On certification to the Superior Court, Appellate Division, whose opinion is reprinted at 164 N.J. Super. 127 (1978).
For affirmance -- Chief Justice Wilentz, and Justices Sullivan, Clifford, Schreiber, Handler and Pollock. For reversal -- Justice Pashman. Schreiber, J., concurring. Pashman, J., dissenting. Schreiber, J., concurring in result.
In this condemnation case the trial court, sitting without a jury, awarded defendant property owners $178,160, with interest, for their land. On appeal defendants alleged error in the admission of testimony by plaintiff's real estate valuation expert, where one of the comparable sales relied upon by the expert for his valuation of the property was verified as to price only by inquiry of the attorney in the transaction and not of a principal or broker as provided by N.J.S.A. 2A:83-1. The Appellate Division affirmed the judgment, 164 N.J. Super. 127 (1978). We granted certification, 81 N.J. 41 (1979), to address this issue: whether a real estate appraiser may base his ultimate opinion on hearsay evidence obtained from an attorney.
One method of demonstrating the fair market value of property for "just compensation" purposes is by proof of comparable sales. Long Dock Co. v. State Bd. of Assessors, 89 N.J.L. 108 (Sup.Ct.1916), aff'd, 90 N.J.L. 701 (E. & A.1917). See generally Payne, "A Survey of New Jersey Eminent Domain Law," 30 Rutgers L.Rev. 1111, 1134 (1977).
Proof of prior comparable sales is generally garnered from the testimony of an expert witness, Rockland Electric Co. v. Bolo Corp., 66 N.J. Super. 171 (App.Div.1961), although expert
knowledge may not be required if the witness is otherwise competent and qualified to testify. White v. State Board of Tax Appeals, 123 N.J.L. 350 (Sup.Ct.1939). The general rule is that
[t]he supporting data testified to by the opinion witness must be relevant and competent although the use of hearsay, in and of itself, is not sufficient to condemn the competency of the opinion, especially where the witness shows that his own knowledge and experience require agreement with such hearsay evidence. The fact that certain elements are not independently admissible in evidence, however, does not bar their consideration by an expert witness in reaching an opinion. [ Nichols' Law of Eminent Domain (3rd ed. 1979) § 18.42 at 18.254 to .262 (footnotes omitted).]
To facilitate the admission of such testimony, the legislature enacted the following statute:
In any action or proceeding for the acquisition or sale of land, or any interest or interests therein, or on review of the assessment for taxes of any real property, any person offered as a witness in any such action or proceeding shall be competent to testify as to sales of comparable land, contiguous or adjacent to the land in question, or in the vicinity or locality thereof, from information or knowledge of such sales, obtained from the owner, seller, purchaser, lessee or occupant of such comparable land, or from information obtained from the broker or brokers who negotiated or who are familiar with or cognizant of such sales, which testimony when so offered, shall be competent and admissible evidence in any such action or proceeding.
This section shall not be construed to apply to any action or proceeding instituted by any individual or private corporation authorized to take property for public use where compensation must first be made to the owner thereof. [ N.J.S.A. 2A:83-1.]
The primary intent of the legislature was to overcome problems created by Essex County Park Commission v. Brokaw, 107 N.J.L. 110 (E. & A.1930), which held that only those persons who had personal knowledge of sales of comparable property could testify to the value of such sales. Assembly Statement to L. 1931, c. 229.
Courts have correctly questioned the Brokaw decision and regarded it as "a dead letter" since the enactment of N.J.S.A. 2A:83-1. See, e.g., New Jersey Sports and Exposition Authority v. Kozoil, 172 N.J. Super. 219 (App.Div.), certif. den., 82 N.J. 287 (1980); Rockland Electric Co. v. Bolo Corp., supra, 66 N.J. Super. at 178. The "obvious intent" of that statute was "to abolish the hearsay rule in cases within the purview of the statute * * * ...