St. Louis Housing Authority v. Bainter, 45167

Decision Date14 January 1957
Docket NumberNo. 1,No. 45167,45167,1
Citation297 S.W.2d 529
PartiesST. LOUIS HOUSING AUTHORITY, a Municipal Corporation (Plaintiff), Appellant, v. Rosie L. BAINTER et al., Defendants, Planet Oil Company, a Corporation (Parcel 138) (Defendant), Respondent
CourtMissouri Supreme Court

James E. Crowe, John J. Shanahan, St. Louis, for appellant.

Shifrin, Shifrin & Agatstein, St. Louis, for respondent.

DALTON, Judge.

This is an appeal from an order granting a new trial to respondent on the ground of error in the giving of an instruction requested by appellant.

Appellant, St. Louis Housing Authority, a municipal corporation, instituted this action against respondent and others to acquire by condemnation proceedings particularly described property in the city of St. Louis for the purpose of constructing and maintaining a low rent housing project. The property to be acquired from respondent consisted of tract No. 138 which was used by respondent, in connection with other property, for cut-rate gasoline service station purposes.

Commissioners were duly appointed and filed their report by which they awarded respondent $32,500 in damages for the property appropriated. Respondent filed exceptions to the award and a trial was had before a jury resulting in a verdict for respondent for $35,000. Respondent moved for a new trial and assigned error on various matters, including the giving of instruction No. 5, on which latter ground the motion was sustained.

Since defendant-respondent claimed damages in excess of $52,000 and offered evidence in support of the claim, while plaintiff-appellant's evidence fixed the reasonable fair market value of the property taken at not to exceed $31,170, the amount in dispute exceeds $7500 and this court has jurisdiction of the appeal. Art. V, Sec. 3, Const. of Mo. 1945, V.A.M.S.

Instruction No. 5 is as follows: 'The Court instructs the jury that in determining the fair market value of the property in controversy the volume of business done on said property may be considered by you only for the purpose of determining whether or not said property is being used by defendant for its highest and best use.'

Respondent's motion for a new trial alleged error in the giving of the instruction as follows:

'* * *

'(a) Under said instruction, the jury was erroneously and improperly directed to limit its consideration of the substantial and uncontradicted evidence of the volume of business done on said property to the sole issue of whether or not said property was being used for its highest and best use.

'(b) The volume of business done on said property was proved by defendant by uncontradicted evidence of the gallonage dispensed therefrom, which evidence, properly admitted by the court, materially tends to prove the value of said property when devoted to its highest and best use, and was material and highly probative with respect to the reasonable rental and fair market value of said property. Under said instruction, however, it was mandatory for the jury to discard and disregard said evidence for that purpose, thus removing from the jury's consideration important and decisive facts.

'(c) Said instruction was not in accordance with the theory upon which the case was tried and was inconsistent with the rulings of the court during the trial with respect to the admissibility of evidence of volume of business as bearing upon reasonable rental and fair market value.

'(d) The erroneous giving of said instruction materially and directly affected the amount of the jury's verdict, to the prejudice of this defendant.'

The order sustaining the motion for a new trial merely stated that the court erred in giving instruction No. 5 at the request of the plaintiff (appellant here).

Only a brief review of the evidence is required. Respondent is a Missouri corporation engaged in the retail distribution of gasoline in the St. Louis area. The service station in question fronts on Twelfth street for the entire block from Hickory to Morrison, and includes tracts Nos. 136, 137, 138 and 139, but only tract No. 138 was owned by respondent and is involved in this proceeding. Only 25% of the station building was located on this tract, but apparently all gasoline pumps were on the property. The traffic flow in front of this station was approximately 35,000 cars in a twenty-four hour period and the station was operated twenty-four hours per day and had been in operation for several years. The station was located on 'the right-hand side of the street going out of the center of the town' and had good visibility and good means of ingress and egress. The nearest major company station was a block away. In the last year of its operation prior to its appropriation, respondent's said station 'pumped' 1,138,811 gallons of gasoline or an average of approximately 94,900 gallons per month. Respondent was not a major oil company, but marketed its gasoline under the major brand name of Mars gasoline, and it operated its station under a classification referred to as a super cut-rate gasoline station.

