Carl M. Freeman Associates, Inc. v. State Roads Commission

Finan, J., delivered the opinion of the Court. The Circuit Court for Montgomery County, over the objec ³²¹ tions of the property owner in a condemnation proceedings, admitted into evidence testimony as to the value of a 7.94 acre parcel of land being condemned, on the basis of its use as residential-agricultural property, when the contiguous land surrounding it, which together with the condemned parcel originally formed an 80 acre tract, had been rezoned by the County Council for Montgomery County 1 from residential-agricultural (R-A) to commercial-apartment use (C-P). 2 The Council had withheld any change in zoning from the 7.94 acres because it had been delineated for highway use on a proposed master plan. The action of the Council in withholding the rezoning from the condemned parcel was compelled by section 111-48f of the Montgomery County Code -which provides: £‘f. Any area reclassified by a local or a sectional or District plan map amendment shall exclude and be held to exclude any portion of the area which lies in the bed of a road, street, or alley, whether existing or proposed on a plan adopted by the Commission or other duly constituted public authority.” The question before this Court is whether testimony as to the value of the condemned property based on the zoning classification R-A in which it was frozen by the operation of section lll-48f of the Montgomery County Code should have been admitted in evidence, when, but for the withheld zoning, the highest and best use of the land would have been R-20 and C-P classifications.

The record reveals that on March 3, 1964, the Montgomery County Council (Council) granted an application of the former owner of the 80 acre tract to have 21.62 acres of the tract reclassified from R-A to a C-P zone. On June 23, 1964, the Council granted a second application for the reclassification from R-A to an apartment zone (R-20) of 50.9 acres. ³²² The resolution of March 3,1964, stated: “Application * * * is hereby granted for 21.62 acres being the amount of land remaining after withholding 1.68 acres for realignment of Georgia Avenue as shown on the Upper Northwest Branch Master Plan.” The resolution of June 23, 1964, stated: “Application * * * consisting of 57.08 acres * * *, is hereby granted for 50.9 acres, more or less, withholding from rezoning all the land within the proposed widenings of Georgia Avenue and Bel Pre Road, as shown on the Upper Northwest Branch Master Plan of April 26, 1961.” On July 30, 1964, the appellant entered into a contract with the zoning applicant for the purchase of the 80 acres for $2,-383,924.68. This price was obtained by placing a value of $32,-300.00 per acre on 23.30 acres included in the commercial zoning application and $28,500.00 per acre on the 57.07 acres included in the apartment application. No exception was made for the 7.94 acres from which zoning was withheld.

The tract in question was conveyed to the appellant on December 29, 1965. On March 29, 1966, the State Roads Commission of Maryland (Commission) commenced condemnation proceedings to take the 7.94 acre tract then owned by Carl M. Freeman Associates, Inc. (appellant), located at the southeast corner of the intersection of Georgia Avenue and Bel Pre Road, Montgomery County. Georgia Avenue is a major north-south road leading into the District of Columbia, and Bel Pre Road is an arterial highway. The appellant did not accept the Commission’s offer for $185,100.00 and filed its petition to certify the taking to the Board of Property Review in accordance with Rule U27 b 1 Maryland Rules.

The Board determined that the fair market value of the property was $535,134.00. The Commission noted an appeal from the award on January 24, 1967 and on February 9, 1967 filed a petition of condemnation in the circuit court. In this petition the Montgomery County Council was named ³²³ as a defendant but it chose not to file an answer or otherwise participate in the proceedings. The 7.94 acres sought to be condemned is a strip of land 2900 feet in length along Georgia Avenue with a varying width of 30 feet to 210 feet and was the parcel withheld from reclassification from R-A by the Council when the remaining portion of the 80 acre tract was reclassified commercial-apartment.

Upon the trial of the case the property owner moved the court to instruct the Commission that in its opening statement it should not make any reference to the R-A zoning classification of the property involved, which instruction was denied. During the trial the Commission offered the testimony of expert witnesses, none of whom based their appraisal on the value of the tract as R-20 zoned property. The witness, Lebling, testified that he appraised the 7.94 acres at $12,000.00' per acre or $93,192.00 based upon the sales price of the unimproved land in the area zoned R-A. This testimony was admitted over the objections of appellant’s counsel. There was also testimony by Mr. Lebling to the effect that he concluded that the Council had withheld apartment and commercial zoning from the 7.94 acre tract so as “to provide for the traffic to and from” the larger portions of the tract and that the zoning applications awarding commercial and apartment zoning to the larger portions had been conditioned upon the withholding of zoning from the 7.94 acre tract, all of which testimony was admitted over the objection of the appellant’s counsel.

