STATE, DEPT. OF TRANS. v. Alf

• Decision Date: 26 January 2000
• Parties: STATE of Oregon, By and Through its DEPARTMENT OF TRANSPORTATION, Respondent, v. Albert A. ALF and/or Grace E. Alf, trustees of the Alf Trust, Defendants, and Mitchell Dale Rickerd, Tamara Elaine Rickerd, husband and wife, Terry Rickerd, Appellants.
• Court: Oregon Court of Appeals

995 P.2d 1197

165 Or. App. 162

STATE of Oregon, By and Through its DEPARTMENT OF TRANSPORTATION, Respondent, v. Albert A. ALF and/or Grace E. Alf, trustees of the Alf Trust, Defendants, and Mitchell Dale Rickerd, Tamara Elaine Rickerd, husband and wife, Terry Rickerd, Appellants.

(CV95486; CA A98944)

Court of Appeals of Oregon.

Argued and Submitted February 16, 1999.

Decided January 26, 2000.

Charles F. Hudson, Portland, argued the cause for appellants. With him on the briefs was Lane Powell Spears Lubersky LLP.

Denise G. Fjordbeck, Assistant Attorney General, argued the cause for respondent. With her on the brief were Hardy Myers, Attorney General, and Michael D. Reynolds, Solicitor General.

Before LANDAU, Presiding Judge, and WOLLHEIM and BREWER, Judges.

LANDAU, P.J.

The principal issue in this condemnation action is whether the trial court erred in permitting the state to introduce evidence of the price that defendants¹ paid for the property that was condemned. We conclude that the trial court did not err in admitting the evidence and therefore affirm. The facts relevant to the disposition of the appeal are not in dispute. The property in question is located on the corner of Highway 99 and Clairmont Street in McMinnville. In 1947, the state acquired an 18-foot-wide right-of-way along the portion of the property adjacent to the highway. In 1954, the owners of the property constructed a drive-in restaurant, Alf's Ice Cream, on the property. The owners used the land located within the state's right-of-way for restaurant parking and for direct access to Highway 99.

In 1989, the state announced its intentions to make use of its right-of-way and to condemn additional property to widen the highway, although actual condemnation proceedings were not commenced until several years later. Meanwhile, the owner of the property was no longer interested in operating the restaurant and sold the property to defendants. All parties were aware of the impending condemnation. The contract of sale, executed in March of 1995, expressly acknowledged that defendants were aware of the state's intention to condemn a portion of the property and that "the purchase price for both the business assets and the real premises has been negotiated * * * to reflect such condemnation proceedings." The final sale price was $75,000, with defendants to retain any proceeds from the anticipated condemnation.

In December 1995, the state initiated this condemnation action. The state condemned in fee simple a narrow strip between 7 and 10 inches wide running the length of the property adjacent to the state's right-of-way along Highway 99. The state also took an easement approximately 5 feet wide directly adjacent to the narrow strip of property taken in fee simple. The property taken, including the easement, totaled approximately 703 square feet, for which the state offered, and deposited with the court, $3,700.

At trial, the state's appraiser testified that the value of the property taken amounted to $1,900. The appraiser based that figure on the difference between the value of the entire property before the taking and its value after the taking.

Defendants took the position that they were entitled to approximately $64,000. According to defendants, just compensation included the value of the 703 square feet of property taken, plus damages for costs associated with the replacement of parking that had been located in the state's right-of-way. Although defendants acknowledged that they were not entitled to damages for the loss of parking itself, they insisted that the loss of access to Highway 99 through the state's right-of-way made the cost of replacement parking substantially greater and that they were entitled to that increase in the cost of constructing replacement parking. Defendants' appraiser offered testimony that the value of the 703 square feet of property taken was $4,132 and that the damage to the value of the remaining property resulting from the loss of access and the increased cost of constructing replacement parking totaled nearly $60,000.

The state called defendant Mitchell Dale Rickerd, asked him what defendants paid for the property, and offered the contract into evidence. Defendants objected that such testimony was not admissible because the sale occurred in contemplation of the condemnation itself and was therefore not probative of the fair market value of the land. The state replied that, because the value of the property before and after the condemnation was pertinent to the establishment of the fair market value of the property taken, testimony about what defendants paid for the property—in contemplation of the condemnation—was highly probative of the value of the property after the condemnation. The trial court overruled defendants' objection, allowed the testimony, and received the contract into evidence. The trial court also permitted defendants to introduce evidence of the circumstances of the sale, the extent to which the price was affected by the anticipated condemnation, and the nature of the prior relationship of the parties. Defendants did just that, offering evidence that the sale price was affected by the anticipated condemnation and that the parties had a longstanding relationship, which affected the sale price of the property.

At the close of trial, defendants took exception to various jury instructions. In particular, defendants objected to the trial court's decision not to instruct the jury to disregard evidence of the March 1995 contract price for the property. The jury returned a verdict for defendants in the amount of $4,371.

On appeal, defendants assign error to the admission of the testimony concerning the March 1995 sale price of the property and to the trial court's failure to instruct the jury to disregard any evidence of that sale price. According to defendants, the sale price was affected by the condemnation itself and was not therefore a reliable indicator of fair market value. In support of...