Com. v. Massachusetts Turnpike Authority

• Decision Date: 03 March 1967
• Parties: COMMONWEALTH v. MASSACHUSETTS TURNPIKE AUTHORITY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 186

224 N.E.2d 186

352 Mass. 143

COMMONWEALTH v. MASSACHUSETTS TURNPIKE AUTHORITY.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Dec. 9, 1966.

Decided March 3, 1967.

John L. Murphy, Jr., Boston (Arthur A. Karp, Boston, with him) for Massachusetts Turnpike Authority.

Charles Ingram, Sp. Asst. Atty. Gen. (Nicholas G. Curuby, Lynn, with him), for Commonwealth.

Before WILKINS, C.J., and SPALDING, WHITTEMORE, CUTTER, KIRK, SPIEGAL and REARDON, JJ.

CUTTER, Justice.

The Commonwealth seeks under G.L. c. 79 the assessment of damages caused by the Authority's eminent domain taking of premises formerly occupied by the Irvington Street armory in Boston. In Commonwealth v. Massachusetts Turnpike Authy., 349 Mass. 1, 206 N.E.2d 74, decided April 6, 1965, we held that the Authority was bound to pay damages to the Commonwealth for taking the locus, thus placing the burden of its acquisition for road purposes upon the portion of the public using the toll turnpike rather than upon the general body of taxpayers.

A jury awarded the Commonwealth $895,000 by a verdict returned on December 18, 1963. A bill of exceptions was not allowed until May 2, 1966. The evidence would warrant finding the facts summarized below.

This land area of 62,356 square feet, covered almost entirely by the armory, was taken on May 29, 1962. The armory was an 'old castle-fortress type' brick building, with granite trim, built in 1889 or 1890 for the use of twelve to fifteen units of militia. Part of the structure was three stories in height. Part of it was a large drill hall, 298 feet long and 130 feet wide. The building was in 1962 'the oldest armory in use in' Massachusetts.

Four units, with a combined strength of 314 men, were using the armory in 1962. There were also nonmilitary uses. ¹ The locus had no motor vehicle parking facilities. There was need to replace the armory. If and when replaced, a modern type of armory and not an old fashioned castle type of building would be built. '(A)rmory requirements vary from time to time' with changes in military practices and methods of training. In recent years new armories have been similar to school buildings with gymnasiums. It could reasonably have been concluded that the use of the armory might have continued for from five to fifteen years after the taking and that, if not destroyed, it would have been in use in 1963 at the time of the trial.

Armories 'are not commonly bought and sold.' One witness, however, had participated in the sale of a smaller old fortress type armory in Cambridge to Massachusetts Institute of Technology (M.I.T.) which could have been found to have been made in an effort to cooperate in expanding M.I.T.'s accommodations for students and research. Another old armory was given to the city of Brockton for school purposes when a new armory was built. An armory in Boston on East Newton Street was transferred to the State Department of Mental Health in 1963. The Dartmouth Street portion of the Irvington Street armory had not been used since 1956 or 1957. Prior to the taking the Armory Commission had made no decision to discontinue use of the building.

Subject to the Authority's exception, an expert engineer testified that the 1962 cost of reproducing the armory as new, apart from land, was $2,431,196, and that the amount of physical depreciation (exclusive of obsolescence) was $1,107,064. In his opinion the armory was a special purpose building because of its armory design, its massiveness, and the great size of the drill shed. ² A qualified real estate appraiser testified that, after allowing for obsolescence, the depreciated reproduction cost of the building was $1,000,000. He valued the land at $200,000. This witness was of opinion that 'the highest and best use of the property was the use at the time of the taking.' Two expert witnesses called by the Authority based their opinions in large measure upon what they thought a buyer might pay for the building. ³ There was also evidence concerning the nature and cost of the type of modern armory likely to be built to house the units using the Irvington Street armory if that armory should be replaced. ⁴

We have before us the Authority's exceptions (a) to the admission of evidence of the adjusted reproduction cost of the armory structure, (b) to the exclusion of testimony sought from expert witnesses, and (c) to the trial judge's refusal to give requested instructions.

1. The taking involved premises used mainly for special public or quasi-public purposes and incidentally for other collateral or subsidiary special activities. The problem of proving the extent of the damage was particularly difficult because, over the years, changes in military practices had made the armory less and less well adapted for its principal use. It was, however, still usable and useful in the absence of more modern facilities.

