People ex rel. State Park Commission v. Johnson

• Decision Date: 18 May 1962
• Citation: 203 Cal.App.2d 712,22 Cal.Rptr. 149
• Court: California Court of Appeals Court of Appeals
• Parties: PEOPLE ex rel. the STATE PARK COMISSION, Plaintiff, Appellant and Respondent, v. Clinton T. JOHNSON et al., Defendants, Respondents and Appellants. Civ. 25896.

Page 149

22 Cal.Rptr. 149

203 Cal.App.2d 712

PEOPLE ex rel. the STATE PARK COMISSION, Plaintiff, Appellant and Respondent, v. Clinton T. JOHNSON et al., Defendants, Respondents and Appellants.

Civ. 25896.

District Court of Appeal, Second District, Division 4, California.

May 18, 1962.

Rehearing Denied June 6, 1962.

Hearing Denied July 11, 1962.

Stanley Mosk, Atty. Gen., Howard S. Goldin, Asst. Atty. Gen., N. B. Peek, Warren J. Abbott, Deputy Attys. Gen., for plaintiff, appellant and respondent.

Irving & Kellogg, Leslie W. Irving, Scott D. Kellogg, Oakland, for defendants, respondents and appellants.

BALTHIS, Justice.

Both plaintiff and defendants appeal from a judgment in a condemnation proceeding after a trial by jury which fixed the value of defendants' property to be acquired by plaintiff.

Plaintiff alleges three errors were committed by the trial court which were prejudicial to the state. The issues raised are:

1. Did the trial court commit prejudicial error in allowing an architect-consultant to state the value of the subject property based on his feasibility study?

2. Did the admission of the sales of other properties, alleged to be noncomparable, constitute prejudicial error?

3. Did the trial court commit prejudicial error by its remarks in the presence of the jury?

Defendant appeals from the judgment on only one issue, namely: Did the trial court err in not allowing interest from a date prior to the entry of judgment?

On April 3, 1958, the State Park Commission in the name of the People of the State of California filed a complaint in eminent domain seeking to condemn the property owned by defendants Clinton T. Johnson and Eva G. Johnson located in the City of Pismo Beach, County of San Luis Obispo, for state park purposes, to wit, for the extension and improvement of Pismo Beach State Park. After a trial upon the legal issues in which the court found for the plaintiff, a trial upon the issue of just compensation was held before a jury on September 15 through September 30, 1960. The jury found the value of the subject property as of April 3, 1958, was $130,953.00 and judgment in condemnation for that sum plus costs was entered. The judgment provided that interest thereon was to run from the date of entry of judgment until the date of deposit of the award.

The subject property is primarily a private sandy beach located in the City of Pismo Beach within a few hundred feet of the Pismo Pier. It is vacant and zoned for commercial use. The width of the subject property is approximately 557 feet. Its depth varies depending on the location of the ever-changing ordinary high tide line and could not be fixed with certainty on the condemnation date.

Defendants' first witness was John Badgley, an architect and planning consultant. Badgley made a 'feasibility' study of the subject property complete with schematic diagrams for the sole purpose of showing that the land could be physically and economically adapted to his envisioned project which included a resort motel with swimming pool, restaurant and lounge bar. Badgley's plans utilized a building technique, a 'floating foundation,' which would eliminate the need for expensive sea walls. Certain figures were introduced over plaintiff's objections in connection with Badgley's economic feasibility study.

The court first sustained plaintiff's objections to the giving of any future income figures emanating from Badgley's study because of the speculation involved. The court then asked Badgley over plaintiff's objections what a purchaser could pay for the property consistent with the feasibility plan presented. Badgley then testified that, using an average of three accepted ways of determining feasibility, an amount of $728,000.00 could be paid for the land. The court then read the standard and accepted definition of fair market value to Badgley and asked whether the land could sell for that amount. Badgley declined to give any estimation of fair market value because as he stated: 'Your Honor, I am not a real estate appraiser, and that is not my concern.' He was only concerned with the 'reasonable economic value' in answering a client's question of 'what can I afford to pay for this; what can I expect to pay for it and still make economic ends meet.'

Plaintiff moved to strike out the part of the testimony giving the price someone could pay for this land but this motion was denied. The court then stated: '* * * the whole question is whether, if it was placed on the market for a reasonable time it would be--there would be a purchaser who has something like this in mind. It might not come to Mr. Badgley, I don't--but the definition is approximately as I have read it. To me that is the way we determine fair market value. The jury can take all of these things into consideration; give it what weight you feel it is entitled to.'

