Before GOODRICH and McLAUGHLIN, Circuit Judges, and KALODNER, District Judge.
McLAUGHLIN, Circuit Judge.
The property concerned in this condemnation matter is located in the City of Philadelphia. A board of view had previously reported that the owner had sustained damages of $24,808. Both sides then appealed to the District Court from that finding. The District Court trial resulted in a verdict in favor of the owner in the sum of $40,000. Two points are made by the appellant, namely:
1. Whether the District Court erred in refusing to strike the testimony of the landowner's expert real estate witnesses, Messrs. Phillips and Tomlinson, as to the value of the land condemned.
2. Whether there was error in sustaining objections to questions put to the same two witnesses on cross examination, by counsel for the government.
The case turns on the government's motion to strike out the entire testimony of Tomlinson, a witness for the landowner. Tomlinson qualified as a real estate expert with knowledge of the particular locality. On direct testimony he said that he based his opinion of the market value of the tract on: examination of the property, its location, description, the surrounding neighborhood, the street improvements, the uses the land could be put to, its most profitable use (which he thought would be for residences) and other sales in the immediate neighborhood. He thought $51,000 was the market value of the land as of April 21, 1941.
On cross examination, asked how he arrived at that estimate, he stated: "I took the value of so much an acre." Counsel pressed the witness in an endeavor to show that his basis of the valuation was a plan of development, the erection of houses and the subdivision into lots. The witness said, "Naturally in order to set a value on a piece of land, you consider what its best uses are, and I considered the best uses of the ground was for the erection of dwellings, and it is easy enough to ascertain how many dwellings could be built upon the ground." He then explained how he thought a builder would divide the land into lots. Following that, on cross examination he was asked: "Q. Without taking that into consideration you would not have a solid basis for your estimate of value, would you, Mr. Tomlinson?" He explained that "* * * you just can't go look at a piece of land and glance over it and say 'That is worth so much money.' That would be like skylarking or window gazing, or something of the kind. You have got to really give some thought as to what you could do with a piece of land, whether it is an industrial piece of land or a residential piece of land; and I considered in this case that here was a block of land developed up to it, where you would build dwellings upon it." He went on to elaborate on its residential facilities. Following this, still on cross examination, he was asked: "And in your mind, Mr. Tomlinson, you made a calculation of how many lots and how many houses could be built, and you also calculated what their cost per lot was?" This was objected to. The Court allowed the question, saying: "I think I will overrule the objections, but I want to caution the jury that when you come to determine the amount of money to which this plaintiff is entitled, you will determine what you think, from all the testimony in the case, is the fair value of the whole tract, and you will not consider any dividing of the tract into lots or the building of houses. You are to determine what the value of the whole tract is. However, I will overrule the objection at this time and allow this line of testimony only to test the witness as to how he arrived at his figure, but I am cautioning the jury that when you come to figure and estimate what the verdict should be, you are to find the value of the whole tract, and I am allowing this line of questioning now only to test the witness in what manner he arrived at his estimate."
The witness answered that he would consider the lots in present condition and with necessary future street improvements to be worth $50 a front foot with 1,600 feet of frontage. He testified further along this line by stating what he thought a builder would do with the property. The government then moved to strike out the entire testimony of the witness on the ground that the "estimated value given by this witness was based upon the subdivision of this land into building lots." The motion was denied.
There is no conflict here between Federal and State law such as arose in United States v. Certain Parcels of Land and Wainwright, 3 Cir., 144 F.2d 626. Both the Federal and Pennsylvania decisions are in accord, that in arriving at market value, the highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future, is to be considered; and that speculative or conjectural use is to be excluded. Olson v. United States, 292 U.S. 246, 54 S. Ct. 704, 78 L. Ed. 1236; Moudy Mfg. Co. v. Pennsylvania R. Co., 215 Pa. 110, 64 A. 373. In Pennsylvania S.V.R. Co. v. Cleary, 125 Pa. 442, 17 A. 468, 11 Am.St.Rep. 913, the Trial Judge had permitted testimony of subdivision into lots to go to the jury on the question of valuation. The Supreme Court said as to this, 125 Pa. at page 452, 17 A. at page 470:
"The learned judge intended to guard this point in his charge to the jury, yet he seems to have left a question to the jury with which they had nothing to do. * * *
"We do not agree with the learned judge that there was any such question for the jury in this case. The jury are to value the tract of land and that only. They are not to determine how it could best be divided into building lots, nor conjecture how fast they could be sold, not at what price per lot. A speculator or investor, in deciding what price he could afford to pay, would consider the chances and probabilities of the situation as then actually existing. A jury should do the same thing. They are not to inquire what a speculator might be able to realize out of a resale in the future, but what a present purchaser would be willing to pay for it in the condition it is now in. This is a rule that is well settled, and the court should have drawn the attention of the jury to it, so as to have left no room for uncertainty on their part. They should have been told that they had nothing to do with the subdivision of this tract, the price of the lots, or the probability of their sale; but that they were to ascertain the fair selling value of the land before and after the entry by the railroad company, in order to determine the actual damage done to its owner."
