On appeal from Superior Court of New Jersey, Law Division, Ocean County.
King, Brody and Landau, JJ. The opinion of the court was delivered by Brody, J.A.D.
Appealing from a judgment based on a jury's condemnation award, the State raises essentially a single argument -- albeit in several contexts. It contends that a trier of fact in a condemnation case may not consider that the property's value is enhanced by the prospect of a zoning change, through ordinance amendment or variance, that would permit a more profitable use, unless the evidence demonstrates that on the date of taking it was more likely than not that such a change would occur. We hold that a property owner's threshold showing is not so high. A jury may consider the prospect of a change in the permitted use if on the date of taking a willing seller and a willing buyer reasonably would have considered the change sufficiently likely that it would affect the selling price.
The State took the property, approximately one acre located in Dover Township, from defendants Frederico and Estrella Caoili (defendants) to improve a major highway with a jughandle turn. The underlying dispute at trial was over the extent, if any, to which the property should be valued for its potential commercial use even though on the taking date it was zoned for only residential use. The State's expert valued the
property at $232,500 for residential use. Defendants' expert valued the property at $445,000 for commercial use. The jury valued the property at $351,000, disclosing by its special verdict that it valued a portion of the property for residential use and valued the rest, which fronts on the highway, to reflect "a potential subdivision of the property to utilize part thereof for a commercial use."
The property is in the shape of an irregular pentagon. The longest side, its 262-foot southerly border, runs along Route 37. Nearby commercial uses along the highway include a gas station and a bank directly across from the property. A large bus garage lies immediately east of the property. The property's westerly and northwesterly borders run along Ramona Lane, a winding street that leads from the highway into a development of 160 single-family homes. Defendants own two of those homes on Ramona Lane, which are located in the northwesterly and northerly portions of their property. The southerly portion of defendants' property serves as the back yards of these two homes. The back yards of several other homes in the development run along the highway west of Ramona Lane. The jury decided that the fair market value of the property would take into account a reasonable probability that despite its placement in a residential zone the undeveloped southerly portion along the highway may be subdivided for commercial use in the near future.
The evidence supports the verdict. It includes the opinion of defendants' expert, the presence of nearby commercial uses along the highway, variances that had been given others along the highway, and the opinion of James Henbest, the Township Deputy Zoning Officer and Assistant Planner. A State's witness, Henbest testified on cross-examination that "the chances are better than 50/50" that a subdivision and a use variance would be granted to permit the highway portion of
the property to be subdivided and used for a "[s]ingle office, small retail outlet."
The State vigorously attacked the relevance and reliability of defendants' evidence. However, whether to admit evidence of value in a condemnation case is "liberally entrusted to the sound discretion of the trial Judge." New Jersey Hwy. Authority v. Rudd, 36 N.J. Super. 1, 3, 114 A.2d 721 (App.Div.1955). The Judge did not abuse that discretion here. Also, although neither party's experts divided the projected uses between residential and commercial, the jury reasonably could have done so by its own appraisal of the evidence aided by its view of the property. It had the authority to "adopt so much of the [expert] testimony as appears sound, reject all of it, or adopt all of it." State v. Vacation Land, Inc., 92 N.J. Super. 471, 478, 224 A.2d 31 (App.Div.1966).
As to the main issue, the State argues that the evidence that Dover would have permitted defendants to use the property for commercial uses was too speculative. It contends that the trial Judge should not have admitted such evidence; if admitted, he should have ruled that it was inadequate to be considered by the jury; and if considered by the jury, he should have instructed the jury that such evidence may not be used to enhance the value of the property unless it is more likely than not that defendants would have received permission to use the property for commercial use.
The State relies on State v. Gorga, 26 N.J. 113, 138 A.2d 833 (1958). The issue there was whether market value as of the date of taking may be affected by the prospect of an amendment to a zoning ordinance. The Court recognized that the probability of a zoning change may or may not be a factor in arriving at market value. On the one hand, the probability could be so strong that a willing buyer and seller would take it into account when arriving at a price. On the other, it could be so ...