On cross-examination Badgley stated that he arrived at the figure mentioned through a study of the potential income from the unit he designed.

The trial court erred by admitting into evidence testimony concerning the specific dollar value of the land, to wit, $728,000.00 for a specific project. However, all of the testimony regarding the adaptability of the land for that purpose was proper.

The rule and the reasons therefore are clearly stated in the leading case, Sacramento Etc. R. R. Co. v. Heilbron, 156 Cal. 408, 412, 104 P. 979, 981, as follows: '* * * this court by its latest utterances has definitely aligned itself with the great majority of the courts in holding that damages must be measured by the market value of the land at the time it was taken, that the test is not the value for a special purpose, but the fair market value of the land in view of all the purposes to which it is naturally adapted; that, therefore, while evidence that it is 'valuable' for this or that or another purpose may always be given and should be freely received, the value in terms of money, the price, which one or another witness may think the land would bring for this or that or the other specific purpose is not admissible as an element in determining that market value, for such evidence opens wide the door to unlimited vagaries and speculations concerning problematical prices which might under possible contingencies be paid for the land, and distracts the mind of the jury from the single question--that of market value--the highest sum which the property is worth to persons generally, purchasing in the open market in consideration of the land's adaptability for any proven use.' (Italics ours.)

The Heilbron rule has been followed in the later cases. In City of Oakland v. Pcific Coast Lumber Etc. Co., 171 Cal. 392, pages 399-400, 153 P. 705, page 708, the court said: 'Appellant 'takes exception' to the language of this court in the Heilbron case to the effect that the value in terms of money which a witness might think the lands would have for some speculative use to which it was not put, and to which it might never be put, was not legitimate evidence. In the Heilbron case this court was not dealing with the question of the value of the land as evidenced by a present use, but solely with the problematical values sought by the witnesses to be put upon the land for problematical uses. If the exception to the exclusion of this kind of evidence is well takenThen it would be quite permissible for the witnesses to say, 'if oil were discovered upon the land it would be worth $20,000 an acre,' 'if a gold mine were discovered upon it it would be worth $10,000 an acre,' 'if a man wanted to buy it and establish a town site it would be worth $3,000 an acre,' and so on, until such inquiry in a condemnation suit would bear a close affinity to Lord Dundreary's famous question, 'If you had a brother would he like cheese?'

In Long Beach City High School Dist. of Los Angeles County v. Stewart, 30 Cal.2d

763, 185 P.2d 585, 173 A.L.R. 249, a witness in the condemnation proceeding was being interrogated concerning the value of the land 'for an industrial purpose.' The Supreme Court held 'such evidence was clearly inadmissible.' (page 771, 185 P.2d 585.)

That evidence of value, based upon a specific use or upon an owner's projected plan, is not admissible, see also Laguna Salada Etc. Dist. v. Pacific Dev. Co., 119 Cal.App.2d 470, 476, 259 P.2d 498; East Bay Municipal Utility Dist. v. Kieffer, 99 Cal.App. 240, 250-251, 278 P. 476, 279 P. 178; City of Stockton v. Vote, 76 Cal.App. 369, 402-403, 244 P. 609. For an out of state case in point, see State, Through Dept. of Highways v. Hub Realty Company (1960), 239 La. 154, 118 So.2d 364, 369.

We believe the error committed here in permitting Badgley to testify as to the speculative value of $728,000.00 was prejudicial. The state's two appraisers testified that the property had a fair market value of $18,000.00 and $20,000.00 respectively. Defendants' appraisers testified to market values ranging from $400,000.00 to $445,000.00. The jury's verdict was for compensation in the sum of $130,953.00.

Even though the jury was instructed on market value we cannot overlook the possibility that the jury was misled and confused by Badgley's testimony. The jury might well have believed that his statement of valuation was not speculative but rather was an opinion of market value entitled to great weight in their determination of fair market value.

A second issue on appeal is whether or not it was error for the court to admit evidence as to the sale prices of two motel properties claimed by defendant to be comparable. Mr. Quinn, a real estate broker from Santa Barbara, testified for defendants that in his opinion the highest and best use of the subject property was for '* * * motel apartments, combination with restaurant and cocktail lounge and possibly some one or two small shops in the building.' He testified as to certain sales that took place. Over objection on the ground of noncomparability he testified concerning a sale...