U.S. v. 10,031.98 Acres of Land, More or Less, Situate in Las Animas County, Colo.

• Decision Date: 30 June 1988
• Docket Number: No. 85-2657,85-2657
• Citation: 850 F.2d 634
• Parties: 26 Fed. R. Evid. Serv. 1 UNITED STATES of America, Plaintiff/Appellee, v. 10,031.98 ACRES OF LAND, MORE OR LESS, SITUATE IN LAS ANIMAS COUNTY, COLORADO, and the Federal Land Bank of Wichita, Defendants, and Sharp Ranch, Inc., et al and Unknown Owners, Defendant/Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 634

850 F.2d 634

26 Fed. R. Evid. Serv. 1

UNITED STATES of America, Plaintiff/Appellee, v. 10,031.98 ACRES OF LAND, MORE OR LESS, SITUATE IN LAS ANIMAS COUNTY, COLORADO, and the Federal Land Bank of Wichita, Defendants and Sharp Ranch, Inc., et al and Unknown Owners, Defendant/Appellant.

No. 85-2657.

United States Court of Appeals Tenth Circuit.

June 30, 1988.

William B. Lazarus, Dept. of Justice, Washington D.C., (Arthur E. Gowran, Jacques B. Gelin, Dept. of Justice, Washington D.C., Robert N. Miller and Linda A. Surbaugh, Denver, Colo., with him on the brief), for plaintiff/appellee.

Jon L. Holm (Steven A. Christensen and Jeffrey C. Johnson with him on the brief), Holm and Christensen, Denver, Colo., for defendant/appellant.

Before ANDERSON, McWILLIAMS, and BALDOCK, Circuit Judges.

STEPHEN H. ANDERSON, Circuit Judge.

Sharp Ranch Inc., appeals from two decisions of the district court. First, it contests the district court's determination to grant a new trial after Sharp Ranch had received a jury verdict valuing ranch property condemned by the United States and severance damage to the remaining ranch property at two million dollars. Second, it contests the district court's refusal to grant a new trial after the jury in the second trial awarded Sharp Ranch $1,733,596.00 as compensation for the condemnation.

Following the first trial, the district court granted the government's motion for a new trial because it found that the jury's verdict was "not based on sufficient evidence and [was] against the clear weight of the evidence." R.Vol. I Tab 12 at 8. Sharp Ranch argues that this determination was an abuse of discretion. Sharp Ranch also argues that the court's refusal to grant its motion for a new trial following the second trial was an abuse of discretion because in the second trial the court misapplied the law of evidence in excluding from trial: (1) the testimony of the owner regarding the value of Sharp Ranch, (2) certain of the owner's business records, and, (3) rebuttal testimony. Sharp Ranch also contends that the district court abused its discretion in the second trial by failing to qualify Gordon Scranton as an expert witness, and by inappropriately responding to a question posed to the court by the jury after the jury had begun its deliberations. Sharp Ranch contends that these alleged errors affected its substantial rights and thus warrant a new trial.

Because we find no abuse of discretion in the district court's first order granting a new trial we affirm that order. However, as to its second determination, we find that the district court committed reversible error when it failed to permit the landowner to testify as to the value of his condemned property. Accordingly, Sharp Ranch is entitled to a new trial and we reverse the district court in part.

I.

The amount which a jury awards in a condemnation proceeding will be upheld if it is within the scope of evidence presented at trial. See United States v. 158.24 Acres of Land, 696 F.2d 559, 564 (8th Cir.1982); United States v. 9.20 Acres of Land, 638 F.2d 1123, 1126 (8th Cir.1981). The trial court commits reversible error, however by making an award which is "clearly erroneous, based upon misapplication of law, unsupported by the evidence or contrary to the clear weight of the evidence." United States v. 77,819.10 Acres of Land, 647 F.2d 104, 109 (10th Cir.1981), cert. denied, 456 U.S. 926, 102 S.Ct. 1971, 72 L.Ed.2d 441 (1982); United States v. 79.95 Acres of Land, 459 F.2d 185, 187 (10th Cir.1972).

In the first trial, Sharp Ranch introduced three witnesses who testified as to the value of the condemned property. The first, Clifton Sharp, the president of Sharp Ranch, Inc., testified as owner of Sharp Ranch that its value before the taking was over four million dollars. He based this valuation on the offering prices he received on potential replacement ranches in the broad general area, coupled with his calculation of the carrying capacity ¹ of Sharp Ranch, which he estimated at more than 800 animal units, ² as compared with the carrying capacity of the potential replacement ranches. See R.Vol. II at 13-14, 20-21, 21-23 Using this same carrying capacity valuation method, he testified that the value of Sharp Ranch after the condemnation was one and a half million dollars. A second witness, Larry Cheney, an expert in animal nutrition, confirmed Sharp's estimate as to the carrying capacity of Sharp Ranch, but did not otherwise offer any testimony as to the value of the ranch either before or after the condemnation.

