Birnbaum v. Ives

• Decision Date: 19 April 1972
• Citation: 301 A.2d 262,163 Conn. 12
• Court: Connecticut Supreme Court
• Parties: Leonard P. BIRNBAUM et al. v. Howard S. IVES, Highway Commissioner.

Page 262

301 A.2d 262

163 Conn. 12

Leonard P. BIRNBAUM et al. v. Howard S. IVES, Highway Commissioner.

Supreme Court of Connecticut.

April 19, 1972.

David Kotkin, Hartford, with whom, on the brief, was Louise H. Hunt, Hartford, for appellants-appellees (plaintiffs).

Jack Rubin, Asst. Atty. Gen., with whom, on the brief, was Robert K. Killian, Atty. Gen., for appellee-appellant (defendant).

Before HOUSE, C.J., and RYAN, SHAPIRO, LOISELLE and FITZ GERALD, JJ.

HOUSE, Chief Justice.

On March 21, 1966, the state, through the defendant highway commissioner, acquired by condemnation, land and a structure thereon located on the easterly side of Washington Street in the city of New Britain. The defendant highway commissioner assessed damages arising from the taking in the sum of $257,300. This sum was deposited by the defendant with the clerk of the Superior Court and the plaintiffs withdrew the entire amount. The plaintiffs appealed to the Superior Court from the assessment of damages and the appeal was referred to Hon. Vine R. Parmelee, state referee, hereinafter referred to as the first referee. The referee, purporting to act as the court, filed a memorandum of decision fixing damages for the taking at $102,000 and on October 17, 1967, rendered judgment for that amount. On motion of the plaintiffs, the Superior Court (Palmer, J.) vacated this judgment on the ground that under the then controlling statute (Public Acts, 1967, No. 621 § 11) the referee was not empowered to render a judgment. The court concluded that the memorandum of decision was in effect a report filed pursuant to the provisions of Practice Book § 354, as amended, and ordered that the appeal be recommitted to the referee with direction to file a report in numbered paragraphs as the Practice Book provides. The referee filed a report as ordered, finding that the structure on the premises had no value and that the fair market value of the entire property was $102,000. The plaintiffs, pursuant to § 363 of the Practice Book, thereupon moved that the referee's report be rejected and an order be entered referring the matter to another referee for a hearing de novo. On September 30, 1968, 28 Conn.Sup. 68, 249 A.2d 849, the court sustained the objections of the plaintiffs and ordered the matter referred to Hon. Raymond E. Baldwin, a state referee, who, pursuant to the provisions of § 52-434a of the General Statutes, heard the appeal with the same powers and jurisdiction as the Superior Court which ordered the reference.

The second referee, sitting as a court, found the following facts: The land in question is located in New Britain approximately one block from the downtown business and commercial districts. It consists of approximately .72 of an acre and is located in an industrial zone. The building situated on the land at the time of the taking had been constructed in two sections, the first in 1912 and the second, an addition on the east side, in 1924. It was six stories in height, contained a full basement and was constructed of reinforced concrete with large concrete posts on each floor. At the time of the taking, the two elevators in the building were inoperable and had not been used for a long time. The building was a veritable shell, and while the basic structure was sound it would have been necessary to replace the wiring, heating, plumbing and wood flooring. In addition, most of the windows had been broken and were in need or repair and replacement. Outwardly, the building was in a rundown, depreciated condition. The entire property had been purchased for $76,000 by the plaintiffs in 1957 through the Birnbaum Furniture Company at a public auction after it had been abandoned as a manufacturing site. The plaintiffs made no improvements to the property after the purchase and on September 1, 1959, petitioned the board of assessors of the city of New Britain for a revision of the assessment on the subject property representing that '76,000.00 . . . is the 100% value.'

