PEOPLE DEPARTMENT OF PUBLIC WORKS v. FORSTER

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District Court of Appeal, Fourth District, California.

The PEOPLE of the State of California, acting by and through the DEPARTMENT OF PUBLIC WORKS, Plaintiff and Appellant, v. Hugo A. FORSTER et al., Defendants and Respondents.*

Civ. 6825.

Decided: January 22, 1962

George C. Hadley, San Diego, Richard L. Franck, Thomas M. Dankert, Charles E. Spencer, Jr., Los Angeles, for appellant. John W. Solomon, Laguna Beach, Holbrook, Tarr & O'Neill, Los Angeles, for respondents.

Facts

Plaintiff seeks to acquire for highway purposes a strip of land totalling 96.551 acres, which is a part of a tract of 2,948 acres belonging to defendants. It is located near the town of San Clemente in Orange County. Plaintiff filed this action March 15, 1957. The action was originally tried in 1959 and a judgment awarding defendants $77,240.80 as the value of the parcel taken and $25,660 severance damage, or a total of $102,900.80, was rendered. Retrial was ordered and the present trial resulted in a judgment awarding defendants $333,100 as the value of the parcel taken and $30,000 severance damage, or a total of $363,100 resulted. Plaintiff appeals.

Offer of Compromise

Plaintiff's primary contention is that the trial court erred in admitting in evidence over plaintiff's objection an offer of compromise made by plaintiff's agent to defendants during negotiations prior to trial. The portion of this offer with which we are here concerned reads as follows:

‘This is a confirmation of a telephone call I had with you on September 5, 1958. The State hereby offers you the sum of $218,000.00 for land and damages. This amount is a compromise figure based on the market value of the parcel as set out in the above mentioned suit. This offer shall continue in effect until 4:30 p. m. on September 17, 1958, and if not accepted on or before said date, this offer shall be considered to be officially revoked.’

The rule that offers of compromise are not receivable in evidence as such is conceded by both parties. This rule springs from a uniform policy of encouraging settlements. (Potter v. Pacific Coast Lumber Co., 37 Cal.2d 592, 602[12], 234 P.2d 16.) Its fundamental purpose and underlying spirit is to allow a litigant to ‘buy his peace,’ and to make offers for that purpose without fear that such an offer of compromise settlement will be used against him if the offer is not accepted. (Wigmore on Evidence, Volume I, section 1061; 31 C.J.S. Evidence § 285, p. 1028; Rose v. Rose, 112 Cal. 341, 344, 44 P. 658; Estate of Johanson, 62 Cal.App.2d 41, 56[20, 21], 144 P.2d 72; Store of Happiness v. Carmona & Allen, 152 Cal.App.2d 266, 273[7], 312 P.2d 1104; Anderson v. Yousem, 177 Cal.App.2d 135, 144[9], 1 Cal.Rptr. 889.)

However, defendants contend that the words, ‘This amount is a compromise figure based on the market value of the parcel as set out in the above mentioned suit,’ constitutes an admission of a fact separate and apart from the offer of compromise. Again, both parties concede the rule that an admission of fact contained in but separable from the offer of compromise is receivable in evidence if it is otherwise relevant and competent. (Rose v. Rose, supra; City of La Mesa v. Tweed & Gambrell Mill, 146 Cal.App.2d 762, 777[20–24], 304 P.2d 803; Scott v. Sciaroni, 66 Cal.App. 583[4], 226 P. 827; Truman v. Sutter-Butte Canal Co., 76 Cal.App. 293, 305–306, 244 P. 923; People ex rel. Department of Public Works v. Union Machine Co., 133 Cal.App.2d 167, 173, 174[5–8], 284 P.2d 72; Bank of Italy, etc., Ass'n v. Johnson, 7 Cal.App.2d 463, 465[1], 46 P.2d 244.) This rule is variously stated in different authorities. Considerable difficulty has been experienced in making a lucid and workable statement of the rule. We are satisfied that if the spirit and purpose of the rule is to be served the statement of fact sought to be admitted must be of such a nature that it is clearly recognizable within its own content as a statement of fact. Otherwise, phrases or words taken out of context could be construed, bent or distorted into and admission of fact in almost every offer of compromise. A summation of the composite of varying opinions is given in 31 C.J.S. Evidence § 285, p. 1042:

‘It is often difficult to determine in a particular case what amounts to an ordinary admission and what constitutes an offer of compromise within the meaning of the general rule above stated; and the intention of the parties must be the guide in each case. If the proposal is tentative, and any statements made in connection with it hypothetical, if the offer was made to ‘buy peace’ and in contemplation of mutual concessions, it is as to such point a mere offer of compromise. On the other hand, if the intention is apparent to admit liability and to seek to buy or secure relief against a liability recognized as such, or if the party making the proposal apparently intended to make no concession but to exact all that he deemed himself entitled to, the proposal is an ordinary admission against interest and not an attempt to compromise.'

