State Highway Commission v. Vaughan, 11691

• Decision Date: 08 June 1970
• Docket Number: No. 11691,11691
• Citation: 470 P.2d 967,155 Mont. 277
• Parties: STATE HIGHWAY COMMISSION et al., Plaintiff and Respondent, v. David P. VAUGHAN et al., Defendants and Appellants.
• Court: Montana Supreme Court

Page 967

470 P.2d 967

155 Mont. 277

STATE HIGHWAY COMMISSION et al., Plaintiff and Respondent, v. David P. VAUGHAN et al., Defendants and Appellants.

No. 11691.

Supreme Court of Montana.

June 8, 1970.

Landoe & Gary, Bozeman, H. B. Landoe (argued), Bozeman, for appellants.

Harry C. Alley (argued), Helena, for respondent.

HASWELL, Justice.

This is a condemnation action by the State Highway Commission involving a 14 acre tract of land located within the city limits of Bozeman. Following a jury trial in the district court of the eighteenth judicial district before the Hon. W. W. Lessley, district judge, judgment was entered awarding the property owners $51,515 for their property. From this judgment and denial of their motion for a new trial, the property owners appeal.

Plaintiff in this action is the State of Montana, acting through the State Highway Commission. It seeks to acquire the land in question for highway purposes, condemning the entire tract and leaving no remainder. Defendants are the property owners, David P. Vaughan and Josephine W. Vaughan, his wife.

The land in question is an irreguarly shaped tract of 14.17 acres located within the city of Bozeman near the east city limits. This tract abuts U.S. Highway #10 on the south with about 1200 feet of frontage thereon. Along this frontage there is highway fill ranging from 15 to 20 feet at the westerly end to 2 to 4 feet at the easterly end. There is a 'bluff' or crest of a small hill located near the west boundary of the property. The water table is high on the tract of land in question.

There is a residence, a guest house, barns, and a granary located on the property. The entire tract is zoned 'Class A, Residential' which permits residential usage up to five-family multiple dwellings. Evidence of the property owners at the trial indicated a policy by the zoning authority of zoning undeveloped lands in this manner until such time as further development was proposed at which time the zoning classification could readily be changed.

The property was purchased by the Vaughans in July 1961 for $37,500. David P. Vaughan testified concerning his purpose in purchasing the property in these words: 'I bought that piece of property because it dominated the eastern approach to Bozeman and then I felt that it was an ideal location for a motel, a restaurant, or any sort of drive-in business, including retail business.'

In 1962 the Vaughans installed a city sewer line on the property to service the entire tract, reserving the right to relocate the line.

Since acquiring the property, the Vaugahns have used it as rental property for suburban residential purposes. They have purposely held the property off the sales market, and it has not been available for purchase.

During the course of trial, the property owners called the manager of the real estate loan department of the First National Bank of Bozeman whose testimony indicated limitations on the availability of funds for financing residential housing on the tract in question, with no corresponding limitations on commercial loans.

Evidence concerning the 'highest and best use' of the property and its market value was in sharp conflict. The state's appraisers both testified that its 'highest and best use' was residential, one appraiser fixing its market value at $41,425 and the other appraiser establishing a market value of $49,000. On the other hand, witnesses called by the property owners testified that the 'highest and best use' of the property was business or commercial, with the back acreage away from the highway having an additional potential for suburban homesite development. Valuations placed on the property were $125,000 by the property owner himself; $101,000 by one independent fee appraiser; $100,371 by another independent fee appraiser; $10,000 per acre by a real estate developer; and $145 to $165 per front foot abutting the highway by a local real estate broker. All valuations were made as of August 27, 1968, the date of service of summons.

The jury returned a unanimous verdict for the property owners in the sum of $51,515 as the value of their property. Judgment was entered thereon. Subsequently the district court denied the property owners' motion for a new trial. The property owners now appeal from the judgment and from the order denying them a new trial.

The single issue upon appeal is the sufficiency of the evidence to support the verdict and judgment.

