City and County of Honolulu v. International Air Service Co., Ltd.

• Decision Date: 29 April 1981
• Docket Number: No. 6428,6428
• Citation: 63 Haw. 322,628 P.2d 192
• Parties: CITY AND COUNTY OF HONOLULU, a Municipal Corporation, Plaintiff-Appellee, v. INTERNATIONAL AIR SERVICE COMPANY, LTD., a California Corporation, Defendant-Appellant, and Bonded Investment Company, Ltd., a Hawaii Corporation, and State of Hawaii, through its Attorney General, Defendants.
• Court: Hawaii Supreme Court

Page 192

628 P.2d 192

63 Haw. 322

CITY AND COUNTY OF HONOLULU, a Municipal Corporation, Plaintiff-Appellee, v. INTERNATIONAL AIR SERVICE COMPANY, LTD., a California

Corporation, Defendant-Appellant,

and

Bonded Investment Company, Ltd., a Hawaii Corporation, and

State of Hawaii, through its Attorney General, Defendants.

No. 6428.

Supreme Court of Hawai'i.

April 29, 1981.

Syllabus by the Court

1. The general aim of proceedings in eminent domain is to arrive at an amount of just compensation which as nearly as possible approximates the value which a free market would attach to the taken property.

2. Any evidence which will aid the jury in fixing the fair market value of the property should be considered by them. However, since juries in eminent domain proceedings are insulated from the realities of the marketplace and hence are not equipped to give proper weight to indicia of highly remote values, courts generally exclude evidence of values which, in their estimation, are so "speculative" as to be unduly confusing to the jury.

3. The reviewing court should not disturb a trial judge's assessment that the proffered evidence reflects, or does not reflect, speculation or remote values, unless a clear abuse of the discretion vested in him is apparent.

4. Evidence of sales of comparable property to the condemnor may be admitted within the discretion of the trial court if it can be shown that the price paid was sufficiently voluntary to be a reasonable index of value or that there is a necessity for the evidence because the only sales of comparable property in the area in recent years have been to the condemnor, in which case the question of whether there was compulsion which affected the price may go to the weight of the evidence.

5. Where there was a definite lack of timely private sales of comparable nature and no affirmative evidence of compulsion surrounding the negotiated sales, the trial judge did not abuse his discretion by concluding evidence of sales of comparable properties to the condemnor had probative value and that the jury could consider it along with other indicia of market value without being misled.

6. An owner, by virtue of his ownership and consequent familiarity with the land and the market for it, is generally held to be qualified to give his opinion as to the value of his land; however, an officer of a corporate owner is not qualified to testify as to the value of land owned by the corporation unless he is an expert.

7. The trial court acted with permitted discretion by rejecting evidence of a plan for future action where no proof was offered of a reasonable possibility or a probability that the proposed transaction could have been executed, and about which nearly everything remained conjectural.

8. A trial judge may properly reject unrefined figures with respect to profits or rentals on a project still in the planning stage as inadmissible evidence of value, since a jury may be incapable of assigning them their proper weight. On the other hand, evidence showing that a certain income-producing use at the time of condemnation was reasonably probable should be admitted. Once the trial court is persuaded by this evidence that the argued use is not so fanciful as to confuse the jury, expert testimony utilizing a legitimate income stream analysis is wholly appropriate and should be admitted.

9. Evidence of value which, although relevant data in transactions on the open market, has a dangerous propensity overly to impress the jury is properly excludable.

10. A condemnation trial is an ordered search for value the free market attaches to the taken property, and the parties should not be allowed to transform the proceeding into a contest of imagination and ingenuity.

11. When evidence offered involved neither a showing of a probable use premised on a planned development nor a probability of future use observable from the present use of neighboring lands, but was essentially an attempt to escalate values above those suggested in comparable transactions, the exclusion of such evidence was within the trial court's discretion.

12. Jury instructions must be considered as a whole, and a refusal to give an instruction that correctly states the law is not error if another expressing a substantially similar principle is given.

13. A trial court should exercise caution not to single out and unduly emphasize one aspect of the purported evidence through its instructions to the jury, for this puts the court in the position of making an argument to the jury and misleads the jury into thinking that because the court has specifically mentioned certain testimonial facts that they are of undue importance or that the court believed them to be true.

John A. Hoskins, Honolulu (Howard K. Hoddick, Honolulu, with him on the briefs, Hoddick, Reinwald, O'Connor & Marrack, Honolulu, of counsel), for defendant-appellant.

