Arkansas State Highway Commission v. Johnson

David Newbern, Justice. This is an appeal by the Arkansas State Highway Commission of a judgment awarding $600,000 to William H. Johnson and other landowners whose property was condemned by the commission to construct a highway interchange. The landowners cross-appeal the trial court’s refusal to award attorneys’ fees. The commission contends the court erred in permitting the landowners to introduce the testimony of Mr. Sanson, who was not called as a witness by the commission, that he had been hired by the commission to make an appraisal of the land taken and appraised it at $233,600. We agree it was improper to allow Sanson to testify that he formed his opinion at the request of the commission, and thus the decision must be reversed. Because we reverse on this point, we need not address the commission’s argument that a court of appeals decision in an earlier appeal of this case is law of the case. We disagree with the commission’s second argument that evidence of the amount it determined to be just compensation for the land taken was erroneously admitted. We address that issue in order to guide the trial court upon retrial, and we conclude the evidence was relevant and admissible. The landowners contend in their cross-appeal that Ark. Const., art. 2, § 22, requires that they be awarded their attorneys’ fees because they are to be “made whole.” We do not interpret the Constitution as creating a right to attorneys’ fees, and thus we affirm on cross-appeal. At the conclusion of the first trial of this case, the jury returned a verdict awarding nothing to the landowners. Judgment was entered awarding the commission $233,600 which had been deposited by the commission with the court, and disbursed to the landowners, as the amount the commission determined to be the value of the land at the time of the taking. The landowners had sought additional damages, which they claimed had been caused by the taking, for injury to surrounding remaining land owned by them. In response, the commission had contended that the remaining land was enhanced by the taking. The landowners sought to introduce evidence that two commission appraisers had concluded that there was neither injury to nor enhancement of the value of the surrounding land. They also sought, by a motion in limine, to exclude evidence of subsequent sales of the remaining land. The trial court denied the motion in limine and refused to allow the landowners to present evidence of commission appraisers’ answers to interrogatories. The landowners’ motion for new trial was granted because the judge concluded he had erred in making these evidentiary rulings and in not holding a sufficiently detailed hearing. The order granting a new trial was affirmed by the court of appeals, and the case was retried, resulting in this appeal. 1. Sanson’s testimony Jimmy Sanson is a reviewing appraiser, but at the time of the trial he was a staff appraiser, employed by the commission. He appraised the land to be taken as being worth $233,600. The commission did not call Sanson as a witness but presented the testimony of other appraisers who testified the landowners were not damaged by the taking because of enhancement, caused by the taking, of the value of their remaining lands. There is no doubt, and it is not argued, that a witness such as Sanson can be called to give his opinion by the party who did not originally procure the witness’s opinion. The issue here is whether it was error to permit Sanson to reveal that his opinion was originally procured by the commission which chose not to present him as a witness. In Arkansas State Highway Commission v. Phillips, 252 Ark. 206, 478 S.W.2d 27 (1972), this court held, with three justices dissenting, that a landowner was permitted to call as a witness a staff appraiser hired by the commission and identified as such to give an opinion, although he was not called as a witness by the commission. In Arkansas State Highway Commission v. Witkowski, 257 Ark. 659, 519 S.W.2d 743 (1975), it was held the trial court did not err in following the Phillips case but that the issue had been decided by a divided court and would be reconsidered. The opinion noted that a majority of jurisdictions would not agree with the Phillips decision. In Arkansas State Highway Commission v. First Pyramid Life Ins. Co.of America, 265 Ark. 417, 579 S.W.2d 587 (1979), the Phillips case was, although not mentioned by name, effectively overruled. It was held, citing the language of the Witkowski decision and the cases cited there, that it was prejudicial error to allow a party to introduce into evidence the original employment of an expert witness over the objection of the party who originally employed the expert. While the only reason given in the First Pyramid decision was that the original employment of the expert was not “pertinent” to the issue of