Alexander v. State , 142 Mont. 93 ( 1963 )

ME. CHIEF JUSTICE JAMES T. HAEEISON

delivered the Opinion of the Court.

This is an appeal from a judgment entered upon a jury verdict in the district court of Mineral County.

It appears that in January of 1959 the State of Montana purchased certain real property in Mineral County from the owners. Upon the tract of land purchased there was a cement batching plant owned by the plaintiff. Following purchase of the land a dispute arose between plaintiff and the State Highway Commission as to whether or not plaintiff had an interest in the land for which defendant State was obligated to reimburse him. In June of 1960, the defendant State brought a quiet title action concerning the real property and plaintiff was joined as a defendant. Following trial of that case it was adjudged that the State was the owner of the property “subject to a claim against said property in favor of Dee W. Alexander in the amount of the fair market value of the concrete mixing plant as it existed on said property as of June 1, I960.”

Following entry of that judgment the plaintiff filed this action and set up two causes of action in his complaint. The first was based upon a constructive trust theory under section 86-210, R.C.M.1947; the second based upon the judgment in the quiet title action hereinbefore referred to. Upon the trial the jury returned a verdict for the plaintiff in the sum of $24,500 and this appeal followed.

We shall comment briefly upon the contentions of defendant raised by its first specification of error. The State contends that it is immune to suit without its consent having been given, and argues that plaintiff should have proceeded under section 82-1113, R.C.M.1947, by presenting a claim to the State Board of Examiners.

Art. 3, § 14 of the Constitution provides:

“Private property shall not be taken or damaged for public use without just compensation having been first made to or paid into court for the owner.”

This constitutional provision was before this court in Less v. City of Butte, 28 Mont. 27, 72 P. 140, 61 L.R.A. 601, 98 Am.St.Rep. 545, and the court stated:

“* * * It seems very clear to us that this section was drafted in the broad language stated for the express purpose of preventing an unjust or arbitrary exercise of the power of eminent domain. It overturns the doctrine that one owning city or town property must continually live in dread of the changing whims of successive boards of aldermen. * * *

“* * * As to whether the appellant is liable ‘under the laws (statutes) of Montana in force at the time’ is wholly immaterial. Section 14, Art III, of the Constitution, is both mandatory and prohibitory. It is self-executing and requires no legislation to rouse it from dormancy. Searle v. City of Lead, 10 S.D. 312, 73 N.W. 101, 39 L.R.A. 345; Hickman v. City of Kansas, 120 Mo. 110, 25 S.W. 225, 23 L.R.A. 658, 41 Am. St.Rep. 684; Harmon v. City of Omaha, 17 Neb. 548, 23 N.W. 503, 52 Am.Rep. 420. * * *

“We think the operation of this section of the Constitution ought not to be restricted. The declarations of constitutions are placed therein to be obeyed, and are not to be ‘frittered away by construction.’ In McElroy v. Kansas City (C.C.) 21 Fed. 257, Mr. Justice Brewer, in passing upon a similar constitutional provision, said: ‘I think, too, in these days of enormous property aggregation, where the power of eminent domain is pressed to such an extent, and when the urgency of so-called public improvements rests as a constant menace upon the sacredness of private property, no duty is more imperative than that of the strict enforcement of these constitutional provisions intended to protect every man in the possession of his own. * * * Such constitutional guaranty needs no legislative support, and is beyond legislative destruction.’ ”

No purpose would be served to cite cases decided through the intervening years to the same effect, suffice it to say that this interpretation has remained the law of Montana. There is no merit to this contention of the defendant, and the cause was properly before the court.

The State contends that certain instructions given were erroneous and others refused should have been given. We have examined the instructions as a whole and it appears that the jury were fairly and properly instructed. We shall hereafter further comment on one instruction.

Finally the State contends that the verdict of the jury is not supported by the evidence. We shall give a resume of the plaintiff’s evidence as to value.

The plaintiff and one Basil Hunt testified as to the value of the plant. The plaintiff on direct examination testified that he would have considered selling the plant but not for less than $35,000; that such amount was the value he placed on it. On cross-examination he testified that he thought it would cost $15,000 to reproduce the structure, sometimes qualifying this figure to materials alone, other times not. He admitted certain motors in the plant were returned to him and the court instructed the jury that it should determine the reasonable value of any property that was salvaged and returned to plaintiff and deduct such amount from the fair market value of the plant as it existed June 1, 1960. However, no testimony was offered or received from which any value of property salvaged could be determined.

