Hetherington Letter Co. v. City of Cedar Rapids

• Decision Date: 23 May 1973
• Docket Number: No. 55195,R--13,55195
• Citation: Hetherington Letter Co. v. City of Cedar Rapids, 207 N.W.2d 800 (Iowa 1973)
• Parties: HETHERINGTON LETTER COMPANY, Appellant, v. CITY OF CEDAR RAPIDS, Iowa, et al., in the matter of the condemnation of real estate for urban renewal project designated as the Civic Center Urban Renewal Project, Iowa, in Linn County, State of Iowa, by the City of Cedar Rapids, Iowa, Appellee.
• Court: Iowa Supreme Court

Page 800

207 N.W.2d 800

HETHERINGTON LETTER COMPANY, Appellant, v. CITY OF CEDAR RAPIDS, Iowa, et al., in the matter of the condemnation of real estate for urban renewal project designated as the Civic Center Urban Renewal Project, Iowa R--13, in Linn County, State of Iowa, by the City of Cedar Rapids, Iowa, Appellee.

No. 55195.

Supreme Court of Iowa.

May 23, 1973.

Edward S. White, Carroll, John D. Randall and G. K. Thompson, Cedar Rapids, for appellant.

David F. McGuire, City Atty., Cedar Rapids, for appellee.

Considered en banc.

REYNOLDSON, Justice.

This is an appeal by Hetherington Letter Company (condemnee) from a district court verdict and judgment fixing damages for the condemnation of its business premises by the City of Cedar Rapids (condemnor). All of condemnee's real estate, in the path of an urban renewal project, was condemned on January 8, 1968. We modify and affirm.

Condemnee raised below, and argues here, issues relating to admissibility of evidence, jury instructions, and attorney fees, which we discuss in the following divisions.

I. On appeal to district court from condemnation commission's award of $112,400, condemnee's petition alleged that in 1962 condemnor employed expert appraisers (J. M. Cleminshaw Company) who appraised the subject property for $135,661. It was alleged condemnor had received benefit by payment of taxes at said valuation and was therefore estopped from claiming the value so fixed was not the actual value of the condemned property.

Following certain pleading maneuvers, condemnor filed application for adjudication of law points relating to the admissibility of evidence to support these allegations of condemnee's petition. No issue is raised based on use of this procedural device to effect, in actuality, a suppression of evidence. Trial court ruled, '(P)laintiff in establishing his main case shall not seek to introduce evidence of the taxable values or the so-called Cleminshaw appraisals, nor refer to these matters in the voir dire to the jury or in any opening remarks in the course of the trial.'

In so ruling, trial court obviously relied on the greatly predominant view holding assessed valuations inadmissible as direct, substantive evidence of fair market value in condemnation proceedings. 5 Nichols on Eminent Domain § 22.1 (Rev. 3rd ed. 1969); 1 L. Orgel, Valuation Under the Law of Eminent Domain § 151 (2nd ed. 1953); 27 Am.Jur.2d, Eminent Domain § 441, pp. 354--56; 29A C.J.S. Eminent Domain § 273(4), pp. 1201--02.

Condemnee, however, points to an exception to the above general holding: the owner's valuation on his return for taxation is ordinarily competent evidence against him. Id.; see annot., 39 A.L.R.2d 209 (1955). Condemnee argues this exception should also apply where, as here, the condemning body participated in fixing the assessed 'actual value,' and (retreating from the original estoppel theory) such valuation should at least be admitted against the condemnor as an admission against interest.

Similar arguments have been rejected by the majority of appellate courts confronting the issue, on the grounds the determination of assessed value is for a different purpose, or that the condemnor is not bound by acts of the public assessing officer. See, e.g., United States v. Certain Parcels of Land, 261 F.2d 287 (4 Cir. 1958); Culver v. Commonwealth, Department of Highways, 459 S.W.2d 595 (Ky. 1970); City of Chicago v. Harrison-Halsted Building Corp., 11 Ill.2d 431, 143 N.E.2d 40 (1957); State Highway Commission v. Anderegg, 241 Or. 31, 403 P.2d 717 (1965). But see, Louisiana Highway Commission v. Giaccone, 19 La.App. 446, 140 So. 286 (1932); In re Site for Memorial Hall, 316 Mich. 215, 25 N.W.2d 174 (1946).

