Housing and Redevelopment Authority for City of Minneapolis v. First Ave. Realty Co.

• Decision Date: 19 February 1965
• Docket Number: No. 38976,38976
• Citation: 270 Minn. 297,133 N.W.2d 645
• Parties: HOUSING AND REDEVELOPMENT AUTHORITY FOR CITY OF MINNEAPOLIS, Respondent, v. FIRST AVENUE REALTY COMPANY, Inc., et al., Respondents-below, Arthur V. Stevens as Executor of Estate of Harry M. Dryer, deceased, Appellant.
• Court: Minnesota Supreme Court

Page 645

133 N.W.2d 645

270 Minn. 297

HOUSING AND REDEVELOPMENT AUTHORITY FOR CITY OF MINNEAPOLIS Respondent, v. FIRST AVENUE REALTY COMPANY, Inc., et al., Respondents-below Arthur V. Stevens as Executor of Estate of Harry M. Dryer deceased, Appellant.

No. 38976.

Supreme Court of Minnesota.

Feb. 19, 1965.

Syllabus by the Court

1. The income being derived from property when subjected to legal condemnation is relevant in estimating its market value.

2. This court has consistently followed the rule that a stranger to a contract is not bound by the parol evidence rule unless he seeks to enforce rights which are based on the instrument.

3. As a general rule, the preliminary question whether a witness has the necessary qualifications to testify as an expert is left to the sound discretion of the trial court.

4. Where a witness for appellant at the trial below used a schedule showing reproduction costs less depreciation to aid his present recollection in giving his testimony, it was within the sound discretion of the trial court to exclude such schedule when offered in evidence.

5. The record in the instant case fails to show anything to indicate that the jury was influenced or motivated by passion or prejudice in arriving at the amount of the damages.

6. The conflict in the expert opinion testimony as to value was for the jury to resolve; the question of damages is essentially one of fact.

7. Opinion testimony of expert witnesses as to value in condemnation proceedings is not binding upon the jury, being only advisory, and the jury may, therefore, weigh such evidence in the light of all the facts and opinion presented to it and draw its own conclusions.

Halpern & Abrahamson, Minneapolis, for appellant.

Mackall, Crounse, Moore, Helmey & Holmes and Connor Schmid, Minneapolis, for respondent.

NELSON, Justice.

Condemnation proceeding involving the Bijou Theater building, which was situated in an older section of downtown Minneapolis known as the lower loop. The building's principal use was that of a moving picture theater, although it also housed an appliance store and barbershop. Commissioners appointed by the district court awarded $85,000 for the property, and both petitioner, the Housing and Redevelopment Authority, and respondent, Arthur V. Stevens, executor of the estate of Harry M. Dryer, deceased owner, appealed to the district court. A district court jury awarded the owner $72,000, whereupon said respondent appealed to this court from an order denying a motion for a new trial.

From a somewhat lengthy record it appears that the Bijou Theater building was erected in the 1890's to house opera. Over the years its use was altered to meet changing conditions, and, when condemned pursuant to proceedings instituted by petition, it was being used as a 'grind' motion picture theater. The term 'grind' refers to continuous daily showings of a particular movie beginning about 10 a.m. and culminating around 11:30 p.m. Admission price at the Bijou when last open was 25 cents per person, with a different double feature played each day.

The owner introduced two witnesses whose valuation of the property ranged from $160,000 to $217,409.36. Petitioner called three appraisers as witnesses whose valuations ranged from $55,000 to $60,000. From the record it appears that the jury's award of $72,000 was well within limits suggested by the conflicting expert opinion evidence when viewed and weighed in the light of all the circumstances.

Appellant's assignments of error concern the admission of the testimony of one Max R. Elkin, officer of the Elox Corporation, which was the lessee of the building. The lease was entered into some 18 to 19 months prior to commencement of the condemnation proceedings, and appellant introduced it in evidence to show the income derived from the property. Petitioner countered by introducing Elkin, who testified that as an officer of the Elox Corporation he negotiated the lease with the owner and that the owner had indicated to him that he wanted a lease which contained a high rental figure which he might display at the proper time to condemnation authorities but that the lessee need not worry about the high rent for he would not be held to it. Appellant now asserts that admission of this evidence was error because it violated the parol evidence rule. Thus, the issue presented on this appeal is whether petitioner, a stranger to the contract, may, in a condemnation proceeding, introduce evidence which tends to show that a lease entered into by the owner of the condemned property was in part fictitious and therefore purposely entered into in some respects to bolster the value of the property.