Basil Hunt testified he had never made an appraisal of a concrete plant before this one, though he exhibited experience in the concrete manufacturing business, had operated two plants on his own and had designed and built such plants. He had come into the Superior area on behalf of the general contractors for certain bridge work to provide a source of ready-mix concrete for them.

He had a firm opinion of what it would cost to replace the plant. When queried as to whether he had a figure that he would be willing to offer plaintiff for the plant he stated he did and he had it here in his hand. He later referred to this as an estimate which he stated was $35,019. Describing how he arrived at that figure he stated the purpose was of taking what was in the plant and putting it up somewhere where it could be operated; that he would be forced to change the design somewhat and as far as the purpose its accomplishments would be equal, or better. He stated the figures represented what you need in the way of a plant and was based on others that he put together. One of the items covered a cement storage warehouse 20' by 40' with load dock. When questioned that there was no cement storage warehouse on the plaintiff’s property lie stated: “No, but there would be one when we get it ready.” His estimate sheet was marked as an exhibit and offered by the plaintiff and was received by the court over the objection of the defendant that it included items which were not even on the property, that it was an appraisal of some other property, no proper foundation, irrelevant, immaterial and incompetent for the purposes of the trial. This exhibit reads:

“Batch Plant 100 to 150 yd. capacity

“1. Site preparation, grading. $ 465.

“2. Slab for work area, 50 x 60 1,420.

“3. Concrete retaining wall 18' x 50' x 12 2,100.

“4. Water line and stand and well. 4,320.

“5. Water pump — 500 gallons 786.

“6. 3 bins overhead storage 6,375.

“7. Grade-screening unit 4,250.

“8. Hopper for oversize 1,300.

“9. Bock crusher 3,680.

“10. Boot, elevator head, conveyor from crusher 1,830.

“11. Cement storage warehouse, 20' x 40' with load dock 4,635.

“12. Electric distribution system overhead 675.

“13. Electric wiring 840.

“14. Electric motors 748.

“15. 300" 24" Belt conveyor — portable 1,595.

“16. Total $35,019”

It appears from the record that the admission of this exhibit was error and prejudicial to the defendant in that it was not an appraisal of the plaintiff’s property because it included items not a part of that property. We have held that speculative and conjectural evidence cannot be the basis for a determination of fair market value. (State Highway Comm’n v. Bradshaw Land & Livestock Co., 99 Mont. 95, 43 P.2d 674; State Highway Comm’n v. Hoblitt, 87 Mont. 403, 288 P. 181; Lewis & Clark County v. Nett, 81 Mont. 261, 263 P. 418.) State Highway Connn’n v. Smith & Jesson, 141 Mont. 302, 377 P.2d 352.

The prejudicial effect of this exhibit became all the more clear as the witness was further cross-examined as follows:

“Q. Now the slip of paper passed around to the jury, I took notes as it was going by, the retaining Avail Avas one item. Is there a retaining Avail in the Alexander property, is there a retaining Avail? A. Not that I could say.

“Q. What about this rock crusher, did you ever observe a rock crusher on the Alexander property? A. There always should be one.

“Q. No rock crusher? A. No.

“Q. You said already there Avas no 20 x 40 warehouse on the Alexander property. Do you lmoAV Aidiat the size of the Alexander plant Avas, the plant itself? A. No.

“Q. You don’t know what the size was? A. No.

“Q. What about the screening unit, $1,300 I believe you said, did you see the screening unit at this batching plant? A. No, vibrating and screen unit, no.

“Q. What you’re appraising is an ideal plant Avhich somebody ought to build if they are going to be in business, and you took this figure and you claim that this figure then represents the market value of the Alexander 12 x 12 cement batching plant, that’s Avhat you did in this case, isn’t it? A. My appraisal that I have in my hand, if you’re to buy the materials, I happen to have them if you Avere to buy them, you couldn’t do it for three times this much money.

“Q. I’m not trying to be argumentative at all, I Avant the jury to understand Avhat kind of an appraisal you made. You took these items here, these represent items you Avould like to see in a cement plant, but none of them were in the Alexander plant, Avere they, the rock crusher and those things? A. No.”

Cecil OAven, project engineer for the State Highway Commission examined the plant and testified it Avas made of wood, in his opinion used Avood, used railroad ties, could see nothing new in the structure; that there were no concrete footings, no concrete construction at all; no water pump, no 3 bin overhead storage, no rock crusher, no elaborate electrical distribution system and no warehouse and that it took about two hours to dismantle it.

Only one other witness testified, Edward Mosier, right of way agent and appraiser for the State. His estimate for materials was $1,170.90, contractor’s overhead and profit $234.18, total cost of materials in place $1,405.08. Labor $1,000 roughly $2,400 total appraisal. Physical depreciation since the plant was not new materials $600, leaving a final appraisal of $1,800.

