Comstock v. Iowa State Highway Commission

• Court: United States State Supreme Court of Iowa
• Citation: 121 N.W.2d 205,254 Iowa 1301
• Docket Number: No. 50923,50923
• Parties: Francis COMSTOCK, Appellee, v. IOWA STATE HIGHWAY COMMISSION, Appellant.
• Decision Date: 09 April 1963

Page 205

121 N.W.2d 205

254 Iowa 1301

Francis COMSTOCK, Appellee, v. IOWA STATE HIGHWAY COMMISSION, Appellant.

No. 50923.

Supreme Court of Iowa.

April 9, 1963.

Evan Hultman, Atty. Gen., C. J. Lyman, Special Asst. Atty. Gen., James E. Thomson, State Counsel, Ames, and Norelius & Norelius, Denison, for appellant.

Raun & Franck, Denison, and Clark & Clark, Ames, for appellee.

SNELL, Justice.

Plaintiff, Francis Comstock, appealed to the district court from the assessment of damages for the taking by eminent domain of a part of his leasehold. The property appropriated was underlaid with sand and gravel subject to removal by plaintiff for processing and sale. From the award following trial by district court jury defendant, Iowa State Highway Commission, has appealed to us.

Plaintiff is a sand and gravel contractor. He owns and operates a sand and gravel pit and processing plant on 11.53 acres of land owned in fee just southwest of Denison. On this land he also has a shop, office, storage space for equipment and the stockpiling of material.

On December 20, 1954 plaintiff leased from the owner on a royalty basis of 20cents per yard additional adjacent land. The lease was for not to exceed ten years. It provided for the mining, removal and sale 'of such quantities of sand and gravel as may be found in and on all' of the described land. The leased land is adjacent to U. S. Highway No. 30. Under his lease plaintiff has been mining, removing, washing, grading and selling sand and gravel from the leased premises.

It should be kept in mind that the leasehold is not for ordinary use, cultivation or occupancy of the premises. It is a leasehold providing for the removal and depletion of physical property.

At the time of the condemnation and appropriation involved herein approximately 3 1/2 years of the lease remained.

In June, 1961 defendant Highway Commission appropriated by condemnation 2.9 acres of the leasehold along Highway No. 30. The portion of the appropriated area underlaid with gravel consisted of 1.96 acres. Numerous tests indicated that there were about 45,000 yards of gravel under this area. The various tests and estimates varied only slightly.

The district court jury fixed plaintiff's damage in the sum of $16,000.00. Defendant commission, being unhappy about plaintiff's witnesses, the evidence received, the court's comments and instructions, and the amount of the award, has appealed.

Fourteen alleged errors are urged but many of them are related and will be considered together.

The record before us sets forth the evidence in considerable detail. The arguments include an extensive discussion of the evidence offered in support of plaintiff's case. The jury verdict was well within the evidence and testimony of plaintiff's witnesses and if the testimony was properly received the amount of the verdict may not be disturbed on appeal. The weight and credit of the testimony is for the jury and not for the trial court or for us.

Four witnesses, including the plaintiff, testified in behalf of plaintiff. Plaintiff testified as to his ownership, his operations, his experience and knowledge in the gravel business, and his estimate as to the value of his leasehold, both before and after condemnation.

Another witness was a consulting engineer, a graduate of Iowa State University and a licensed civil engineer. The witness testified that he investigated and made a study of plaintiff's leasehold, was familiar with its operations and the kind and quality of gravel and sand produced. He testified as to the present price per cubic yard of the processed products and his calculations as to the cost of processing the sand and gravel for market. He arrived at a difference of $1.00 per cubic yard between the production cost, including the royalty payment, and the market price of the processed product. The witness, in addition to his professional training, had previously worked for the defendant highway commission, and at the time of trial was employed as a consulting engineer. If his testimony was admissible as preliminary to the issue of plaintiff's damage there was no question about his qualification as a witness. He did not estify as to the amount of plaintiff's damage.