valuation, the other reasons can be found in Justice George Rose Smith’s dissenting opinion in the Phillips case. Justice Smith’s opinion began as follows: I would reverse this judgment. In simple fairness a party ought not to be permitted to show, as the appellees did in the trial court, that his adversary has failed to call as a witness an expert whom his adversary employed merely for the purpose of obtaining an opinion. If such testimony has any effect at all, other than its intended purpose to arouse an attitude of passion and prejudice in the jury room, that effect is completely outweighed by the reasons of policy for not admitting such proof and by the weight of authority elsewhere. The opinion then pointed out, (1) that such testimony is of no direct benefit to the jury in reaching its decision, (2) that there, as here, there was no reason to suspect wrongdoing by the commission, (3) it is unfair to put the commission in the position of having to explain its action in not calling the witness, and (4) the better reasoned cases do not permit it. The landowners argue that the Witkowski and First Pyramid cases are distinguishable or should be reexamined and overruled. With respect to the argument that the cases are distinguishable, no arguments are made, but the landowners refer to the fact that the trial judge distinguished them. Looking to the trial court’s order we find his distinction to have been on the basis that “the appraisals” of the commission were used in this case in making representations to third parties, primarily the federal government in obtaining federal funding for the highway project, and that was not so in the Witkowski and First Pyramid cases. It was not “the appraisals” that were used to get federal money for the project. It was, rather, the commission’s “statement of just compensation” which is required by the federal guidelines stated in the Uniform Relocation Assistance and Real Property Acquisition Act of 1970,42 U.S.C.A. §§ 4651 through 4655. The statement of “just compensation” required by § 4651 to be made by the condemning authority to the landowner is clearly a conclusion reached by the agency which shall be no less than “the agency’s approved appraisal of the fair market value of such property.” The two are obviously separate. The conclusory statement of “just compensation” is like the statement of “just compensation” Ark. Code Ann. § 27-67-312 (1987) requires to be annexed to a declaration of taking made by a condemning authority. Mr. Sanson’s appraisal was in the amount of $233,600. That was also the amount stated in the statement of just compensation in this case. The fact that the amount of Sanson’s appraisal is the same as the amount of the just compensation statement makes it somewhat difficult in this case to perceive that the two are separate, but they are. Sanson testified that the commission’s procedure in establishing the amount of just compensation for land to be taken begins with an appraisal, such as the one he made, by a staff appraiser. That appraisal is then reviewed by a reviewing appraiser. If the reviewing appraiser agrees with the staff appraiser’s appraisal, “as of that point, it becomes the official position of the Arkansas Highway Department that this is the amount of just compensation that the property owners are entitled to.” The record includes a deposition by Paul Broyles, Chief of the Right-of-Way Division, Arkansas Highway Department. Mr. Broyles stated the procedure used by the department and noted that an appraisal by a staff appraiser would not necessarily become the department’s determination of just compensation to be used for negotiations with the landowner or in obtaining federal funding. It first must be approved by the reviewing appraiser, after which it “would normally be sent to the Acquisition Section and utilized in negotiations with the landowner and in application for federal funds. . . .” While the issue of the admissibility of the statement of just compensation which we address in the next segment of this opinion was not raised in the Witkowski and First Pyramid cases, the issue of the admissibility of the original employment of the appraiser was, and it is the same issue raised here. With respect to that issue, we cannot distinguish those cases from this one. In asking us to reconsider the Witkowski and First Pyramid cases the landowners cite Levitsky v. Prince George’s County, 50 Md. App. 484, 439 A.2d 600 (1982) and Barton v. Board of Education, 617 P.2d 347 (Utah 1982), both of which are clearly contrary to our cases. The Levitsky case recognizes the split of authority on the question of revealing the expert’s original employment and notes that the Maryland Court of Appeals has chosen the approach of leaving the matter within the trial court’s discretion. The opinion in the Barton case does no more than recite the argument made by the majority of this