Equitable Life Assur. Soc. of United States v. Carmody

Decision Date03 November 1942
Docket NumberNo. 12232.,12232.
PartiesEQUITABLE LIFE ASSUR. SOC. OF UNITED STATES v. CARMODY.
CourtU.S. Court of Appeals — Eighth Circuit

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A. H. Sargent, of Cedar Rapids, Iowa (C. G. Lee, of Ames, Iowa, on the brief), for appellant.

Ed. J. Kelley, of Ames, Iowa, for appellee.

Before SANBORN, THOMAS, and JOHNSEN, Circuit Judges.

JOHNSEN, Circuit Judge.

In a proceeding under subsection s of section 75 of the Bankruptcy Act, 11 U.S. C.A. § 203, sub. s, appraisers appointed by the Conciliation Commissioner, in May 1940, appraised the value of the debtor's farm, consisting of 220 acres in Story County, Iowa, at $24,420, or $110 an acre. Thirteen months later, the debtor offered to pay into court the amount of the appraised value, under subsection s(3), and applied to the Conciliation Commissioner for an order turning over possession and title, free and clear of incumbrances, on this basis. The secured creditor, who had a mortgage lien of over $33,000 on the property, filed a request that the Conciliation Commissioner hold a hearing and fix the value in accordance with the evidence submitted. A hearing of several days was thereupon held and, from the evidence, the Conciliation Commissioner found the value of the farm to be $24,420, or $110 an acre, as had the appraisers, and entered an order that the debtor was entitled to redeem the property for this amount. On a review by the District Court, that court approved and confirmed the order of the Conciliation Commissioner, and the secured creditor has appealed.

Appellant's principal contention is that the finding of the Conciliation Commissioner and the District Court as to the value of the farm is clearly erroneous, because it apparently rests upon the testimony of the witnesses for the debtor, who, it is argued, were "absolutely disqualified as witnesses" and whose evidence "was rendered absolutely incompetent by their own admissions."

The record shows that five real estate salesmen had testified for appellant that in their opinion the land was worth from $135 to $140 an acre, and that five neighborhood farmers on behalf of the debtor had estimated its market value at $100 to $110 an acre. On cross-examination, one of the debtor's witnesses had answered that market value was determined by what the land would produce; another that it depended upon "what the land will produce and the condition of the soil"; the third that it was "all the land was worth"; the fourth that it was "what the land will sell for if it were put up and sold at public auction" or "what it sold for if sold at private sale"; and the fifth that "it is the price that is put on a commodity where neither side has to sell or buy". Some of these answers were, of course, incorrect; others were inexact; and only one perhaps was a reasonably accurate legal definition of market value. But, in the situation presented by the record, we do not believe that it can be said that all of the debtor's witnesses were "absolutely disqualified" to testify, and that their evidence was rendered "absolutely incompetent", and that there was nothing in the record upon which the finding of the District Court and the Conciliation Commissioner could soundly rest.

A full reading of the testimony of the debtor's witnesses shows that they had taken into account and described on the witness stand such various elements entering into the value of the property involved as its location, topography, soil formation and quality, existence of depreciating defects and blemishes, nature and condition of improvements, et cetera. Appellant overlooks, we think, what we have had occasion to point out in other cases, that the determination of land value in an ordinary case is not necessarily a mere alternative choosing between the arithmetical estimates of opposing experts. Burnett v. Central Nebraska Public Power & Irrigation District, 8 Cir., 125 F.2d 836; Samuelson v. Central Nebraska Public Power & Irrigation District, 8 Cir., 125 F.2d 838. The trier of the facts is entitled to consider all the specific factors developed by the evidence, which may be of assistance in determining the value of a tract of land, such as location, character, quality, condition, desirability, et cetera, and to weigh and appraise the entire situation on the basis of the facts shown, in the light of the common knowledge and experience of the community on such a general matter, and to give to the estimates of the experts only such significance as they soundly appear to merit under all the circumstances.

The situation here is hardly identical with that presented in Re Alberti, D.C.S.D. Cal., 41 F.Supp. 380, 381, upon which appellant relies, where the court said: "This review presents the very simple question whether agricultural property can be appraised legally by taking into consideration one factor only, namely, productivity, under the use to which it is being put." In the present case, the witnesses for appellant and those for the debtor clashed sharply in their description and judgment of many of the value factors, such as the condition of the soil and the improvements, and the Conciliation Commissioner was, of course, required to resolve the questions of credibility on the various elements detailed. He was entitled, however, to determine the fact as to each specific element, as he believed it to exist from the testimony, and to use all of such facts, together with such light as he felt was soundly contributed by the varying arithmetical estimates of the witnesses, in formulating his own judgment as to the actual market value of the property, and, on the record before us, we cannot say, nor do we have any reason to believe, that he was applying a false standard or criterion of market value, such as the court held had been done in the Alberti case.

Appellant further contends, however, in effect, that, if all of the debtor's witnesses were not disqualified and if their testimony was not wholly incompetent, the evidence of appellant's witnesses was nevertheless required to be given controllingly greater weight than that of the debtor's witnesses, because they were experienced real estate salesmen, shown by their testimony to be familiar with the prices of all the other recent land purchases...

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