State v. Hollis

JENNINGS, Justice.

In November of 1959, the Arizona State Highway Department commenced certain construction and improvements on U. S. Highway 60 near Globe, Arizona. As a result of this construction the roadway was elevated from five to eighteen feet over adjoining property and a drainage ditch was constructed next to the property line. The oVners o'f this property, Frank E. Hollis and' Eva Marie Hollis, filed suit in Gila County Superior Court against the State of Arizona to recover damages for impairment of access to their property. Following a jury trial judgment for $85,450' was awarded to plaintiffs Hollis and the State appeals.

A number of assignments of error are presented supported by eight propositions of law... Only, .one assignment complies in all respects with the rules of this Court. This, is that the court erred in denying the State’s timely -motion for change of venue from Gils* Qounty to Maricopa -County.. The basis of the motion is A.R.S. §§ 12-821 and 12-824(B), which provide as follows:

Ҥ 12-821.

“Persons having claims on contract or for negligence against the state, which have been disallowed, may on the terms and conditions set forth in this article, bring action thereon against the state and prosecute the action to final judgment.

Ҥ 12-824.

“B. Upon written demand of the attorney general, made at or before the time of answering, served upon the opposing party and filed with the court where the action is pending, the place of trial of any such action shall be changed to Maricopa County.”

Paragraph I of the amended complaint alleges that the State had agreed the highway would be constructed at grade and that the property concerned would have an unrestricted access to Highway 60. Paragraph III of the amended complaint alleges acts of trespass by the contractor who was performing the construction for the State whereby the plaintiff’s property sustained damage. It is claimed therefrom that venue should be in Maricopa County in accordance with the State’s demand because the complaint sounds in contract and tort.

The remainder of the complaint alleges that the State, without instituting ■condemnation proceedings, appropriated the plaintiffs’ access rights to their property and otherwise damaged the property by the acts of its agent. The complaint therefore states a cause of action on the theory of inverse eminent domain. Destruction and impairment by the State of ingress or egress to private property is compensable under Article 2, section 17 of the Arizona Constitution, A.R.S. Pima County v. Bilby, 87 Ariz. 366, 351 P.2d 647 (1960); Fletcher v. State ex rel. Morrison, 90 Ariz. 251, 367 P.2d 272 (1961). The authority for such an action comes directly from the Constitution. It is neither an action in contract nor one in negligence as provided by A.R.S. §§ 12-821 to 12-826, and the procedures required therein do not apply. State v. Leeson Upholstry, 84 Ariz. 44, 323 P.2d 692 (1958). The right of the State to remove a case to Maricopa County under section 12-824 (B) is limited to the actions authorized by section 12-821.

A.R.S. § 12-1116 provides that actions for condemnation shall be brought in the superior court in the county Jn which the property is located. That the landowner, in default of proper condemnation action by the State, must himself institute proceedings to secure compensation does not change the essential nature of the cause of action. It is still in the nature of a condemnation of a private property right by the State under the sovereign right of eminent domain. The property involved is located in Gila County and the action was properly brought in that county.

The remaining assignments of error unfortunately fail to meet with the requirements of the Supreme Court rules. Most of them do not specify the particular ruling or action which is complained of and therefore cannot be considered. Tidwell v. Riggs, 70 Ariz. 417, 222 P.2d 795 (1950); Rules of Supreme Court 5(c), 17 A.R.S.

Those assignments which do point out the ruling of the court are defective in that the ground of error is not stated. Thornburg v. Frye, 44 Ariz. 282, 36. P.2d 548 (1934); Rules of Supreme Court 5(.c). Insufficient assignments are not cured by reference to the argument or other, portions of the brief, for, if it be necessary-to-do this to ascertain the error complained of, the brief does not comply with the rule.requiring assignments of error. Reid v. Van Winkle, 31 Ariz. 267, 252 P. 189 (1927).

It is our conclusion however, that one of the assignments when examined in conjunction with the propositions of law is specific enough to identify the principal ground of complaint. United Ass’n of Journeymen and Apprentices etc. v. Marchese, 81 Ariz. 162, 302 P.2d 930 (1956). It concerns the admission and consideration of a lease on part of the property and was the basis for the expert testimony ás ta damages.

The Hollis property consists of 23 acres located two to two and one-half miles from Globe. There was 1980.4 feet of frontage with a maximum depth of 730 feet. The property was located three-quarters of a mile from the junction of U. S. 60 and 70 going into Globe. The grade of the highway before the construction of the controlled access highway was about 21 inches. After the construction the grade varied along the front footage from 8 feet to 17 feet.

In March 1957 Hollis entered into a 99-year lease with one Schwarz covering the front footage consisting of 7.9 acres. The lease provided for periodic increases in the rental and Schwarz intended to develop the front footage commercially. The Schwarz lease continued in effect until May 1958. ’At about that time it was allowed to lapse. The remainder of the acreage was intended by Hollis for a drive-in theater and to this end he had development plans prepared and obtained bids on theater equipment. This was prior to the time of the taking, which was fixed as November 25, 1959. Construction was begun August 12, 1959. The property is the first level ground for a seven-mile stretch of highway coming into Globe. The surrounding area is hilly and there is little property in the area available for private development.

