State Highway Commission v. Empire Bldg. Material Co.
Decision Date | 04 September 1974 |
Citation | 523 P.2d 584,17 Or.App. 616 |
Parties | State of Oregon, by and through its STATE HIGHWAY COMMISSION, composed of Glenn L. Jackson, et al., Appellant, v. EMPIRE BUILDING MATERIAL CO., an Oregon corporation, et al., Respondents, Besser Company, a Michigan corporation, et al., Defendants. |
Court | Oregon Court of Appeals |
John W. Burgess, Asst. Atty. Gen., Salem, argued the cause for appellant. With him on the briefs were Lee Johnson, Atty. Gen., and W. Michael Gillette, Sol. Gen., Salem.
John L. Schwabe, Portland, argued the cause for respondents. With him on the brief were George W. Mead, Jr., and Alan H. Johansen, Portland.
Before SCHWAB, C.J., and FOLEY and THORNTON, JJ.
The State Highway Commission (Commission) brought this condemnation action to acquire 19.8 acres of land owned by defendant Empire Building Material Co. (Empire). The property was required for use in construction of the Columbia River-Pacific Highway section of the East Portland freeway in Multnomah County.
The 19.8 acres sought by eminent domain were part of an approximate 26--acre tract owned by Empire, upon which Empire operated a concrete products plant. The plant was situated primarily upon an eight-acre tract, where it had been established in 1945, and where it continued to operate. In June 1968 Empire purchased the adjoining 17.96 acres, which provided room for expansion, although Empire had not significantly done so at the time of condemnation (December 1971).
The 19.8 acres being taken included virtually all of the 17.96 acres purchased in 1968, plus two acres of the original eight-acre tract, leaving Empire with roughly six acres upon which to operate its plant. The taking also included several buildings and various items of machinery and equipment.
The Commission's complaint alleged the sum of $435,000 as just compensation for the taking. However, the Commission had previously made offers of $722,200 (June 15, 1971) and $512,000 (July 12, 1971), which offers were refused by Empire. Empire answered that $2,067,400 was just compensation for the taking. The jury awarded Empire $863,250 and the Commission appeals.
The Commission argues that the case should be reversed and remanded for a new trial because of the following actions taken by the trial judge, which the Commission alleges were erroneous:
(1) The trial judge excluded testimony concerning the June 1968 purchase price Empire paid for the adjoining 17.96 acres, which was offered as a 'comparable sale' (among seven others) upon which the Commission's appraisers based their opinions as to the value of the 19.8 acres being taken in December 1971.
(2) The trial judge ruled, as a matter of law, that certain items of machinery and equipment were fixtures, included within or damaged by the taking.
(3) The trial judge refused an offer of proof which allegedly would indicate that Empire bought the adjoining 17.96 acres in 1968 for speculatory reasons, rather than for expansion of its plant.
Mr. Haley, one of the state's appraisers, testified as to his opinion of the value of the land and property being taken by the state (as of December 1971). Concerning the value of the land, he testified that he used the 'market data' approach and explained that he checked 25 or 30 recent, similar industrial sales in the general area. Six or seven of these sales were particularly helpful to Mr. Haley in forming his opinion as to the present value of the property being taken. As the first of these comparable sales, Mr. Haley began to describe the 1968 purchase by Empire.
Empire objected to any evidence of the price it paid for the 17.96 acres in 1968 on the ground that it was not a comparable sale. Empire argued that the property had changed physically and in market value over the three and one-half years since the 1968 purchase and was therefore not the same property in 1971. The trial judge at first stated that such evidence is not admissible; however he heard arguments on the matter and the Commission's offer of proof that Empire paid $120,500 for the 17.96 acres in 1968 (about $6,700 per acre). The trial judge stated that under Douglas County v. Meyers et al., 201 Or. 59, 268 [17 Or.App. 621] P.2d 625 (1954), admission of this sale price was a matter within the court's discretion. The judge then rejected the Commission's offer, ruling that the 1968 purchase price was not admissible because not a comparable sale.
Thereafter, Mr. Haley testified concerning six other sales that he deemed comparable. The value of these sales ranged from $6,990 per acre (1968) to $15,000 per acre (1970). Mr. Haley testified that in his opinion the 19.8 acres which the state sought by eminent domain were worth $217,450 in December 1971 (about $11,000 per acre).
