The Commonwealth seeks under G.L.c. 79 the assessment of damages caused by the Authority's eminent domain taking of premises formerly occupied by the Irvington Street armory in Boston. In Commonwealth v. Massachusetts Turnpike Authy. 349 Mass. 1, decided April 6, 1965, we held that the Authority was bound to pay damages to the Commonwealth for taking the locus, thus placing the burden of its acquisition for road purposes upon the portion of the public using the toll turnpike rather than upon the general body of taxpayers.
This land area of 62,356 square feet, covered almost entirely by the armory, was taken on May 29, 1962. The armory was an "old castle-fortress type" brick building, with granite trim, built in 1889 or 1890 for the use of twelve to fifteen units of militia. Part of the structure was three stories in height. Part of it was a large drill hall, 298 feet long and 130 feet wide. The building was in 1962 "the oldest armory in use in" Massachusetts.
Four units, with a combined strength of 314 men, were using the armory in 1962. There were also nonmilitary uses.
Armories "are not commonly bought and sold." One witness, however, had participated in the sale of a smaller old fortress type armory in Cambridge to Massachusetts Institute of Technology (M.I.T.) which could have been found to have been made in an effort to cooperate in expanding M.I.T.'s accommodations for students and research. Another old armory was given to the city of Brockton for school purposes when a new armory was built. An armory in Boston on East Newton Street was transferred to the State Department of Mental Health in 1963.
Subject to the Authority's exception, an expert engineer testified that the 1962 cost of reproducing the armory as new, apart from land, was $2,431,196, and that the amount of physical depreciation (exclusive of obsolescence) was $1,107,064. In his opinion the armory was a special purpose building because of its armory design, its massiveness, and the great size of the drill shed.
We have before us the Authority's exceptions (a) to the admission of evidence of the adjusted reproduction cost of the armory structure, (b) to the exclusion of testimony sought from expert witnesses, and (c) to the trial judge's refusal to give requested instructions.
1. The taking involved premises used mainly for special public or quasi-public purposes and incidentally for other collateral or subsidiary special activities. The problem of proving the extent of the damage was particularly difficult because, over the years, changes in military practices had made the armory less and less well adapted for its principal use. It was, however, still usable and useful in the absence of more modern facilities.
The evidence, including photographs of the locus as it was at the time of the taking, tends to support the Commonwealth's view that the armory was a "special use" or service-type property (see fn. 2). Although the building could be used incidentally for public events, athletic contests, and certain trade and social affairs, the jury could reasonably conclude that it was not primarily designed for these purposes; that such a building would not be offered for sale or have any general market; that the most valuable use of the structure was as an armory; and that its value for incidental activity was less than its residual value to the Commonwealth during the armory's remaining useful life as public property to be employed as an armory and for related public purposes.
In Newton Girl Scout Council, Inc. v. Massachusetts Turnpike Authy. 335 Mass. 189, we recognized (pp. 194-195) that for a special purpose property (developed for the particular needs of a nonprofit, charitable, or religious organization) there will generally not be an active market and that its fair value cannot readily "be shown by sales of nearby comparable property." We said that "to reach a just result when such a property is taken by eminent domain ... much greater flexibility in the presentation of evidence" is essential than "in the case of properties having more conventional uses," and that, as to such properties, "the cost of land plus the reproduction cost (less depreciation where appropriate) of improvements may be more relevant than in the ordinary case."
The same principles which are applicable to nonprofit agencies also apply, in general, to special purpose buildings owned by the State, public agencies, or public utilities, where the evidence warrants the conclusion that the real value of a property taken by eminent domain cannot be shown by a sequence of sales of similarly used properties,
2. The Authority's principal exceptions relate to the propriety of considering, as a guide to value, evidence of the 1962 reproduction cost of the armory building with adjustments to reflect depreciation and obsolescence. As we have already indicated, such evidence may be received (to be given appropriate weight with other evidence) with respect to takings of special purpose properties of public or nonprofit owners, where reproduction of essentially the same type of structure at the same site or elsewhere would be reasonable in the event of its destruction or taking. See Assessors of Quincy v. Boston Consol. Gas Co. 309 Mass. 60, 66; the Newton Girl Scout Council, Inc. case, 335 Mass. 189, 195.
