State by Lord v. Malecker, 38492

• Decision Date: 21 February 1963
• Docket Number: No. 38492,38492
• Citation: 120 N.W.2d 36,265 Minn. 1
• Parties: STATE of Minnesota, by Miles LORD, its Attorney General, petitioner, Respondent, v. William MALECKER et al., Respondents-below, Gerard's Incorporated, Appellant.
• Court: Minnesota Supreme Court

Page 36

120 N.W.2d 36

265 Minn. 1

STATE of Minnesota, by Miles LORD, its Attorney General petitioner, Respondent, v. William MALECKER et al., Respondents-below Gerard's Incorporated, Appellant.

No. 38492.

Supreme Court of Minnesota.

Feb. 21, 1963.

Syllabus by the Court.

1. Subject to the provisions of Minn.St. 117.14, the compensation to be awarded for a partial taking of subdivided but undeveloped rural real estate is the depreciation in value of the entire tract by reason of the condemnation, and not the aggregate amount of the damages resulting to individual lots.

2. Where is a condemnation action all of the elements which governed their testimony were fully presented, it was not error to permit the jury to consider the opinion of experts that the owner suffered no damage from loss of access to a lake which the witnesses believed to be of dubious value.

Carroll & Perbix, Hopkins, for appellant.

Walter F. Mondale, Atty. Gen., Rolf O. Slen, Deputy Atty. Gen., Leo W. Cavanaugh Special Asst. Deputy Atty. Gen., St. Paul, for respondent.

OTIS, Justice.

The appellant, Gerard's Incorporated, seeks review of an order denying a new trial conditioned on an additur, arising out of the condemnation of property taken for highway purposes by the State of Minnesota. It is the contention of Gerard, the owner, that in testifying to damages its witnesses were entitled to consider the diminution in value of individual lots and to present to the jury the aggregate depreciation of the total number rather than restricting damages to the reduced value of the tract as a whole. The owner further assigns as error the failure of the state's experts to consider facts which the owner claims were essential in arriving at damages, and that an inadequate award thereby resulted.

On the date of taking, March 1, 1960, Gerard owned 110 acres of unimproved real estate in Eden Prairie Township located approximately 5 miles southwest of the city of Minneapolis. The property is divided by County Road No. 60, with 88 acres lying northeast of the road and 22 acres lying southwest. The tract is adjacent to the meander line of Bryant's Long Lake, the open water of which is approximately 1,000 feet to the east. Although the court held as a matter of law that the owner had legal access to the lake, the area adjacent to the property is low swampland, making difficult any practical use and access to the open water. Prior to the taking, the property was subdivided into lots and blocks by a plat which had the tentative approval of the township. However, the plat was not filed with the register of deeds and had not been accepted by the Hennepin County authorities. While the streets had been graded and graveeled, no sewer, water, or gas was available, and no utilities had been installed other than electricity. At the time of the taking, none of the lots had been sold. It is undisputed that their highest and best use was for residential purposes. An outstanding private easement for a roadway extended across the property, and at the time of taking it constituted an impediment to the title.

In these proceedings the state has taken in fee 9.57 acres for the construction of a freeway across the northeast corner of the tract. In addition, an easement expiring December 1, 1962, covering 1.47 acres, was acquired for waste. The plan for the highway anticipated an elevation of 15 or 20 feet above grade. It will obscure the view of the lake from a portion of the property, and cuts off all access to it.

The amount of damages awarded by the commissioners appointed by the court was $20,000, from which award both the owner and the state appealed, the state claiming the maximum damages were $6,500, and the owner claiming damages in the sum of $145,800. The jury brought in a verdict of $7,450 ¹ which, by additur, was raised to $9,000 as a condition to denying a new trial.

On direct examination, Mr. Earl J. Gerard, one of the officers of Gerard's Incorporated, testified that the value of the whole tract was depreciated by $100,000. In arriving at this figure he stated that he took the aggregate of the damages to each individual lot, there being 131 in all. The court granted a motion to strike this testimony, holding that it did not reflect the correct measure of damages, and stated:

'* * * (W)hat we are concerned with here is the overall value of the entire property and not the value of the individual lots. Put it a different way what we are concerned with is what might be called the Wholesale value of this property. That is, selling the entire property as one big unit rather than selling the individual lots separately, * * *.' (Italics supplied.)

Thereupon Mr. Gerard recomputed the damages and reduced his estimate to $68,000. In so doing he again added the values of individual lots to reach the total figure, but apparently discounted the damage to each lot by an arbitrary percentage in order to reflect his understanding of the court's ruling.

1. Gerard takes the position that an owner has the unqualified right to estimate the value of his property and that it was error to question the foundation for its testimony as to damages. ² It further asserts that it is proper to arrive at values and damages by reference to the aggregate depreciation of individual lots, and cites as authority County of Blue Earth v. St. Paul & S.C.R. Co., 28 Minn. 503, 11 N.W. 73. In that case the issue was whether, in a condemnation proceeding of an unplatted block in the heart of Mankato, the owner's witnesses could arrive at values by mentally dividing the area into lots for residential purposes. The trial court's refusal to strike such testimony was affirmed. In so holding, this court, speaking through Mr. Justice Mitchell, stated (28 Minn. 508, 11 N.W. 75):

'* * * It appeared that this was city property, capable of being subdivided into lots, and used for residence purposes in case it should be sold. The adjacent property was thus divided, and usually sold by the lot. It is a well-understood fact that in towns and cities values are usually fixed at so much a lot, or, in large cities, at so much a front, or even at so much a square foot, and we can see no impropriety in a witness going through such a mental process in order to arrive at the value of the whole tract. In fact, such a process might, in some instances, be necessary, for city property is not usually rated or quoted at so much a block or acre, but at so much a lot, or front or square foot.'

We believe the Blue Earth case is correctly distinguished from the case at bar by the decision of the Oregon court in State Highway Comm. v. Deal, 191 Ore. 661, 672, 233 P.2d 242, 247. In refusing to permit testimony with respect to the manner in which the property was susceptible of subdivision, the Oregon court pointed out:

'* * * the land in that case (Blue Earth) was city property, in fact the court house square, while here we are dealing with a remote strip of wild land on the Oregon coast.'

An owner may show the highest and best use to which property may be adapted regardless of whether it is so used at the time of taking. Any competent evidence may be considered if it legitimately bears on the market value. ³ However, the dilemma in which the owner here finds itself is pointed up by our decision in Wilcox v. St. Paul & N.P. Ry. Co., 35 Minn. 439, 29 N.W. 148. There the owner sought damages to an entire tract of 10 lots although only 2 of them were directly affected by the condemnation. We held that in the case of unoccupied city property it was error to award damages by reference to any lots except those actually condemned. In the instant case, if we were to treat with the property on a lot-by-lot basis, it would seem to follow that the jury should consider only the damages resulting to the 8 lots taken, and that the owner would not be entitled to compensation for the adverse effect of the condemnation on the remaining 123 lots. However, following the great weight of authority, we are of the opinion that the court was correct in confining a consideration of damages to what the court described as the 'wholesale value' of the entire tract as distinguished from a computation based on the aggregate damage to individual lots.

In somewhat analogous situations, where...