STATE v MARSH

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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 ~ecided :JAN 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. s i z e from . 0 4 a c r e t o 113.53 a c r e s . The p a r c e l s r a n g e i n 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 dep r i v e d of t h e u s e o f t h i s l a n d . 198.58 acres. t o 4-1/2 The t o t a l " t a k e " i s t h e r e f o r e 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 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 quest 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 . 198.58 a c r e s a t $800 p e r a c r e . She p l a c e d t h e v a l u e o f t h 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 quest 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 ani 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 presented. Court entered judgment On May 18, 1976, the ~istrict awarding the landowner, Hazel Marsh, $104,726.70. This amount represented the balance of the verdict which she had not previously 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 qualified 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 judgment 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 forming an intelligent and correct judgment * * * beyond 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 knowledge 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 intelligent 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 $150 per day including mileage, Missoula to Philipsburg; preparation of trial exhibits and other matters related to appraisal and testimony at trial .$ 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 ... 3,300.00 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 Raymond Fox TOTAL Attorneyfees . . . . . . . . . . . $2,560.00 . . . . . . . . . . . 642.37 ................ ............... .3,202.37 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. Mont . I v. Putnam (1977), 1247. , P.2d Mont Olson v. Carter (1977), 34 St.Rep. 1539, 1543; Engebretson . , 571 P.2d 368, 34 St.Rep. 1241, 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 attorney 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 demonstrating 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. 1947. Section 93-8619, R.C.M. 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. 93-9913, R.C.M. 1947 (amended 1975). In 1975 the legislature raised the interest rate payable to 10 percent. Ch. 534, S1. Section 1975 Mont. Laws, 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 payable 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 thereafter. 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, (Emp 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 . " t i o n 12-201, R.C.M. 1947. Sec- 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 . ( 1 9 5 3 ) , 127 Mont. 366, 370, 264 P.2d 705. Davidson v. Love 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. Marsh emphasizes, The language which " * * * 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 i n t h e s t a t u t e and was l e f t unchanged. * * *", was a l r e a d y 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 reasonable attorney fees. The cause is remanded to the District Court for further proceedings in accordance with this opinion.

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