In Hamory v. Pennsylvania, etc., R. Co., 222 Pa. 631, 72 A. 227, a witness concededly had made up his estimate of what that property was worth just before the railroad was located, by estimating what it would bring if it had been laid out in building lots and all of the lots had been sold at what he thought lots were worth there. The Supreme Court upheld the exclusion of the testimony because the witness's method of estimating the market value was improper. In Kleppner v. Pittsburgh, etc., R. Co., 247 Pa. 605, 93 A. 765, the estimates of the amount of damages were also made up by dividing the land into lots and fixing the price on which they would sell. The Court held that such testimony should have been stricken out. In Rothenberger v. Reading City, 296 Pa. 423, 146 A. 104, the exclusion from evidence of a plan for subdivision was upheld.
Under the Cleary case, a jury is not allowed to pass upon evidence which speculatively subdivides a tract into lots, with the estimate in reality being the total of the assumed value of the lots. Under the Hamory and Kleppner cases, estimates based solely upon subdivided figures are excluded. Neither situation appears in the instant matter. Tomlinson's testimony was allowed solely for the purpose of seeing how he arrived at his figure and the jury was expressly cautioned that testimony as to subdivision into lots was not to be considered by them in determining the amount to which plaintiff was entitled. Later, in the charge, the Court further emphasized this, saying: "On cross examination witnesses on both sides were permitted by the Court to be examined concerning the development for which the property is adapted. This, of course, was to bring out the testimony as to what this land is best adapted for, but it was also permitted to see if any witness based his estimate on the entire tract exclusively on a basis of individual lots or houses, and if so, his estimate would have to be excluded from the jury; but all the witnesses on both sides testified that their estimates were based on other proper factors, and for that reason the estimates of the four witnesses will all be submitted for your consideration, but let me again caution you that you are to value the tract of land as of April 21, 1941, and that only. You are not to determine how it could best be divided into building lots, nor conjecture how fast they could be sold, nor at what price per lot. You should not inquire what a speculator might be able to realize out of a resale in the future, but you should consider what a purchaser would have been willing to pay for it on April 21, 1941, in the condition it was then in."
The testimony as to lot value was developed at the insistence of the government on cross examination, in the hope or expectation that it would eventually appear as the basis for Tomlinson's estimate. It was permitted, only after repeated objections by counsel for the owner. While the record shows that such lot value was considered by Tomlinson, it does not appear that it was the sole or decisive factor in the formation of his opinion as to market value. In his testimony above referred to, he named a number of other substantial reasons on which he founded his judgment. The questionable evidence as to subdivision into lots, and the value of the latter, might well have been stricken by the Trial Judge on proper motion under the Hamory and Kleppner cases but such motion was never made. The only application was to strike out the entire testimony. This was too broad in scope. We think that in denying the motion as made and instructing the jury as he did, the District Judge disposed of the matter fairly to both sides and in accordance with the legal situation then arising. The decisions support this view. In Wilson v. Equitable Gas Co., 152 Pa. 566, 25 A. 635, a condemnation matter, a number of witnesses testified to the value of the farm in question, before the location of a certain pipe line, and after basing their opinion on cross examination on its division into building lots. This division had never actually been made on the ground but was merely plotted on paper and did not correspond with the street as laid out. The pipe line was laid along Spencer Avenue, a street laid out by the City of Pittsburgh across the farm but never opened. Upon the conclusion of the cross examination of each witness, motion was made to strike out the testimony on the ground that the estimate of damage was based upon a subdivision of the property into lots and the effect the construction of the pipe line would have upon the lots in the subdivision of the property; and also, that the streets are to be laid out over the property differently from those located by the city authorities. The motion was denied. The trial thereafter resulted in a verdict and judgment in favor of the plaintiff owner. On appeal, the appellant urged that under the Clearly decision, supra, the Trial Court had erred in refusing to strike the above mentioned testimony. In affirming the judgment, the Supreme Court said, 152 Pa. at page 570, 25 A. at page 636, after citing cases: "In view of these authorities, and especially in view of the fact that the corporation defendant was endeavoring to limit the inquiry to the value of the land as a farm, we think it was competent for the plaintiff to show that a portion of it was ripe for building improvements, or for any other purpose that enhanced its value. The plaintiff's witnesses having testified in chief that the property as a whole was injured in amounts varying from three to eight thousand dollars, we do not think it affected the competency of their testimony that upon their cross-examination it ...