The evidence, including photographs of the locus as it was at the time of the taking, tends to support the Commonwealth's view that the armory was a 'special use' or service-type property (see fn. 2). Although the building could be used incidentally for public events, athletic contests, and certain trade and social affairs, the jury could reasonably conclude that it was not primarily designed for these purposes; that such a building would not be offered for sale or have any general market; that the most valuable use of the structure was as an armory; and that its value for incidental activity was less than its residual value to the Commonwealth during the armory's remaining useful life as public property to be employed as an armory and for related public purposes.

In eminent domain cases the general measure of damages is the fair market value of the property at the time of the taking. Tigar v. Mystic River Bridge Authy., 329 Mass. 514, 517, 109 N.E.2d 148. This measure necessarily 'is always based upon hypothetical conditions' (see Nichols, Eminent Domain (Rev. 3d ed.) § 12.32, p. 218) in that it is supposed to be 'the highest price which a hypothetical willing buyer would pay to a hypothetical willing seller in an assumed free and open market.' Epstein v. Boston Housing Authy., 317 Mass. 297, 299--300, 58 N.E.2d 135, 137. See Bonbright, Valuation of Property, 414--415.

In Newton Girl Scout Council, Inc. v. Massachusetts Turnpike Authy., 335 Mass. 189, pp. 194--195, 138 N.E.2d 769, p. 773, we recognized that for a special purpose property (developed for the particular needs of a nonprofit, charitable, or religious organization) there will generally not be an active market and that its fair value cannot readily 'be shown by sales of nearby comparable property.' We said that 'to reach a just result when such a property is taken by eminent domain * * * much greater flexibility in the presentation of evidence' is essential than 'in the case of properties having more conventional uses,' and that, as to such properties, 'the cost of land plus the reproduction cost (less depreciation where appropriate) of improvements may be more relevant than in the ordinary case.' ⁵

The same principles which are applicable to nonprofit agencies also apply, in general, to special purpose buildings owned by the State, public agencies, or public utilities, where the evidence warrants the conclusion that the real value of a property taken by eminent domain cannot be shown by a sequence of sales of similarly used properties, by a capitalization of earnings, or by other usual criteria. See Nichols, Eminent Domain (Rev. 3d ed.) §§ 12.32, 15.1(1) et seq., 15.42--15.44; Orgel, Valuation under Eminent Domain (2d ed.) §§ 38--40. The principal usefulness of many properties owned by governmental bodies is to their respective owners for a particular purpose which is likely to be of interest to no other person. See Bonbright, Valuation of Property, 413--421, esp. at 416, 447--449.

2. The Authority's principal exceptions relate to the propriety of considering, as a guide to value, evidence of the 1962 reproduction cost of the armory building with adjustments to reflect depreciation and obsolescence. As we have already indicated, such evidence may be received (to be given appropriate weight with other evidence) with respect to takings of special purpose properties of public or nonprofit owners, where reproduction of essentially the same type of structure at the same site or elsewhere would be reasonable in the event of its destruction or taking. See Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 66, 34 N.E.2d 623; the Newton Girl Scout Council, Inc. v. Massachusetts Turnpike Authority, 335 Mass. 189, 195, 138 N.E.2d 769. ⁶

There is danger, of course, that evidence of reproduction cost (even if it purports to be fairly adjusted) may lead to 'an excessive award unless it is (in fact) adequately discounted for obsolescence and inadequacy as well as for physical depreciation' (emphasis supplied). See Orgel, Valuation under Eminent Domain (2d ed.) § 199, and also §§ 188--198. In the Newton Girl Scout Council, Inc. case, 335 Mass. 189, 138 N.E.2d 769, the structures taken remained reasonably well adapted to the special purposes for which they were employed. They had not been shown to be in such condition as to make reproduction unlikely to imprudent. Accordingly, adjusted reproduction cost figures could have been admitted in evidence because (a) the current cost of reproducing the buildings could be adjusted (fairly and without undue complication or conjecture) to reflect accrued physical depreciation and any functional or other obsolescence, and (b) the adjusted figure would reasonably tend to prove what the owner would have to pay to obtain approximately the same still desirable and useful structures, after taking into account age, wear and tear, and observed obsolescence.

A different situation exists, however, where special purpose structures are very greatly out of date, are no longer well fitted to their particular use,...