Arkansas State Highway Commission v. Schmoll

• Decision Date: 09 February 1970
• Docket Number: No. 5--5070,5--5070
• Parties: ARKANSAS STATE HIGHWAY COMMISSION, Appellant, v. Carl SCHMOLL, Appellee.
• Court: Arkansas Supreme Court

Page 938

449 S.W.2d 938

248 Ark. 52

ARKANSAS STATE HIGHWAY COMMISSION, Appellant, v. Carl SCHMOLL, Appellee.

No. 5--5070.

Supreme Court of Arkansas.

Feb. 9, 1970.

Thomas B. Keys and Virginia Tackett, Little Rock, for appellant.

Williams & Gardner, Russellville, for appellee.

BYRD, Justice.

This litigation was formerly before us in Arkansas State Highway Commission v. Schmoll, 245 Ark. 21, 430 S.W.2d 852 (1968). Following the reversal, the matter was again submitted to a jury which awarded a judgment of $52,000. For reversal of the $52,000 judgment, appellant Arkansas State Highway Commission contends that the verdict is excessive and that there is no substantial evidence to support it.

The record shows that Mr. Schmoll's ownership consists of 107.67 acres being SW 1/4 of SW 1/4 of Sec. 18, the NW 1/4 of the NW 1/4 of Sec. 19, and a portion of the NE 1/4 of the NW 1/4 of Sec. 19, all in T. 7 N., R. 18 W. The property is bordered on the south by Highway 64. The Highway Department is here taking 84.52 acres, for construction of I--40 and the balance for a scenic drive. The southeastern corner of this property lies some 200 feet west of the city limits of Atkins, Arkansas. The topography of the property is such that it commences at the foot of and rises to the top of Crow Mountain.

For valuation purposes appellee introduced himself and Jackson Ross, a real estate expert. Mr. Schmoll testified that his property had a before value of $135,110 and an after value of $41,725. In arriving at his before value he used $750 per acre for the north 40 and $1500 per acre for the south 63.18 acres. On cross-examination he testified that the attorney for the Highway Department was correct in assuming that he was saying that property similar to his upper 40 acres was selling on the market in January 1966 for $750 an acre. At other times Mr. Schmoll stated that he did not use comparable sales but just used his opinion of what it was worth. However he stated that the Fengler Estate, just east of the lower portion of his property, sold some lots, 150 by 150, for $1500 per lot. According to his testimony all such lots were on existing roads. Another was Roy Kindrick's sale of 2 acres across Highway 64 for $3,000. A third sale was the Orlando Pryor land--a 5 acre sale for $5,000 on the highway near the Highway 64 frontage of the subject property. All of Mr. Schmoll's testimony was designed to show that the highest and best use of his property was for residential building sites.

Mr. Jackson Ross, an appraiser, testified to a before value of $113,916 and an after value of $33,000 resulting in damages of $80,916. He stated that he made a study of land values in or near Atkins in January 1966, and that his study showed that near the subject property there were 'several lots that had sold off north of 64 highway at that time.' He readily admitted that the only road frontage on Mr. Schmoll's property is Highway 64 and that there are no roads to the back of Mr. Schmoll's property. He further admitted that all of the comparable sales he considered were on a road of some kind. The comparable sales considered by Mr. Ross were as follows:

1. Emil Fengler et ux, to Paul and Lois Raney, a 150 ft. by 150 ft. parcel for $750.00, which he described as roughly 1/4 of an acre;

2. Fengler to Hurshel and Ruby Miller, a 150 ft. by 218 ft. parcel for $800.00;

3. Fengler to Robert Raney, 150 by 150 ft. for $750.00;

4. Fengler to Dovie Miller, a 190 ft. by 195 ft. parcel for $800.00, which he described as 'a fraction over half an acre;'

5. Joe Stephenson to Melvin Fuller, a 150 ft. by 200 ft. parcel for $1,000.00, described as being just off Highway 105; and

6. Pryor Estate to Pratt, 5.7 acres for $5,000.00 which he described as being bought for the purpose of putting in a market (this was described as being comparable to Mr. Schmoll's land adjacent to Highway 64).

Throughout his testimony Mr. Ross referred to a parcel 150 ft. by 150 ft. as approximately a quarter of an acre.