The Commission also called Mr. Wormcke, an expert witness, who testified that when he first appraised the property for the Commission, he placed on it a value of $370,000.00 without regard to the withheld zoning, and discounted this value by 50 °/o as representing his opinion of the result of a negotiated figure; it was on the basis of this appraisal that the $185,000.00 was paid into court by the Commission. He further testified that he subsequently changed his evaluation and was now of the opinion that the Commission should pay no more than $12,000.00 an acre. Wormcke also stated that he used the R-A zoning classification in arriving at an evaluation of the property. The appellant established its value of the property by way of the testimony of three real estate appraisers who, as expert ³²⁴ witnesses, testified that the highest and best use of the property was for apartment development (R-20), and placed a valuation ranging from $318,000.00 to $342,800.00 based on R-20 use of the land.

The lower court in its instructions to the jury in general followed the definition of “fair market value” as set forth in the Maryland Code (1967 Repl. Vol.) Art. 33A, § 6. It did however add that, “Consideration may also be given to the reasonable probability of the area acquired being rezoned within a reasonable time.” The appellant in the court below contended that a condemnation of the property based on evidence of valuation, other than that of apártment-commercial, constituted a taking of private property without just compensation. We are aware that a discussion of the legal effect of section lll-48f of the Montgomery County Code in context with the case at bar leads into the question of whether there can be a collateral attack upon the ordinance which may appear contrary to the view expressed by this Court in Congressional School v. State Roads Commission, 218 Md. 236 , 146 A. 2d 558 (1958).

There Chief Judge Bruñe, speaking for the Court, stated by way of dictum, that a collateral attack on the validity of a zoning ordinance in a condemnation suit is impermissible. The facts and law as enunciated in Congressional School , are of sufficient import in relation to the case at bar, as to warrant a detailed comparison. In Congressional School all of the land to be taken was zoned as residential. Thisi classification had been retained approximately three years before the taking for a strip 100 feet wide measured from the center line of the existing road.

Next to this strip was another strip 200 feet wide which was zoned as commercial and beyond that the remainder of the School’s property was zoned as light industrial. There was evidence from one of the Commission’s witnesses that the strip zoned as residential “was reserved for road widening.” The Court in Congressional School used language which would be most helpful to us now, except that it was by way of dictum: “There seems to be general agreement among the au ³²⁵ thorities which have considered the question that zoning cannot be used as a substitute for eminent domain proceedings so as to defeat the constitutional requirement for the payment of just compensation in the case of a taking of private property for public use by depressing values and so reducing the amount of damages to be paid. See 1 Metzenbaum, Zoning (2nd Ed.), pp. 74-79; 1 Orgel, Valuation under Eminent Domain (2nd Ed.), § 1, p. 10; 1 Yokley, Zoning (2nd Ed.), § 163; Robyns v. City of Dearborn, 341 Mich. 495 , 67 N.W.2d 718 ; Grand Trunk Western R.R. v. City of Detroit, 326 Mich. 387 , 40 N.W.2d 195 ; State ex rel Tingley v. Gurda, 209 Wis. 63 , 243 N. W. 317 ; Henle v. City of Euclid, 97 Ohio App. 258, 125 N.E.2d 355 , appeal dismissed, 162 Ohio St. 280 , 122 N.E.2d 792 . Cf.

Scholl v. Borough of Yeadon, 148 Pa. Super 601 , 26 A. 2d 135 , (ordinance requiring setbacks, where the purpose was to effect a street widening more cheaply). See also In re Gibson, 28 Ont.L.R. 20, 11 D.L.R. 529 (1913), in which a city by-law classified certain property as residential and imposed a set-back restriction. The court there said that if the sole purpose of these restrictions was to prevent any building on the property pending its condemnation for use as a street, then the by-law should be treated as a part of the expropriation proceeding.

The court went on to say that there 1 were certain difficulties in so treating the restrictive by-law, but did not elaborate as to what they were.” However, the Court never came to grips with the validity of the zoning ordinance which impressed the 100 foot strip with a residential classification in an effort to reserve it for road widening purposes. The case was reversed and remanded for a new trial on the grounds that the court below had erred in a ruling on the admissibility of evidence unrelated to the ordinance. The Court categorically refused to consider any argument relating to the validity of the zoning ordinance involved in Con ³²⁶ gressional School, indicating that the proper procedure to have been followed would have been by way of a bill in equity seeking injunctive relief' against the application of the ordinance thus making a direct, instead of a collateral, attack on its constitutionality. In this regard the Court pointed out that the zoning authority would be a necessary party to such action and thus be in a position to defend the ordinance, whereas in Congressional School it was not a party to the proceedings.

In Congressional School the Court also made comment on the fact that the objectionable zoning classification had occurred three years prior to the taking and that although under the existing laws at that time, the property owner had no statutory right of appeal to either the circuit court or the Court of Appeals, proceedings in equity were available to enjoin enforcement of an action alleged to be unconstitutional. Yet, for over three years the property owner failed to take any action to challenge the imposition of the residential