Hine v. Manhattan Railway Co., 132 N.Y. 477 (1892)
Evidence of unaccepted offers for real property is generally inadmissible to prove its market value because such offers are considered unreliable hearsay.
Summary
In this case regarding property damage from an elevated railway, the New York Court of Appeals addressed whether a property owner could testify about unaccepted offers they received for the property to prove its value before the railway’s construction. The Court held that such evidence is inadmissible. The rationale centered on the unreliability of unaccepted offers, as they lack the scrutiny of cross-examination and depend on numerous unverifiable circumstances. The Court reversed the lower court’s judgment, finding the admission of this evidence constituted reversible error because the question of value was sharply contested.
Facts
The plaintiff, Hine, sought relief for damages to their property allegedly caused by the defendant Manhattan Railway Co.’s construction. To demonstrate the property’s diminished value, Hine testified about specific dollar-amount offers he had received for the property before the railway was built. These offers were unaccepted. The plaintiff intended to use the prior unaccepted offers as evidence of the property’s market value before the railway’s negative impact.
Procedural History
The trial court admitted the plaintiff’s testimony regarding the unaccepted offers. The General Term affirmed the trial court’s decision. The Manhattan Railway Co. appealed to the New York Court of Appeals, arguing that the admission of the offer evidence was an error.
Issue(s)
Whether a property owner can introduce evidence of unaccepted offers for the purchase of their property as proof of the property’s market value.
Holding
No, because unaccepted offers are unreliable hearsay, lacking the safeguards of cross-examination and dependent on numerous unverifiable circumstances.
Court’s Reasoning
The Court reasoned that admitting evidence of unaccepted offers is problematic for several reasons. First, it introduces an absent person’s opinion on value without allowing for cross-examination. The offeror’s opinion may not be competent or based on an expectation of actually purchasing the property at its true market value. The court quoted *Keller v. Paine*, stating: “If evidence of offers is to be received it will be important to know whether the offer was made in good faith, by a man of good judgment, acquainted with the value of the article and of sufficient ability to pay; also whether the offer was cash, for credit, in exchange, and whether made with reference to the market value of the article, or to supply a particular need or to gratify a fancy. Private offers can be multiplied to any extent for the purpose of a cause, and the bad faith in which they were made would be difficult to prove.” The Court emphasized that the question of value was sharply contested, and the court could not determine what weight the inadmissible testimony was given. Therefore, the admission of this evidence was deemed reversible error. The Court distinguished offers made in an open market for standardized goods from offers for unique real estate, noting the latter’s susceptibility to manipulation and lack of transparency.