State Roads Commission v. Novosel

• Decision Date: 10 February 1954
• Docket Number: No. 71,71
• Citation: 203 Md. 619,102 A.2d 563
• Parties: STATE ROADS COMMISSION v. NOVOSEL et al.
• Court: Maryland Court of Appeals

Page 619

203 Md. 619

102 A.2d 563

STATE ROADS COMMISSION v. NOVOSEL et al.

No. 71.

Court of Appeals of Maryland.

Feb. 10, 1954.

Andrew W. Starratt, Jr., Special Atty., Rockville (Edward D. E. Rollins, Atty. Gen., Joseph D. Buscher, Spec. Asst. Atty. Gen. and James C. Morton, Jr., Spec. Atty., Baltimore, on the brief), for appellant.

Walter C. Mylander, Jr., Baltimore (Henry A. Mylander, and Marshall A. Binder, Baltimore, on the brief), for Novosel.

Louis M. Strauss, Annapolis (John H. Hopkins, IV, Annapolis, on the brief), for Collier et al.

Before SOBELOFF, C. J., and DELAPLAINE, COLLINS, and HENDERSON, JJ.

SOBELOFF, Chief Judge.

In a condemnation suit brought by the State Roads Commission to acquire a strip of land to widen the Revell Highway, the jury, after viewing the site and hearing testimony, made its inquisition and awarded the lessees of the property, Collier and wife, $8500, and the owners of the reversionary interest, Novosel and wife, $22,000. From judgment entered upon the jury's award, this appeal was taken by the Commission.

The area involved contains about .369 acres and was occupied and used by the Colliers as a restaurant and package liquor store on the north side of the Revell Highway about two miles west of the Chesapeake peake Bay Bridge. The lease of the property, made in 1947, was for a ten-year period with a renewal privilege of ten years at a rental of $140 per month. In antedated the construction of the bridge; indeed, when the property was leased it was not certain that the bridge would actually come into being. The Revell Highway, now a modern dual highway linking the bridge with main traffic arteries to Baltimore and the South, was then only a single lane road. Favored by the volume of traffic from the bridge, from the subsequently established State Park nearby, and from recently constructed homes in neighboring real estate developments, the restaurant and liquor business increased in volume ten-fold and prospered. Coupled with these factors was the protection afforded by the zoning law which largely shielded this nonconforming use from competition.

The central question raised by this appeal is how and to what extent these circumstances may fairly be reflected in measuring damages for the taking.

I.

The State's chief complaint is against the appraisals made by the appellee Collier and his expert appraiser, Charles M. Bandiere. It is contended that these appraisals should have been excluded, as they were based upon business profits. The appellant concedes that it is proper to consider profits in computing damages from the taking of business property, but urges that profits should not be permitted to be the sole or principal consideration.

In the condemnation of an interest in land the law is careful to avoid the capitalization of profits derived from a business occupying such land; for that which is being taken and for which compensation is due is the land, and not the business. Business profits, it is well recognized, are no sure test of land value for they depend not only on location but on other factors; the same location may be fruitful of profit to one and not so to another. This does not mean, however, that in determining the value of the land no consideration is to be given to its productive capacity which, in such circumstances as are present in this case, has an important bearing on value. 4 Nichols on Eminent Domain 3rd Ed., § 12.3121; 5 Nichols, § 19.3 and ; 1 Orgel on Valuation under Eminent Domain 2nd Ed., § 164.

As a practical matter, a prospective purchaser would hardly fail to consider whether or not the business conducted on the premises had proved profitable, for this would be a measure of the desirability of the location, if not to him then to other purchasers. The precise weight to be accorded to this factor is a matter of judgment on which experts may differ, and of this the jury is the final judge. In this case we find that Mr. Bandiere did inquire into the productivity of the premises, and particularly into the question of business profits, although in his testimony he was not permitted to give the figures. He did not, however, confine himself to profits for he testified, 'I have made several visits to the property and measured the value of that type of business to the location with respect to vehicular traffic, the type of highway, the fact that the highway is a connecting link and is what has now become an eastern coastal highway from Maine to Florida; I have considered the income of the lease; I have studied volumes of business, profits therefrom; I have studied the processes through which you evaluate leases and arrive at conclusions.'

With the increasing vogue of leases of business property reserving rentals computed on a percentage of the volume of business transacted by the tenant, it would be artificial and illusory to reject an expert opinion of rental value that takes into account the volume of business which experience has shown a particular piece of property is capable of producing; and, of course, the resulting profits may be, if anything, even more pertinent to the question of value. We find no basis for the objection either to the testimony of the expert, or to that of the owner who as such, irrespective of other qualifications, is permitted to give his estimate of the value of his holdings. Bailey v. Ford, 151 Md. 664, 135 A. 835; Pennsylvania Threshermen & Farmers' Mutual Casualty...