City of St. Louis v. Union Quarry & Const. Co., 50773

• Decision Date: 13 September 1965
• Docket Number: No. 50773,No. 1,50773,1
• Parties: CITY OF ST. LOUIS, Respondent, .v UNION QUARRY & CONSTRUCTION COMPANY et al., Appellants
• Court: Missouri Supreme Court

Page 300

394 S.W.2d 300

CITY OF ST. LOUIS, Respondent, .v UNION QUARRY & CONSTRUCTION COMPANY et al., Appellants.

No. 50773.

Supreme Court of Missouri, Division No. 1.

Sept. 13, 1965.

Motion for Rehearing or for Transfer to Court En Banc Denied

and Opinion Modified on Court's own Motion Oct. 11, 1965.

Thomas F. McGuire, Acting City Counselor, Andrew J. Reis, Associate City Counselor, St. Louis, for respondent.

Shaw, Hanks & Bornschein, by Claude Hanks, Clayton, for appellants.

HOUSER, Commissioner.

This is a proceeding by City of St. Louis to condemn for park purposes land in the city consisting largely of an abandoned rock quarry being used by its owners, Union Quarry & Construction Company, Walter and R. Nick Skrainka, as a private dump. Commissioners awarded landowners $35,916.57. Trial of exceptions before a judge of the circuit court, sitting without a jury, resulted in a finding of damages in the same sum, $35,916.57, and a judgment affirming the report of the commissioners. Since landowners claimed damages in the sum of $83,500 and offered evidence in support thereof, we have jurisdiction of this appeal as the amount in dispute exceeds $15,000. State ex rel. Kansas City Power & Light Co. v. Salmark Home Builders, Inc., Mo.Sup., 350 S.W.2d 771; State ex rel. State Highway Commission v. Howald, Mo.Sup., 315 S.W.2d 786; Constitution, Art. V, Sec. 3, V.A.M.S.; Sec. 477.040, V.A.M.S.

The first question is whether the court erred in denying landowners a jury trial. This proceeding was instituted under the provisions of Art. XXI, Sec. 3 of the Charter of the City of St. Louis, which provides that 'Any party entitled to and desiring trial by jury of its rights to compensation shall file in the cause, before the assignment of the commissioners in each case, written demand therefor, including therein a description of its property to be taken or damaged, and failure so to do shall be a waiver of the right of trial by jury.' Landowners did not file a written demand for a jury before the assignment of commissioners. Instead, they filed a motion for trial by jury on July 21, 1962, after the report of the commissioners as filed, after the amount of the award was paid into the registry of the court, and after the deposit had been paid to the landowners, less the amount due the collector for delinquent taxes.

Landowners claim that they have a constitutional right to a trial by jury, Constitution, Art. 11, Sec. 4; that there was no issue for trial by a jury until exceptions to the report of the commissioners were filed, and that their request, made shortly thereafter, was timely; that the charter provision requiring a request for a jury trial before the assignment of commissioners is illogical and unconstitutional, under Constitution, Art. 11, Sec. 4, which preserves inviolate the right to trial by jury in all trials of claims for compensation when the rights of any corporation are affected by any exercise of the power of eminent domain.

This precise point has been ruled adversely to the contention of landowners in several cases. As late as November 13, 1961 this Court handed down the en banc decision of City of St. Louis v. International Harvester Co., Mo.Sup., 350 S.W.2d 782, 785, et seq., [4, 5], in which Sec. 3 of Art. XXI was upheld on the ground that reasonable regulations and conditions may be made prerequisites for a jury trial, and unless a party to a suit complies with such regulations waiver of a jury trial may result. Three cases were cited in which it has been ruled that unless a request for a jury is timely made under this charter provision the right thereto is waived. 350 S.W.2d, l. c. 786. On the basis of these decisions this point is ruled against landowners without further comment.

The next question is whether the court erred in sustaining the commissioners' award of damages. Landowners complain that the commissioners (and the circuit court) did not use the proper basis in arriving at the damages; that in fixing the market value of the condemned property (a hole in the ground used as an income-producing public dump) commissioners and court did not take into consideration the unique character of the land in question and its adaptability to its highest and best use, but employed an improper standard of value, namely, evidence of sales of an entirely different kind of property (lands in the area suitable for use as residential property).