court in the Phillips case and by the dissenters in the Witkowski case. Neither of them presents anything which would cause us to reconsider the issue which was resolved in the First Pyramid decision. Also cited is Cronk v. State, 420 N.Y.S. 113 (1979), apparently the opinion of a trial judge of the New York Court of Claims, for the proposition that an unfiled appraisal obtained by the condemning authority in excess of that upon which it relied at trial was admissible as an “admission against interest.” That rationale is one which was not discussed in the First Pyramid opinion or in the Phillips and Witkowski cases. The opinion in the Cronk case points out that the higher appraisal had been used by the condemning authority in representations to the federal government, although the amount sought by the state agency from the federal government was argued to have been less than the amount suggested in the appraisal. We find the Cronk case to be distinguishable from this one. There is no evidence that Mr. Sanson’s appraisal was used by the commission in representations to third parties. As explained above, it was, rather, the commission’s determination of just compensation which was so used. Again, we see a difference between the appraisal and the commission’s conclusion based upon it. As the amount of Sanson’s appraisal and the amount the • commission concluded to be just compensation to the landowners were the same, we must consider whether any prejudice resulted from the error committed in letting the jury know of Sanson’s original employment. In closing argument, the landowners’ counsel stated: Let me say this about Mr. Sanson: You notice that while he was the appraiser that made the original appraisal, established just compensation, did it in conformity — as he testified to you — with Federal and State law what he had to do, following the requirements of the law — had that reviewed by the reviewing appraiser with the Department, who agreed with him, and signed off on it and established that as the Department’s official estimate of just compensation that these people were due as a result of the taking of their twelve acres and who called Mr. Sanson. You notice Mr. Gowen [counsel for the commission] didn’t call him, and he’s an employee out there with Mr. Gowen at the Highway Department — had been for years — he’s been there fifteen years. We’re the ones that called him. Mr. Gowen could have if he was shooting straight with you. He could have put Sanson on the stand, and Sanson could have explained to you how he made the original appraisal and then how after this suit got going he decided to change his mind on it. Ladies and gentlemen, I submit to you that you have seen a case here where the Highway Commission has played fast and loose with the rights of these citizens in making appraisals and then suppressing it, of going out and getting another appraiser at some considerable expense to tell you folks that the Highway Department could take those twelve acres out there and not pay a dime for them. That’s what they’re trying to do and it’s not right — it’s not fair. Clearly, full advantage was taken of the evidence of Jimmy Sanson’s original employment. When the argument of counsel is considered along with the fact that the jury in the first trial, at which the evidence in question here was excluded, awarded the landowners nothing and the fact that this jury awarded $600,000, we cannot say the error was not prejudicial. 2. Evidence of just compensation In United States v. 320.0 Acres of Land, 605 F.2d 762 (5th Cir. 1979), the condemning authority, following the guidelines found in 42 U.S.C.A. § 4651, provided the landowners a statement of just compensation. At trial, the condemning authority presented evidence of lesser values and argued that Fed. R. Evid. 408 precluded introduction by the landowners of the statement of just compensation because it was a figure used in settlement negotiations. The court of appeals held that the statement of just compensation was an admission. It was proper evidence because, rather than being a negotiation figure, it was a statement of the amount the government believed the landowner was constitutionally entitled to if negotiations should fail. Both § 4651 and Ark. Code Ann. § 27-67-312 (1987) require estimates of just compensation. The Arkansas statute requires that such an estimate be annexed to the declaration of taking of property for public highway purposes. We agree with the conclusion that the statement of just compensation is not a negotiation or settlement figure excluded by A.R.E. 408. The rationale of the 320.00 Acres of Land case has been followed in courts of other states, see, e.g., Thomas v. State, 410 So.2d 3 (Ala. 1982); Cook v. State, 430 N.Y.S.2d 507 (1980). In its argument that the statement of just compensation may not be introduced, the commission cites Arkansas State Highway