£8] Expert witnesses for appellee testified as to their opinion of the market value of the property. They valued the property in two parts, i. e., the front footage covered by the lease and the back acreage. Together with other elements, they considered the Schwarz lease as a factor in arriving at their opinions of the- front footage. It was admitted over obj ection for the stated purpose of showing the highest and best use of the area covered. Appellant attacks admission of the Schwarz lease on the ground that plaintiffs cannot recover for loss of profits or business loss. It is clear that there is confusion over whát constitutes business income. Income from a business must be distinguished from income from the intrinsic nature of the property itself. If the property is rented for the use to which it is best adapted, the actual rent received, capitalized at the rate which local custom adopts for th,e purpose, forms one of the best tests of value and, accordingly, evidence of rent actually received at a time reasonably near the time of taking should be admitted. County of Maricopa v. Shell Oil Co., 84 Ariz. 325, 327 P.2d 1005 (1958) ; 4 Nichols, Eminent Domain §§ 12-312, 12-3122 (3d ed. 1951). When offered by the owner the rental is assumed to be what he contends is the best available use. County of Maricopa v. Shell Oil Co., supra; People ex rel. Department of Public Works v. Dunn, 46 Cal.2d 639, 297 P.2d 964 (1956) (Where it was held prejudicial error to strike from the evidence and withdraw from the jury consideration of testimony of value based on a lease on the property); Kelchner v. Kansas City, 86 Kan. 762, 121 P. 915 (1912).

The Kelchner case states a sound reason for the rule as follows:

“Witnesses were permitted to testify to the amount of rents received by the owner from the property taken, and this ruling is alleged to be erroneous. It is true that the market value of the property is the measure of damages for the appropriation, but evidence of market value is not necessarily restricted to direct answers to the particular question, ‘What is the market value?’ Rentals received in good faith necessarily affect values and in common transactions are considered by intending purchasers with other elements in estimating market value. No good reason is perceived why a jury should not have the benefit of such information. The witnesses should be allowed to state any fact concerning the property which will fairly aid in arriving at its market value, and income received in good faith from the ordinary use of the property within a reasonable limit of time is clearly one of the facts naturally contributing to that end, excluding, however, anything fanciful or fictitious.” 86 Kan. at 763, 121 P. at 915— 16.

The argument reflects the idea that the lease is too remote because it was not actually in operation in November 1959, the date of the taking. The relevancy of the lease must be determined under the circumstances of each case, and should be left to the discretion of the court unless a clear abuse is shown. There is no showing that the lease was not entered into in good faith or that its termination was not in accord with the hereinafter described testimony.

There was evidence from which the jury could believe the lease would have been in effect if it were not for the construction.

Hollis testified as follows:

“Q When did this lease terminate?

“A One year — he kept the lease in effect for one full year, and at the end of one year when the terms went to $200.00 a month he and I talked about it and at that time we decided that until the road was completed, or almost, to where he could ‘develop it, that we wouldn’t exercise the lease any more, but that he would, after it was constructed he could come back and pick up the lease. He would get first choice.

“Q And at the time you terminated the lease by mutual consent, were you informed at that time by any of the State Highway Department officials generally what the department was going to do, and • ultimately did, as far as the road in front of your property was concerned ?

"A Yes.

“MR. EUBANK: Object to the leading questions, if the Court please.

“THE COURT: Sustained.

“Q What information at the time the lease was terminated did both you and Mr. Schwarz have as to what the State was going to do concerning the construction of the highway in front of your property?

“A The right of way department had talked about it, and it was my understanding that they were going 'to raise the roadbed, and at that time they couldn’t give me any definite figures but we felt it was going to be raised considerably because they informed us to that effect.”

It is competent to show the value of property as it would have been if no such highway construction had been contemplated. In other words, the property cannot be charged with a lesser value at the time of taking when the decrease in such value is' occasioned by reason of the taking itself. In re South Twelfth Street, 217 Pa. 362, 366, 66 A. 568 (1907); 4 Nichols, Eminent Domain § 12-3151(2) (3d ed. 1951); 1 Orgel, Eminent Domain § 105 (2d ed. 1953).

“ * * * The impairment of value resulted from nothing he had done, but as the immediate consequence of the steps taken by the municipality towards the appropriation, in invitum, of the owner’s land. In the present case it is quite clear that without the right to build upon the land, this narrow strip, 60 feet wide, located as it is, would be of little, if any, value. This, then, is the contention, that the municipality in the furtherance of public ends, having stripped the land of nearly its entire value, now, when it seeks to accomplish fully its purposes in connection therewith, is to be allowed to acquire the land by paying a sum measured by the little value the municipality has left in it. Such a result would be a travesty on the constitutional provision which requires in all such cases just compensation to be made for the prop- ■ erty taken.” 217 Pa. at 366, 66 A. at 569.

Plaintiffs were entitled to show the use for which the property was adapted was that of lease for commercial development and the evidence that it had been so leased prior to the taking was within the range of discretion of the trial court. The testimony of the experts based on the Hollis lease was properly admitted and justifies the verdict and supports the damages.

Judgment affirmed.

BERNSTEIN, C. J., and STRUCK-MEYER and LOCKWOOD, JJ., concur.