The opinion of the court was delivered by: NEALON
On June 27, 1942, Donato A. Lettini, a general contractor in the construction field, purchased a large tract of land in the Borough of Delaware Water Gap, Monroe County, Pennsylvania, overlooking the Delaware Water Gap itself. On November 2, 1959, in response to a recommendation by his lawyer and accountant that title be transferred to a corporate entity, for tax purposes, Mr. Lettini conveyed 59.1 acres of this tract to Delagap Corporation
for a consideration of $59,100. Pennsylvania and federal transfer taxes of approximately $600 were paid on that amount. During the years 1958 and 1959, Michael A. Policelli, a registered engineer, surveyed the property and in 1960 a map of lots was prepared showing a subdivision of the acreage in question into lots with a lake, park area, and numerous roads plotted thereon. The property was considered as especially appealing for development purposes inasmuch as it was in the Pocono resort area, had a spectacular view of the Delaware Water Gap, was less than 100 miles from the metropolitan areas of New York and Philadelphia, was readily accessible to Interstate Route 80, and had a generous supply of water. Commencing in 1958, Mr. Lettini cut a road into the property and constructed, graded and placed a gravel topping on other roads throughout the property; cleared the trees and brush; excavated and created a 5 1/2 acre spring-fed lake, 14 feet at its deepest point, and stocked it with fish; and dug a well 585 feet deep which was capable of producing 150 gallons a minute, enough to service 150 homes. Beginning on August 6, 1960, and ending June 27, 1966, Delagap sold 11 lots, as identified on the Policelli map, comprising a total of 2.48 acres, to certain relatives and friends for a total consideration of $12,460.
According to Mr. Lettini, he did this reluctantly and as a favor to the grantees inasmuch as his original plan was to actually construct the homes himself and to sell the homes as a part of his subdivision plan.
(One lot purchaser did construct a home prior to condemnation.) It should be pointed out here that Mr. Lettini had extensive experience in land development and building construction, having erected shopping centers, apartment houses, and residential subdivisions in Union, Caldwell, Elizabeth, and Cedar Grove, New Jersey. It is also conceded by the Government that Mr. Lettini's subdivision plans were not made in anticipation of any governmental condemnation project. The Government condemned the subject property on January 30, 1968.
In expressing his opinion of market value, Mr. Lettini contended the property had a value of $5,000 per acre, or $250,000 for the 50.7 acres condemned. Mr. Guyton Kempter, a Registered Professional Engineer in Monroe County, testified that the property was adaptable to subdivision and that the layout was a "good engineering plan for that property".
The landowner produced two real estate experts, Mr. Davis Chant and Mr. William Henkelman. Each testified in great detail as to the physical characteristics of the condemned property and concluded that its highest and best use was as a recreational-residential subdivision. Mr. Chant testified that he used comparable sales in determining market value and identified these as an analysis of lot sales in seven Pocono Mountan development tracts, as well as sale of 33 unimproved acres from W. B. Eilenberger to Fox Ridge Realty Co., and 36.25 acres from Pardee Place to William Copper. In his opinion, the fair market value of the land taken was $85,000. On cross examination, Mr. Chant stated that he considered the sales hereinabove referred to and, in addition, evaluated the land on a lot basis for a gross value of $393,000 for 131 lots from which he deducted the following estimated costs: $27,000 for roads, $3,100 engineering expenses, $66,810 sales commissions, $39,300 administrative costs, $5,000 interest costs, $500 taxes, $68,775 advertising and sales promotion, and $98,250 profit. These expenses added up to $308,735, and when deducted from $393,000, left a balance rounded out to $85,000. According to Mr. Chant, the land would be developed and sold out in one year which, from experience he had in two other Pocono area developments containing 900 lots and 400 lots, could be accomplished without difficulty.