There is danger, of course, that evidence of reproduction cost (even if it purports to be fairly adjusted) may lead to "an excessive award unless it is [in fact] adequately discounted for obsolescence and inadequacy as well as for physical depreciation" (emphasis supplied). See Orgel, Valuation under Eminent Domain (2d ed.) § 199, and also §§ 188-198. In the Newton Girl Scout Council, Inc. case, 335 Mass. 189, the structures taken remained reasonably well adapted to the special purposes for which they were employed. They had not been shown to be in such condition as to make reproduction unlikely or imprudent. Accordingly,
A different situation exists, however, where special purpose structures are very greatly out of date, are no longer well fitted to their particular use, and would not be reproduced by any prudent owner. In such a case, evidence of adjusted reproduction cost will be irrelevant, for it is difficult, even for an expert, to estimate suitable allowances for physical depreciation and obsolescence of such an obsolete structure. See United States v. Benning Housing Corp. 276 F.2d 248, 253 (5th Cir.); Buena Vista Homes, Inc. v. United States, 281 F.2d 476, 477-478 (10th Cir.); United States v. Certain Interests, 296 F.2d 264, 270 (4th Cir.). See also United States v. Toronto, H. & B. Nav. Co. 338 U.S. 396, 403; United States v. 25.4 Acres of Land, 65 F.Supp. 333, 337 (E.D.N. Y.); Salzberg v. State, 24 App. Div.2d (N.Y.) 664, 665 (no useful value left). See also Nichols, Eminent Domain (Rev.3d ed.) §§ 15.43, 20.2. Cf. Fairfield Gardens, Inc. v. United States, 306 F.2d 167, 173-174 (9th Cir.). The present record shows that evidence of the 1962 reproduction value of this obsolete armory had slight, if any, relevance in determining its value to the Commonwealth or to any other person. Even after a careful attempt to adjust the reproduction cost figures sufficiently for obsolescence, the result would be likely to confuse the jury. In the circumstances, admission of this evidence was prejudicial error.
3. Even when a structure taken by eminent domain, because obsolete at the time of the taking, would not be reproduced, it may still be useful and usable by its owner for
If the armory had not been taken, the Commonwealth for a period of time could have postponed replacing the armory by a more modern structure. This (if done reasonably economically) clearly would have cost less than rebuilding the old armory. There was evidence of the cost of such an economical replacement (see fn. 4). The Commonwealth, by the taking, lost not only the value of its land but also the value to it of being able to postpone expenditure for a new structure. The value of that possibility of postponement (that is, the fair value of having available the old structure or a reasonable replacement structure during the useful life of the old armory remaining after 1962) is susceptible, we think, of measurement by some appropriate actuarial computation of the monetary loss to the Commonwealth caused by the destruction of its opportunity to postpone the expenditure (e.g. the present value of the interest upon the investment in, and the depreciation upon, a reasonable replacement structure during the remaining useful life of the old structure).
Any expert appraiser's opinion of the residual value of such a building will be expressed as an amount based on his judgment and experience, but he will naturally need to use (to assist him in his judgment) one or more reasonable methods of computing residual value or fair rental value of the same structure or a reasonable replacement of it for the
KIRK, J. (concurring in result)
For the reasons stated by the majority I agree that the exceptions should be sustained. The cost in 1962 of reproducing a structure erected in 1889, which admittedly never would be reproduced, is obviously irrelevant and confusing as a factor in determining the damages sustained by the taking.
The majority suggest, however, that the cost of a suitable replacement structure may be considered by an expert in forming an opinion of the residual value of the old armory. This, it seems to me, would be equally irrelevant and confusing. The Commonwealth's evidence shows that a suitable replacement, which would necessarily require a different locus, would involve the construction of a modern school-type building with gymnasium, a parking area (for military and civilian vehicles), a helicopter landing area
Expert opinion testimony doubtless will be necessary to establish the fair market value of the property at the time of the taking. Although the admissible range of supporting data for the expert's opinion rests mainly in the discretion of the judge, it should not, I submit, extend to the estimated cost of a replacement structure.
Real Estate Appraiser Real Estate Appraiser Real Estate Appraiser No. 1 No. 2 No. 3 ___________________________ ______________________ _____________________ (Called by the Commonwealth) (Called by the Authority)
Building Building$100,000 Building$115,000 Reproduction $2,431,196 cost Physical 1,107,064 depreciation __________ $1,324,132 __________ Depreciated reproduction cost (including obolescence - economic and functional) $1,000,000 Land Land LandArea 62,356 at At $2 per $3.20 per sq. 200,000 sq. ft. 125,000 125,000 ft. __________ ________ ________ Total value $1,200,000 $225,000 $240,000