered to be an integral part of fair market value, namely the value of the income to be derived from the land pending its full development. The amount of damages is the only point at issue, since public necessity for the acquisition was admitted by the owner and stipulated to at the trial. Herbert H. Hughes, one of the appellees, owns the land in question.

The other appellees are the trustees of a deed of trust which is a lien on the subject property. Hughes, therefore, is the one vitally interested. His 10.4 acre tract of land is located between Germantown and Gaithersburg in the Middlebrook area of Montgomery County; between Maryland Route 355 and Route I-70S. In fact, Route 355 is the eastern boundary of the whole parcel.

The Board sought to condemn the back 3.4789 acres for the site of a future school to be known as Urbana Elementary School. The property owner retained the portion of the land fronting on ³³⁷ the highway. In essence, it may be said the Board’s chief complaint is its state of shock at a jury verdict of $83,500, or about $24,000 per acre, which seems a bit high to it for unimproved back land in Montgomery County even in this present day and age. Since this is an eminent domain case in which the points raised on appeal have to do with the admission of evidence, we shall evaluate the objections in the light of Hance v. State Roads Comm., 221 Md. 164, 156 A. 2d 644 (1959), where Judge Prescott said for the Court: “Courts are reluctant to set aside verdicts for errors in the admission or exclusion of evidence unless they cause substantial injustice.

This is especially true in condemnation proceedings. Such cases usually consume much time in trial, and are expensive in nature. As a rule, they are determined by a myriad of different items of evidence. The exclusion or admission of small items of evidence of doubtful materiality are not likely to be of great importance in the outcome of the case, and most courts refuse to set aside a verdict in cases of this kind, for error in the rulings on questions of evidence, unless, as indicated above, substantial prejudice be shown. 5 Nichols, [Eminent Domain], Sec. 18.1 [2].”Id. at 176.

To like effect see Md. Community Dev., Inc. v. S. R. C., 261 Md. 205, 208 , 274 A. 2d 641 (1971); Belworth, Inc. v. City of Baltimore, 256 Md. 369, 372 , 260 A. 2d 284 (1970); First Nat’l Realty v. S. R. C., 255 Md. 605, 610 , 258 A. 2d 419 (1969); and State Roads Comm. v. Kuenne, 240 Md. 232, 235 , 213 A. 2d 567 (1965). i Under the provisions of Maryland Code (1957, 1973 Repl. Vol.) Art. 21, § 12-104, the value of the land was determined as of the date of trial, June 5, 1973, since there had been no prior taking. The Board complains because the owner was permitted to testify, over objection, that he paid $247,500 for ³³⁸ the whole tract when he bought it in December, 1965. It urges that this testimony was not admissible since “the sale occurred seven and one-half years prior to the time of taking and did not cover substantially the same property which is the subject of the condemnation proceedings.” In Baltimore City v. Schreiber, 243 Md. 546, 551 , 221 A. 2d 663 (1966), we permitted a property owner to testify as to the purchase price.

Judge Marbury there reviewed the authorities for the Court. The Board regards as significant his.statement for the Court: “The general rule in this country and in this state is that ‘evidence of the price paid for condemned real property on a sale prior to eminent domain proceedings is admissible in the proceedings at least where the sale is voluntary, is not too remote in point of time, or is not otherwise shown to have no probative value.’ (Emphasis added.) Anno. 55 A.L.R.2d 793 -812, and cases therein cited at pages 794-797.” Id. at 551. It also sees significance in the further statement in that case: “[T]he better rule seems to be that if, in the sound discretion of the trial judge, the time is not so remote as to destroy its probative value in regard to the issue of present fair market value, then he should admit the testimony and leave the weight of the evidence for the consideration of the jury, along with such distinguishing factors as may be brought to the attention of the jurors on cross-examination or otherwise.” Id. at 552. In Schreiber , the Court held that evidence of the purchase price 10 years prior to condemnation as to one parcel and nine years before that date as to another was not “so remote in point of time as to have no probative force in regard to present fair market value, and thus [it found] no abuse of discretion on the part of the trial judge in failing to sustain objections to this testimony.” The Board suggests, however, ³³⁹ that in this case “a new condition is presented which has not heretofore been considered by this Court.” It says that here “evidence was introduced as to the seven-and-one-half-year old purchase price of the 10.04-acre tract of which the subject property was only a small part.