The testimony of Meyer Kopolow, a qualified witness and the president of the respondent company, tended to show that there was a standard or formula in the oil business by which the fair market value and the reasonable rental value of a station was determined. He said the customary standard in the industry for determining the lowest possible selling or purchasing price of a station was the equivalent of one dollar per gallon 'pumped' at the station on the average per month; and that, if a station was averaging 50,000 gallons per month, the minimum purchasing or selling price would be $50,000. His testimony further tended to show that in leasing such service stations, operators and owners of major oil stations, applied a formula in determining reasonable rental value; and that the minimum rental was usually fixed at one cent per gallon per month of gasoline sold on the premises, although the rental was sometimes higher. He said that the reason gallonage was so important was because the profitability and success of a station was dependent on the gasoline it sold. He also said the mentioned formulas were used in fixing and buying and selling prices of stations, and in determining rentals to be paid or received; and that such formulas were in customary usage in the industry as minimum figures. He fixed the fair market value of the service station and improvements at $95,000 and the value of the monthly rental per month at one cent per gallon of gasoline sold or $950 per month. He said the primary factor in determining the fair market value of a service station or its reasonable rental value was 'the volume of business or gallonage which has been sold in that station in the past.'

The testimony of Kenneth C. Baker, the president of one of respondent's competitors, tended to show that the standard or formula applied in the business in determining rentals, per month or per year as far as independent stations, such as defendant's, were concerned, was one cent per gallon on gasoline sold on the premises, but that in many instances the major oil companies leased property and paid rental of one and one-half cents per gallon. He said that the use of the formula was common practice in the industry.

Witness H. O. Byrd, a real estate appraiser, testified concerning the value of tract No. 138. In determining the fair market value he used the income capitalization method based, in part, upon the rental value of the premises, which was based in turn at one cent per gallon on gasoline sold on the premises. He also used the 'reproduction cost, less depreciation method,' and ultimately arrived at the fair market value of tract No. 138, exclusive of the other tracts, as $55,200.

Another witness, Enno Krache, whose qualifications were admitted, also relied principally on 'the capitalization approach' by capitalizing the net income the property could be expected to produce. His conclusion was based simply upon the amount of rent the property would command and 'not upon the amount of profits its operation would produce.' He fixed the fair market value of tract No. 138 at the date of appropriation at $52,000. We need not review the detailed method by which he ultimately arrived at this value for this particular portion of the service station premises in question.

One of plaintiff's witnesses used 'the cost approach and considered comparable sales in the neighborhood method' and he gave a breakdown on the reproduction costs for the improvements. He said gallonage was not important because it took into consideration other factors than the land and its improvements. He said consideration should be given to the cost of comparable or substituted property. He fixed the value of the tract in question at $31,170. Another witness mentioned three different methods of appraisal, but used what he termed 'the reproduction less depreciation approach.' He fixed the rental of the station in question at $300 per month and the fair market value of tract No. 138 at $30,000. This witness said he didn't recognize that gallonage had anything to do with fair market value or the amount of rent when comparable stations were available.

Appelant first contends that the court erred in sustaining respondent's motion for new trial '* * * because said instruction when read with the othr instructions in the case properly charges the jury that the measure of damage for the appropriation of respondent's property is its fair market value computed upon the basis of its highest and best use.' Appellant says that when so considered the instruction 'properly charges the jury as to the elements of damage which it may consider in arriving at the fair market value of respondent's property.'

In determining whether a particular instruction is prejudicially erroneous it is well settled that all of the instructions must be read and construed together as a single charge and, where so taken...

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