George I. Hieda, Deputy Corp. Counsel, Honolulu, for plaintiff-appellee.

Before RICHARDSON, C. J., and OGATA, MENOR, LUM and NAKAMURA, JJ.

NAKAMURA, Justice.

Defendant-appellant International Air Service Company, Ltd. (hereafter IASCO) appeals from a judgment awarding it $3,450,000 as just compensation, on the verdict of a jury, in an eminent domain proceeding for the acquisition of approximately 12.6 acres of leeward Oahu beachfront land brought by Plaintiff-appellee City and County of Honolulu (hereafter the City). Seeking a new trial, IASCO asserts errors in evidentiary rulings and jury instructions. But we conclude from a review of the record and applicable precedent that the trial court committed no reversible error and affirm the judgment.

I.

A.

In 1965 and 1966 the City acquired, for park purposes, thirteen acres of a forty-three acre tract of beach front real estate situated at Lualualei, Waianae, between Farrington Highway and the ocean, which was then held by Bonded Investment Company, Ltd. (hereafter Bonded). Bonded subsequently subdivided the remaining thirty acres into forty-seven lots and in 1968 sold nineteen of them, fifteen of which were sold under an agreement of sale, to IASCO, who purchased the land for possible development. The subdivided parcels were all zoned partly for apartment use and partly for residential use, the portions of each lot nearer the highway being designated for apartment use and the remainder of each being designated for residential use. Roughly two-thirds of the land purchased by IASCO was in an A-1 apartment zone.

Pursuant to resolutions adopted by the City Council in 1969, the City was authorized to acquire the fifteen lots that were subject to the agreement of sale between IASCO and Bonded, along with adjoining and nearby parcels held by other owners, for an extension of Maili Beach Park. While the City succeeded in negotiating purchases with most of the other owners, it failed to do so with IASCO. Meanwhile, IASCO actively sought other buyers for its property, and in January of 1974 agreed to sell all of the fifteen parcels to another developer. This agreement, however, was made subject to cancellation if the property became subject to condemnation proceedings within two months. ¹

Shortly thereafter, on February 6, 1974, the City commenced an eminent domain suit to acquire the fifteen lots for the authorized park extension. The property it sought to acquire consisted of 549,434 square feet of land (approximately 12.6 acres) with an ocean frontage of 1,246 feet and a highway frontage of approximately 1,200 feet. ²

B.

The sole issue at trial was just compensation. Each party's presentation of evidence consisted largely of testimony elicited from its expert on land valuation. Both appraisers purportedly relied on the "market data" approach, a method which measures value by comparison to sales of similar property. ³ But as is often the case, there was a significant disparity in the estimates of "fair market value." ⁴ And as is usually the situation, the taker's expert submitted the lower valuation of $6.28 per square foot and the owner's expert arrived at a higher valuation of $10.00. The jury's verdict, which IASCO maintains was inadequate, closely approximated the value placed on the property by the City's expert.

IASCO contends the trial court erred by:

1. Admitting evidence related to prior transactions between the City and other owners although a foundation for the admission of such evidence was not established;

2. Admitting evidence of transactions not disclosed by the City before trial although the nondisclosure violated a pre-trial order;

3. Not allowing IASCO's president to state his opinion on the value of the condemned land;

4. Permitting the City's expert to use the aborted 1974 agreement of sale covering the condemned property as a "comparable sale" but not allowing IASCO to demonstrate an alleged "depressing" effect of the condemnation on the agreed price;

5. Unduly limiting the testimony of IASCO's expert with regard to evidence purportedly supporting his valuation; and

6. Improperly instructing the jury in several respects.

The trial court's erroneous rulings in the foregoing regard, IASCO argues, were primarily responsible for the jury's failure to return a verdict reflecting the "fair market value" of the property taken.

II.

"(T)he general aim of proceedings in eminent domain is to arrive at an amount of just compensation which as nearly as possible approximates the value which a free market would attach to the taken property." City & County v. Market Place, Ltd., 55 Haw. 226, 242, 517 P.2d 7, 19 (1973). Value, according to a well-respected treatise, "is always a matter of opinion." 5 Nichols', The Law of Eminent Domain § 18.1, at 18-5 (3d ed. 1979). Our adoption of liberal standards on the admissibility of an expert's opinion on value and evidence purportedly supporting an expert's opinion on value in condemnation trials is consonant with the foregoing observation. State v. Kunimoto, 62 Haw. 502, ---, 617...