Correia v. New Bedford Redevelopment Authority

• Decision Date: 10 May 1977
• Court: Appeals Court of Massachusetts

Page 538

362 N.E.2d 538

5 Mass.App.Ct. 289

Manuel P. CORREIA v. NEW BEDFORD REDEVELOPMENT AUTHORITY Appeals Court of Massachusetts, Bristol.

Argued Feb. 14, 1977.

Decided May 10, 1977.

Raymond A. Letourneau, New Bedford, for defendant.

Charles R. Desmarais, New Bedford, for plaintiff.

Before HALE, C.J., and GOODMAN and ARMSTRONG, JJ.

HALE, Chief Justice.

This is a petition for an assessment of damages (G.L. c. 79, § 12) arising out of the defendant's taking, in 1971, of two parcels of land owned by the plaintiff and located in New Bedford. A jury returned a verdict of $429,000 ($404,000 for the larger parcel and $25,000 for the smaller parcel), and the case is here on the defendant's appeal from a judgment entered pursuant to that verdict.

The property in question consisted of two parcels of land upon which were three buildings. The principal building was located on the larger of the two parcels. There were two small buildings on the smaller lot. The principal building was comprised of a main floor and a basement, each having the same area. That building was constructed on a slope and had a separate entrance to the basement from the rear of the building. The basement area was used for a tire retreading shop. The main floor was utilized to sell tires, refrigeration units, television sets, other appliances, and automotive supplies. The building had been built in 1922, and an addition was constructed in 1963. That addition was used as a service area for the installation of tires on trucks and automobiles.

The defendant's appeal raises several issues relating to the admissibility of evidence. As our consideration of the question of the admissibility of evidence of the reproduction cost of the buildings is dispositive of the case, it will be discussed first.

1. The plaintiff presented the testimony of one Victor Fleurent, a general contractor who had built a portion of the plaintiff's buildings. Over the defendant's objection Fleurent was asked for his opinion as to the depreciated reproduction cost of the building on one of the parcels. The defendant objected to the admission of that testimony on the ground that the depreciated reproduction cost method was not a proper measure of damages unless it had first been demonstrated that the property taken was a 'special use' property, and no such showing had been made here. The general rule applied in determining the amount of compensation due when property is taken under the power of eminent domain is that the measure of damages is the fair market value of the property at the time of the taking. Kinney v. Commonwealth, 332 Mass. 568, 571--572, 126 N.E.2d 365 (1955). Fair market value is defined as '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 (1944). In some instances, 'when property is of such a nature or so situated or improved that its real value for actual use cannot be ascertained by reference to market value,' Smith v. Commonwealth, 210 Mass. 259, 261, 96 N.E. 666, 667 (1911), the standard of special value, as determined by computing the cost of reproduction minus an appropriate amount for depreciation, may be resorted to. This method is most often applied to property that is specially adapted for a particular use which does not have a very active market, ¹ so that its value cannot be shown by reference to sales of nearby comparable property. See Newton Girl Scout Council, Inc. v. Massachusetts Turnpike Authy., 335 Mass. 189, 194, 138 N.E.2d 769 (1956). In such cases 'it is proper to allow testimony to be given of (the) value (of the property) for the special purpose for which it is used . . ..' Cochrane v. Commonwealth, 175 Mass. 299, 302, 56 N.E. 610, 611 (1900). Tigar v. Mystic River Bridge Authy., 329 Mass. 514, 518, 109 N.E.2d 148 (1952). But evidence of the cost of reproduction is a very inconclusive test of the value of property, Goodyear Park Co. v. Holyoke, 298 Mass. 510, 511, 11 N.E.2d 439 (1937), and thus it is admissible only (a) where reproduction of essentially the same type of structure would be reasonable in the event of its destruction or taking, Commonwealth v. Massachusetts Turnpike Authy., 352 Mass. 143, 148, 224 N.E.2d 186 (1967), and (b) it is impossible to prove the value of the property without dispensing with conventional fair market or income capitalization rules. Tigar v. Mystic River Bridge Authy., supra, 329 Mass. at 518, 109 N.E.2d 148. We assume for the purposes of this case that requirement (a) has been satisfied.

The burden of proving that the property taken is special purpose property, the value of which cannot be practicably established by conventional means, is on the plaintiff. Davenport v. County of Franklin, 277 Mass. 89, 93, 177 N.E. 858 (1931). Silk v. Commonwealth, 1 Mass.App. 149, 152--153, 294 N.E.2d 480 (1973). The trial judge must make a preliminary finding that the plaintiff has established to the satisfaction of the court that a determination of fair market value using the usual rule would be impossible. He may then admit evidence of reproduction costs as a measure of value. Silk v. Commonwealth, 1 Mass.App. at 153, 294 N.E.2d 480. See Tigar v. Mystic River Bridge Authy., supra, 329 Mass. at 518--519, 109 N.E.2d 148, and cases cited therein.

In the instant case, at the time the evidence of reproduction cost was admitted, there had been no evidence of any comparable sales in the area nor any evidence that there had been no sales of comparable property. Neither had there been evidence to indicate that it was either possible or impossible to arrive at the fair market value through the capitalization of income approach.

The plaintiff in substance argues that the following aspects of his witnesses' testimony would support a preliminary finding that the property in question was especially adapted to a particular use, or was of a type not commonly bought and sold: (1) the floor of the building was constructed of steel-reinforced concrete to accommodate the weight of automobiles and tractor trailer trucks serviced by the facility; (2) the electrical wiring in the building was installed to handle a number of power tools specific to the tire retreading and refitting business; (3) the building contained a steam-generating boiler for use in the tire retreading service; (4) the doors were oversized to allow large trucks to be driven inside; (5) there were alignment pits and hydraulic lifts, eight for passenger cars and two for trucks. While all of those factors in combination might have supported a finding that the property was particularly adapted to a special use, such features were also susceptible of valuation by the market data approach and in fact were considered by the plaintiff's real estate expert in making his appraisal of the fair market value. The presence of special features or special equipment in a building does not necessarily indicate that the property is of a type that can be classified as special purpose, to allow admission of the cost of reproduction. See United States v. Certain Property Located in the Borough of Manhattan, 306 F.2d 439, 447--448 (2d Cir. 1962). In the present case the judge made no preliminary finding that it would be impossible to establish value by use of market data so that the usual rule could be dispensed with in favor of the reproduction cost method.

The plaintiff's real estate expert, called as a witness following Fleurent, testified, among other things, that he had attempted to arrive at a fair market value by the market data approach but found the only comparable sales were such as to assist him in arriving at the value of the underlying land. He did, however, testify that he had made a determination of the fair market value by capitalizing the income which he imputed to the property, no part of which was rented. He...