Appropriation for Highway Purposes, In re

• Decision Date: 27 March 1957
• Docket Number: No. 34928,34928
• Citation: 166 Ohio St. 249,142 N.E.2d 219
• Parties: , 2 O.O.2d 82 In re APPROPRIATION FOR HIGHWAY PURPOSES. The QUEEN CITY REALTY CO., Appellant, v. LINZELL, Dir., Appellee.
• Court: Ohio Supreme Court

Page 249

166 Ohio St. 249

142 N.E.2d 219, 2 O.O.2d 82

In re APPROPRIATION FOR HIGHWAY PURPOSES The QUEEN CITY REALTY CO., Appellant, v. LINZELL, Dir., Appellee.

No. 34928.

Supreme Court of Ohio.

March 27, 1957.

Syllabus by the Court

1. In a proceeding to have a jury determine the amount to be paid as the value of real estate being appropriated for state highway purposes pursuant to the power of eminent domain, any evidence as to the value of an outstanding leasehold interest in such real estate is incompetent.

2. In such a proceeding, evidence as to the reasonable rental value of such real estate may be admissible.

This matter originated in 1955 as a proceeding in the Common Pleas Court of Hamilton County to determine the amount to be paid for certain real estate appropriated by the State Director of Highways as needed in the construction of the Third Street viaduct in Cincinnati. See Section 5519.01 et seq., Revised Code.

The Queen City Realty Company was the owner of the real estate involved subject to a September 1949 lease to Herschel Wimmer for five years with a right to renew for five years, which right had been exercised.

The realty company, being dissatisfied with the $35,000 fixed by the director as the value of the property appropriated, filed a petition setting forth its intention to appeal from the amount so fixed.

The question as to the value of the property being taken was submitted to a jury which brought in a verdict assessing that value at $47,000 ($32,250 for land and $14,750 for structures).

A motion of the realty company for new trial was overruled, and judgment for $47,000 was entered on the verdict. That judgment provides for payment of the $47,000 to be held by the clerk 'to the parties * * * as their interests may appear in an order for distribution [to be] made by the court.'

On appeal by the realty company to the Court of Appeals, that judgment was affirmed.

The cause is now before this court on appeal from the judgment of the Court of Appeals, pursuant to allowance of a motion to certify the record.

Gorman, Davis & Hengelbrok, Cincinnati, for appellant.

C. William O'Neill, William Saxbe, Attys. Gen., Smith H. Tyler, Jr., Cincinnati, and Hugh E. Kirkwood, Jr., Columbus, for appellee.

TAFT, Judge.

The only question raised on this appeal is whether the trial court erred in excluding evidence as to the separate value of the leasehold interest of Wimmer which, except for the appropriation, would have continued for about four more years, i. e., from the time of the appropriation in March 1955 until September 1959. The excluded evidence was by one witness that 'the fair market value of the leasehold of * * * Wimmer' was 'approximately $18.200' and by another witness that 'the fair and reasonable market value of' that leasehold interest was '$19,050.'

In arguing for an affirmance, appellee relies upon paragraph two of the syllabus of In re Appropriation by Ohio Turnpike Commission, 164 Ohio St. 377, 131 N.E.2d 397, 399. However, that paragraph, although recognizing the discretion of a trial court in the admission and exclusion of evidence in an appropriation proceeding, would not apply in the instant case unless, to use its words, 'it is apparent * * * that no prejudicial error * * * intervened.' The question remains therefore whether it was prejudicial error for the trial court to exclude such evidence.

Unquestionably, a leasehold interest in real estate may have a substantial value, notwithstanding that it involves a liability to pay rent. Thus, if the reasonable rental value of the real estate is $1,200 per year, a leasehold interest in that real estate for one year at an annual rental of $1,000 per year would give the lessee a right to use something reasonably worth $1,200 by merely paying a rental of $1,000. That right would therefore have a value of approximately $200. Also, it is apparent that, in determining the value of the landlord's reversion, the value of the leasehold interest must be deducted from the value of the real estate. However, the ultimate question to be determined by the jury in the instant case was not the value of the leasehold interest of Wimmer or the value of the reversion of the realty company but the value of what was being appropriated, i. e., the real estate as a whole. ¹ In re Appropriation by Superintendent of Public Works (Sowers v. Schaeffer), 155 Ohio St. 454, 99 N.E.2d 313; Id., 152 Ohio St. 65, 87 N.E.2d 257. Compare annotation, 7 A.L.R.2d 1297, relating to appropriations of only temporary use and occupancy of property; annotation, 3 A.L.R.2d 286, relating to appropriations of only leasehold interests in property; and State v. Platte Valley Public Power & Irrigation District, 147 Neb. 289, 23 N.W.2d 300, 166 A.L.R. 1196, where applicable statutes contemplated separate assessment of ownership interests in property appropriated. If the value of that real estate could be readily determined without considering the value of Wimmer's leasehold interest or the value of the realty company's reversion, it is apparent that consideration of those collateral values in the instant proceeding would only have complicated unnecessarily the problem of the jury in making the only determination that it was required to make.

As suggested in City of St. Louis v. Rossi, 333 Mo. 1092, 64 S.W.2d 600, if testimony is permitted in a proceeding of this kind as to the value of a leasehold interest, we will have not only real estate experts but also jurors passing upon all kinds of...