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State Highway Commission v. Compton

March 1, 1973

STATE HIGHWAY COMMISSION, PETITIONER,
v.
COMPTON ET AL, RESPONDENTS



On Review from the Court of Appeals.

John W. Osburn, Solicitor General, Salem, argued the cause for petitioner. With him on the brief were Lee Johnson, Attorney General, Al J. Laue, Assistant Attorney General, and Leslie B. Hampton, Assistant Attorney General, Salem.

John L. Schwabe, Portland, argued the cause for respondents. With him on the brief were Andrew F. Fink and Souther, Spaulding, Kinsey, Williamson & Schwabe, Portland.

Howell, Justice. O'Connell, Chief Justice, and McAllister, Denecke and Holman, Justices.

Howell

The State of Oregon, through the Highway Commission, filed an action in eminent domain to take a portion of defendants' property for highway purposes. A jury returned a verdict for defendants for $78,500 as compensation for the taking. Defendants, unsatisfied with the award, appealed to the Court of Appeals, which reversed the judgment and remanded the case for a new trial. 9 Or App 264, 490 P2d 743 (1971). We granted review.

The issues involve the admissibility of certain evidence.

Before the taking, the defendants owned nine

lots consisting of approximately 40,000 square feet of land located on the east side of the city of Portland. The property was zoned for residential purposes, but there was evidence the zone could be changed.

An expert appraiser called by defendants testified that the highest and best use of defendants' property was for "retail commercial requiring substantial automobile traffic" such as a fast-food operation or a motel. Using the market data approach and considering sales of comparable properties, he found the amount of just compensation to be $217,000. He testified over objection that he also considered the income approach to valuation, as he believed the property could be leased for motel use at 50 cents per square foot, or a total of $20,100 net per year to the defendants. Capitalized at 8 per cent, the market value of the property taken would be $251,600.

Thereafter defendants offered certain evidence by a certified public accountant that the property could be leased to a national motel chain for the construction of a motel at a net rental to defendants of $24,000 per year for the land. The trial court rejected the testimony. The rejection was the primary basis of the defendants' appeal to the Court of Appeals, which held the evidence was admissible and reversed the case. We disagree and find that the evidence offered was highly speculative.

The record discloses the following relating to the proffered testimony of the certified public accountant, Mr. Rice.

Rice testified that he was a certified public accountant associated with a San Francisco firm which specialized in accounting and consulting work for various ...


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