Arkansas State Highway Commission v. First Pyramid Life Ins. Co. of America

• Decision Date: 02 April 1979
• Docket Number: No. 78-277,78-277
• Court: Arkansas Supreme Court
• Parties: ARKANSAS STATE HIGHWAY COMMISSION, Appellant, v. FIRST PYRAMID LIFE INSURANCE COMPANY OF AMERICA et al., Appellees.

Page 587

579 S.W.2d 587

265 Ark. 417

ARKANSAS STATE HIGHWAY COMMISSION, Appellant, v. FIRST PYRAMID LIFE INSURANCE COMPANY OF AMERICA et al., Appellees.

No. 78-277.

Supreme Court of Arkansas, In Banc.

April 2, 1979.

Rehearing Denied May 21, 1979.

Thomas B. Keys and Kenneth R. Brock, Little Rock, for appellant.

Spitzberg, Mitchell & Hays by John P. Gill, Little Rock, for appellees.

BYRD, Justice.

Appellant Arkansas State Highway Commission by eminent domain took 58.39 acres from three separate tracts of land, the title of which was held by appellee First Pyramid Life Insurance Company of America, for construction of the East Belt Freeway where it connects with I-40. Appellant deposited $44,960.00 as estimated just compensation at the time of the taking. Appraisal witnesses Jack Farris, James Larrison and Wesley Adams called on behalf of appellee testified to damages of $550,150, $640,950 and $495,000 respectively. For appellant Dave Roberts placed damages at $73,743 and William B. Putnam placed the damages at $46,945. The jury returned a verdict for $495,000. For reversal of the judgment entered on the jury's verdict, appellants contend:

"I. The trial court erred in permitting Wesley Adams to be called as a witness by the appellees over appellant's objection.

II. The trial court abused its discretion in allowing appellees to call Wesley Adams in rebuttal.

III. The trial court erred in admitting into evidence certain transactions between 1st Pyramid and Harris Cattle Company.

IV. The trial court erred in not striking the value testimony of appellee's expert witness, Jack Farris, relating to his before value.

V. The trial court erred in not striking the before value testimony of appellee's expert witness, James Larrison.

VI. The trial court erred in not granting a mistrial.

VII. The trial court erred in not allowing appellant's Exhibit "D" and the testimony relative thereto into evidence.

VIII. The trial court erred in not permitting appellant to introduce its proffered Exhibit No. 11."

POINT I. Appellant makes two contentions under this point I. e.:

"(1) The trial court erred in allowing appellees to call Wesley Adams, an appraisal expert, as a witness in order to ascertain the amount of his appraisal, and

(2) The trial court erred in permitting appellee to bring out that Wesley Adams had been hired by appellant as an expert appraisal witness and the appellant was not calling him as a witness."

Both questions were virtually answered in Arkansas State Highway Comm'n v. Witkowski, 257 Ark. 659, 519 S.W.2d 743 (1975), wherein we cited Boyles v. Houston Lighting and Power Company, 464 S.W.2d 359 (Tex.1971), State ex rel. State Highway Comm'n v. Texaco, Inc., 502 S.W.2d 284 (Mo.1973) and Logan v. Chatham County, 113 Ga.App. 491, 148 S.E.2d 471 (1966). Those cases hold that neither party to a condemnation case is bound by rejected opinions of expert witnesses employed by them to appraise property being condemned and cannot be prejudiced by the admission in evidence of rejected appraisals made at their instance. All of those cases also hold that testimony as to the original employment of the expert is not pertinent to the issue of just compensation and when admitted over the objection of the party who originally employed the expert the same constitutes prejudicial error requiring a new trial.

It follows that the trial court erred in permitting appellee to show that Wesley Adams had been employed by appellant to make an appraisal of the estimated just compensation due.

POINT II. In view of the fact that Adams if called must be called as a witness for the landowner, this alleged error is not apt to occur on a retrial.

POINTS III. and VII. The record shows that appellee in the purchase of the property from Harris Cattle Company had some kind of an agreement for the sharing of development costs with Rector, Phillip and Morse, Inc. The 1973 deed from Harris Cattle Company to appellee recites a consideration of $10,000 paid and the execution of a Vendor's Lien Note in the amount of $2,000,765.30 with interest at 4%. The deed provided that the lien retained could be released upon any part of the property by the payment of $7,700.00 per acre. The Vendor's Lien Note provided:

"VENDOR'S LIEN NOTE

$2,000,765.30 September 6, 1973

First Pyramid promises to pay Harris Cattle Company $2,000,765.30 with interest at rate of 4% Per annum. Principal sum due September 6, 1979. Interest due and payable March 6, 1975, and annually then after. Note is evidence of unpaid balance of purchase price for 260 acres and payment of note is secured by Vendor's lien retained in deed between parties. Harris not entitled to obtain a judgment against First Pyramid in event of default sole and exclusive remedy of Harris is to retain any payments previously made and require First Pyramid to reconvey the said land, or that part which they still have. Upon reconveyance it shall be by Warranty Deed free and clear of any liens. If upon default First Pyramid fails to reconvey upon written demand by Harris within 10 days, then Harris can obtain judgment plus 10% Interest and attorney's fees."