In considering the building's usefulness and value, the second referee (exercising the powers of the court and hereinafter referred to as the court) found that it suffered from functional depreciation since it did not conform with the modern concept of single- and two-story structures for industrial plants. In addition, there was totally inadequate parking space available for employees and no available space for the outside storage of raw materials. The entrances to the building for receiving and shipping were inadequate and the number and size of the concrete supporting columns took up a large amount of floor space and reduced substantially the usable floor area. At the time of the taking, the building, unless completely renovated, was not usable for anything other than bulk storage of materials impervious to the weather. It would cost $439,700 to put the building into good physical condition and make it into a property which could be rented for industrial purposes. To make it suitable for apartment purposes would cost between $600,000 and $700,000. The building was obsolete for manufacturing purposes. Its best use was for commercial purposes of a warehouse but, according to present-day standards, the building was an overdevelopment of the land and a detriment rather than an advantage to it. At the date of the taking, the economic life of the building was 'nothing.'

From these findings the court concluded that the building was physically and functionally obsolete and worthless, and it would have been economically unsound to spend any substantial sum of money in an effort to render it usable. It concluded that in determining any value of the building in its condition at the time of the taking, the reproduction cost less depreciation method of valuation was invalid and unreliable and an approach utilizing the capitalization of prospective income, if the building were renovated, was purely theoretical and too speculative a method by which to ascertain the fair market value.

The court further concluded that the building contributed nothing to the value of the land and that the fair market value of the premises at the date of the taking and the amount due to the plaintiffs as damages for the taking was $120,330. It rendered judgment for the defendant in the amount of $136,970, $120,330 less than the $257,300 which had been deposited in court by the defendant and withdrawn by the plaintiffs pursuant to § 48-11 of the General Statutes. From that judgment the plaintiffs appealed to this court and the defendant took a cross appeal, assigning as error the September 30, 1968, order of the Superior Court refusing to accept the report of the first referee and referring the matter to the second referee for hearing.

On their appeal the plaintiffs have assigned as error the court's refusal to find facts which they claimed were admitted or undisputed in the finding of several facts without evidence, in reaching several conclusions not supported by the evidence, in rejecting parts of expert testimony offered by the plaintiffs, and in overruling several of the plaintiffs' claims of law.

A primary contention of the plaintiffs is that the court erred in excluding and refusing to consider evidence as to the value of the structure predicate on a capitalization of income theory of appraisal. In support of this contention, the plaintiffs rely heavily on the recent case of Connecticut Printers, Inc. v. Redevelopment Agency, 159 Conn. 407, 270 A.2d 549. That case concerned the valuation of a five-story building which was so constructed as to be most efficiently utilized as a site for a printing, binding or engraving operation. We determined that the referee's valuation, based on a capitalization of projected income as a general commercial building, was proper in light of the fact that there was no ready market for structures for printing plants, the highest and best use of the property. Although we approved the capitalization of prospective income approach as employed by the referee in that case, we clearly reiterated in that opinion the operative rule of law as to a referee's selection of a valuation method. '(N)o one method of valuation is controlling and . . . the referee may select the one most appropriate to the case before him.' Connecticut Printers, Inc. v. Redevelopment Agency, supra, 414, 270 A.2d at 553; Brothers, Inc. v. Ansonia Redevelopment Agency, 158 Conn. 37, 43, 255 A.2d 836; Research Associates, Inc. v. New Haven Redevelopment Agency, 152 Conn. 137, 142-143, 204 A.2d 833. The court's conclusion in the case at bar that the capitalization of income approach applied to the circumstances before it would be too speculative and purely theoretical was reasonable and proper. It finds evidential support in the testimony of the defendant's expert witness, David Collins, and legal support in the decisions of other courts and in the writings of noted authors. See Olson v. United States, 292 U.S. 246, 257, 54 S.Ct. 704, 78 L.Ed. 1236; Peoples Gas Light & Coke Co. v. Buckles, 24 Ill.2d 520, 182 N.E.2d 169; 5 Nichols, Eminent Domain (3d Rev. Ed.) § 19.22 (2).

The plaintiffs' second contention is that the court erred in not taking into consideration the building's potential commercial use. A...