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Dept. of Public Works v. Pellini





APPEAL from the Circuit Court of Peoria County; the Hon. HOWARD WHITE, Judge, presiding. MR. CHIEF JUSTICE HERSHEY DELIVERED THE OPINION OF THE COURT:

Rehearing denied January 16, 1956.

This is an appeal from a condemnation judgment of the circuit court of Peoria County which was entered upon a jury verdict awarding the appellants, Mr. and Mrs. Lloyd H. Buchele, $32,500 as just compensation for the property in question.

The appellants, in challenging the adequacy of the award, ask that the judgment be reversed and judgment entered here for $53,000, or, in the alternative, that a new trial be ordered. Specifically, they contend: (1) The court erred in permitting petitioner's experts to give an opinion of value. (2) The court admitted improper evidence on behalf of petitioner. (3) The appellants were denied the right to fully cross-examine petitioner's expert witnesses. (4) The court erred in refusing to permit the appellants to introduce evidence of reproduction cost of the building. (5) The amount of the verdict was contrary to evidence relating to value. (6) The court erred in denying appellants' motion for a verdict in the amount shown by undisputed evidence, i.e., net income capitalized at the rate used by petitioner's experts.

The property here condemned for highway purposes by the Department of Public Works and Buildings is located at 311 N. Perry Avenue, in Peoria, has a frontage of 72 feet on Perry Avenue, and extends 171 feet to an alley. It is improved with a two-story frame structure (estimated to be 75 years old) which has been made into ten apartments (three in the basement, four on the first floor and three on the second floor).

The building has a hot-water heating system (fired by a stoker), the walls are plastered throughout, there is ceramic tile in the bathrooms, and the exterior is covered by asbestos siding.

The appellants, who purchased the property in 1948, live in a four-room apartment on the first floor, while another apartment is occupied by a custodian who receives the rental of the apartment (estimated by appellants as $15 per week) for his services. The remaining eight apartments are rented furnished on a weekly basis, six at $15 per week and two at $13 per week. In addition, there is a single story concrete block building at the rear in which are located four garages, each renting for $7 per month. At the indicated rentals, the ten apartments and the garages would gross approximately $8,400, annually, if rented as furnished for an entire year. (This includes a figure of $22.50 a week for the owners' apartment as furnished.)

Two experts testified on petitioner's behalf. The first, John J. Manning, a real-estate broker with wide appraisal experience, gave $32,500 as his opinion of the fair market value of the property as of the date the petition was filed, September 1, 1952. His testimony disclosed that he inspected the property on three different occasions and was well acquainted with the vicinity. In fact, for a number of years he had been manager of the Diamond apartments, which were located only 36 feet from the property in question and were similar in size and other essential respects. The Diamond apartments were sold in 1952 for $26,500, plus $3,500 for furnishings.

This witness explained in detail some of the additional factors which he took into consideration in formulating an opinion of value. He said he assumed a gross rental of $8,400 and capitalized this at ten per cent after deducting estimated annual operating expenses. Some of these expenses he ascertained from the owners themselves (taxes, heat, water and other utilities), while as to others he made estimates (insurance, management, exterior maintenance, general repairs, furniture replacement, garbage collection, supplies, custodian and miscellaneous). After deducting estimated expenses, he arrived at a yearly estimated net of $3,220. Capitalized at ten per cent this corresponded roughly to his $32,500 valuation.

The petitioner's other expert, Ellery Lay, was another real estate broker in Peoria who was experienced in the appraisal of apartment properties. He also estimated the fair cash market value at $32,500. He had viewed the premises with Manning, and they had discussed their appraisals. Likewise, he checked his estimate by a capitalization of income process similar to that employed by Manning.

The appellants offered the testimony of Robert J. Phalen, an abstracter and appraiser, who stated that in his opinion the fair cash market value of the property was $54,100. It appeared from his testimony that he had been on the premises only a few hours on the Saturday before he testified. Moreover, in making his estimate he said that he accepted the appellants' word that the expenses for a year did not exceed $2000 and that the property grossed $8,400. However, he said that the principal basis for his computation was the cost of reproduction less depreciation.

One of the appellants, Buchele, placed a value of $65,000 upon the property; and his wife testified in some detail as to operating expenses incurred in renting the apartments. Based upon her testimony, a figure of $2971.70 was arrived at as to the actual costs thus incurred during the preceding year. We discuss particulars of her testimony later in the opinion.

Finally, the appellants made an offer to prove that at current building costs it would take $85,275 to reproduce the building and garage in so far as it would be possible to reproduce it with comparable materials and at comparable dimensions. The court refused the offer and excluded this testimony.

The record discloses that prior to the taking of evidence in the cause the jury viewed the premises.

We consider the appellants' contentions in the order stated. First, did the court err in permitting the petitioner's ...

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