No. 13599
IN THE SUPREME COURT OF THE STATE OF MONTANA
1977
THE STATE OF MONTANA, ACTING BY AND THROUGH
THE STATE HIGHWAY COF@TISSION OF THE STATE OF
MONTANA,
Plaintiff and Appellant,
HAZEL MARSH,
Defendant and Respondent.
Appeal from: District Court of the Third Judicial District,
Honorable Robert J. Boyd, Judge presiding.
Counsel of Record:
For Appellant:
Daniel J. Sullivan argued, Helena, Montana
For Respondent:
Mulroney, Delaney, Dalby and Mudd, Missoula, Montana
Dexter L. Delaney argued, Missoula, Montana
submitted: November 30, 1977
:JAN
~ecided 2 0 1970
Mr. J u s t i c e Frank I . Haswell d e l i v e r e d t h e Opinion o f t h e C o u r t .
T h i s i s a n a p p e a l from a judgment r e n d e r e d i n a condemna-
t i o n a c t i o n i n v o l v i n g t h e a c q u i s i t i o n of p r o p e r t y by t h e s t a t e
f o r t h e p u r p o s e o f i n t e r s t a t e highway c o n s t r u c t i o n .
T h i s c a s e came b e f o r e t h i s C o u r t p r e v i o u s l y on a n a p p e a l
b r o u g h t by t h e landowner, Hazel Marsh, from t h e judgment r e n d e r e d
i n t h e o r i g i n a l D i s t r i c t C o u r t t r i a l , S t a t e H y Comm'n v. Marsh
w
( 1 9 7 4 ) , 165 Mont. 198, 527 P.2d 573. I n t h a t c a s e we o r d e r e d a
new t r i a l , h o l d i n g t h a t t h e D i s t r i c t C o u r t committed r e v e r s i b l e
e r r o r i n n o t a l l o w i n g t h e landowner t o e x p r e s s an o p i n i o n on t h e
v a l u e of h e r l a n d .
The l a n d condemned by t h e s t a t e c o n s i s t s of 152.5 a c r e s
i n 13 d i f f e r e n t p a r c e l s of i r r e g u l a r shape. The p a r c e l s r a n g e i n
s i z e from . 0 4 a c r e t o 113.53 a c r e s . A s a r e s u l t of t h e "take",
46.08 o t h e r a c r e s a r e l a n d l o c k e d and t h e landowner i s t o t a l l y de-
p r i v e d of t h e u s e o f t h i s l a n d . The t o t a l " t a k e " i s t h e r e f o r e
198.58 acres. The p a r c e l s o f l a n d t a k e n a r e immediately a d j a c e n t
t o 4-1/2 m i l e s of C l a r k Fork R i v e r f r o n t a g e i n G r a n i t e County,
Montana.
T h i s c a s e was r e t r i e d t o a j u r y i n A p r i l , 1976. At trial
t h e landowner t e s t i f i e d a s t o h e r ownership of t h e l a n d i n ques-
t i o n and t h a t t h e l a n d was b e i n g used a s a c a t t l e r a n c h . She
t e s t i f i e d t h a t h e r r a n c h c o n s i s t e d o f some 7,000 a c r e s o f deeded
land along with 1,860 a c r e s of leased land. The landowner ex-
p r e s s e d h e r f a m i l i a r i t y w i t h t h e b o u n d a r i e s and t e r r a i n o f b o t h
h e r r a n c h i n t o t o and t h e condemned l a n d . She t e s t i f i e d t h a t
t h e p o r t i o n of h e r r a n c h which a b u t s t h e C l a r k Fork R i v e r i s t h e
most v a l u a b l e p o r t i o n b e c a u s e i t c o n t a i n s r i c h c r o p l a n d , w a t e r
f o r h e r l i v e s t o c k , and i n a d d i t i o n , r e c r e a t i o n a l p o t e n t i a l . The
c a r r y i n g c a p a c i t y o f t h e r a n c h was 450 a n i m a l u n i t s p r i o r t o t h e
t a k i n g and a s a d i r e c t r e s u l t of t h e t a k i n g t h e c a p a c i t y h a s been
d e c r e a s e d by a p p r o x i m a t e l y 125 animal u n i t s .
