State v. First Methodist Church of Ashland

• Decision Date: 21 September 1971
• Citation: 488 P.2d 835,6 Or.App. 492
• Parties: STATE of Oregon, acting by and through the State Board of Higher Education, composed of George H. Layman, et al., Appellant, v. The FIRST METHODIST CHURCH OF ASHLAND, Oregon, an Oregon non-profit corporation, and The Wesley Foundation of Southern Oregon College, an Oregon non-profit corporation, Respondents.
• Court: Oregon Court of Appeals

Page 835

488 P.2d 835

6 Or.App. 492

STATE of Oregon, acting by and through the State Board of Higher Education, composed of George H. Layman, et al., Appellant, v. The FIRST METHODIST CHURCH OF ASHLAND, Oregon, an Oregon non-profit corporation, and The Wesley Foundation of Southern Oregon College, an Oregon non-profit corporation, Respondents.

Court of Appeals of Oregon, Department 1.

Argued and Submitted July 22, 1917.

Decided Sept. 21, 1971.

Al J. Laue, Asst. Atty. Gen., Salem, argued the cause for appellant. With him on the brief were Lee Johnson, Atty. Gen., and Jacob B. Tanzer, Sol. Gen., Salem.

Sidney E. Ainsworth, Ashland, argued the cause and filed the brief for respondents.

Before LANGTRY, P.J., and FOLEY and FORT, JJ.

LANGTRY, Presiding Judge.

Plaintiff condemnor appeals from a judgment based on a jury award of $65,000 in a condemnation case. The property taken was a church youth center building upon land totaling 16,500 square feet adjacent to the Southern Oregon College campus in Ashland. The building was one story, frame construction, covering 1500 square feet.

The main thrust of plaintiff's four assignments of error is the trial court's acceptance of the 'substitute facility' or reproduction theory for the valuation of defendants' property. Plaintiff requested the following instruction, which the trial court refused to give:

'The only issue in this case is the Fair Cash Market Value of the property being acquired by the State * * *.

'Therefore, I instruct you that you shall not consider or speculate as to what a replacement property might cost.'

The court did instruct:

'* * * (An expert) witness may consider the principle of substitution * * * in determining the value of the property being taken.

'* * * Evidence of the cost of the substitution * * * is not direct evidence of the value of the property taken * * * (but may be considered in evaluating the expert's testimony).'

The exception allowed to the refusal to give the requested instruction suffices to raise the question of whether consideration of the replacement theory was appropriate. We believe it was error.

Market value is the recognized measure of compensation when land is taken by eminent domain. State Highway Comm., State By and Through v. Superbilt Mfg. Co., 204 Or. 393, 281 P.2d 707 (1955); 4 Nichols', Eminent Domain 41, § 12.2 (1962). Other criteria are recognized, though, in special circumstances. One is the 'replacement facility' theory, described in 4 Nichols', § 12.32 at 227:

'Where a building is a specialty, and, in a sense, unique, being constructed for a special use, the valuation cannot be predicated on the same basis as a building constructed for general * * * use. * * * It has been held under such circumstances that reproduction cost or replacement cost may be considered * * *.'

Two appraisers testified for defendants, each basing his opinion of value upon a theory of 'substitution' or reproduction of the facility. The asserted uniqueness of the youth center was the close proximity to campus and its function in serving the 'religious, emotional, and secular needs of students on campus.' The record indicates that the construction and design of the center were standard. The import of the substitution, replacement, or reproduction rule is a speciality that renders market value inapplicable because comparable transactions are impossible. See, for example, In re James Madison Houses, Borough of Manhattan, 17 A.D.2d 317, 234 N.Y.S.2d 799 (1962), noted in Nichols', Eminent Domain, Supp. V 4, p. 149. We see no 'speciality' in the physical makeup of the youth center that renders market value inapplicable as a measure of compensation.

The evidence in the case at bar also indicates that recently there had been one sale of comparable land, with as much area and within two city blocks of the campus, to another church for a college youth center, and there had been other sales in the same area of roughly comparable property. Inability to demonstrate lack of market value is not present here, so replacement facility valuation was inappropriate.

Even if the above requirement had been met, we are not convinced the 'substitute facility' theory would have been appropriate. Recent cases indicate its use has been limited to cases where the property taken performs a legally necessary function. In a leading case in which the doctrine was used, United States v. Certain Land in Borough of Brooklyn, etc., 346 F.2d 690, 694--695 (2d Cir. 1965), the court said:

'But the additional cost of land for an adequate playground may fit more neatly into another pigeon hole than in the traditional severance damage category. It may be more proper to treat it under the rubric of the substitute facility doctrine, namely, to provide such substitute facilities as are 'necessary' to carry out the public function served by the condemned property. * * * But 'necessity...