Smith v. Potomac Electric Power Co.

Brune, C. J., delivered the opinion of the Court. The property owner, Thos. Somerville Co. (Somerville), and Alfred H. Smith, who, for convenience, may be called Somerville’s tenant or lessee, appeal separately (both appeals being combined in one record) from judgments entered upon the inquisition of a jury in a condemnation suit instituted by Potomac Electric Power Company (PEPCO). The taking by eminent domain is for purposes of a high tension electric line, and the validity of the taking is not questioned.

Somerville was awarded damages of $42,000 for the taking of the property and Smith was awarded nothing for the value of the remaining term of his “lease.” The appellants complain of some of the court’s rulings on evidence and of some of its instructions to the jury. The tract in question comprises 4.624 acres of land at or near Muirkirk in Prince George’s County. It is not quite rec ⁵⁶ tangular in shape, and is 250 feet in width and approximately 800 feet in length, taking the average of the two sides. One of the short sides abuts on the southeastern side of the right of way of the Baltimore & Ohio Railroad.

Somerville, which acquired the property from the Washington Brick Company (the Brick Company) owned a total of about 68.5 acres on that side of the railroad, when this suit was filed, and the tract condemned cuts a band across it almost in the middle, severing the two remaining parts of the tract. To offset or minimize the effect of the severance, PEPCO proposed by its petition (and these proposals were incorporated in the inquisition) that certain rights outlined as follows be reserved to Somerville and its successors in ownership of the severed tracts: (A) that they, their officers, employees, etc., and visitors may, at their own risk cross the strip at any time and at any and all points; (B) and (C) to construct, maintain and use, and to permit others to use, one or more roads and a railroad line across the strip at approximately right angles to it, subject to limitations as to elevation; (D) to construct, operate, maintain and use, and to permit others to use, underground sewer, water, gas and other utility lines also crossing the strip at right angles; and (E) to require PEPCO and its successors, without expense to them, to dedicate to public use any such road or underground utility line. Somerville and its predecessor had operated a brick manufacturing plant on the tract for some years prior to this suit, which was instituted in August, 1962. On May 3, 1962, Somerville’s predecessor in ownership of the tract, the Brick Company (of which Thomas H. Somerville was the President), entered into an agreement with Smith (for convenience usually referred to below as “the lease”) by which the Brick Company sold to Smith and Smith agreed to purchase the sand and gravel in and upon the tract here involved at a price of 150 per cubic yard (equivalent to 100 a ton).

The lease required that all sand and gravel to be mined and dug thereunder be removed within two years. It also limited the depth to which Smith could dig (though the Brick Company or Somerville later permitted this depth to be exceeded by Smith) and it required Smith to grade and level the areas mined at the expiration of ⁵⁷ the mining period. Smith could terminate the agreement when the mining of sand and gravel from the tract should no longer be profitable. This point was apparently not reached and the lease had about ten months still to run when this suit was tried and the condemnation terminated the lease.

The appellant Somerville’s first contention is that the trial court was in error in declining to give the jury a definition of consequential damages and in instructing the jury that it could offset against such damages the value of the rights of user in the strip being condemned which were to be retained by the owner of the remaining property. The main thrust of this contention appears to be that the result of these alleged errors was that the jury deducted the value of these rights of user from the value of the strip taken. Though it might perhaps have been desirable to state that the only consequential damages suggested in the case were due either to severance or to what the president of Somerville described as the “nuisance” of the high tension wires with respect to the sale or leasing of the remaining property, we think that the instructions given were not misleading because of the absence of such a statement and that Somerville was not prejudiced by its absence. (Cf.

City of Baltimore v. State Roads Comm., 232 Md. 145, 154 , 192 A. 2d 271 , holding it unnecessary to have given an abstractly correct instruction, where its effect might have been to confuse the jury.) The instructions made it clear that there were claims for damages in addition to and separate from the damages payable as an irreducible minimum for the value of the fee in the 250-foot strip, and these damages were referred to as consequential. The value, if any, of these claims for severance damage and “nuisance” (the latter being rather nebulous in a heavy industrial use area) was left entirely to the jury, and the court was emphatic and explicit in telling the jury that the value of any rights of user of the strip could be set off against, but could not be allowed to an amount in excess of, the consequential damages. In one of the several passages in which the court so instructed the jury, it said, after pointing out that these might balance each other: “It may well be that you might find that the consequential damages, if you find any, may be in excess ⁵⁸ of what rights the company grants back, but you couldn’t find that the rights they give back are in excess of the consequential damages because the net result of that would be that you would be taking that from the value of the fee, which the Court instructs you you cannot do.” In the face of such explicit instructions, we find Somerville’s first contention to be untenable. The fact that at one point, in connection with telling the jury that there were no “affirmative benefits” to Somerville from the power line, the court referred to the rights of user as “mitigating benefits” does not alter our conclusion, for the court made it clear that these “mitigating benefits” were merely the rights of user in the strip and that they could be applied only as mitigating — meaning “offsetting, reducing or lessening” — the consequential damages, and that they could not be applied to the fee taking.