The landowner was a l l o w e d t o t e s t i f y a s t o h e r o p i n i o n
of t h e v a l u e o f t h e t a k e n l a n d . She p l a c e d t h e v a l u e o f t h e
198.58 a c r e s a t $800 p e r a c r e . The r e c o r d c l e a r l y r e f l e c t s
t h a t t h e b a s i s f o r t h i s o p i n i o n was a comparison of h e r l a n d
w i t h l a n d i n v o l v e d i n t h r e e s a l e s o f s m a l l t r a c t s of r i v e r f r o n t -
a g e l o c a t e d i n t h e immediate a r e a . Two of t h e s e t r a c t s were
s o l d f o r r e c r e a t i o n a l u s e s and t h e t h i r d f o r a u s e u n r e l a t e d t o
c a t t l e ranching.
T h e r e a f t e r , t h e l a n d o w n e r ' s a p p r a i s e r , Roy Rodenberger,
t e s t i f i e d t h a t t h e h i g h e s t and b e s t u s e o f t h e p r o p e r t y i n ques-
t i o n was a s a n o p e r a t i n g c a t t l e r a n c h w i t h t h e s t r o n g p o t e n t i a l
f o r r i v e r frontage t r a c t s . Rodenberger v a l u e d t h e p r o p e r t y ac-
c o r d i n g t o " t h e a n i m a l u n i t method". Under t h i s method t h e t o t a l
r a n c h v a l u e was computed by m u l t i p l y i n g t h e market p r i c e p e r an-
i m a l u n i t a s d e r i v e d from s i m i l a r r a n c h o p e r a t i o n s by t h e t o t a l
carrying capacity. The d e c r e a s e i n c a r r y i n g c a p a c i t y d i r e c t l y
a t t r i b u t a b l e t o t h e t a k e , 123 animal u n i t s , was t h e n m u l t i p l i e d
by market v a l u e p e r u n i t i n o r d e r t o d e t e r m i n e t h e l o s s t o t h e
t o t a l r a n c h o p e r a t i o n caused by t h e t a k e .
Rodenberger a l s o t e s t i f i e d a s t o o t h e r s a l e s o f s m a l l
p a r c e l s o f r i v e r f r o n t a g e o f which he was aware. H e compared
t h e p r i c e per acre paid i n the other s a l e s with h i s l o s s per acre
c a l c u l a t e d from t h e a n i m a l u n i t method a s a c r o s s check. The l o s s
p e r a c r e c a l c u l a t e d from t h e animal u n i t method w a s computed by
u s e of t h e f o l l o w i n g f o r m u l a :
animal u n i t s l o s t x v a l u e o f a n animal u n i t
number o f a c r e s t a k e n
A f i g u r e o f $732 p e r a c r e was d e t e r m i n e d by u s e of t h i s f o r m u l a
and Rodenberger t e s t i f i e d t h a t t h i s f i g u r e compared f a i r l y w i t h
t h e amounts p a i d p e r a c r e f o r s i m i l a r p r o p e r t i e s .
On A p r i l 23, 1976, t h e j u r y r e t u r n e d a v e r d i c t f o r t h e
landowner f o r $92,096. The landowner t h e n moved f o r an a d d i t i o n a l
award of $32,312.23 to be included in the judgment. This amount
represented her alleged necessary expenses of litigation. At
the hearing on her motion, the District Court took oral argument
and received various affidavits in support of the expenses she
claimed. The record does not reveal whether oral testimony or
exhibits other than affidavits supporting the expenses were pre-
sented.
On May 18, 1976, the ~istrictCourt entered judgment
awarding the landowner, Hazel Marsh, $104,726.70. This amount
represented the balance of the verdict which she had not prev-
iously withdrawn, plus LO percent interest on that balance from
the date the state took possession of the property in question,
plus $32,312.23 as her necessary expenses of litigation. The
state appeals.
Four issues are before this Court on appeal:
1. Whether the District Court erred in refusing to strike
the landowner's appraisal when said appraisal was based on a
valuation derived from the sale of three small tracts of land
whose use was different than that of landowner's ranch?
2. Whether the District Court erred in admitting the
testimony of Rodenberger, the landowner's appraiser, relative to
the valuation of the landowner's property for a recreational use
in small tracts rather than as a whole?