The photographs introduced by the State show a roughly built structure about 12' by 12' in size, containing what appear to be many old railroad ties and of extremely crude construction. To illustrate we set forth defendant’s exhibits A and B.

Exhibit A (Photograph)

Exhibit B (Photograph)

While this is not an eminent domain action, what was said’ by this court in State Highway Comm’n v. Peterson, 134 Mont. 52, 328 P.2d 617, is applicable:

“Plaintiffs agree that the defendants should be fairly and wholly compensated. The contention of the plaintiffs is that the damages awarded defendants are far in excess of full compensation for the property taken. In eminent domain proceedings, the jury findings will generally not be disturbed on appeal unless they are so obviously and palpably out of proportion to the injury done as to be in excess of just compensation provided for by section 14, Article III, of the Montana Constitution. Yellowstone Park R. R. Co. v. Bridger Coal Co., 34 Mont. 545, 87 P. 963; Interstate Power Co. v. Anaconda Copper Min. Co., 52 Mont. 509, 159 P. 408.”

We have discussed in the ease of State Highway Comm’n v. Smith & Jesson, supra, the previous holdings of this court where opinions of witnesses as to value are based upon speculative and conjectural evidence. The testimony of the owner in this cause, standing alone, is not sufficient to sustain the verdict. His testimony is contradictory and is not clear and convincing so as to sustain his burden of proof.

On the record here the damages awarded plaintiff are obviously and palpably out of proportion to the injury done as to be in excess of just compensation and the judgment must be reversed and remanded for a new trial.

Since this cause is being remanded for a new trial and the matter of testimony of an owner as to value has been referred to we feel it appropriate to re-examine the rule heretofore laid down by this court with respect to such testimony.

In Story v. Maclay, 3 Mont. 480, it was held that a plaintiff owner of an ox train seeking to recover an amount for transporting merchandise from Fort Peck to the Old Crow Agency, who did not have any knowledge of the freighting business, or the rates usually charged therein, or the topography of the country between Fort Peck and Crow Agency, or any other fact that would qualify him as an expert, was not competent to express his opinion as to what it was reasonably worth to transport the freight. After discussing what would have to be known from practical experience and observation to qualify to give such testimony, the court stated:

“The record does not show that the witness was competent to give his opinion as an expert. There was no preliminary examination to ascertain whether he was qualified to express an opinion upon the subject of the inquiry. It does not appear that he had any knowledge whatever of the freighting business, or of the rates usually charged per pound for transporting merchandise. It was not shown that he knew any facts or had any knowledge that would qualify him to speak as an expert. His opinion was therefore incompetent testimony upon a material issue and its admission in evidence error.”

It is apparent that in this early case no differentiation was made between the position of one as owner and the ordinary expert witness, both being required to possess the qualifications of an expert witness.

In Osmers v. Furey, 32 Mont. 581, 590, 81 P. 345, dealing with the testimony of an owner as to value, it was stated:

“The plaintiff testified that most of the furniture had been purchased by her from a prior lessee for $1,600 about 14 months before the seizure, and that soon after her purchase she had added to it to the amount of $400 by the purchase of new furniture. She stated that she knew the value of the furniture, and that it was worth $2,000. The testimony was admitted, over the objection of defendants that it was incompetent in that the plaintiff had not shown sufficient knowledge to give her opinion, and that the purchase price paid by her did not in any way tend to show the market value of it. The witness stated further that she had been using the greater portion of the furniture for about 14 months, having bought it when nearly new from one Eva A 1thoff, who had assigned the lease to her; that it was in good condition; that she had once before purchased property of the same sort; that she had added to it about $400 worth of other furniture entirely new; that none of it had deteriorated appreciably by use; and, after stating the price she paid for it ($2,000), that it was still worth that amount to any person who desired to buy property of that character, whether in the house, as when she purchased it, or not. While the knowledge and experience thus evinced by her was not extensive, still it was sufficient to permit her to state her opinion. Holland v. Huston, 20 Mont. 84, 49 Pac. 390; Emerson v. Bigler, 21 Mont. 200, 53 Pac. 621; Porter v. Hawkins, 27 Mont. 486, 71 Pac. 664.”

The court still required qualification by knowledge and experience of an owner to permit testimony as to value.

