State v. Oakley

• Decision Date: 28 March 1962
• Docket Number: No. A-8520,A-8520
• Citation: 95 A.L.R.2d 1207,163 Tex. 463,356 S.W.2d 909
• Parties: , 95 A.L.R.2d 1207 The STATE of Texas, Petitioner, v. Ralph OAKLEY et al., Respondents.
• Court: Texas Supreme Court

Page 909

356 S.W.2d 909

163 Tex. 463, 95 A.L.R.2d 1207

The STATE of Texas, Petitioner, v. Ralph OAKLEY et al., Respondents.

No. A-8520.

Supreme Court of Texas.

March 28, 1962.

Rehearing Denied May 30, 1962.

Will Wilson, Atty. Gen., H. Grady Chandler, Joseph G. Rollins and Jay Howell, Asst. Attys. Gen., Austin, for petitioner.

David Tisinger, Austin, for respondent.

STEAKLEY, Justice.

In this condemnation proceeding the jury found the market value of the 66.1 acres of land taken was $62,500.00 and the judgment awarded respondents a recovery in this amount. Respondents appealed and the Court of Civil Appeals reversed and remanded the cause (346 S.W.2d 943) upon the holding that the trial court erred in permitting an expert witness for the State to testify to the sale prices of several tracts of land, of which he did not have firsthand knowledge, for the purpose of showing part of the basis for his opinion of the market value of the land condemned. The Court of Civil Appeals regarded the testimony as hearsay and therefore inadmissible.

The precise problem arises from the testimony offered by petitioner of the witness, Jim Frederick, a real estate broker and professional appraiser. The witness was offered as an expert and was permitted, over objection of respondents as hearsay, to testify on direct examination concerning several sales of properties which he considered comparable, and as aiding him in reaching his opinion of the value of the tract taken, but the sales prices of which he learned from other sources. The testimony as to the other sales was not offered as proof of the facts of such sales, or of the sales prices, but for the limited purpose of showing a part of the basis for the value opinion of the witness.

We have reviewed the testimony of the witness and note that no objection was made by respondents to his qualifications as an expert 'in the real estate appraisal business.' It further appears that the witness was 'employed by the State to make appraisals of the Ralph Oakley property' and that he testified in considerable detail concerning the manner and method of his appraisal study, together with the factors considered by him. He testified that his opinion of the value of the 66.1 acres condemned was '$49,401.00, which is an average of $747.36 an acre.' He then explained at considerable length the various factors considered by him in the value conclusion to which he had testified, and stated that 'the most comparable sales are those located in the immediate vicinity and that are subject to the same influences, the same traffic, the same population, the same characteristics, nearer to the location of the property you are appraising, are more comparable.' Thereupon the witness was interrogated concerning the various sales which he considered, after which counsel for the State commenced a series of questions as to what the various pieces of property sold for, asking at the outset the sale price of the first price of property to which the witness had previously testified. At this point counsel for respondents took the witness on voir dire and established that he did not 'participate personally in the sale.' Whereupon objection was interposed 'to any further testimony as hearsay and going into mental processes.' Counsel for the State then took the witness on direct examination and asked, 'Did you confirm this sale with the buyer or the seller?', to which the witness replied, 'I confirmed it with one of the principals involved.' Counsel for the State then stated to the court: 'Your Honor, we tender this evidence, not to prove the actual sale itself, but as one of the bases from which the witness arrived at his opinion of value.' The court overruled the objection of counsel for respondents, whereupon counsel for respondents asked, 'May it clearly be understood that I have a running bill of exceptions on all of these sales that he goes into * * * on the ground that they are hearsay.', in support of which counsel for respondents again took the witness on voir dire to establish that he, the witness, did not 'participate in any of these sales' himself. The court then gave counsel for respondents 'a full bill on all these sales.' Thereafter the witness proceeded to recite the sales price of the properties which he had investigated and which he considered as comparable to the property involved in the condemnation suit, after which counsel for respondents interrogated him at considerable length on cross-examination.

With respect to the testimony of the witness in the particulars under review, the trial court instructed the jury as follows:

'You are instructed that testimony by witnesses not having first hand knowledge of the matter stated that certain properties had sold for certain prices shall not be considered as evidence that such properties have sold or that such properties have sold for the prices stated, or as evidence of the market value of the property involved, but may only be considered as being information which the witnesses testified they gathered for the purpose of forming an opinion of the market value of the property involved.'