The Commission's other appraiser, Mr. Buettner, testified that he based his opinion on the above sales, plus a 1968 sale of 16.05 acres at $12,070 per acre, which Mr. Haley did not mention. Mr. Buettner concluded that the 19.8 acres of land were worth $232,500 (17.5 acres at $10,000 per acre and 2.3 acres at $25,000 per acre). Thus the Commission's appraisers introduced evidence of seven comparable sales, other than the 1968 purchase by Empire.
The general rule is that evidence of the price an owner paid for property is relevant and admissible evidence concerning the value of property in a condemnation proceeding. See, Annotation, 55 ALR2d 791 (1957); 5 Nichols on Eminent Domain 21--4, § 21.2 (3d ed 1969). However, the rule in Oregon is that 'it is within the sound discretion of the trial court to admit or exclude testimony as to the purchase price of property paid by the owner' of property taken in a condemnation proceeding. Highway Commission v. Jones, 237 Or. 372, 374, 391 P.2d 625 (1964); See, 5 Nichols, supra at 21--13.
The purchase price paid by an owner has been excluded when it was 'too remote' in time to be a 'proper criterion of present values,' Portland v. Tigard, 64 Or. 404, 408, 129 P. 755, 756, 130 P. 982 (1913), or when the land in question has increased in value since the purchase in question, Highway Commission v. Jones, supra, 237 Or. at 375, 391 P.2d 625, and Highway Commission v. Hewitt et al., 229 Or. 582, 590, 368 P.2d 346 (1962). On the other hand, our Supreme Court has held that no error was committed by admitting evidence of the purchase price paid by an owner when there has been no timely objection that the purchase price no longer reflects the property's present market value, Arley v. Chaney/Nelson, 262 Or. 69, 81, 496 P.2d 202 (1972), Moore Mill & Lbr. Co. v. Foster, 216 Or. 204, 255, 336 P.2d 39, 337 P.2d 810 (1959), and Fidelity Sec. Corp. v. Brugman et al., 137 Or. 38, 48, 1 P.2d 131 (1931), or when the sale was not too remote or there was no evidence that conditions affecting value have materially changed, Douglas County v. Meyers et al., 201 Or. 59, 65, 268 P.2d 625 (1954). As our court said in Fidelity:
The evidence in the case at bar indicates that conditions affecting value have changed materially. Some fill has been added to the land, the land has an additional street access by virtue of being annexed to Empire's original property, and the land is necessary for further expansion, if any, of Empire's production capacity. Further, all the appraisers testified that the land was worth more at the time of the taking (December 1971) than when purchased in June 1968. Also of importance is the fact that the taking includes two acres of Empire's original, developed property, along with several buildings and various items of machinery and equipment. All these factors provided a basis for the trial court's exclusion of the 1968 purchase price. This was a matter well within the court's discretion. Highway Commission v. Jones, supra.
The Commission argues that the trial judge actually did not exercise his discretion at all, excluding the evidence as a matter of law. The record does not support this argument. Even assuming, Arguendo, that the Commission is correct and that the evidence should have been admitted, it does not appear that the Commission was prejudiced by the court's ruling. The Commission's appraisers testified fully as to seven other comparable sales and fully explained the basis of their opinions concerning the value of the property being taken in December 1971. The burden is on the appellant to demonstrate not only error but prejudicial error before a reversal and new trial will be justified. Fassett v. Santiam Loggers, Inc., 267 Or. 505, 517 P.2d 1059 (1973); State Highway Comm. v. Carmel Est., 15 Or.App. 41, 514 P.2d 1124 (1973). The Commission has not demonstrated that it has been prejudiced by the ruling in question. See, State Highway Commission v. Lee, 207 Kan. 284, 485 P.2d 310 (1971); But see, State, by Mondale v. Larson, 285 Minn. 467, 174 N.W.2d 114 (1970).
Attached to Empire's answer to the Commission's complaint in eminent domain were two separate lists of machinery and equipment which Empire considered to be fixtures. One list included those items located on that portion of the property being taken; the other listed items alleged to be damaged by the taking, although not located on the property being taken. Empire argued that these items were attached (annexed) to the property, and adapted for the particular use for which it...
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