Furthermore, the entire tract contained far more desirable land at the time of the earlier sale fronting on a state road and was improved by and benefited from the operation of a trailer park and restaurant business.” The ancient Preacher of more than 2000 years ago, said by some to have been King Solomon, 1 one of the wisest and noblest of men, and said by others to have written as much as 700 years after Solomon, 2 said, “[T]here is nothing new under the sun.” 3 Just a bit less than 200 years ago the similar observation was made, “There is nothing new except what has been forgotten.” 4 Thus, it is not surprising that the Board’s proposition here is not new and that our earlier consideration of it has been overlooked or forgotten. In Williams v. New York, P. & N. R.R., 153 Md. 102 , 137 A. 506 (1927), cited in Schreiber , a railroad company sought to condemn land near Salisbury in Wicomico County. The trial court excluded testimony of one of the defendants “in regard to a recent sale to him of a portion of the land sought to be condemned, and the price agreed to be paid by him, and his payments on account of the purchase money.” Judge Adkins said for the Court: “There was reversible error in these rulings. It was said in Baltimore v. Smith, 80 Md. 458 : ‘We think, ³⁴⁰ therefore, that the prices realized at sales of the land in question and of similar land in its vicinity, made within a reasonable period of time theretofore, being voluntary and not forced sales, are admissible in evidence, either on direct or cross-examination of witnesses conversant with the facts.’ There is nothing in the record to indicate that this sale was not made in good faith; and if it was, there could not well be more relevant testimony as to the value of the property.” Id. at 110.

The objection of the Board here overlooks the measure of damages in a partial taking, a point that did not escape the trial judge (McAuliffe, J.). He said: “The valuation schedule formula requires a consideration of the value of the entire tract before the taking and after the taking. Therefore, the value of the entire tract is relevant to the proceedings, is it not?” Chief Judge Bruñe said almost precisely the same thing for the Court in Baltimore v. State Roads Comm., 232 Md. 145 , 192 A. 2d 271 (1963): “[I]n condemnation cases, the value of what is taken is ordinarily to be determined in a case of partial taking by the difference between the fair market value of the entire tract before the taking and the fair market value of what is left after the taking. See Veirs v. State Roads Comm., 217 Md. 545, at 554-55 , 143 A. 2d 613 , and cases there cited . . . .” (Citing cases.) Id. at 152.

The elapsed time between the date of purchase in this case and the date as of which fair market value was to be determined was less than that approved by us in Schreiber . Evidence as to the purchase price of the entire tract was relevant, since the jury was obliged to: determine the difference between the fair market value of the entire tract before the taking and the fair market value'of the remaining ³⁴¹ tract after the taking. Accordingly, there was no abuse of discretion on the part of the trial judge in admitting into evidence the testimony of the owner as to the sum he paid for the purchase of the whole tract at a time seven and one-half years prior to the date of trial. ii The second point of controversy concerns testimony of an expert for the landowner. At the time of trial the whole tract was zoned R-R. Under the Montgomery County zoning ordinance the R-R zone generally called for single-family, detached dwellings on lots having a minimum size of 20,000 square feet.

The area involved is covered by the Germantown Master Plan. It recommends future R-30 zoning for part of the tract and R-20 zoning for the remainder. Both zones permit multiple family residential construction. The R-30 zone allows a maximum of one dwelling unit per 3,000 square feet of land.

The R-20 zone allows a denser construction of one dwelling unit per 2,000 square feet of land. Appraisers for the Board and the owner were in agreement that there was a reasonable probability of a change in the zoning classification within a reasonable time. See Hutchison v. Balto. Gas & Elec., 241 Md. 329, 332-33, 216 .