In Roy v. Clark, (Mont 1923), 215 P. 232, this court stated:

“The court erred in permitting the plaintiff to give her opinion of the value of the automobile, which the evidence disclosed was a 1917 model, secondhand when purchased by plaintiff for $400, and used by her over 13 months. In this state the mere fact of ownership of personal property is not regarded as sufficient to qualify one to state his estimate of its value. Wigmore on Evidence, § 447, lays down the following rule:

“ ‘A witness called upon to give an opinion on the subject of value, whether offered as an expert or not, must lay a proper foundation for the introduction of his opinion, by showing he possesses the means to form an intelligent opinion, derived from an adequate knowledge of the nature and kind of property in controversy, and of its value.’ Osmers v. Furey, 32 Mont. 581, 81 Pac. 345; Matoole v. Sullivan, 55 Mont. 363, 177 Pac. 254; Roy v. King’s Estate, 55 Mont. 567, 179 Pac. 821; Watson v. Colusa-Parrot, etc., Co., 31 Mont. 513, 79 P. 14.

“While there is no inflexible rule laid down under which the qualifications of a witness are to be tested, it should appear that the witness has had, and utilized, means superior to those available to the jurors. Mont. R. Co. v. Warren, 137 U.S. 348, 11 Sup. Ct. 96, 34 L.Ed. 681. Plaintiff did not show sufficient knowledge upon the subject to render her competent to testify as to the value of the car. Timely and proper objection was interposed and should have been sustained. She could not describe and did not know the condition of the car when purchased or on the date of its conversion or during the interim, could not enumerate the new parts purchased, the repairs made or the cost of either, and while not knowing the cost of a new car of like kind, she expressed the belief that the valuation fixed by her was less than one-half the price of a new car.”

These prior holdings were qualified in Klind v. Valley County Bank of Hinsdale, 69 Mont. 386, 222 P. 439, wherein the court stated.

“In proof of the value of the animals converted, the plaintiff- testified, based upon his personal knowledge of the particular cattle and eight years’ experience in raising and handling cattle in the immediate vicinity, that the ‘whole bunch’ of cattle were worth from $835 to $950, and he thereupon gave specific estimate of the animals.”

There were two other witnesses as to value and after reciting the testimony of these two witnesses our court continued:

“All this testimony of these thre'e witnesses as to value was introduced without objection on the part of the defendant or question as to their qualification. On cross-examination of each of them, it appeared that none of them were familiar with any sales of cattle in the immediate vicinity in the fall of 1921, and therefore it is argued that such evidence is of no merit whatsoever on the question of value.

“Defendant’s contention relative to such character of evidence is not supported by the correct rule applicable. As to the owner’s version of the value of the property converted and the sufficiency of his evidence in that respect, Professor Wigmore, in his work on Evidence, lays down the correct rule as follows: ‘The general test, that anyone familiar, with the values in question may testify, is liberally applied, and with few attempts to lay down detailed minor tests. The owner of an article, whether he is generally familiar with such values or not, ought certainly to be allowed to estimate its worth; the weight of his testimony (which often would be trifling) may be left to the jury; and the courts have usually made no objection to this policy.’ Wigmore on Evidence (2d Ed.) § 716.

“The correct result was reached by this court in Roy v. Clark not officially reported in the Montana Reports, 215 Pac. 232, but this court was in error therein in indicating that, in an action of conversion, the owner of personal property, by reason of such ownership alone, is not qualified to give an estimate of its value. "We are now satisfied that prima facie proof of ownership of personal property alleged to have been converted is all that is required to qualify the claimant to make an estimate of its reasonable value, and so declare the rule.”

In Vukmanovich v. State Assur. Co., 82 Mont. 52, 264 P. 933, dealing with the testimony of an owner, this court stated:

“It is contended the court erred in overruling objection to this question, asked of plaintiff, ‘Were the values that you placed upon the articles at that time the reasonable value of those articles at that time, in your opinion?’ To which question she answered, ‘Sure, indeed, they were worth the value mentioned.’ The question and answer referred to the list made for plaintiff by another, above referred to and admitted in evidence. The answer is the answer above discussed and given preliminary to offer in evidence of the list. The answer was given after plaintiff had testified that, in having the list made for her, she had given as the values of the various articles what she remembered as having been told her by her husband, who purchased the articles, to have been the purchase prices thereof. Then came the foregoing question, purporting to elicit a statement of her own knowledge, and the answer.