The question before us in narrowed to that of the admissibility of the testimony of the expert witness concerning sales of which he did not have personal knowledge, and which was offered for the limited purpose we have noted, since neither the qualifications of the expert witness nor the comparability of the sales to which he testified are challenged. See in the latter connection Hays v. State, Tex.Civ.App., 342 S.W.2d 167, State v. Morse, Tex.Civ.App., 342 S.W.2d 165, and State v. Sides, Tex.Civ.App., 348 S.W.2d 446 (all writ refused, n. r. e.) which considered the admissibility of expert testimony as to comparable sales when questioned on the basis that the sales were not sufficiently similar to be comparable but in which the source of information to which the witness testified was not raised.

On the question thus presented there is a division of authority between the courts of other states and between the Courts of Appeals in Federal jurisdictions.

Kentucky, Oregon and New Jersey have adopted the view that the testimony is admissible and that the hearsay exclusion is inapplicable. See Stewart v. Commonwealth, Ky., 337 S.W.2d 880; State v. Parker, 225 Or. 143, 357 P.2d 548; Delaware, L. & W. R. Co. v. City of Hoboken, 16 N.J.Super 543, 85 A.2d 200.

We quote the analysis by the courts in Stewart v. Commonwealth and in Delaware. L. & W. R. Co. v. City of Hoboken, supra.

Stewart v. Commonwealth:

'It is quite often true that the most thorough, comprehensive and accurate professional appraisals are based almost entirely on 'hearsay' in the legal sense of the word. Persons who appraise or deal in real estate professionaly make it their business to keep abreast of current transactions. The value of an appraisal depends very largely on the manner in which it is developed. It is of importance to the court and jury to know how it was made and on what information it was based. If some or all of that information was acquired by hearsay, but through the customary channels of the trade, or by methods recognized as standard in the making of appraisals, we see no useful purpose in a rule of absolute exclusion. Therefore, confincing the effect of this opinion to witnesses whose qualifications include experience in appraising or dealing in real estate as a business, we hold that testimony as to the prices paid in comparable sales is not inadmissible merely because it is secondary or hearsay evidence. Since Mr. Hennessy was professionally qualified as an appraiser and real estate broker, the fact that he had verified the prices by personal contact with the purchasers was a sufficient basis to admit his testimony on the comparable sales.'

Hoboken:

'The modern trend in the law of evidence favors both a liberal rule of admissibility and the giving of a broad discretionary control to the trial judge. The present rule in many, perhaps in a majority, of American jurisdictions permits an expert witness as to value to base his opinion on those sources of information to which business men usually resort, and allows the witness to divulge to the court the data on which his opinion is based, even though hearsay testimony is thus presented. 32 C.J.S., Evidence, § 545, p. 289. Our standard of true value is the price a willing purchaser and a willing seller would agree upon. Murphy v. Town of West New York, 132 N.J.L. 111, 39 A.2d 38 (Sup.Ct.1944). The expert witness should consider the same elements as would willing and intelligent buyers and sellers; he may rely upon the same sources of information that they would use. As Chief Judge Parker pointed out in U. S. v. 25.406 Acres of Land, 172 F.2d 990 (4th C.C.A.1949), since the court adopts the standards of the market place in making valuations, there is no reason why it should close its eyes to how the market place arrives at and applies the standards. And see the opinion of Chief Justice Maltbie in Vigliotti v. Campano, 104 Conn. 464, 133 A. 579 (Conn.1926). Also City of Baltimore v. Hurlock, 113 Md. 674, 78 A. 558 (Md.1910), and Davenport v. Haskell, 293 Mass. 454, 200 N.E. 409 (Mass.1936).'

Massachusetts, Colorado and Missouri hold the view that such testimony is improper as hearsay and is misleading. See National Bank of Commerce v. City of New Bedford, 175 Mass. 257, 56 N.E. 288; Hunt v. City of Boston, 152 Mass. 168, 25 N.E. 85; City and County of Denver v. Quick, 108 Colo. 111, 113 P.2d 999, 134 A.L.R. 1120; State of Missouri ex rel. State Highway Comm. v. Dockery, Mo., 300 S.W.2d 444.

The United States Court of Appeals for the First Circuit in United States v. Katz, 213 F.2d 799, denied the contention of the government that expert witnesses 'should have been allowed to testify as to those prices (paid for comparable lands) on direct examination to show the jury the basis upon which their opinion of value rested,'...