A. 2d 573 (1966). The testimony of all appraisers was that the highest and best use for the whole tract was multi-family residential development in line with those envisioned changes. The owner’s expert testified that in his opinion the value of the whole tract before the taking was $276,100 and that the value of the portion remaining after the taking was $180,500, a difference of $95,600 or about $27,500 per acre for the land taken. Further inquiry developed the hypotheses upon which he rested his opinion.

He testified relative to sales with unit values of $33,850, $26,500, $24,713, and $24,047 per acre; that his “adjusted” unit values for the same sales were $26,400, $21,700, $23,452, and $21,414; and that in making adjustments he considered time, zoning status, and location. Without objection, he testified that the average of ³⁴² his adjusted values was $23,250 per acre. From this it developed that he had used a “unit rate” for subject land of $22,500 per acre and that he had added to this the sum of $5,000 per acre to reach his appraisal of $27,500 per acre as the present fair market value. This $5,000 was based upon income derivable from the use then being made of the land as a trailer park, etc. He said a prospective purchaser normally would retain title to any given tract of land until it was developed by him to its highest and best use and that the expense of taxes, mortgage interest, possible mortgage repayment, and possible insurance in the interim would all be considered a burden.

He claimed that a purchaser would take into consideration in his valuation of the whole that income which might be produced in the interim which he could apply to those expenses. Two bases for the objection are advanced. The first is that the income data relied upon was “from a two-year-old tax return.” This objection went to the weight of the evidence rather than to its admissibility. The Board was in a position to follow up on this on cross-examination and it did.

Of course, the age of that data was available to counsel for comment in their argument to the jury. The second basis for objection seems to be that the approach “seeks to allow the property owner to have his cake (value for the highest and best use) and eat it too (add an incremental value for income derived from present use).” The Board further states: “As was readily admitted by [the appraiser], the improvements on the eastern portion of the tract would have no value for the highest and best use of the property. Only by his ingenious ‘back-door’ method was he able to testify concerning value attributable to income from improvements which would have to be destroyed under the highest and best use of the property.” It contends that this is but a piling of value onto value, most recently considered and rejected by us in Mont. Co. v. Old Farm Swim Club, 270 Md. 708 , 313 A. 2d 458 (1974), and ³⁴³ previously considered in Smith v. State Roads Comm’n, 257 Md. 153, 161 , 262 A. 2d 533 (1970).

In Smith, the trial court was held to have properly excluded testimony regarding the value of sand and gravel deposits separate and apart from the value of the land. We do not see those cases as applicable to this situation. In Old Farm Swim Club an expert had been permitted to testify as to the value of certain shade trees. He described a formula used by the International Shade Tree Conference as a basis for valuation.

Through the application of that formula he then valued 28 trees at more than $11,000. On cross-examination he conceded that he was not a land value expert and that his determination as to the value of the trees had no relationship to the value of the land. Judge Singley pointed out for the Court that the expert’s testimony had the effect of “completely obscuring the true test — the extent to which the trees enhanced the value of the property taken, an element to be taken into account, as we assume it was, in the experts’ opinion of the value of the property condemned.” Smith is likewise distinguishable. In that case the trial court “excluded testimony before the jury as to the value of the mineral deposits separate and apart from the value of the land as a whole.” As Judge Finan there put it, “the expert witness [had] sought to testify before the jury how he arrived at his evaluation of the mineral deposits by determining what was the unit value of the minerals in place and multiplying that value times the quantity.” He said for the Court: “We think such testimony is not only highly speculative, but if a jury is to intelligently analyze it without accepting the gratuitous assumptions inherent in such testimony, it requires them to reach separate conclusions on a gallimaufry of collateral issues which are more apt to confuse than enlighten.

We think the danger in such testimony was set forth with clarity in U.S. Ex. Rel. TVA v. Indian Creek Marble Co., 40 F. Supp. 811 (D. Tenn. 1941), wherein the Court rejecting such testimony stated: ³⁴⁴ ‘Fixing just compensation for land taken by multiplying the number of cubic feet or yards or tons by a given price per unit has met with almost uniform disapproval of the courts. This is true because such valuation involves all of the unknown and uncertain elements which enter into the operation of the business of producing and