Thus in the case at bar we are confronted with the ultimate question: Does the offer of compromise contain a statement of fact clearly recognizable by its own content and separable from the offer itself which can fairly and reasonably be called a statement of fact amounting to an admission? We think not. The values contended for by the parties were in wide variance. Plaintiffs contended that the highest and best use was agricultural and the maximum value expressed by their experts was $43,500.00. Defendants contended that the highest and best use was for subdivision purposes and the maximum value expressed by their experts was $579,306.00. The plaintiff never conceded that subdivision was the highest and best use. The trial court eventually succumbed to the insistence of defendants and took extensive testimony out of the presence of the jury regarding discussions between agents of the parties prior to the writing of the letter offering compromise. This testimony was in sharp conflict, as might be expected. There is little doubt that it influenced the trial court's decision to admit the offer of compromise into evidence. There is of course, substantial authority that in some cases where the statement is truly separable, but is somewhat ambiguous, the trial court might submit to the jury the conflicting evidence relating to such ambiguity, for it to determine whether or not an admission had in fact been made. (Phoenix Assur. Co. Limited of London, England v. Davis, 5 Cir., 67 F.2d 824, 826[4], and the several authorities there cited.) Here no attempt was made to submit the matter to the jury factually. We cannot in any event find in the words of the letter any such admission of market value as would warrant its submission to the jury even on the factual question. The words, ‘This amount is a compromise figure based on the market value,’ are all contained in one continuous phraseology. Market value as here used refers to some unknown opinion factor in no way referred to by the letter. It does not say, ‘A market value which we have determined.’ It does not say, ‘We have concluded that the market value is $218,000.’ If it refers to the opinion of anyone it more probably refers to some opinion urged by defendants through compromise negotiations. To admit it on the basis of its own content rests on pure speculation for it does not even purport to say that the writer believes this is the true market value, the very use of the words ‘compromise figure’ in the same phrase clearly belies any such interpretation. It is a classical example of ‘buying the peace’ by compromise. Defendants have cited a number of other cases to the effect that admissions of fact contained in an offer of compromise are independently admissible. No one questions that rule, but an examination of such cases reveals that in each of them the admitted statement shows clearly an admission of fact in its own content.

The Error Was Prejudicial

Defendants contend that even though the admission of the questioned material was error it cannot be said that ‘it is reasonably probable that a result more favorable to the appealing party would have been reached in the absence of the error.’ (People v. Watson, 46 Cal.2d 818, 837, 299 P.2d 243, 255.) As was said in Butigan v. Yellow Cab Co., 49 Cal.2d 652, 660 [10], 320 P.2d 500, 505, 65 A.L.R.2d 1,

‘The determination whether, in a specific instance, the probable effect of the instruction has been to mislead the jury and whether the error has been prejudicial so as to require reversal depends on all the circumstances of the case, including the evidence and the other instructions given. No precise formula can be drawn.’

The jury was instructed by the trial court to the effect that the letter was received in evidence, not as an offer of compromise, but as an admission on the part of plaintiff that at the time the offer was made it had some opinion as to the market value of the property together with damages suffered by the remainder, if any, consistent with the facts stated in the clause, ‘* * * based on the market value of the property;’ that the law favors compromises and it should not be taken by the jury as an admission of liability to pay that amount. Thus, although members of the jury were told that they should not regard it as an admission of liability, they knew that liability would depend directly on fair market value. Thus any admission of value could have no other logical effect on the mind of the jury than the very thing the trial court in its instruction intended to warn them against. Such cautionary instruction under the circumstances necessarily presented to the mind of the lay jury a contradiction which was the inevitable result of the improper admission of the compromise offer in the first place, and could not remove the imprint of the inadmissible evidence.

