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Department of Conservation v. Kyes

OPINION FILED FEBRUARY 22, 1978.

THE DEPARTMENT OF CONSERVATION, PETITIONER-APPELLANT,

v.

WILLIAM E. KYES ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Jo Daviess County; the Hon. JAMES R. HANGSEN, Judge, presiding.

MR. JUSTICE GUILD DELIVERED THE OPINION OF THE COURT:

On May 29, 1974, the Department of Conservation of the State of Illinois (hereinafter referred to as the State) filed a petition to condemn the real estate located at 512 Bouthillier Street in Galena, Illinois. Named as defendants in this proceeding were William E. Kyes and Neil J. Robbins, the owners of the property, Lois Zurliene, a contract purchaser of the property, and the Galena State Bank and Trust Company, which held a mortgage on the property. The jury returned a verdict of $48,000 as just compensation and judgment was entered upon the verdict. The State's post-trial motion was denied and the State appeals.

The property has approximately 60 feet of frontage on Bouthillier Street and varies in depth from 127 to 133 feet. It is immediately contiguous to the U.S. Grant Home State Memorial. The improvements on the property consist of a small house which has been renovated for commercial usage as a restaurant and a small outbuilding. Prior to hearing any testimony the jury viewed the subject property.

Thereafter the State presented only one witness, a real estate appraiser who testified that, in his opinion, the value of the property was $14,500. He characterized the highest and best use of the property as a "limited commercial" use for something like a small restaurant, gift or antique shop. His testimony included evidence of approximately 20 real estate transactions, all but one of which involved sales of residential real estate. He considered these sales comparable because there was no zoning in Galena at the time and, therefore, he felt that the properties could have been converted to commercial uses if the owners had so desired.

Defendants Kyes and Robbins both testified to their acquisition of the subject property, improvements made upon it by them, and their operation of a restaurant on the premises during the last two months of the tourist season in 1972. They further testified to the negotiations resulting in a contract to sell the subject property to defendant Zurliene and her default on that contract after learning of the State's intention to acquire the subject property. Zurliene also testified to the negotiations and contract for sale of the property to her. In addition, she testified at length concerning her plans to build a carriage and harness museum on the subject property.

The defense also introduced the testimony of two valuation witnesses. Both testified that the highest and best use of the property was commercial, especially because of its location next to the Grant Home. Both also testified concerning the sale of the Grantview Inn, directly across the street from the subject property, as a comparable sale. One witness valued the subject property at $48,000 and the other at $56,256. Finally, there was rebuttal testimony concerning the issue as to when defendants Kyes and Robbins first acquired knowledge that the State might be interested in acquiring the subject property.

The State contends that it is entitled to a new trial because of the following allegedly erroneous actions of the trial court: (1) admitting evidence of the $68,000 asking price which Kyes and Robbins placed on the subject property when they offered it for sale; (2) admitting evidence of the defaulted contract between Kyes and Robbins and Zurliene (hereinafter referred to as the Zurliene contract); (3) admitting evidence of a $25,000 mortgage on the subject property; (4) admitting evidence concerning defendant Zurliene's plans for use of the property; (5) admitting evidence of the sale of the Grantview Inn as a comparable sale and the testimony of the defense valuation witnesses based on it; and (6) allowing improper comments by defense counsel during closing argument.

• 1, 2 It is a well established rule in condemnation cases that when the jury has viewed the premises and the amount of the verdict is within the range of the evidence, the verdict of the jury will not be disturbed unless the record clearly shows that it has been influenced by passion or prejudice or unless there was a clear and palpable mistake. (See, e.g. Trustees of Schools v. LaSalle National Bank (1961), 21 Ill.2d 552, 173 N.E.2d 464; Department of Public Works and Buildings v. Lambert (1952), 411 Ill. 183, 103 N.E.2d 356.) In addition, even the improper admission or exclusion of value evidence does not constitute reversible error when there is other evidence of value on both sides and the jury has the opportunity of weighing the conflicting evidence. Trustees of Schools v. LaSalle National Bank.

With these principles in mind, we turn to the State's first allegation that the trial court erred in permitting testimony that when Kyes and Robbins listed the subject property for sale, their asking price for the entire restaurant business thereon, including substantial amounts of personal property, was $68,000. The State complains of four specific instances in which such testimony was elicited. The first time the asking price was mentioned was in answer to a direct question concerning what the amount of that price was. The witness completed a rather lengthy answer before the State objected that such testimony was not an indication of the fair cash market value of the property. The court replied that it was competent as an asking price and that he would allow it, but only as an asking price, whereupon defense counsel replied that that was all that they were introducing it as. The remaining three instances in which the price was mentioned were during the testimony of the defendants about the negotiations leading up to the Zurliene contract. In response to one objection by the State, the court stated that the defense was only explaining the transaction between the defendants. Another time the court specifically instructed the jury that it was only an asking price.