3. Whether the District Court erred in allowing the
landowner her necessary expenses of litigation based on a record
which did not include oral testimony nor exhibits other than the
affidavits presented here?
4. Whether the District Court properly computed the rate
of interest to be paid upon the judgment?
Both parties agree that State v. Marsh, supra, and the
cases cited therein are controlling in the resolution of appellant's
first issue. In Marsh, quoting in part from Alexander v. State
(1963), 142 Mont. 93, 110, 381 P.2d 780, we stated:
"'We now restate the rule to be that an owner,
upon prima facie proof of ownership, shall be
qualified to estimate in a reasonable way the
value of his property for the use to which he
has been putting it. Such owner is not quali-
fied by virtue of ownership alone to testify as
to its value for other purposes unless he possess,
as any other witness as to value, "some peculiar
means of forming an intelligent and correct judg-
ment as to the value of the property in question
beyond what is presumed to be possessed by men
generally"'.
"It should be noted that as stated, this basic
landowner-witness rule consists of two parts:
"(1) The landowner on prima facie showing of
ownership may testify as to value so long as:
"(a) His testimony is 'reasonable', and
" (b) The value testified to is for the uses to
which he is putting the land.
"(2) However, if the landowner desires to testify
as to value 'as to other purposes', then:
"(a) We must have 'some peculiar means of form-
ing an intelligent and correct judgment * * * be-
yond what is presumed to be possessed by men
generally. ' " 165 Mont. 203.
See also: Alexander v. State Highway Commission, supra;
Rauser v. Toston Irrigation District (1977), Mont . , 565
The state contends that the landowner has a qualified
right to express an opinion as to the value of her property for
the purpose to which the property is being used. The state,
however, argues that here the landowner lacks the requisite know-
ledge to enable her to testify as to the value of her land for
purposes other than the purpose for which it is being used. We
disagree.
The landowner had lived on the ranch in question for a
number of years. She was well aware of the recreational amenities
of her Clark Fork River frontage. She carefully studied two
sales of small tracts of property for recreational purposes in
the area. She participated in the third sale which she used as
a basis for her opinion. The sum total of these facts certainly
bestowed upon the landowner herein a means of forming an in-
telligent and correct judgment of the value of her land beyond
what is possessed by men generally.
In the second issue the state urges that the District
Court erred in allowing the landowner's expert, Roy Rodenberqer,
to check his animal unit valuation of the ranch with the price
per acre paid for various small tracts of recreational property.
The basis for this contention is an argument that the property's
highest and best use was for a cattle ranch and testimony as to
recreational purposes was not admissible. Such is not the case.
Rodenberger testified on two occasions that the highest and best
use of the property was as an operating cattle ranch with a strong
potential for river frontage tracts. The District Court, in the
exercise of its discretion, chose to admit such evidence and we
find no reason to overturn its decision.
Appellant's third issue concerns the District Court's
award of necessary expenses of litigation. After the verdict,
the landowner filed a "Motion for Award of Necessary Expenses
of Litigation and Memorandum of Costs and Disbursements" and a
"blotion for Award of Necessary Expenses of Litigation and Motion
for Judgment for Final Order of Condemnation".
The necessary expenses the landowner claimed were:
Appraisal fee of expert appraiser Roy Rodenberger
for appraisal and attendance at five days of
trial in the above captioned action at $150 per
day including mileage, Missoula to Philipsburg;
preparation of trial exhibits and other matters
related to appraisal and testimony at trial ... .$ 3,300.00
Expert witness fee of James Lackman for testimony
at trial and in preparation for trial testimony ... 400.00
Expert witness fee of Hank Deschenes for testimony
at trial and in preparation for trial testimony ... 400.00
Aerial photographs, Scott Brown Photography ...... 562.70
Evergreen Air Service incident to taking
aerial photographs .................. 66.00
Appellate costs in State vs. Marsh, including
preparation of transcript, printing of brief,
and attorney fees incurred by Defendant to
Wade Dahood . . . . . . . . . . . . $2,560.00
Raymond Fox . . . . . . . . . . . . 642.37
TOTAL .... ................ .3,202.37
Attorneyfees .... ............... 24,138.16
Motel charges, meals and mileage incurred by
Dexter L. Delaney in pretrial preparation
during the period of the trial . . . . . . . . . . . . 243.00
TOTAL $32,312.23
In support of these motions the landowner's attorney
filed an affidavit justifying the expenditures. Regarding the
attorney fees, affiant stated that the claim represented the
amount the landowner owed her attorney under a contingent fee
contract in which the landowner's attorneys were to receive
33-1/3 percent of the difference between the verdict received in
the previous trial of this cause ($52,000) and the net judgment
including interest recovered by the landowner in the new trial.
