L'Etoile v. Director of Public Works, 9959

• Decision Date: 10 July 1959
• Docket Number: No. 9959,9959
• Citation: 153 A.2d 173,77 A.L.R.2d 1174,89 R.I. 394
• Parties: , 77 A.L.R.2d 1174 Osias J. L'ETOILE et ux. v. DIRECTOR OF PUBLIC WORKS of State of Rhode Island. Ex.
• Court: Rhode Island Supreme Court

Page 173

153 A.2d 173

89 R.I. 394, 77 A.L.R.2d 1174

Osias J. L'ETOILE et ux. v. DIRECTOR OF PUBLIC WORKS of State of Rhode Island.

Ex. No. 9959.

Supreme Court of Rhode Island.

July 10, 1959.

William R. Goldberg, Ronald R. Gagnon, Pawtucket, for petitioners.

Guy E. Gallone, Special Counsel, Providence, for respondent.

POWERS, Justice.

This is a petition under Public Laws 1953, chapter 3105, sec. 11, for the assessment of damages caused through the taking by eminent domain on December 20, 1956, of the petitioners' real property by the state for freeway purposes. The condemnation was effected pursuant to the provisions of said P.L.1953, chap. 3105, and General Laws 1938, chap. 75, § 2, as amended. The case was heard by a superior court justice sitting with a jury and resulted in a verdict for the petitioners in the sum of $32,000 with interest. The petitioners filed a motion for a new trial which was denied. The case is here on their bill of exceptions to such denial and to evidentiary rulings during the trial. The respondent herein will sometimes be referred to as the state.

The property in question consisted of a parcel of land with a two and one-half story apartment house thereon, situated on the southeasterly corner of Cottage and Underwood streets in the city of Pawtucket. The land on which the house and a three-car brick garage were located comprised something more than 12,000 square feet, well landscaped with substantial shrubs, trees and lawn. There were six rental units, all occupied, consisting of a three-room doctor's office and two two-room apartments on the first floor, three three-room apartments on the second floor, and four unused attics on the third floor.

The petitioner Osias J. L'Etoile testified that the total annual rents, including the garages, amounted to $4,428; that the apartments were equipped with gas stoves and refrigerators; and that the rental charges covered heating and hot water. He also testified that the expenses in connection with the maintenance and operation of the property amounted to $1,332.24 but that this did not include any managerial expenses or repairs. It appears that he personally made all repairs and carried on the management of the property. He further testified that the property was purchased in 1926 and shortly thereafter he made substantial repairs and converted it into an apartment house. He testified in detail as to the nature and extent of these improvements but was not permitted to testify as to their cost.

Charles H. Lawton, Jr., after qualifying as an expert familiar with real estate properties and their values in the city of Pawtucket, testified that the fair market value of petitioners' property at the time of the taking on December 20, 1956, was $50,000. He attempted to testify as to what he considered the fair rentals of petitioners' property should be, but on objection from the state was not permitted to do so. He computed the expenses in connection with operating the property as an apartment house to be $1,925 leaving a return of income to petitioners which, capitalized at 6 1/2 per cent on the investment, placed the fair market value at $50,000.

During the examination of the witness Lawton the petitioners attempted to introduce as a full exhibit a photograph of property located diagonally across the street from their property, but on respondent's objection were not permitted to do so. It was offered for the purpose of showing the nature and type of property in the immediate neighborhood. It is undisputed that petitioners' property was in a residence B zone and that the property shown in the said photograph was not in the same zone to the knowledge of the witness.

William E. Coyle, Jr., after qualifying as an expert familiar with real estate properties and their values in the city of Pawtucket, testified that in his opinion the fair market value of petitioners' property was $25,000. He also testified that for investment purposes it would be necessary to add to the fixed expenses testified to by petitioner Osias J. L'Etoile an allowance for repairs, upkeep and management. In his opinion no prospective purchaser for investment purposes could be expected to provide these services on a personal basis without making allowance for their value, or if performed by an employee engaged for that purpose the compensation therefor would reduce the net annual income, and in either event the realistic net annual income would amount to $2,278 and not approximately $3,300 as estimated by witness Lawton. He further testified that the required rate of return would be 9 per cent rather than 6 1/2 per cent to permit the investor to recoup his original investment over a reasonably foreseeable period of years.

Testifying that in his opinion the property was in excellent condition and for that reason had an investment future of thirty-three years, he computed 3 per cent as necessary for recoupment, leaving a net return on the investment of 6 per cent per annum. The witness Coyle further testified that he was familiar with the sale of a piece of property on Cottage street in May 1956, which as an investment was comparable to petitioners' property in appraising the fair market value of the latter. The property in question was within 500 feet of petitioners' property and in May of the same year in which petitioners' property was condemned it sold in the open market for $24,000.

In cross-examination as to whether or not he had taken into consideration the excellent landscaping, shrubs, trees and lawn on petitioners' property, the witness Coyle testified that he had given it consideration, but that from an investor's point of view its maintenance constituted another item of expense and that investors gave weight to esthetic values only as they affected income. He added in this connection that all real estate people considered residential properties of more than four dwelling units as investment property which, in his words, 'does not carry with it the normal amenities that you find in a one-family home.' Queried as to the proximity of Glencairn Manufacturing Company to the property sold in May 1956, which the witness had used for purposes of comparison, Coyle stated that he did not know the exact distance but testified: 'It isn't close enough to be an influence * * *.'

In rebuttal the petitioners subpoenaed William J. Lynch, a prominent Pawtucket realtor. Counsel for respondent objected to any questioning of this witness and on petitioners' exception the court suggested that they make an offer of proof. Thereupon, in the absence of the jury, petitioners placed on the record an offer of proof that for thirty years Lynch had lived just two blocks from their property; that he was an expert in real estate values and had appraised petitioners' property for the state; that he knew Glencairn Manufacturing Company was noisy and close by the so-called comparable property; and that petitioners' property was at least one fifth of a mile from said comparable property. They also offered proof of his appraisal of petitioners' property and the reasons therefor.

William J. Lynch was then sworn and in response to a question asked by petitioners' attorney stated that he did not wish to testify, having never represented petitioners and having done some work for the state, adding: 'And I just don't feel that I should represent two masters.' The trial justice then sustained respondent's objection on the grounds that an expert witness should not be permitted to testify as such unless so engaged, nor as a resident of petitioners' neighborhood in rebuttal of the opinion of the witness for the state that the proximity of the manufacturing concern was not an influence in establishing a fair market value of the property sold for $24,000 in May 1956. It is clear from the transcript that the court did not consider the second phase of the testimony proposed to be offered by Lynch as proper rebuttal.

The petitioner Osias J. L'Etoile then testified in rebuttal that the Glencairn Manufacturing Company was noisy, could be heard at the location of the so-called comparable property, could not be heard at petitioners' property, and that there were no other manufacturing concerns which could be heard from the location of petitioners' apartment house.

The evidence further discloses that a letter dated April 11, 1957, was received by petitioners in which the state made an offer of $28,100, in connection with the condemnation of their property. Counsel for petitioners offered to place this letter in evidence, to which offer respondent objected. The court sustained the objection on the ground that the instant case was subject to the same rules of evidence as prevail in any other case.

The petitioners' bill of exceptions alleges eighty-nine grounds of error, one being to the denial of their motion for a new trial and the others relating to evidentiary rulings. These latter exceptions have been more or less grouped by petitioners into four...