Vine Street Corp. v. City of Council Bluffs

• Decision Date: 31 July 1974
• Docket Number: No. 56064,56064
• Citation: 220 N.W.2d 860
• Parties: VINE STREET CORPORATION, Appellant, v. CITY OF COUNCIL BLUFFS, Iowa, Appellee.
• Court: Iowa Supreme Court

Page 860

220 N.W.2d 860

VINE STREET CORPORATION, Appellant, v. CITY OF COUNCIL BLUFFS, Iowa, Appellee.

No. 56064.

Supreme Court of Iowa.

July 31, 1974.

Smith, Peterson, Beckman, Willson & Peterson, Council Bluffs, for appellant.

Porter, Heithoff, Pratt & Reilly, Council Bluffs, for appellee.

Heard by MOORE, C.J., and LeGRAND, REYNOLDSON, HARRIS and McCORMICK, JJ.

McCORMICK, Justice.

Plaintiff Vine Street Corporation appeals from judgment entered on a district court jury award of condemnation damages against defendant City of Council Bluffs. The City condemned plaintiff's service station site in connection with a downtown urban renewal project. The appeal presents three problems relating to the law of evidence in eminent domain proceedings. We reverse and remand.

The questions raised in plaintiff's appeal are whether trial court erred in admitting into evidence (1) the assessed valuation of the condemned property, (2) testimony as to the number of owners in the path of the same project who conveyed their property without condemnation, and (3) an opinion of the value of the condemned property concededly not based on its highest and best use.

I. Evidence of assessed valuation. The date of condemnation was April 20, 1970. The City offered evidence of the assessed valuation of the property for tax purposes as of that date during direct examination of its witness John D. Ingraham, a Council Bluffs realtor and appraiser. Plaintiff objected to the evidence as immaterial, irrelevant, and hearsay. The objection was overruled, and the witness testified the assessed valuation, 27 percent of actual value for tax purposes, was $15,110. The witness later testified the fair market value of the condemned property was $117,400 at the time of the taking.

Plaintiff's objection was predicated on three specific grounds. A specific objection is effective to preserve error on the grounds specified and none other. Porter v. Iowa Power and Light Company, 217 N.W.2d 221, 231 (Iowa 1974). Hence our task is to determine whether trial court erred in overruling the objection on those grounds and not whether the evidence might have been subject to objection on some other basis. We are not confronted with other grounds recognized as valid by courts in other cases. See Annot., 39 A.L.R.2d 209 et seq. The question here is whether the evidence should have been excluded as immaterial, irrelevant or hearsay.

Materiality refers to the pertinency of the offered evidence to the issue in dispute. Relevancy refers to its probative value in relation to the purpose for which it is offered. State v. Clay, 213 N.W.2d 473, 477 (Iowa 1973). For purposes of this case, it is sufficient to say hearsay is an out-of-court assertion offered in court to prove the truth of the matter asserted. For a detailed definition of hearsay see State v. Miller, 204 N.W.2d 834, 840 (Iowa 1973).

Evidence of assessed valuation determined under a prior statute was held neither material nor relevant to an eminent domain proceeding in Hetherington Letter Co. v. City of Cedar Rapids, 207 N.W.2d 800 (Iowa 1973). We relied there upon the fact that under the applicable statute § 441.21, The Code, 1966, market value was only one element in actual value for tax purposes. However, since amendment in 1967 by Acts 62 G.A. ch. 354, §§ 1, 2, the statute has provided, 'The actual value of all property subject to assessment and taxation shall be the fair and reasonable market value of such property.' See § 441.21, The Code, 1973. Under the statute in Hetherington actual value and market value were not equated; under the statute here they are equated. We left open in Hetherington the issue of admissibility of evidence of assessed valuation determined under the present statute. 207 N.W.2d at 803.

Fair and reasonable market value at the time of the taking is the issue here. Assessed valuation is purportedly based entirely on that value. Evidence of assessed valuation under the statute applicable here is thus both material and relevant to the ultimate issue in an eminent domain proceeding. Trial court did not err in overruling plaintiff's objection on those grounds.

The hearsay ground remains. When offered as substantive evidence of market value, assessed valuation is obviously hearsay. It is an out-of-court assertion offered in court to prove the truth of the matter asserted.