Mr. Henkelman testified that he viewed and examined the subject property on nine different occasions. He stated that he discussed lot sales and prices received therefor with Pocono Mountain land developers at Locust Lakes, Lake Naomi, Hemlock Farms, Pine Ridge, and Hidden Lake, and considered these as comparable sales for lots. According to the witness, he also considered the lot value approach, concluding that the gross sale amount in a one-year sellout
would be $371,500 from which would be deducted $26,400 to complete the roads, $13,100 for engineering and surveying, $59,440 sales commissions, $37,150 administrative expenses, $55,725 advertising, $4,500 interest, $250 taxes, and $92,875 profit, leaving a balance of $82,000 which he considered to be the fair market value.
The Government's two experts regarded the highest and best use as being for seasonal residential development and recreational purposes and placed the market value at $33,000 and $21,500 respectively. The jury returned a verdict of $100,000, higher than the opinions of all four experts, but less than that of Mr. Lettini.
I. Mr. Lettini's Testimony
The owner of land taken by a governmental agency is entitled to the fair market value of the property at the time of taking. Market value is what a willing buyer would pay in cash to a willing seller, United States v. Miller, 317 U.S. 369, 373-374, 63 S. Ct. 276, 87 L. Ed. 336 (1943). Sales of comparable land in the area most accurately evidence fair market value. United States v. Featherston, 325 F.2d 539 (10th Cir. 1963). However, the law is not wedded to any particular formula or method for determining fair market value as the measure of just compensation. Sill Corporation v. United States, 343 F.2d 411, 416 (10th Cir.) cert. denied, 382 U.S. 840, 86 S. Ct. 88, 15 L. Ed. 2d 81 (1965). The modern federal rule is that all relevant and material evidence is admissible unless there is a sound, practical reason for barring it. United States v. 60.14 Acres of Land, 362 F.2d 660, 666 (3d Cir. 1966). Accordingly, the opinion testimony of a landowner on the valuation of his land has been admitted in federal courts without further qualification. The basis for admitting such testimony is a presumption of special knowledge arising out of ownership. United States v. 3,698.63 Acres of Land, etc., North Dakota, 416 F.2d 65, 67 (8th Cir. 1969); United States v. Sowards, 370 F.2d 87 (10th Cir. 1966); United States v. 60.41 Acres of Land, supra ; Kinter v. United States, 156 F.2d 5, 7 (3d Cir. 1946). In the case before the Court, Mr. Lettini, President of the corporate landowner, came armed with an additional credential in that he had wide experience as a building contractor and land developer and, consequently, had more qualifications than the average landowner. No objection was made to his testimony or to the reasons given in support thereof. The jury apparently was impressed by his testimony as the verdict rendered was higher than all expert testimony. Consequently, the verdict is supportable on his unchallenged testimony alone.
II. The Testimony of Plaintiff's Expert Witnesses
The Government contends that the testimony of Messrs. Chant and Henkelman should not have been allowed because it was erroneously predicated on a highest and best use of a subdivided residential-recreational area and utilized an improper "lot method" appraisal.
Initially, it should not be overlooked that both Chant and Henkelman testified on direct examination that they used comparable sales in coming to their determinations of market value. Chant specifically stated that he used lot values as market data in addition to comparable sales. (emphasis supplied) As in United States v. 3.544 Acres of Land, supra, the testimony as to lot value was developed at the insistence of the Government on cross examination and while the record shows that such lot value was considered by Chant and Henkelman, it does not appear that it was the sole or decisive or exclusive factor in the formation of their opinions as to market value. The jury, under the Court's instructions, could properly have concluded that landowner's expert testimony was grounded on comparable sales.
However, assuming arguendo, that the testimony of Chant and Henkelman is based on a lot valuation approach, I am still unpersuaded by Government counsel's objections. The Government makes much of the fact that the landowner's map had not been recorded in the Monroe County Recorder of Deed's Office and that no approval of a plan of subdivision had been obtained from the County Planning Board. These failures are factors to be considered in determining whether there was a subdivision at the time of taking but they are by no means dispositive. At oral argument, Government counsel conceded that if a subdivision actually existed at the date of taking, then a lot valuation approach using the market value of each lot less expenses would be appropriate. He asserted, however, that a ...