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State v. McDonald

Supreme Court of Arizona

May 18, 1960

STATE of Arizona, Appellant,
v.
James Lyle McDONALD and Ada McDonald, his wife; First National Bank of Holbrook, Arizona; R. E. Rockwell and Irene Rockwell, his wife; Nyal G. Rockwell and Helen O. Rockwell, his wife, Appellees.

Page 344

[88 Ariz. 3] Wade Church, Atty. Gen. and Charles L. Hardy, Asst. Atty. Gen., for appellant.

Earl Platt, St. Johns, for appellees.

PORTER MURRY, Superior Court Judge.

This is an appeal by the State of Arizona (hereinafter termed the State or plaintiff) from a judgment in a condemnation suit wherein substantial damages were awarded to defendants-appellees, Rockwell and McDonald, for properties condemned by the State for highway purpose. The case was tried to the court sitting with a jury. The defendants will either be referred to as such or, where necessary, by their surnames.

The basic facts are these: in the year 1955 the Arizona State Highway Commission took the necessary steps to relocate part of the existing Holbrook-Lupton Highway (U.S. 66, which is the heaviest travelled transcontinental highway in the State) and to acquire an enlarged right of way 255 feet in width. A portion of the highway crossed adjoining lands owned separately by these defendants. The road at this point runs at an angle from southwesterly to northeasterly.

The McDonalds had title to some 540 acres of practically unimproved land lying in sections 19 and 30, Twp. 19 North, Range 24 East, G. & S. R. B. & M., which had been acquired primarily for potential business sites. The property lies in Apache County just to the east of and adjacent to the Navajo-Apache county line. A segment of the scenic Painted Desert (which is part of the Petrified Forest National Monument) lies immediately to the north of said acreage. By easement dated October 18, 1954, the McDonalds granted to the State the requisite 255-foot right of way across their lands. The consideration for the 37.9 acres thereby taken was a nominal $10 per acre plus a vital concession by the State that McDonald should [88 Ariz. 4] have 'two standard 30-foot turnouts * * * installed at the time of construction left of approximate Hwy.Eng.Sta. 4.00 and 7.00.'

Defendants Rockwell owned some 200 acres to the east of the McDonald property lying in sections 19 and 20 (same township and range), upon which was then located a typical roadside business. By easement dated March 10, 1955, the Rockwells granted to the State a similar right of way across their lands. The primary consideration paid for the 11.1 acres taken was not the nominal ten dollars per acre but rather this proviso appearing in the easement, viz.:

'2. It is further understood and agreed that the following condition shall be met and installations made at the time of construction of the Holbrook-Lupton (Apache County Line--Crazy Creek Section) Highway, project F183(26):

Page 345

'1-30-foot standard turnout of approximate Highway Engineer's Station 69/50

'1-30-foot standard paved turnout of approximate Highway Engineer's Station 69/50

'1-30-foot standard paved turnout right of approximate Highway Engineer's Station 79/00 not to be scarified.

'The above mentioned turnouts to be joined to present pavement.

'Present pavement to be used for turnout at approximate Highway Engineer's Station 79/00.'

With the passage by Congress of the 'Highway Act of 1956', the road in question (U.S. 66) became a part of the National system of interstate defense highways. To conform to the standards therein prescribed this 'Freeway' was to be constructed as a 314-foot, four-lane divided highway, with controlled access. This made it necessary that the State acquire an additional 59-foot strip of land from both defendants. The instant suit was filed, inter alia, to accomplish this purpose. In each instance the strip sought to be condemned lies 'on the southerly side of, parallel and immediately adjacent to the right of way of the Holbrook-Lupton Highway as now established.' Four parcels (Nos. 1, 2, 3 & 5) of the McDonald property--aggregating 8.40 acres--plus two parcels (Nos. 4 and 6) of the Rockwell property containing 3.64 acres, were included.

As to the Rockwells it is conceded this new construction will put them completely out of business, as the 59-foot strip not only obliterates practically all of the improvements of their roadside business, but hereafter they will not be able to get either on or off the highway, as there will not be a single gate along the 4,300 feet of their frontage on the south side or the 3,000 feet on the north side. Nor are any frontage[88 Ariz. 5] roads now planned in the area. Furthermore, Rockwells will be unable to directly cross over from one side of their holding to the other.

