FILED: January 26, 2000
STATE OF OREGON, by and through
its Department of Transportation,
Respondent,
v.
ALBERT A. ALF and/or GRACE E. ALF,
trustees of the Alf Trust,
Defendants,
and
MITCHELL DALE RICKERD, TAMARA
ELAINE RICKERD, husband and wife,
TERRY RICKERD,
Appellants.
Appeal from Circuit Court, Yamhill County.
John W. Hitchcock, Judge.
Argued and submitted February 16, 1999.
Charles F. Hudson argued the cause for appellants. With him on the briefs was Lane Powell Spears Lubersky LLP.
Denise G. Fjordbeck, Assistant Attorney General, argued the cause for respondent. With her on the brief were Hardy Myers, Attorney General, and Michael D. Reynolds, Solicitor General.
Before Landau, Presiding Judge, and Wollheim and Brewer, Judges.
LANDAU, P. J.
Affirmed.
LANDAU, P. J.
The principal issue in this condemnation action is whether the trial court
erred in permitting the state to introduce evidence of the price that defendants(1) paid for
the property that was condemned. We conclude that the trial court did not err in
admitting the evidence and therefore affirm.
The facts relevant to the disposition of the appeal are not in dispute. The
property in question is located on the corner of Highway 99 and Clairmont Street in
McMinnville. In 1947, the state acquired an 18-foot-wide right-of-way along the portion
of the property adjacent to the highway. In 1954, the owners of the property constructed
a drive-in restaurant, Alf's Ice Cream, on the property. The owners used the land located
within the state's right-of-way for restaurant parking and for direct access to Highway 99.
In 1989, the state announced its intentions to make use of its right-of-way
and to condemn additional property to widen the highway, although actual condemnation
proceedings were not commenced until several years later. Meanwhile, the owner of the
property was no longer interested in operating the restaurant and sold the property to
defendants. All parties were aware of the impending condemnation. The contract of
sale, executed in March of 1995, expressly acknowledged that defendants were aware of
the state's intention to condemn a portion of the property and that "the purchase price for
both the business assets and the real premises has been negotiated * * * to reflect such
condemnation proceedings." The final sale price was $75,000, with defendants to retain
any proceeds from the anticipated condemnation.
In December 1995, the state initiated this condemnation action. The state
condemned in fee simple a narrow strip between 7 and 10 inches wide running the length
of the property adjacent to the state's right-of-way along Highway 99. The state also took
an easement approximately 5 feet wide directly adjacent to the narrow strip of property
taken in fee simple. The property taken, including the easement, totaled approximately
703 square feet, for which the state offered, and deposited with the court, $3,700.
At trial, the state's appraiser testified that the value of the property taken
amounted to $1,900. The appraiser based that figure on the difference between the value
of the entire property before the taking and its value after the taking.
Defendants took the position that they were entitled to approximately
$64,000. According to defendants, just compensation included the value of the 703
square feet of property taken, plus damages for costs associated with the replacement of
parking that had been located in the state's right-of-way. Although defendants
acknowledged that they were not entitled to damages for the loss of parking itself, they
insisted that the loss of access to Highway 99 through the state's right-of-way made the
cost of replacement parking substantially greater and that they were entitled to that
increase in the cost of constructing replacement parking. Defendants' appraiser offered
testimony that the value of the 703 square feet of property taken was $4,132 and that the
damage to the value of the remaining property resulting from the loss of access and the
increased cost of constructing replacement parking totaled nearly $60,000.
The state called defendant Mitchell Dale Rickerd, asked him what
defendants paid for the property, and offered the contract into evidence. Defendants
objected that such testimony was not admissible because the sale occurred in
contemplation of the condemnation itself and was therefore not probative of the fair
market value of the land. The state replied that, because the value of the property before
and after the condemnation was pertinent to the establishment of the fair market value of
the property taken, testimony about what defendants paid for the property--in
contemplation of the condemnation--was highly probative of the value of the property
after the condemnation. The trial court overruled defendants' objection, allowed the
testimony, and received the contract into evidence. The trial court also permitted
defendants to introduce evidence of the circumstances of the sale, the extent to which the
price was affected by the anticipated condemnation, and the nature of the prior
relationship of the parties. Defendants did just that, offering evidence that the sale price
was affected by the anticipated condemnation and that the parties had a longstanding
relationship, which affected the sale price of the property.
At the close of trial, defendants took exception to various jury instructions.
In particular, defendants objected to the trial court's decision not to instruct the jury to
disregard evidence of the March 1995 contract price for the property. The jury returned
a verdict for defendants in the amount of $4,371.
On appeal, defendants assign error to the admission of the testimony
concerning the March 1995 sale price of the property and to the trial court's failure to
instruct the jury to disregard any evidence of that sale price. According to defendants,
the sale price was affected by the condemnation itself and was not therefore a reliable
indicator of fair market value. In support of their argument, defendants place special
reliance on Highway Commission v. Callahan, 242 Or 551, 553, 410 P2d 818 (1966).
The state argues that the trial court did not abuse its discretion in admitting evidence of
the sale and in declining to instruct the jury to ignore that evidence. According to the
state, Callahan stands for the narrow proposition that a prior sale of the condemned
property that was affected by anticipated condemnation cannot be used to establish the
value of the property before the condemnation. In this case, the state argues, the
evidence was not offered to establish the value of the condemned property before the
condemnation, but rather the value of the remaining property after the condemnation.
Thus, the price that defendants paid for the property in contemplation of the
condemnation is directly relevant to the matter in dispute. We agree with the state.
We begin with the admissibility of the evidence of the March 1995 sale.
When the state condemns private property for public use, the owner of the property is
entitled to "just compensation." Or Const, Art I, § 18. Just compensation generally is
taken to refer to "fair market value," which, in turn, refers to what a willing buyer would
pay a willing seller. Highway Comm. v. Superbilt Mfg. Co., 204 Or 393, 412, 281 P2d
707 (1955). In the case of a partial taking of property, fair market value is measured by
the value of the property acquired plus any severance damages, that is, any depreciation
in the value of the remaining property caused by the taking. Dept. of Trans. v. Lundberg,
312 Or 568, 574, 825 P2d 641, cert den 506 US 975 (1992).
In determining the fair market value of land, the threshold of relevancy is
low. Lundberg, 312 Or at 575. The Supreme Court has instructed that
"'all considerations that might fairly be brought forward and reasonably be
given substantial weight in negotiations between the owner and a
prospective purchaser' should be taken into account."
1. We refer to defendants Mitchell Dale Rickerd, Tamara Elaine Rickerd, and
Terry Rickerd. Defendants Albert A. Alf and Grace E. Alf are not parties to the appeal.
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