Another witness called by plaintiff was a graduate of the State University of Iowa with a Bachelor's Degree in geology presently employed as a geologist for a construction company doing leasing and exploration work for sand, gravel and limestone. He had made an examination of the plaintiff's leasehold, had made borings, and ascertained the quality, quantity and character of the gravel being produced. He was familiar with the sale price of the product and with production costs, including the royalty payments, and the cost of removing the overburden. He testified as to the amount of plaintiff's damage and in arriving at his conclusion considered, among other matters, the amount of sand and gravel available for removal, all costs incident thereto and the market price of the processed product. If his approach to the problem was proper there is no question about his qualification as a witness.

The third expert witness called by plaintiff was a professional farm manager and appraiser engaged in such work since 1935 and with experience in every county in the state. He familiarized himself with the plaintiff's leasehold, he inspected the land, the material produced, the amount of overburden and the depth of gravel deposits, the cost of production and the general selling price, and the amount of gravel available for excavation. Based upon all of the elements considered and the various approaches by appraisers, he gave his opinion as to the before and after value of the plaintiff's leasehold. He, too, was a qualified witness if his approach to the problem was from a sound premise.

Five witnesses testified for the defendant. They consisted of the district materials engineer for the defendant commission; a witness from Council Bluffs, who was in the general real estate and appraisal business; a banker from an adjoining county, experienced with real estate values; a farmer with a small gravel pit on his farm; and a geologist with the defendant commission.

As is usual in such cases, the difference between the evidence as to value offered by the plaintiff and by the defendant was great.

Of the fourteen alleged errors relied upon for reversal, eleven relate to the qualification and testimony of plaintiff's witnesses. Of the eleven, five challenge the foundation from which plaintiff's witnesses expressed valuation opinions, and six relate to the inclusion and consideration of production costs and market price of the finished product in arriving at the witness' opinion.

I. Defendant challenges the qualification of plaintiff's witnesses and the foundation from which they expressed their opinions.

Each of plaintiff's witnesses testified as to his experience, training, background, method of approach to the problem and the elements considered. Each explained how he arrived at his conclusion.

The record shows that each was especially well qualified in his respective field.

It is the uniform rule that the receipt of opinion evidence, whether lay or expert, and the extent to which it will be received in any particular case, is a matter resting largely in the administrative discretion of the trial court. Appellate courts are loathe to interfere with such discretion unless manifestly abused to the prejudice of the complaining party. Grismore v. Consolidated Products Co., 232 Iowa 328, 342, 5 N.W.2d 646; Ruth v. O'Neill, 245 Iowa 1158, 1171, 66 N.W.2d 44; McBeth v. Merchants Motor Freight, Inc., 248 Iowa 320, 324, 79 N.W.2d 303. There was no error in connection with the qualification of plaintiff's witnesses.

II. The real issue as to the evidence is the approach from which plaintiff's witnesses considered to problem and the controlling elements in their conclusions. Defendant contends that each witness was using a unit rule and multiplied the yards of gravel available by $1.00 per yard profit.

There is a rather startling similarity between the conclusions of the witnesses and computations under the unit rule. Two of plaintiff's witnesses fixed the damage at $45,000.00 and one at $48,000.00.

Plaintiff's witnesses deny the use of the unit rule but admit that quantities, costs and sale prices were considered. They say the similarity is a mere coincidence. We agree. In Ranck v. City of Cedar Rapids, 134 Iowa 563, 566, 111 N.W. 1027, it was held proper for an owner to prove the presence and value of undeveloped mineral deposits in the land taken.

As hereinafter discussed the socalled unit rule is not the measure of damage. Neither is the contemplated profit from the use of real estate. All of the various factors, however, may be considered in determining before and after value. Multiplying production units by the market price per unit does not fix value but the producing ability of real estate has a definite bearing on value. Anticipated profit has too many variables including managerial skill to be the sole basis for fixing value, but the hope for gain is a motivating element in the purchase of commercial property. Income and profit are not necessarily the same.

Here the leasehold was not for ordinary use on a recurring basis. Plaintiff's right and his only right was to exploit, mine, deplete and sell the actual physical property constituting a part of the real estate. If he had been permitted to continue under his lease 45,000 yards of the real estate would have been removed and a hole in the ground would have remained. What plaintiff actually owned was the right to remove and sell gravel. The value of what he had to sell, less the cost incident thereto, would certainly be indicative of value. It might be the most important indicia in the case at bar because when plaintiff finished removing the gravel nothing of value would be left. To a man in the gravel...