• 3, 4 We agree generally with the State's argument that testimony from an owner of property concerning his unaccepted offers to sell at a specific price is not evidence of the fair cash market value of such property. It is common knowledge that the asking prices which sellers place upon their property are often inflated. In addition, when an owner offers such evidence on his own behalf it is, of course, self-serving and therefore objectionable. (5 Nichols, The Law of Eminent Domain § 21.4(2) (rev. 3d ed. 1975).) In this case, however, we do not believe that this evidence was offered for the purpose of showing the value of the property. No one argued that this asking price should be considered as evidence of value and the jury was specifically instructed that it was only an asking price and nothing more. All of the valuation witnesses testified to substantially lower opinions of value with the highest such opinion being almost $12,000 less than the $68,000 asking price. The real reason such testimony was offered by the defense in this case is as background information having to do with the Zurliene contract. The exact nature and validity of that contract was a hotly disputed issue between the parties in this lawsuit. The State took the position that, in entering into that contract, Kyes and Robbins clearly took advantage of Zurliene, possibly to the extent of defrauding her and were attempting to do the same with regard to the State. Under such circumstances, the defense reacted by attempting to show that the contract was, in fact, the result of negotiations and entirely legitimate. We believe that the defense could and should have made its point without reference to the specific original asking price on the property but find that the mention of the price did not constitute reversible error under the circumstances of this case. This is especially so in view of the fact that the State made no attempt to object until after the first mention of the specific asking price on the property, even though it was clear from the question asked that it was aimed at eliciting such information. We refuse to accept the State's argument that the mere existence of such information is harmful and prejudicial to it. There is nothing in the instant record which indicates that the jury was in any way influenced or misled by the testimony concerning the asking price on the property.

The State next contends that the trial court erred in admitting evidence of the Zurliene contract. It was entered into in December 1972 and specified a purchase price of $48,000. Three lump sum payments were due before July 1, 1973, and the remainder was to be paid in monthly payments of $300 each. Interest was due at the rate of 7 1/2% beginning January 1, 1973, but there was a provision to reduce the interest rate if other lump sum payments were made which substantially reduced the balance due on the contract. Zurliene was obligated to pay all taxes and special assessments and to provide insurance. Finally, the contract provided that if Zurliene failed to make the payments, the sellers had the option of declaring the contract forfeited and retaining the payments made to date as liquidated damages. Zurliene paid a total of $10,000 on this contract during December 1972. The contract, however, has been in default since July 1, 1973, when Zurliene did not make the payment due upon that date. The uncontroverted testimony in the record indicates that the reason for the default was that Zurliene learned that the State definitely intended to acquire the subject property, even though it was not certain when condemnation would take place.

The State argues that a defaulted contract such as this does not provide reliable evidence of the fair cash market value of the property and should be excluded. The State cites City of Chicago v. Blanton (1958), 15 Ill.2d 198, 154 N.E.2d 242, which we find to be inapplicable. In Blanton only $1000 of the $37,500 contract price was ever paid, and that was returned after the condemnation proceedings were filed. In addition, the contract contained an express provision giving the purchaser the option of forfeiting his down payment to the seller if he decided for any reason that he did not wish to proceed with the sale. The court concluded that this was in effect an option contract, which the trial court did not err in excluding when there was evidence of recent sales of similar land in the vicinity. While the ultimate results here might be the same as in Blanton, it is the sellers who are given the option of declaring the contract and payments thereon forfeited if the buyer does not fully perform as agreed upon. This is a standard clause in real estate installment sale contracts. The State takes the position that because the contract had been in default since July 1, 1973, the defendants were, in effect, treating this contract as an option contract. They inferred, both in the trial court and in this court, that if this were a true and binding contract, the sellers would have sued Zurliene. We agree with the trial court on this matter. Even though perhaps the sellers could have sued Zurliene, they were not in any way obligated to do so. The State also argues that, under the circumstances herein, there should have been some further showing that the contract represented a legitimate sale. We believe the fact that the purchaser had already paid $10,000 pursuant to this contract serves to emphasize its legitimacy as a contract and not a mere option to buy property. It is also undisputed that the purchaser went into possession, paid taxes on the property, and engaged in other activities indicating she had definite plans to buy and use the property in question. We will discuss those plans in more detail later in this opinion. Thus, we believe that the defense herein did, in fact, make a showing that this was a bona fide contract for sale of the subject property, which would have been performed but for the condemnation.

• 5 There appears to be little law in Illinois dealing directly with the admissibility of evidence of installment sales contracts under circumstances similar to this case. In other jurisdictions, however, evidence of the price fixed in a contract, made in good faith, for the sale of the property being condemned is admissible, regardless of the fact that it is an installment contract (5 Nichols, The Law of Eminent Domain § 21.5 (rev. 3d ed. 1975). Department of Public Works and Buildings v. Kelly (1976), 40 Ill. App.3d 896, 353 N.E.2d 195, involved the installment sale of the remainder of the property being condemned. That case held that the trial court did not abuse its discretion in excluding evidence of the contract in question. It is obvious from the description of the contract given in Kelly, however, that it contained many more provisions than the instant contract, some of which were highly unusual, including the fact that the seller was to remain on the premises without rental payments and that the purchaser had no personal liability on the contract. Department of Public Works and Buildings v. Klehm (1973), 56 Ill.2d 121, 306 N.E.2d 1, involved the sale of the property being condemned under an installment contract. While the exact issue before the court in Klehm was whether the contract constituted a sale for cash or an exchange of property, we note that evidence of the contract was held to be properly admitted. The contractual documents contained a number of rather unique provisions, including specific provisions with regard to what would happen if the property were condemned. In Forest Preserve District v. Barchard (1920), 293 Ill. 556, 563, 127 N.E. 878, 882, which involved installment sales of real estate admitted as comparable sales, the supreme court said:

"This court has held that sales which have been partly on time may be admitted in evidence in order to assist the jury in arriving at the fair cash market value of the land in controversy [citations] but the court said in those cases, that while competent its value as evidence was for the jury, and it is clear under the reasoning of those cases that the actual cash value of the land to be taken is the sole inquiry to be passed upon by the ...


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