In reaching our conclusion that Somerville’s first contention is without merit we have assumed without deciding that there was sufficient proof of severance damages to warrant the submission of the issue to the jury (which the appellee forcefully denies). Even with this assumption we find no error prejudicial to this appellant, if there were any error at all, in the manner in which this issue was submitted to the jury. By its second contention, Somerville complains of the exclusion of the testimony of Captain Eaigle, and of a real estate broker, Mr. Dieudonne, as to rentals of a tract owned by Captain Faigle less than half a mile away from the tract in question. The Eaigle tract consisted of thirteen acres improved by roads and utilities, including five railroad sidings, and by buildings.

The tract being condemned was raw land, scarred from mining operations, and in need of regrading; the other tract was a developed industrial park. It was agreed that use for a similar purpose was the highest and best use for the Somerville tract and that rezoning for such use could readily be obtained. Somerville sought to introduce evidence of rentals in the existing, neighboring industrial park as a basis for valuing its property on a capitalization of earnings if its property were developed for use as an industrial park. We think that the trial ⁵⁹ court properly excluded the proffered evidence because the valuation sought to be deduced therefrom was too speculative in character.

Somerville’s land was not in fit condition for use for industrial development, considerable expense would be involved in putting it in suitable condition for such use, not one building intended for such use was constructed, under contract for construction, or even in a planning stage, and there were no tenants, actual or prospective. This court has consistently required more than speculation as a basis for proving damages in cases not involving condemnation (Abbott v. Gatch, 13 Md. 314 ; Winslow Elevator Co. v. Hoffman, 107 Md. 621 , 69 A. 394 ; Evergreen Amusement Corp. v. Milstead, 206 Md. 610 , 112 A. 2d 901 ; Harry’s Tavern, Inc. v. Pitarra, 224 Md. 56 , 166 A. 2d 908 ); and we think a like rule is also applicable in condemnation cases. In condemnation suits we have held admissible evidence of comparable sales as an aid to determining value and we have left much to the discretion of the trial court in deciding what sales are sufficiently comparable to be admissible (see, for example, Bergeman v. State Roads Comm., 218 Md. 137 , 146 A. 2d 48 ; Lustine v. State Roads Comm., 217 Md. 274 , 142 A. 2d 566 ), but there are limits to such evidence based upon comparability and relevance. See Winepol v. State Roads Comm., 220 Md. 227, 231 , 151 A. 2d 723 , and City of Baltimore v. State Roads Comm., supra, 232 Md. at 151 .

We have also held that evidence based upon rentals of the subject property and the capitalized value thereof may be admissible. See the Winepol, Bergeman and Lustine cases just above cited and State Roads Commission v. Novosel, 203 Md. 619 , 102 A. 2d 563 . In this case we do not reach the question of the admissibility of evidence of rentals of comparable properties, for we think that Captain Faigle’s developed industrial park simply was not comparable to Somerville’s tract, which was wholly undeveloped for similar use and had not even progressed to the planning stage for such use. See Greenfield v. Philadelphia, 282 Pa. 344, 354 , 127 A. 768 .

We may add that Somerville got the benefit of evidence based in part upon the results of the Eaigle operation, despite the exclusion of direct testimony with regard thereto. One of its wit ⁶⁰ nesses, Mr. Dieudonne, a real estate expert, was permitted to testify that he checked his calculation of the value of the Somerville tract, which he stated, against a capitalization of earnings of the Faigle industrial park and that he had full information as to the leases involved in that operation. Cf. Brinsfield v. M. & C. C. of Baltimore, 236 Md. 66 , 202 A. 2d 335 .

The third contention made hy Somerville is that the trial court erred in not permitting two of its officials to testify as to the value of the property. One of them, Thomas Somerville, III, was its president and a director and presumably a stockholder (though evidence of the last is not clear). The other was Mr. John C. Harding, Jr., its vice president and a stockholder, but not a director. There was no showing that either was qualified as an expert on real estate values.

The question thus before us is whether a director, officer and/or shareholder of a corporation, concededly not qualified by reason of special knowledge, is entitled to testify as to the value of property on the basis that he