“True, in Klind v. Valley County Bank, 69 Mont. 386, 222 P. 439, this court held that prima facie proof of ownership of personal property, alleged to have been converted, is all that is required to qualify the claimant to make an estimate of its reasonable value; in other words, that an owner of personal property may testify to its reasonable value. ■ As there set forth, Prof. Wigmore, in his work on Evidence, says: ‘The owner of an article, whether he is generally familiar with such values or not, ought certainly to be allowed to estimate its worth; the weight of his testimony (which often would be trifling) may be left to the jury.’ Wigmore on Evidence, (2d Ed.) § 716. In this instance, we consider the answer of plaintiff worse than trifling; we consider it inherently wholly valueless, because of its nature. Here we have a witness, the owner, testifying a lot of household furniture and goods, purchased years in the past, much of it many years, to be worth the purchase price, $4,247.30, when purchased, used for years in a boardinghouse, and still of the same value, making no allowance for depreciation. It is incredible, obviously untrue. When an owner of personal property testifies in a reasonable way as to the value thereof, it is competent testimony. In this instance we hold the testimony incompetent. We so hold not that the owner may not estimate the value of his property, but because of the nature of the answer. True, the trial court could not tell from the question what would be the answer, but, after the answer had been made, counsel for defendant moved to strike it, and we hold it should have been stricken.” (Emphasis added.)

In later opinions this court has consistently stated the rule to be that the owner of property is a competent witness to estimate its value. See Rasmussen v. O. E. Lee & Co., 104 Mont. 278, 66 P. 2d 119; Smith v. Armstrong, 118 Mont. 290, 166 P.2d 793; Harding v. H. P. Johnson, Inc., 126 Mont. 70, 244 P.2d 111.

A resume of the foregoing expressions of this court on the rule permitting an owner to estimate the value of his property discloses that in the early opinions the owner needed the qualifications of practical experience, observation and knowledge on which to base an intelligent opinion.

The Klind case, supra, adopted the rule that the owner of an article, whether generally familiar with such values or not, ought to be allowed to estimate its worth, the weight of his testimony to be left to the jury, and the court qualified the opinion in the Roy ease, supra. It should be noted that in the Roy case the owner had no knowledge as to the value of the car while in the Blind case the owner evidenced practical experience, observation and knowledge on which to base an intelligent opinion.

Following the Blind case in the Vukmanovich case this court refused to accept the testimony of the owner as to value because in its opinion such testimony was incredible, obviously untrue, and limited the rule expressed in the Klind case by stating that if the owner testifies in a reasonable way as to the value it would be competent testimony.

Reasonable is defined in Webster’s Third New International Dictionary as “being in agreement with right thinking or right judgment; not conflicting with reason: not absurd: not ridiculous: * * * not extreme: not excessive: * *■ *■ possessing good sound judgment: well balanced: sensible.”

Following the Vukmanovich case, the later opinions of this court have made the unqualified statement that an owner is a competent witness to estimate the value of his property, overlooking the factor that such estimate must be reasonable. Through these intervening years many economic changes have occurred and particularly at this time our courts have a number of eminent domain actions and in many of which, like the instant case, the owner’s testimony is not reasonable but on the contrary is speculative, conjectural, and contradictory.

It would appear from the expressions in our later opinions that mere proof of ownership has been interpreted to permit such owner to estimate the value in any field of use of his property that could be conceived, rather than limiting it to his reasonable opinion as to the value of the property. We believe the rule should be further limited to make the owner a competent witness to testify as to the reasonable value of the property for the use to which he is putting it, and to go beyond that field he must possess the qualifications required of a general witness as to value. Illustrating our view, one using land owned by him for the purpose of pasture in grazing cattle may testify in a reasonable way as to its value for that purpose, but he may not testify as to its value as town lots, or as a gravel pit, or for any other purpose unless he be further qualified.

This court stated in State Highway Comm’n v. Peterson, supra, 134 Mont, at 63, 328 P.2d at 623:

“Who are competent to give opinions on value of property is generally in the discretion of the trial judge. It must appear that the witness has some peculiar means of forming an intelligent and correct judgment as to the value of the property in question beyond what is presumed to be possessed by men generally. Lewis, Eminent Domain, § 656, p. 1127 (3d. ed.). One who knows the real property in question and is familiar with the uses to which it may be put, may testify as to its market value. The witness need not know of any sales and he need not be a technical expert.”

We now restate the rule to be that an owner, upon prima facie proof of ownership, shall be qualified to estimate in a reasonable way the value of his property for the use to which he has been putting it. Such owner is not qualified by virtue of ownership alone to testify as to its value for other purposes unless he possess, as any other witness as to value, “some peculiar means of forming an intelligent and correct judgment as to the value of the property in question beyond what is presumed to be possessed by men generally.”

The judgment is reversed and the cause ordered remanded for a new trial.

MR. JUSTICES ADAIR, JOHN C. HARRISON, and DOYLE, concur.