In addition, the landowner filed affidavits from three other
attorneys experienced in condemnation litigation who stated that
the 33-1/3 percent contingent fee contract that the landowner
had with her attorneys was the standard fee arrangement in
condemnation cases.
The District Court allowed the landowner the full
$32,312.23 as her necessary expenses of litigation.
The state contends that affidavits justifying these
expenditures are not sufficient to support their award, but
that such an award must be based on other evidence. The land-
owner contends that because the record does not reveal whether
oral testimony or exhibits other than these affidavits were
presented, the award of her necessary expenses of litigation
must stand.
We have previously considered what kind of evidence
must be introduced to support an award of attorney fees.
First Security Bank v. Tholkes (1976), 169 Mont. 422, 547 P.2d
1328, 1332, 33 St. Rep. 341; Crncevich v. Georgetown Recreation
Corp. (1975), 168 Mont. 113, 119-20, 541 P.2d 56, 59. The
reasonableness of the attorney fee claimed must be shown by
evidence. Rauser v. Toston Irrigation District, Supra. A
contingent fee contract is not controlling in demonstrating the
reasonableness of an attorney fee. Olson v. Carter (1977),
Mont .
I -P.2d , 34 St.Rep. 1539, 1543; Engebretson
v. Putnam (1977), Mont . , 571 P.2d 368, 34 St.Rep. 1241,
1247. An award of attorney fees must be based on a hearing
allowing for oral testimony, the introduction of exhibits, and
an opportunity to cross-examine in which the reasonableness of
the attorney fees claimed is demonstrated. Such an award may
not be based solely on a contingent fee contract between at-
torney and client.
In eminent domain proceedings in which contingent fee
contracts are entered into after July 1, 1977, we note that the
1977 legislature specifically provided reasonable and necessary
attorney fees shall be determined on the basis of evidence dem-
onstrating the customary hourly rate for an attorney's services
in the county in which the trial is held and not on the basis
of the contingent fee contract. 1977 Mont. Laws, Ch. 48, S1
(codified at section 93-9921.2, R.C.M. 1947) .
The state argues that we should extend these require-
ments to the other items claimed as necessary expenses of
litigation. A statutory procedure for such a hearing which
allows for taking of oral testimony, introduction of exhibits,
and cross-examination already exists. Section 93-8619, R.C.M.
1947.
Appellant's final issue concerns the District Court's
award of 10 percent interest per annum on the condemnation award.
The state initially filed this condemnation suit on April 29,
1968, and took possession of the property in question some
time after that.
From that time until July 1, 1975, condemnation awards
drew "lawful interest" (6 percent) from the date on which the
property owner surrendered possession of the property. Section
93-9913, R.C.M. 1947 (amended 1975). In 1975 the legislature
raised the interest rate payable to 10 percent. 1975 Mont. Laws,
Ch. 534, S1. The jury in Marsh's new trial rendered a verdict
after the effective date of this amendment.
The state contends that the proper rate of interest pay-
able in this case is 6 percent for the whole period in question
and cites in its support the Louisiana case of Long Leaf Lumber,
Inc. v. Svolos (1972), La.App., 258 So.2d 121. It points out,
however, that New York cases hold that the old interest rate
applies up to the date of amendment and the new interest rate
applies from that time onward. Board of Education v. Sapsin
(1970), 35 A.D.2d 973, 317 N.Y.S.2d 918; In Re Incorporated Vil-
lage of Hempstead (1970), 33 A.D.2d 1036, 308 N.Y.S.2d 798.