The McDonald property--with its two miles of frontage (counting both sides of the road)--will have one 'ranch gate' on each side of the highway, the traffic over which is limited to five cars per day. (Such a gate, according to the plan, is installed every three miles.) The State's engineering testimony is that if any place of business were attempted to be served through said gates they would be immediately closed to all traffic. It is a part of the master highway plan that for a distance of 11 1/2 miles--of which these properties are a part--there shall be no facility available for gas or food or a business of any kind.

The State's amended complaint sought not only to acquire the 59-foot strip but to wipe out 'all access rights appurtenant and incident to the abutting parcels of lands.' Counsel for the State, in his opening statement to the jury, very frankly admitted 'the State was forced to revoke or to violate the agreement which had been made with these owners regarding these turn-outs * * *' and he conceded that the owners were entitled to compensation for the value of those access rights.

The jury returned separate unanimous verdicts, in favor of McDonalds for the sum of $14,250 and Rockwells $60,000. Judgment was thereupon entered against the State for such amounts. After denial of a motion for new trial, this appeal was taken.

The trial court correctly instructed the jury as to what constituted 'fair market value', viz.:

'The measure of just compensation which must be paid to the defendants for the value of the portion of their land taken, and for the damage, if any, to the remaining portion, is fair market value.

'Fair market value is defined as the highest price estimated in terms of money which the property would bring if exposed for sale in the open market, with reasonable time allowed in which to find a purchaser, buying with knowledge of all of the uses and purposes

Page 346

to which it was adapted and for which it was capable.

'Market value is also defined as the price property would probably bring after fair and reasonable negotiations where the owner is willing to sell but not compelled to do so and the buyer is willing to purchase but is under no necessity of doing so.'

The difficulty arose with both the State and defendants in establishing a yardstick of any bona fide comparable sales in the area. Defendant's witness Larry Burk, a realtor and appraiser from Phoenix, neatly expressed the problem: 'This is an area [88 Ariz. 6] where ownerships of property are large, distances are great, exchanges are few.' As a matter of fact there had been no sales in the immediate vicinity other than 'the going-business sale' from the father, R. E. Rockwell, to his son Nyal Rockwell, infra. From the Navajo-Apache line east to Sanders (21 miles) during the period 1947-1955 there were just four recorded sales on this stretch of highway involving only land. Furthermore there were apparently only seven roadside businesses on U.S. 66 between Holbrook and Navajo, a distance of about 40 miles.

The principal assignments of error raise the question as to what evidence is material and relevant in condemnation proceedings in order to determine the value of land to be condemned. We shall discuss specifically some of the evidentiary problems presented.

Over the objection of the State the court admitted in evidence the 1954 contract of sale between defendants R. E. Rockwell and his son Nyal of the identical property here involved; this included the 200 acres of patented land with improvements thereon and a 'going business' consisting of a garage, filling station, restaurant, curios, bar, and dance floor. The contract price was $50,000, upon which a down payment of $10,500 was made, the balance payable at the rate of $200 per month, and at the time of trial there was a balance due of $31,700. The sale included a small stock of goods and a No. 7 & 9 liquor license, 'together with the business and all of the good will thereof.' It is this quoted phrase of the contract to which objection is specifically made. Admittedly there was lumped together therein both the realty and the 'going business' under one price; furthermore it is conceded that at the time of sale the parties (father and son) did not separately evaluate the component parts thereof.

As clearly pointed out in the instruction above quoted, the measure of just compensation to the owner in a condemnation suit is the 'fair market value' of the land taken. See, Mandl v. City of Phoenix, 41 Ariz. 351, 356, 18 P.2d 271. In the case of State ex rel. La Prade v. Carrow, 57 Ariz. 429, 114 P.2d 891, we stated:

'It is practically unanimously held that injury to a business is not property, within the meaning of the statutes relating to eminent domain, unless there is some express statutory provision allowing it, and that it is only damages to the real ...


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