Mr. Walker Watson, an appraiser for the Highway Department, arrived at a before value of $27,750 and an after value of $19,750 for total damages of $8,000. Mr. A. R. Jordan, a Russellville real estate broker and appraiser, arrived at a before value of $30,040 and an after value of $21,915 for total damages of $8,215. Mr. Walker used the following comparable sales:

1. A July 1965 sale from Nottenkamper to Kyle, 12 acres for $13,000--he allocated $7500 to improvements, leaving $5500.00 for 12 acres of land at $460 per acre;

2. A 1962 sale from Duval to McElroy 500 ft. west of Schmoll's property in which a tract with 104 ft. frontage on Highway 64 by 400 ft. deep sold for $500;

3. A 1962 sale from Gibson to Willcutt of a 20 acre tract that sold for $6,000--he allocated $3,000 to improvements and $3,000 to land, arriving at a per acre value of $150; and 4. A 1964 sale 1 1/4 miles west of Mr. Schmoll's property where a 44 acre tract sold for $7,000 or $175 per acre (at the time of trial 3 houses had been built on the 44 acres.)

Mr. Jordan used the following comparable sales:

1. A sale from Kinslow to Hudson which compared to the back wooded part of Mr. Schmoll's property--a 110 acre tract at $6,000 or $55 per acre;

2. A sale from Bowden to Cole, a 44 acre tract at $175 per acre which he considered comparable to Mr. Schmoll's open lands;

3. The sale from Duval of McElroy used in Walker's appraisal; and

4. Nottenkamper to Kyle, a 12 acre sale used by Mr. Walker--however Mr. Jordan allocated $6500 to improvements and $6500 to land for a per acre value of $541.

In Arkansas State Highway Commission v. Watkins, 229 Ark. 27, 313 S.W.2d 86 (1958), we pointed out the speculative nature of evidence which uses the sale price of lots for comparable sales in arriving at the valuation of large tracts of raw ground in this language:

'The reason for the rule above set out is well demonstrated in the case under consideration. While some of appellees' witnesses explained that, in comparing the value of subject land and lots with other subdivisions of Little Rock and particularly with Lakewood Addition, they had taken into consideration the location and the necessity of supplying paved streets, water and sewerage, etc., yet that fact in no way eliminates the element of chance and speculation. On the other hand, such explanation merely emphasizes that element. Any attempt to determine the cost of such improvements would have entailed the use of time and technical knowledge beyond the scope of practicability and reason. In addition to the above, many more speculative matters would arise for consideration. For example: How much other land in the vicinity is available for subdivisions; What will be the future demand for additional building sites; How long will it be before the subject land is made ready for the erection of dwellings; How fast will the lots be sold, and how much will be the finance charges, and; What will be the cost in real estate commissions for selling the property, and what will be the expense of numerous other items that could be mentioned?'

The present case is a classic example of the speculative nature of such testimony. Here the proof shows that the property commences at the foot of Crow Mountain and slopes up to or near the top of Crow Mountain. Both Schmoll and his witness Ross relied entirely upon plot sales for individual building sites, all located along existing roadways and none more than a quarter mile north of Highway 64. Yet the record shows that Schmoll's property extends one-half mile north of Highway 64.

While the sales of the individual building plots were properly admitted into evidence for comparison to Mr. Schmoll's property that is similarly situated, it is obvious that such sales are speculative when used with respect to property some distance from a roadway. For instance, the record here shows that Emil Fengler from 1961 to 1965 only sold 5 parcels for building sites. Notwithstanding this, Mr. Ross insisted that there was a ready market for every building site into which Mr. Schmoll's property could be subdivided. Also both Schmoll and Ross assigned the back 40 a valuation equal to one-half of the value of the front 40, while admitting that all of their parcel sales were south of the back 40 and that the back 40 was further up the incline toward the top of Crow Mountain.

Therefore, it appears to us that appellee is using plot sales (comparable to the sales of finished lots) along existing roadways with other improvements and comparing the price paid for the acreage involved in those sales with his raw acreage for purposes of determining its value without taking into consideration the many variables such as demand; the cost of engineers; the installation of improvements, such as roads, water and sewer or septic tanks; and the numerous man hours and financing charges that go into the development of a residential area.

For the reasons stated we find that there is no substantial evidence in the record to sustain a judgment for $52,000.

Reversed and remanded.

FOGLEMAN, J., dissents.

FOGLEMAN, Justice (dissenting).

I respectfully dissent because I think the court has actually weighed the evidence in this case and, after comparing the testimony of value witnesses presented by appellant with that of value witnesses for appellee, decided that the appellee's evidence failed to provide substantial support for the jury verdict, or that the sales relied upon by appellant's witnesses were more comparable than those relied upon by appellee. I do not see how it can be said that the record on this second trial and the arguments advanced by appellant here require a second reversal of this case.

In the first place the court's opinion is based, in part, upon a premise not really argued by appellant. Here, I refer to the treatment of the Schmoll testimony. The argument as to the deficiency in the Schmoll testimony is epitomized in the following paragraph...