Marsh contends that the amendment of the statute should
be applied retroactively in her case and that the proper interest
rate payable is 10 percent from the date the state took possession
of her property.
In our view it is more equitable to apply the 6 percent
interest rate up to the effective date of the amendment and to
apply the 10 percent interest rate from the effective date there-
after. We are supported by the early Montana case of Stanford V.
Coram (1903), 28 Mont. 288, 293-94, 72 P. 655. In Stanford the
interest rate payable on judgments received prior to 1899 was
1 0 percent. I n 1899 t h e l e g i s l a t u r e d e c r e a s e d t h e i n t e r e s t r a t e
payable t o 8 percent. The S t a n f o r d c o u r t h e l d t h e r a t e o f i n t e r -
e s t p a y a b l e was 1 0 p e r c e n t up t o t h e d a t e o f amendment and 8 p e r -
cent thereafter. When i n t e r e s t i s a l l o w e d by s t a t u t e , i t i s
g i v e n a s damages f o r d e l a y i n payment of t h e p r i n c i p a l o b l i g a -
tion. Although t h e l e g i s l a t u r e c a n change t h i s measure of
damages, t h e r a t e o f i n t e r e s t p a y a b l e s h o u l d be t h a t r a t e c u r r e n t
i n t h e p e r i o d s d u r i n g which t h e d e l a y i n payment h a s o c c u r r e d .
S t a n f o r d v . Coram, s u p r a ; P e o p l e v. Sexton ( 1 9 4 0 ) , 284 N . Y . 57,
Marsh a r g u e s t h a t a l t h o u g h amendments t o s t a t u t e s u s u a l l y
a p p l y o n l y p r o s p e c t i v e l y , t h e l e g i s l a t u r e i n amending s e c t i o n
93-9913 i n t e n d e d t h e 1 0 p e r c e n t i n t e r e s t r a t e t o be r e t r o a c t i v e .
She p o i n t s t o t h e f o l l o w i n g s t a t u t o r y l a n g u a g e a s e v i d e n c i n g t h a t
intent:
" * * * t h e f u l l amount f i n a l l y awarded s h a l l
draw i n t e r e s t a t t h e r a t e o f t e n p e r c e n t ( 1 0 % )
p e r annum from t h e d a t e on which t h e p r o p e r t y
owner s u r r e n d e r s p o s s e s s i o n o f t h e p r o p e r t y
* * *." S e c t i o n 93-9913, R.C.M. 1947, (Em-
p h a s i s s u p p l i e d by Marsh.)
"No law c o n t a i n e d i n any o f t h e c o d e s o r o t h e r s t a t u t e s
o f Montana i s r e t r o a c t i v e u n l e s s e x p r e s s l y s o d e c l a r e d . " Sec-
t i o n 12-201, R.C.M. 1947. Although a s t a t u t e need n o t s a y " t h i s
s t a t u t e s h a l l be r e t r o a c t i v e " , t h e i n t e n t t h a t i t o p e r a t e r e t r o -
a c t i v e l y must be e x p r e s s e d and u n m i s t a k a b l e . Davidson v. Love
( 1 9 5 3 ) , 127 Mont. 366, 370, 264 P.2d 705. That unmistakable
i n t e n t does not e x i s t here.
The 1975 amendment t o s e c t i o n 93-9913 merely s u b s t i t u t e d
" i n t e r e s t a t t h e r a t e o f t e n p e r c e n t p e r annum" f o r " l a w f u l
interest". 1975 Mont. Laws, Ch. 534, 81. The language which
Marsh emphasizes, " * * * from t h e d a t e on which t h e p r o p e r t y
owner s u r r e n d e r s p o s s e s s i o n o f t h e p r o p e r t y * * *", was a l r e a d y
i n t h e s t a t u t e and was l e f t unchanged. W e do n o t t h i n k t h i s
amendment demonstrates unmistakable intent that the 10 percent
interest rate apply to periods before July 1, 1975.
This case must, therefore, be remanded to determine the
proper amount of interest due applying the 6 percent interest
rate from the date the state took possession of the property up
to the effective date of the 1975 amendment and applying the 10
percent interest rate thereafter and for determination of reason-
able attorney fees.
The cause is remanded to the District Court for further
proceedings in accordance with this opinion.