Mayor of Baltimore v. Himmel

Burke, J., delivered the opinion of the Court. The Mayor and City Council of Baltimore instituted proceedings for the condemnation in fee of eleven pieces of property for use in connection with the establishment by the City of a Civic Centre. A portion of the property was subject to ground rent. By their inquisition the jury found that the damages which would be sustained by the owners of the ⁶⁷ entire property by the taking, use and occupation by the City to be $283,500.00.

The value of the ground rents (which was fixed by agreement and about which there is no question in this ease) was found to be $15,230.00. The balance, $268,270.00, was awarded to the other owners. The appeal before us was taken from the judgment entered on the inquisition by the Baltimore City Court. The property condemned is located in the block bounded by Frederick, Lexington, Harrison and Fayette streets, and contains about one-half of the block.

Eight pieces of this property are improved arid three are unimproved. The entire property condemned was used and occupied by the appellees as a manufacturing plant for the manufacture of furniture: The business was an old, well established and quite an extensive one. The property is located in a manufacturing section of the City, on good streets, and of easy access to wharves and railroads. The buildings are well adapted to the land and the locality, and are so connected up as to enable the owners to use them all as useful and separate units in the prosecution of their business.

Expensive and suitable machinery was installed upon the property — boilers, engines, a sprinkler and heating system, shafting, motors, elevators, electric wiring, plumbing, etc. Some of this mechanical equipment was permanently attached to the soil, and others of it could not, be detached without greatly injuring' it. The evidence shows that the appellees were the owners of a large, valuable and well equipped manufacturing plant. For the disposition of the legal questions presented by the record it will be sufficient to deal with the evidence according to its general purport and effect, as it relates to the qirestions to be decided. The method pursued by the City to prove the present fair market value of the property taken was this: It called competent real estate experts, who first valued each separate piece of land, and then gave their opinion as to how much the value of each lot was enhanced by the improvements, and stated fully the reasons upon which their valuations were based.

This method of arriving at the value ⁶⁸ of the property was made very clear from the following extract from the testimony of Harry E. Gilbert, the first witness called by the City. After testifying to the value of each lot as unimproved and to the amount the improvement thereon added to each lot, he testified that: “The aggregate of his land value is $36,835. He thought that the added value which the improvements gave to the property was $107,150, without reference to the sprinkling system. He considered that the latter gave another added value of $5,500 and that the boiler house gave an added value of. $500, making the aggregate value of the property in fee $150,230.

He had reached this conclusion through sales in the neighborhood and had considered rentals and his knowledge of what buildipgs added to the land values, what they are worth on the market. He had not given or attempted to give any. construction value of the buildings or a reproduction value. The reason for this was that it .was his experience and the experience of every real estate man (and it is acknowledged) that that process will not give one the value of the land plus old buildings; because there are other things that enter into the value of property that depreciate the property. There is a thing that is very vital and important known as economic depreciation, independent of'structural depreciation.” Charles iST.

Boulden, the other real estate expert for the City, adopted the same method of valuation, and “gave his judgment as to the value of the’ land in each separate lot, these figures aggregating $38,320.83, and testified that he considered the building added to the value of the property an aggregate of $105,300, making the aggregate value of the property $143,620.83. Deducting the value of the ground rents, as agreed upon, $15,320, the -value of the Himmel interests in the property was $128,390.83. He testified that he reached these conclusions from other sales in the neighborhood in comparison with the land value and values of the buildings on the property. Then he checked it up by comparison with rental value.” Richard R. Pue testified that': “He considered the fee simple value for the property $135,- ⁶⁹ 596, and that the interest of the Himmels, after deducting the capitalization of the ground rent, to be worth $120,366.

The land value alone he considered to be $34,010. It was his opinion that the buildings added $101,586 to the value of the, land. After an inspection of the property and a consideration of its location, he compared that information with sales of other properties, which he analyzed, and with their rental values. And to this information he applied his experience as real estate man and reached the conclusion stated.” Neither of these witnesses placed any value on the machinery or other mechanical equipment other than that mentioned by Mr. Gilbert.

Those witnesses furnished the principal evidence on the part of the City to prove the value of the property taken. Mr. Gilbert valued the entire interest in fee at $150,230.00; Mr. Boulden at $148,390.83, and Mr. Pue’s valuation was $135,596.00. The landowners pursued, in one respect, a totally different method of arriving at the fair value of the property. They called James Carey Martien, William E. Eerguson, and Charles EL Steffey, each competent real estate experts, and each gave his valuation of the land embraced in the condemnation.