Rudolph S. Del Donno, the Senior Vice-President of appellee in charge of investments testified that appellee had laid out for improvements $1,425,000. That the North Little Rock Water Department, Plough Incorporated (The Maybelline Plant), North Little Chamber of Commerce and Fifty For The Future had reimbursed appellee for $640,318.00, leaving appellee's unreimbursed improvement costs at $784,682.00. Other than for the lands involved in this litigation appellee according to the terms of the Vendor's Lien Note had paid $57,000 on the principal. The witness was permitted to show by cancelled check that for the lands involved in the eminent domain action, appellee had paid to Harris Cattle Company at the rate of $7,700 per acre for a total of.$448,500. Mr. Del Donno also stated that at the request of appellee's counsel in a lawsuit in chancery court between appellee and Harris Cattle Company, he had executed a deed of the property back to Harris Cattle Company but he did not know whether the deed had been accepted.

Appellant to rebut the foregoing proof sought to call Allan W. Horne a member of appellee's board of directors and its legal counsel in the chancery court action between appellee and Harris Cattle Company to show how appellee was attempting to extricate itself from any obligation on the Vendor's Lien Note by trying to return the land to Harris Cattle Company. In its proffer of proof appellant elicited from Horne that appellee was not necessarily a volunteer in paying the $7,700 per acre to Harris Cattle Company for the 58.39 acres involved in this eminent domain action I. e. the.$448,500 check but that the obligation arose because the Vendor's Lien Note failed to make an exception in cases of eminent domain actions. However, the trial court excluded all of the testimony of Horne.

To support the action of the trial court in permitting appellee to show the price that it paid for the land, appellee relies upon Arkansas State Highway Commission v. Hubach, 257 Ark. 117, 514 S.W.2d 386 (1974), where we stated:

"When a parcel of land is taken by eminent domain, the price which the owner paid for it when he acquired it is One of the most important pieces of evidence in determining its present value. However, this assumes that the sale was recent, was a voluntary transaction between parties each of whom was capable and desirous of protecting his own interests, and that no change in conditions or marked fluctuation in values has occurred since the sale. A price paid under such conditions is a circumstance which a prospective purchaser would seriously consider in determining what he himself should pay for the property. As evidence before a jury, it consumes little time in introduction and raises few collateral issues, so that every argument is in favor of its admissibility."

Based upon the foregoing we agree with appellee that the trial court did not err in permitting appellee to show what it had paid for the land. It does not follow that the court was correct, in refusing to permit appellant to show through Horne, that appellee was attempting to extricate itself from the transaction. Rules 401 and 402 of the Uniform Rules of Evidence, Ark.Stat.Ann. § 28-1001 (Supp.1977), provide:

"Rule 401. Definition of 'Relevant evidence.' 'Relevant evidence' means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.

Rule 402. Relevant evidence generally admissible Irrelevant evidence inadmissible. All relevant evidence is admissible, except as otherwise provided by statute or by these rules or by other rules applicable in the courts of this State. Evidence which is not relevant is not admissible."

In view of the foregoing rules the appellant was certainly entitled to produce any evidence that it might have to show the Two Million Dollar transaction between appellee and Harris Cattle Company was a sick or sham transaction. Consequently, the trial court erred in refusing to admit the testimony of Horne.

POINT IV. Jack Farris, called as a real estate expert by appellee, testified that in determining that the fair market value of the property taken had a fair market value of $569,425 he considered that the highest and best use of the property was for industrial purposes. Farris stated that he used the comparable sale approach in appraising the property. The first comparable sale he used was First Pyramid Life Insurance Company to Pulaski Equipment Company, 5 acres sold for $21,800 per acre. The second sale was First Pyramid Life to Kenneth Penebaker, one acre sold to Twin City Bank for $53,000. The third sale was First Pyramid to Mapco, an easement at $12,000 per acre. The fourth sale was Faulkner and Saterra to Southwestern...