1. It is clear that the income which was being derived from the property when subjected to legal condemnation is relevant. In Regents of University of Minnesota v. Irwin, 239 Minn. 42, 57 N.W.2d 625, we indicated that such evidence was admissible provided any fictitious or fanciful income was excluded.

In regard to the parol evidence rule, we concede it to be fundamental that oral evidence concerning discussions prior to or contemporaneous with the execution of a written instrument which varies the terms thereof is inadmissible. ¹ The rationale behind the rule is that it insures stability and enforceability of a written contract. ² Our concern in this case, however, is only to ascertain whether the rule is applicable to the situation arising by reason of appellant's introduction of the rental lease.

2. Appellant now argues that the parol evidence rule prohibited Elkin's testimony in regard to certain purposes of the lease because the rule encompasses situations where a stranger is attempting to prove facts inconsistent with the written contract. In support of this position, appellant cites Minneapolis, St. P. & S.S.M. Ry. Co. v. Home Ins. Co., 55 Minn. 236, 56 N.W. 815, 22 L.R.A. 390; Sayre v. Burdick, 47 Minn. 367, 50 N.W. 245; Lawton v. St. Paul Permanent Loan Co., 56 Minn. 353, 57 N.W. 1061; Geiger v. Sanitary Farm Dairies, 146 Minn. 235, 178 N.W. 501; Martin v. Setter, 184 Minn. 457, 239 N.W. 219, 80 A.L.R. 471. These cases do not hold what appellant suggests. They uniformly enunciate a rule consistently followed by this court, which is that a stranger to a contract is not bound by the parol evidence rule unless the stranger seeks to enforce rights which are based on the instrument. ³ In the cases cited by respondent this court follows the above-mentioned rule and we therefore see no need to make further reference to them.

Getting back to the purpose of the parol evidence rule as applied here, it is clear that Klkin's testimony could not affect the enforceability of the lease. This proceeding was in no way concerned with its enforcement, nor was petitioner seeking to enforce rights under the lease. The effect of the testimony was merely to prove that the owner's motive in entering into the lease was to take advantage of the petitioner by bolstering the value through fictitious rental values and thereby constructively at least defrauding the public. Whether appellant actually entertained any such motives was a matter for the jury to determine in light of all facts and surrounding circumstances.

In Union Ry. Co. v. Hunton, 114 Tenn. 609, 88 S.W. 182, a case similar to the one before us, the Tennessee court indicated that the condemnor should be permitted to show the special circumstances under which the lease was effected which impaired its evidentiary effect as a true expression or indication of the value of the property. ⁴ We so hold in the case at bar.

It appears from the record that under the lease the Elox Corporation was compelled to make a $12,000 deposit with the owner to insure against rental payment failure. The termination of the lease was introduced into evidence and it contained a recital that the lessee was entitled to a return of $7,550. Elkin testified under cross-examination that that amount had been paid to the Elox Corporation. Appellant then sought to introduce a proof of claim in the amount of $7,550 which had been filed with the probate court against the lessor-owner's estate. The trial court refused admission of the claim, and appellant has assigned this as error.

The underlying reason for appellant's attempt to introduce the proof of claim stems from Elkin's testimony that the owner had desired a lease with a high rental figure. Appellant became concerned that the jurors may have inferred fraudulent conduct on the owner's part. If the jurors at any time drew such an inference it must have been dispelled by appellant's cross-examination of Elkin. The offer in evidence of the proof of claim was intended by appellant to disprove any inference of fraud on the part of the owner since the amount of the claim had been limited to that due from the deposit balance. The introduction of the proof of claim, however, could serve no useful function and was merely cumulative. We think the trial court properly rejected it.

3. Appellant next suggests that Elkin was incompetent to give expert opinion testimony as to the rental value of the Bijou Theater. In Carmody v. Aho, 251 Minn. 19, 23, 86 N.W.2d 692, 695, we said:

'* * * As a general rule, the preliminary question whether a witness has the necessary qualifications to testify as an expert is left to the sound discretion of the trial court. * * *

'In the first place, the opinion of expert witnesses is intended to be used only where, because of superior learning or experience, the witness is more capable of formulating a correct opinion on the subject matter involved than are the members of the jury.'

In this case, Elkin and his father managed the Bijou Theater during the 2-year period preceding condemnation. Previous to this he had been involved over a period of some 10 years in the operation and management of the nearby, similarly used, Crystal and Loop Theaters. The Loop, Crystal, and Bijou Theaters were the only 'grind...