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 subdivision did not exist at the time of taking and any estimate of retail prices for lots and the expenses concomitant with subdividing would be highly speculative and prejudicial to the Government.
In considering this argument, we must return once again to the rule enunciated in Sill Corporation v. United States, supra, that the law is not wedded to any particular formula or method for determining fair market value as the measure of just compensation. "Perhaps no warning has been more repeated than that the determination of value cannot be reduced to inexorable rules." United States v. Toronto, Hamilton & Buffalo Navigation Co., 338 U.S. 396, 402, 70 S. Ct. 217, 221, 94 L. Ed. 195 (1949). In United States v. 60.14 Acres of Land, supra, the Court referred to the often quoted words of Chief Judge Parker, "'Artificial rules of evidence which exclude from the consideration of the jurors matters which men consider in their everyday affairs hinder rather than help them at arriving at a just result. In no branch of the law is it more important to remember this, than in cases involving the valuation of property, where "at best, evidence of value is largely a matter of opinion". See Montana R. Co. v. Warren, 137 U.S. 348, 352, 11 S. Ct. 96, 34 L. Ed. 681 * * * .' United States v. 25.406 Acres of Land, 172 F.2d 990, 995 (4 Cir. 1949), cert. denied, 337 U.S. 931, 69 S. Ct. 1496, 93 L. Ed. 1738."
It may well be that even though the highest and best use of a property is for a residential subdivision, if no meaningful steps have been taken in that direction, viz., construction expenses and actual lot sales, then a "lot method" appraisal or a "developer's residual" approach, as it is also known, would be inappropriate. But that is not the situation here. The status of the subdivision and its availability for sale within the reasonably foreseeable future was an actual and real one, certainly not hypothetical, remote or speculative. Someone about to purchase the property on January 30, 1968, the date of condemnation, would have to regard it as having a highest and best use as a subdivision and, in determining what purchase price he would be willing to pay, would have to consider all factors, including sales price for individual lots and additional expenses of development, in arriving at his decision. The Pennsylvania Supreme Court in Stoner v. Metropolitan Edison Co., 439 Pa. 333, 337, 339, 266 A.2d 718, 722 (1970), recognized that those uses which would occur to the average buyer and influence him must enter directly into the market value of the land regardless of the use to which the owner had previously applied the land and held in that case that "(the) evidence presented was sufficient to persuade a jury that a buyer, at the time of condemnation, would have been influenced by this possibility of future development . . .". In United States v. Iriarte, 166 F.2d 800, 804 (1st Cir. 1948) the Court noted that ". . . the price a promoter would pay for undeveloped land suitable for subdivision would be influenced by the price he would expect to get per lot after subdivision . . . (but), of course, he would also take into account the expense of development . . .". See also United States v. City of New York, 165 F.2d 526 (2d Cir. 1948). All facts which would influence a person of ordinary prudence, desiring to purchase the property, are admissible. Kimball Laundry Co. v. United States, 338 U.S. 1, 16, 69 S. Ct. 1434, 93 L. Ed. 1765 (1949). And, as hereinbefore noted, the modern trend favors a broad rule of admissibility, with discretion in the trial court. United States v. 60.14 Acres of Land, supra ; United States v. 25.406 Acres of Land et al., 172 F.2d 990, 993 (4th Cir. 1949). This is not a case where a land-owner dreamily contemplates the use to which his property may be put at some undefined future time but rather one where the property is geographically suited for development; is located in a booming developmental area; has been subdivided into lots according to a duly certified map; has been cleared and graded and improved with the creation of a spring-fed lake, the construction of access roads, and the digging of a deep well sufficient to supply water to 150 homes; and where actual sales of lots as identified on the map have taken place, the deeds of which contain building restrictions compatible only with a residential real estate development. In United States v. 100 Acres of Land in Marin County, 468 F.2d 1261 (9th Cir. 1972), the Court upheld the use of the "developer's residual approach" and described it as follows:
"In arriving at their values, the owner's witnesses took into consideration the market data of sales of adjacent subdivided lots and made deductions for selling and advertising expenses, engineering and development costs, overhead costs, taxes, buyers' anticipated profits, and for acreage lost for streets, etc. in order to reflect or indicate the value of the property at the time of taking. In this case, the data relied on was derived from the market and facts as had been generated in the development of adjacent land. This method is referred to as the 'developer's residual approach'."