Sharp Ranch attempted to qualify its third witness, Gordon Scranton, as an expert land appraiser. Although the district court refused to certify Scranton, it did allow him to give lay testimony. The principal testimony concerning valuation that Scranton gave regarding value of the Sharp Ranch property was that a comparable ranch with a similar carrying capacity sold at $4,499 dollars per animal unit of carrying capacity. The attorney for the government objected to this testimony and the objection was sustained by the district court.

The only other valuation testimony was offered by the government's expert witness, Stephen Willman. Mr. Willman testified that the value of the Sharp Ranch before the taking was three million dollars and that its value after the taking was $1,655,000 making the fair market compensation to the Sharps $1,345,000.

After its deliberations the jury in this first trial found that before condemnation the Sharp Ranch was worth $3.6 million, and that after condemnation the remaining portions of the ranch were worth $1.6 million. Accordingly, the first jury awarded the Sharps two million dollars in compensation. Although, on the surface the jury's award appears to be within the range of the testimony, the court found this award unsupported by sufficient evidence, and granted a new trial.

The court based its decision on two grounds. First, it determined that Clifton Sharp's method of property valuation made his estimate of property value insufficient to support the award. Second, it noted that Gordon Scranton's testimony as to the value of property based on its carrying capacity was based on mathematical error and was thus likely to mislead the jury. We find neither of these determinations to be a clear abuse of discretion.

"[A]n owner, because of his ownership, is presumed to have special knowledge of the property and may testify as to its value." United States v. Sowards, 370 F.2d 87, 92 (10th Cir.1966). He may offer such testimony without further qualification. Furthermore, in testifying as to the value of his property the owner is entitled to the privileges of a testifying expert. See LaCombe v. A-T-O, Inc., 679 F.2d 431, 434 n. 4 (5th Cir.1982); see also United States v. Laughlin, 804 F.2d 1336, 1341 (5th Cir.1986) (owner's testimony is expert opinion under Fed.R.Evid. 702); Robinson v. Watts Detective Agency, 685 F.2d 729, 739 (1st Cir.1982) (owner allowed to give estimate of property value based in part on hearsay); Kestenbaum v. Falstaff Brewing Corp., 514 F.2d 690, 699 (5th Cir.1975) (quoting Fed.R.Evid. 702), cert. denied, 424 U.S. 943, 96 S.Ct. 1412, 47 L.Ed.2d 349 (1976); Fed.R.Evid. 702 advisory committee note ("[W]ithin the scope of the rule are not only experts in the strictest sense of the word, e.g., physicians, physicists, and architects, but also the large group sometimes called 'skilled' witnesses, such as bankers or landowners testifying to land values.") (emphasis added).

Nonetheless, a landowner's testimony as to the value of his property is not always sufficient testimony on which a verdict can be based. There must be a basis for the landowner's valuation, and when the landowner's own testimony shows that his valuation has no probative value, the district court may determine that the landowner's testimony alone is insufficient to support a jury verdict. Sowards, 370 F.2d at 92 ("[W]here the presumption of the owner's special knowledge is negated by his own testimony, his opinion has no probative value and is insufficient to sustain the award."); see also Kestenbaum, 514 F.2d at 698-99; Klapmeier v. Telecheck International, Inc., 482 F.2d 247, 253 (8th Cir.1973).

At the initial trial, Clifton Sharp indicated that he used the offering prices he was quoted by those attempting to sell comparable ranches in the general area as the base prices from which he then made adjustments based upon the relative carrying capacities of those ranches to Sharp Ranch. It has long been held in condemnation suits that the offering price of replacement properties cannot be used to show the fair market value of condemned land.

"Evidence of the price paid for other comparable property must be confined to instances in which the transactions have been completed by an agreement between a seller and a buyer for the sale of the property for a stipulated price. It is well settled that a mere offer, unaccepted, to buy or sell is inadmissible to establish market value."

United States v. Smith, 355 F.2d 807, 811 (5th Cir.1966); see also United States v. Dillman, 146 F.2d 572, 575 (5th Cir.1944), cert. denied, 325 U.S. 870, 65 S.Ct. 1409, 89 L.Ed. 1989 (1945); Atlantic Coast Line R. Co. v. United States, 132 F.2d 959, 963 (5th Cir.1943); United States v. Certain Parcel of Land, 322 F.Supp. 841, 851 (W.D.Mo.1971); Annotation, Unaccepted Offer To Sell Or Buy Comparable Real Property As Evidence Of Value Of Property In Issue, 25 A.L.R. 4th 615 (1983); cf. Sharp v. United States, 191 U.S. 341, 348-50, 24 S.Ct. 114, 115-16, 48 L.Ed. 211 (1903) (Offers to purchase real estate not akin to offers to purchase articles sold in the market with a known and ready price); United States v. Regents of New Mexico School of Mines, 185 F.2d 389, 391 (10th Cir.1950) (evidence of specific offers of purchase not admissible to determine fair market value); Emerald Oil Co. v. Commissioner, 72 F.2d 681, 683 (10th Cir.1934) (sa...