This proceeding having been instituted under the Charter of the City of St. Louis (Art. XXI, Secs. 3 and 7), the report of the commissioners has the effect of a jury verdict, is presumptively valid, stands and may not lawfully be set aside until the exceptor meets the burden of introducing sufficient substantial evidence to establish that the report was wrong in point of law or matter of fact. City of St. Louis v. Pandjiris Weldment Co., Mo.Sup., 270 S.W.2d 17. Landowners excepted to the commissioners' report on two grounds: (1) that the award was grossly inadequate; (2) that in determining the amount of the damages the commissioners proceeded upon erroneous principles of law and refused to consider proper elements of value and damages. An exception based upon the excessiveness or inadequacy of the award ordinarily involves a determination whether the circuit court abused its discretion or acted arbitrarily in sustaining the commissioners' report. City of St. Louis v. Pandjiris Weldment Co., supra. Something more than a review of an exercise of discretion is involved of this appeal, namely, the determination of a question of law: whether the commissioners (and the circuit judge) applied the proper standards of value under the particular facts and circumstances of this case.

The facts are that the property was operated as a quarry until 1935, after which it was used as a public dump. In 1948 the city passed an ordinance requiring the owners to obtain a permit and (apparently) restricting the material to be dumped to noncombustibles. The owners obtained permits each year, and continued the operation as a private dump until the date of condemnation, June 27, 1962. They employed a manager, who kept books and complete records. A charge was made for dumping, $1 per truckload. Records for the 16 years preceding the taking show that an average of 20,000 truckloads of dirt and noncombustible material were dumped each year. Loads averaged 5 cubic yards. Landowners thus grossed $20,000 annually, on the average, from this operation. The quarry was only partially filled as of the date of the taking. Calculations show that as of that date it would have taken 625,000 cubic yards of material to fill the hole so as to make it level with surrounding land, taking into account the factor of compaction. Figuring that they were handling about 100,000 cubic yards per year of uncompacted rubbish the hole would have been filled, not considering compaction, in something over 6 years; with compaction, it would take 10 or 11 years. Prior to the date of taking the owners sold some property adjoining the quarry (property suitable for use as building lots) for 20cents per square foot.

There are no other unfilled quarries or unfilled holes in the vicinity, and there have been no sales of quarries in recent years.

Landowners intended to continue their operation until the quarry was filled, then sell the land to A & P Company or Shell Petroleum for parking spaces or to the city for park purposes.

Landowners produced the testimony of two experienced and thoroughly qualified experts, John Doerr and Stephen Thornton, who appraised the quarry property at $75,000 and $83,500, respectively. Using the method of capitalization of income, Mr. Doerr took the stream of income of approximately $20,000 per year reasonably to be expected for a period of 11 years, applied a discount factor to yield a present value of $64,950 to which he added the present worth of the property for use as building lots ($33,500 figured at 20cents per square foot), discounted to yield a current market value of $11,741. The sum of these two figures, i. e. the present worth of the income stream plus the reversionary value of the land at the end of the income period, produced the appraisal figure of $75,000 (rounded out figures). This was based upon a 10% rate of discount. Whereas a discount rate of 6% is normal, the more conservative 10%, which produces a lower value, was used by Mr. Doerr because he considered that it reflected a truer value in this case. These estimates were based upon a detailed analysis of the income and actual expenses for the 5 years preceding condemnation. Mr. Doerr considered that $75,000 was the value of the property at its highest and best use; that this is what a well-informed buyer would be justified in paying and an informed seller would be justified in receiving.

Mr. Thornton also used the capitalization of income method. He arrived at the appraisal figure of $83,500 as follows: He figured the value of the land if sold as residential property at $33,500, based on 20cents per square foot after the hole would be filled in. Discounted back to present worth this figures $18,000. Investigation of the market on the dumping of noncombustible refuse revealed that the going rate would average about 30cents a cubic yard. He calculated annual gross receipts of $18,750 based on 30cents per cubic yard. He calculated expenses of $9,950, with net earnings of $8,800 per year. Figuring that the pit would be filled up in 10 years, using a 6% discount rate, he arrived at a present worth of the income stream of 10 years of $64,768. This, rounded out, plus the $18,000 above, added up to $83,500 present discounted value of the property at its highest and best use.

The city's expert, Charles W. Herold, also thoroughly experienced and qualified, valued the property at $31,700. He took into consideration that the adjoining property sold at about 20cents per square foot. He stated that the property condemned...