The offer of compromise was received in evidence shortly before the two appraiser witnesses of plaintiff testified. These two witnesses, Fisher and Wood, placed the fair market value at $38,620 and $43,500, with severance damage at $25,660 and $29,000 respectively, thus giving total figures of fair compensation at $64,280.00 and $72,500.00. Defendants' experts, Brabant and Holden, placed the fair market value at $337,750 and $579,306, with severance damage at $113,450, thus totalling $451,200 for Brabant. Holden did not testify on severance damage. The court's independent expert, Maskey, placed the value at $265,512.50 and severance damage of $49,300.00, making a total of $314,812.50. If the jury accepted the instruction of the trial court that the letter offering a compromise was evidence of an admission by plaintiff that it had, at some time prior to the trial, an opinion of value, they must have thought that it constituted an admission of value plus severance damage at $218,000.00. They could not help believing that the two appraiser witnesses were in some way, at least in part, responsible for that figure and were at the trial deliberately testifying falsely as to their opinion of value, since there was no evidence whatever that the property had decreased in value between the time of the offer and the time of trial. This belief, even if it entered the mind of the jury as a mere suspicion, was bound to have disastrous results in plaintiff's entire evidence. We are satisfied that a different result would have been probable without the erroneously admitted evidence.

Estoppel

Defendants next contend that plaintiff is estopped to complain because he discussed and read defensively the letter and its contents. We find no merit in this contention. When evidence is erroneously admitted over the objection of a party, the objecting party is not required to sit idly by, awaiting the possible favorable outcome of an appeal, to see if he was right in his objection. He has the right to continue the struggle to meet the improperly admitted evidence in the best way he can. His efforts cannot be held to estop him in his original objection nor to constitute a waiver thereof. To hold otherwise would be to produce the intolerably unjust rule that an objecting party, by the very fact of the improper admission of evidence from the opposing party, may be forced into a deadly legal trap from which there is no extrication. If he does not struggle he is apt to lose his case in the trial forum; if he struggles he may tighten the noose on his own throat. We cannot accept such a forced dilemma as representing true justice under law. (De Roulet v. Mitchel, 70 Cal.App.2d 120, 125[4], 160 P.2d 574; Hoel v. City of Los Angeles, 136 Cal.App.2d 295, 310[15], 288 P.2d 989; People v. Lagiss, 160 Cal.App.2d 28, 37[10].)

Expert Witness Fees

Plaintiff complains that the court's award of $100 per day for fees for an expert appointed by the court to ‘investigate and testify at the trial of such action relative to the fair market value of the property,’ and severance damage, was error. However, in the making of the motion for the appointment defendants stipulated that they would bear the expense of the expert witness in excess of the statutory fee of $50.00. The sole amount taxed as costs was $50.00 per day. We are unable to find that plaintiff was injured or has any just cause of complaint on this score, even though it be assumed that plaintiff's contention that Section 1266.2, Code Civ.Proc., is exclusively controlling in eminent domain actions instead of Section 1871 Code Civ.Proc. We find no merit in plaintiff's contention regarding the expert witness fee.

Interest

Next, plaintiff contends that the trial court erred in awarding interest on the amount recovered from the effective date of the order of possession. Apparently during the trial no evidence was offered by any party to show this date. Upon reviewing the matter before judgment the trial court found itself unable to award compensation for possession prior to trial because no date was in evidence. It therefore ordered, of its own motion, that the trial be reopened for the purpose of fixing the date from which interest or other compensations should commence pursuant to the order of immediate possession. On July 22, 1960, said court held a hearing for such purpose and entered judgment on August 24, 1960. Interest was awarded in accordance with the provisions of Code Civ.Proc. § 1255b, as it then stood, on all unpaid portions of the judgment from said effective date of the order of possession, which was April 17, 1957. Several amounts had been withdrawn at various times by defendants, and these were properly deducted for interest computation purposes.

Plaintiff, at the hearing of July 22, 1960, offered to prove the reasonable value of the use and occupation of the property after April 17, 1957 as being ‘in lieu’ of interest. Apparently defendants construed this offer as being intended as an offset against interest. In any event, the court rejected the offer and ordered interest on the unpaid portions of the judgment as above noted. Code of Civ.Proc. § 1255b, as it then stood, provided for lawful interest from the effective date of the order. No mention is made of offsets, deductions, or ‘in lieu.’ People v. Podrat, 194 A.C.A. 734, 739[2], 15 Cal.Rptr. 343 (Hearing denied by Supreme Court October 11, 1961) is controlling. The section as amended in 1961, of course, adequately provides for deductions but that amendment had not been made at the time judgment was rendered. We find no merit in this contention of plaintiff. In the light of the views hereinbefore expressed no other points require discussion.

The judgment is reversed.

SHEPARD, Justice.

GRIFFIN, P. J., and COUGHLIN, J., concur.