The thrust of appellants' argument is that the valuation of their property by the state's witnesses, which was substantially adopted by the jury in its verdict, is so far removed from its actual value that it denies them the 'just compensation' guaranteed by the Montana State Constitution. They contend the state's valuations are incorrect in that (1) such valuations are based on residential rather than business use, (2) the state placed undue emphasis on existing zoning restrictions foreclosing proper consideration of business or commercial use, and (3) the 'comparable sales' used as a basis for such valuations are not comparable at all. Accordingly, the property owners insist, the state's valuations are incredible, unworthy of belief, and do not constitute substantial credible evidence supporting the verdict and judgment. They ask us to set aside this verdict and judgment and grant them a new trial.

On the other hand, the State Highway Commission contends that the verdict and judgment should not be set aside because it is supported by substantial credible evidence. The gist of the state's argument is that the issues of 'highest and best use' and 'value' are jury questions in the instant case under the conflicting evidence; that both parties fully presented their respective theories and evidence on these issues to the jury at the trial; and that the jury resolved these conflicts in the evidence largely in favor of the state.

The scope of review by this Court on an appeal based on isufficiency of the evidence is simply to determine whether there is substantial credible evidence to support the verdict and judgment. Sumner v. Amacher, 150 Mont. 544, 437 P.2d 630; Greenup v. Community Transit Co., 145 Mont. 39, 399 P.2d 418; Wyant v. Dunn, 140 Mont. 181, 368 P.2d 917. This Court will not disturb a jury verdict and the judgment based thereon where there is substantial credible evidence supporting the verdict and judgment. Kiely Construction Co. v. State, State Highway Comm., Mont. 463 P.2d 888. In reviewing the eivdence for this purpose, we must do so in the light most favorable to the prevailing party in the district court. Rogers v. Hilger Chevrolet Company, Mont., 465 P.2d 834; Strong v. Williams, 154 Mont. 65, 460 P.2d 90.

Before proceeding to review the evidence in the light of these principles, we observe that the Montana Constitution, Article III, Sec. 14 provides:

'Private property shall not be taken * * * for public use without just compensation having been first made to * * * the owner.'

This constitutional requirement has been further implemented and defined by statute, section 93-9913, R.C.M.1947, as amended, providing in part as follows:

'For the purpose of assessing compensation the right thereto shall be deemed to have accrued at the date of the service of the summons, and its actual value as of that date shall be the measure of compensation for all property * * * taken * * *.'

' Actual value' as used in the foregoing statute means 'market value'. State Highway Comm. v. Jacobs, 150 Mont. 322, 435 P.2d 274; State Highway Comm. v. Tubbs, 147 Mont. 296, 411 P.2d 739; State Highway Comm. v. Milanovich, 142 Mont. 410, 384 P.2d 752; State v. Peterson, 134 Mont. 52, 328 P.2d 617. Such market value is based on the 'highest and best use' to which the land is adaptable, whether actually so used or not. State Highway Comm. v. Jacobs, supra. However, the land must be available for such use on the date of service of summons and marketable at that time for such use. State v. Hoblitt, 87 Mont. 403, 288 P. 181.

Turning our attention to the evidence in the instant case, it is apparent that the evidence is in direct and irreconcilable conflict on the 'highest and best use' of the land in question. Broadly speaking, the property owners' witnesses indicated this to be a business or commercial use while the state's witnesses viewed it as a residential use.

The property owners' first witness on this issue was Carl Tange, Jr., a real estate developer, who testified in substance that the subject property is suitable for commercial development and adapted to use as a motel complex, a supper club, a service station, or a large truck stop. Ivan Shaw, an independent fee appraiser, testified that the 'highest and best use' of the property in question is commercial development, with the back acreage having a dual potential for commercial development or suburban homesite development. C. R. Steele, a real estate consultant and appraiser, indicated that the land fronting on the highway to a depth of about 300 feet had its 'highest and best use' for roadside business with the back acreage for suburban development and use. The landowner himself,...