Mr. Martien valued it at $72,877.00 in fee; Mr. Eerguson at $68,328.32; Mr. Steffey at $73,910.00. Mr. Martien and Mr. Steffey said the buildings upon the property were well adapted to the land and the surroundings, and that the property’was being used for its highest utility. These witnesses, although familiar with the character of the buildings, expressed no opinion as to the amount they added to the value of the land, bxxt said their structxxral value represented a .fairly proportionate enhancement in the market value of the land, and that the accurate or best, method to determine the valxxe of the property, where it was improved as this was to its highest utility, is to ascertain throxxgh the real estate broker the value of the ground, and through the builders the value of the improvements. The appellees then called Otto G. Simonson, an architect of high qualifications and wide experience in his profession, and K. B. Mason, a con ⁷⁰ tractor and builder of forty years’ experience.

Each of these witnessed was familiar with the buildings upon the land, and each testified as to the structural or reproduction value at the present time, with what they considered due allowance for depreciation. Mr. Simonson estimated the reproduction value to be $255,351.42, and Mr. Mason’s valuation was $287,532.11. Other witnesses, upon the same principle, fixed a value upon the boilers, engines and other items of equipment which the appellees claimed to be fixtures. Upon the testimony produced by the appellees, as we have outlined it, arises one of the principal questions in the case.

It is this: Was evidence of structural or reproduction value, with due allowance for depreciation, admissible in this ease to show market value ? This questiop is raised by the seventh, eighth, eleventh, twelfth, thirteenth, fourteenth, fifteenth, seventeenth, nineteenth and twentieth bills of exceptions. In McGaw v. Baltimore, 131 Md. 430 , decided in 1917, the lower Court by an instruction directed “the jury to disregard the testimony of the appellant’s witness as to the costs of constructing the building at the present time.” This ruling was held to be reversible error. In discussing the question of the admissibility of evidence of structural value in condemnation cases the Court stated the general rule to be, “that such value may be proved, with a due allowance for depreciation, as reflecting upon the market value of the land, provided the buildings are well adapted to the land and its surroundings and their structural value represents a fairly proportionate enhancement of the market value of the land.

New York v. Dunn et al., 198 27. N. Y. 84, 41 L. R. A. (N. S.) 411, note; Patch v. Boston, 146 Mass. 52 ; Jacksonville & S. E. Ry. Co. v. Walsh, 106 Ill. 256 ; Sedgwick on the Measure of Damages, 9 Ed. Vol. 3, Sec. 1168, 10 R. C. L. Sec. 124.” All the conditions justifying the admission of reproduction value under the rule laid down in that case are present in this, and unless we overrule that case we must hold that the evidence excepted to was properly admitted.

It must be admitted that the decisions in other jurisdictions are not.uniform ⁷¹ upon the question, but it is useless to discuss them if we are' prepared to adhere to our former ruling. It is contended that the application of that rule in condemnation cases, when the cost of construction is abnormally high, would result in great injustice. But as to that it may be said that under any rule that might be applied some injustice and some unfairness to one or other of -the parties may be found to exist. We do not apprehend that the fears of the City will be realized by the application of the rule in proper cases.

What the owners are entitled to is just compensation for the property taken, and that was the present fair market value of the land taken as enhanced by the buildings and fixtures upon it. The City was condemning the land — not personal property. The buildings and fixtures are a part of the realty, and must be considered and allowed for to the extent that they enhance the value of the land to which they are affixed. It is said in 10 R. C. L., Sec. 124, that: “When a piece of land upon which btiildings have been erected and affixed to the soil is taken by eminent domain, so far as the buildings add to the market value of the land, they must be considered in determining the compensation to be awarded to the owner; and in determining the damage to land not taken, injury to buildings standing thereon must be included.

When fixtures become part of the realty, if the land on which the building stands is taken in whole or in part for the public use, the owner is entitled to have the fixtures considered in determining the amount of his compensation. An owner is not entitled to have buildings, or fixtures valued as separate items additional to the market value of the land; but the issue in each case is the market value of the land with the buildings and fixtures upon it. The owner, therefore, receives nothing for the buildings and fixtures unless they increase the market value of the land. In the ordinary ease, however, the character of the structures is well adopted to the kind of land upon which they are erected, and the cost of the buildings and