It is true this court, in several early cases, held the assessment roll with respect to the land affected by the condemnation was admissible when signed by the property owner. Nedrow v. Michigan-Wisconsin Pipe Line Co., 245 Iowa 763, 61 N.W.2d 687 (1953); Duggan v. State, 214 Iowa 230, 242 N.W. 98 (1932); Welton v. Iowa State Highway Commission, 211 Iowa 625, 233 N.W. 876 (1930). It is not apparent from these decisions whether condemnee raised the defenses under our then relevant statutes that market value was only one element considered in arriving at the actual value upon which assessed value was based (§ 7109, The Code, 1927; § 441.13, The Code, 1950), that the assessor, not the owner, was charged with fixing values for the listed property (§ 7106, The Code, 1927; § 441.10, The Code, 1950), or that the owner swore only the 'list' was correct, not specifically to the value affixed by the assessor (§ 715, The Code, 1927; § 441.18, The Code, 1950).

When those cases were decided, the tax assessment appeal decisions ruled if the property had a market value, there could ordinarily be no distinction between market value and actual value. Hawkeye Portland Cement Co. v. Board of Review, 205 Iowa 161, 217 N.W. 837 (1928).

That interpretation, however, was eroded by Bankers Life Co. v. Zirbel, 239 Iowa 275, 31 N.W.2d 368 (1948) and Des Moines Building-Loan & Savings Ass'n v. Bomer, 240 Iowa 1192, 36 N.W.2d 366 (1949). Finally, in James Black Dry Goods Co. v. Board of Review, 260 Iowa 1269, 1276, 151 N.W.2d 534, 538 (1967), cert. dismissed, 390 U.S. 901, 88 S.Ct. 817, 19 L.Ed.2d 868 (1968), we said,

'It should be noted that the value to be determined is actual value and that 'market value, if any,' is only one of the elements to be considered. Market value, of course, is an important consideration but it may be inflated above or deflated below actual value determined under the statute and it is not controlling. * * * A change in market value would not necessarily establish or change actual value.'

At all times pertinent to this tax valuation appraisal the relevant code provision specified market value as only one element of 'actual value.' See Regular Session of the 58th General Assembly, Chapter 291, Section 21; § 441.21, The Code, 1966. We relied on this statutory language in James Black, supra, to hold for tax purposes 'market value' and 'actual value' could not be equated. In view of that rationale, we cannot logically hold 'actual value' for tax purposes is direct, substantive evidence of fair market value in an eminent domain proceeding.

We are further influenced toward this conclusion by the condemnor's argument it was only partially, and indirectly, responsible for the Cleminshaw tax appraisal. It had one of three votes (without veto power) on the conference board which selected the appraisal firm and appointed the city assessor. Regular Session of the 58th General Assembly, Chapter 291, Section 2. Condemnor itself had a statutory right to appeal an assessment, negating the claim the city assessor was its agent. Section 442.10, The Code, 1958.

Pertinent here is the pragmatic rationale in 1 L. Orgel, Valuation Under the Law of Eminent Domain § 150, at pp. 629--31, that actual value for tax purposes need only be relatively correct, not absolutely exact:

'For purposes of taxation, property valuation is presumed to measure ability to pay and is used as a basis for distributing the costs of government. The tax officials are interested primarily in a fair basis of apportionment of these costs * * *. * * * (T)he courts recognize that in tax valuation equality of assessment is more important than a precise determination of market value. In eminent domain, on the other hand, the purpose of the valuation is not to serve as a basis for apportioning the current costs of government, but rather to indemnify an owner for the total loss of his property.'

Lastly, this record indicates the tax appraisal figure was disclosed to the jury by condemnee in cross-examination of condemnor's expert witness.

We hold trial court did not err in disallowing admission of the actual value of the property as fixed for tax purposes as direct, substantive evidence of fair market value in an eminent domain proceeding.

This determination is not to be construed as necessarily controlling in a comparable situation in which property is valued for tax purposes under our present statute which, excepting only agricultural property, provides 'The actual value of all property subject to assessment and taxation shall be the fair and reasonable market value of such property.' Section 441.21, The Code, 1973. For discussion of the new fair market value approach see Tiffany v. County Bd. of Rev. in and for Greene Co., 188 N.W.2d 343 (Iowa 1971); Juhl v. Greene County Board of Review, 188 N.W.2d 351 (Iowa 1971).

II. In instruction 5 trial court precisely followed Instruction 14.4, I Special Committee on Uniform Court Instructions, Iowa State Bar Association, Iowa Uniform Jury Instructions (Civil) (1970), which defines 'fair and reasonable market value' in terms of 'cash price'. This was objected to on the grounds it would create 'further confusion' and that the appraisal experts did not testify in terms of 'cash price.'

In Stortenbecker v. Iowa Power and Light Company, 250 Iowa 1073, 1079--1080, 96 N.W.2d 468, 472 (1959) we set out with approval language of an instruction defining 'fair and reasonable...