Commissions. Taylor, 269 Ark. 458, 602 S.W.2d 657 (1980), in which it was held that the amount deposited with the court by the commission, representing the commission’s determination of the value of the land at the time of taking, was properly introduced by the landowner because it had already been mentioned by counsel for the commission in his opening statement. The opinion states, however, that “ordinarily evidence of the amount deposited by a condemnor as estimated just compensation is not admissible in evidence. The amount is only tentative and the amount ultimately fixed may be more or less than the deposit,” citing 6A Nichols on Eminent Domain, p. 27-55, § 27.25[1] (1979). While we find no support for the statement in the cited paragraph in the treatise, we do find it in Chief Justice Harris’s dissenting opinion in Arkansas State Highway Commission v. Blakeley, 231 Ark. 273, 329 S.W.2d 158 (1959). In the Blakeley case, a commission appraiser testified the landowner’s land was worth $200 less than before the taking. On cross-examination, counsel for the landowner mentioned that the commission had deposited $500 with the court and asked if the witness had not been working for the highway department when that appraisal was made. The witness answered he had not. The court’s opinion contained this obiter dictum, which was followed by our court of appeals in Arkansas Power & Light Co. v. Melkovitz, 11 Ark. App. 90, 668 S.W.2d 37 (1984): had the witness answered “yes,” counsel for the landowner could have pursued the matter in order to impeach the witness’s testimony by showing he had made a prior inconsistent statement. Chief Justice Harris’s disagreement with the latter statement was based on his conclusion that the deposit represented only a “compromise” figure or an “offer” being made by the commission for the land. We conclude that when the commission is required by federal or state law to reach a determination of just compensation and to communicate that information to the landowner, the court, or third parties, it is by statutory definition more than an offer or compromise figure. While it is true that a jury or court may award more or less than the amount stated, that does not change the fact that such a statement constitutes an admission of the constitutional entitlement of the condemnee, and it should be admissible as evidence to rebut the condemnor’s contentions that the condemned property is worth less than the amount stated as just compensation. 3. Attorneys’ fees The landowners argue they are entitled to recover their attorneys’ fees as a part of their compensation. They recognize that we deny such a recovery when it is sought as part of the costs of litigation in eminent domain cases, Selle v. City of Fayetteville, 207 Ark. 966, 184 S.W.2d 58 (1944), while we permit it where there is evidence of “bad faith” on the part of the condemning authority. Des Arc Watershed Imp. Dist. v. Finch, 275 Ark. 229, 630 S.W.2d 17 (1982); Housing Authority v. Amsler, 239 Ark. 592, 393 S.W.2d 268 (1965). They argue, however, that we permitted a rate of interest in excess of the statutory rate in Arkansas State Highway Commission v. Vick, 284 Ark. 372, 682 S.W.2d 731 (1985), on the theory that otherwise the landowner would not have been “made whole.” We have some sympathy for the argument that a landowner who is the defendant in condemnation proceedings and who did nothing to bring them on himself or herself but contests only the value of the property in question should not be required to pay for the proceedings. See Stewart & Grindle, Inc. v. State, 524 P. 2d 1242 (Alaska 1974), where the Supreme Court of Alaska interpreted its rule of court, which allows attorneys’ fees where it appears necessary to achieve a “just result,” as permitting the granting of attorneys’ fees in condemnation cases. The same could be said of many other types of proceedings, however, such as the automobile accident where the plaintiff was doing absolutely nothing wrong when struck by a negligent driver’s car. As the landowners’ brief candidly points out, the Supreme Court of Georgia once adopted the position that a landowner was entitled to attorneys’ fees in condemnation proceedings, White v. Georgia Power Co., 227 S.E.2d 385 (Ga. 1976), only to find itself embroiled in controversy over the decision which it ultimately overruled, DeKalb City v. Trustees, 251 S.E.2d 243 (Ga. 1978), noting that the problems it faced could be avoided by a well drafted statute. Although we agree the provisions of Ark. Const, art. 2, § 22, constitute a strong exhaltation of the right of property in this state, the right of property comes in many different forms, and we are not prepared to hold attorneys’ fees are recoverable to protect any particular one in the absence of an authorizing statute. Reversed on appeal; affirmed on cross-appeal. Hickman, Hays, and Glaze, JJ., dissenting in part.