It has frequently been held inadmissible on this ground. See United States v. Anderson, 447 F.2d 833 (8 Cir. 1971), cert. denied, 405 U.S. 918, 92 S.Ct. 943, 30 L.Ed.2d 788; United States v. Certain Parcels of Land, etc., 261 F.2d 287 (4 Cir. 1958); State v. 45,621 Square Feet of Land, 475 P.2d 553 (Alas.1970); Chicago & E.R. Co. v. Smith, 6 Ind.App. 262, 33 N.E. 241 (1893); Love v. Common School District No. 28, 192 Kan. 780, 391 P.2d 152 (1964); Scott v. O'Neil's Admr., 23 Ky.Law Rep. 331, 62 S.W. 1042 (1901); Bergen County Sewer Au. v. Borough of Little Ferry, 15 N.J.Super. 43, 83 A.2d 4 (1951); Bunn v. Harris, 216 N.C. 366, 5 S.E.2d 149 (1939); Girard Trust Co. v. Philadelphia, 248 Pa. 179, 93 A. 947 (1915); Edmondson v. Carroll, 65 S.W.2d 1107 (Tex.Civ.App.1933). We follow the same rule. Dudley v. Minnesota & N.W. Ry. Co., 77 Iowa 408, 42 N.W. 359 (1889).

The City contends the evidence is nevertheless admissible as an admission. Although the City's theory is that the evidence would be admissible for purposes of impeachment, an admission by a party, if material and relevant, is also admissible as substantive evidence. Egan v. Egan, 212 N.W.2d 461, 465 (Iowa 1973); McCormick on Evidence § 262 (Second Ed.1972).

As noted in Hetherington several of our early cases held the assessment roll for condemned land was an admission by the property owner when signed by him. 207 N.W.2d at 802. The rationale of those cases was questioned and limited in Hetherington. In this case, the City seeks to expand that rationale. It contends that when a taxpayer pays his taxes he acquiesces in the assessed valuation of his property just as if he signed the assessment roll and the evidence should be admitted on the same basis. This argument not only overlooks the effect of Hetherington on the earlier holdings but elevates submission to the tax authorities to the equivalent of agreement by the taxpayer to the accuracy of the assessed valuation of his property.

A taxpayer has no duty to protest an undervaluation of his property. He would ordinarily be foolish to do so. His failure to do what he has no duty to do can hardly constitute an admission on his part. 27 Am.Jur.2d Eminent Domain § 441 at 354 ('no inference can fairly be drawn that (the assessed value) is correct from the failure of the owner to object on the ground that the valuation is too low.'). We reject the City's contention.

We hold trial court erred in overruling plaintiff's objection insofar as it was based on the hearsay ground.

The City argues that even if it was error to admit the evidence it is not reversible error, asserting any prejudice was removed by the remainder of the witness' testimony and by the court's instruction to the jury on the proper measure of damages. We do not agree. There is nothing in the record to overcome the presumption of prejudice which accompanies the admission of improper evidence over proper objection. Prejudice is presumed when error appears unless the contrary is affirmatively established. Jones v. Iowa State Highway Commission, 185 N.W.2d 746, 751 (Iowa 1971); Bailey v. Chicago, Burlington & Quincy Railroad Co., 179 N.W.2d 560, 567 (Iowa 1970); Bellew v. Iowa State Highway Commission, 171 N.W.2d 284, 291 (Iowa 1969), and citations. A reading of the transcript shows the City offered the assessed valuation as substantive evidence of the fair and reasonable market value of the property. It should not have been admitted. There is nothing in the other testimony of the witness or in the court's instructions to assure the jury would disregard it.

The admission of evidence of assessed valuation of the condemned property was reversible error.

II. Evidence of agreements with other property owners. During redirect examination of Robert Ferluga, director of the City's urban renewal department, counsel for the City asked how many property owners in the urban renewal area had accepted City purchase offers. Plaintiff objected on grounds of materiality and relevancy. The objection was overruled. The witness testified there were 90 privately owned tracts, owners of 76 having received offers, with 55 acceptances and only five rejections at the time of trial.

The City acknowledges this testimony was properly excluded when offered earlier on direct examination. Evidence relating to a condemning authority's success in negotiating with other property owners is neither material nor relevant to the right of an owner to recover just compensation in an eminent domain proceeding. Thornberry v. State Board of Regents, 186 N.W.2d 154,...