Consumers Power Co. v. Allegan State Bank, Docket No. 3311

• Decision Date: 10 December 1969
• Docket Number: Docket No. 3311,No. 3,3
• Citation: 20 Mich.App. 720,174 N.W.2d 578
• Parties: Petition of CONSUMERS POWER COMPANY, a corporation, for the condemnation of certain interests in lands in Allegan County, Michigan, Plaintiff-Appellee, v. ALLEGAN STATE BANK et al., Defendants-Appellants
• Court: Court of Appeal of Michigan — District of US

Page 578

174 N.W.2d 578

20 Mich.App. 720

Petition of CONSUMERS POWER COMPANY, a corporation, for the

condemnation of certain interests in lands in

Allegan County, Michigan, Plaintiff-Appellee, v. ALLEGAN STATE BANK et al., Defendants-Appellants.

Docket No. 3311.

Court of Appeals of Michigan, Division No. 3.

Dec. 10, 1969.

Rehearing Denied Feb. 2, 1970.

Released for Publication March 4, 1970.

John B. Nahan, Allegan, for defendants-appellants.

Leo W. Hoffman, Hoffman, McDonald & Hoffman Allegan, for plaintiff-appellee.

Before QUINN, P.J., and HOLBROOK and T. M. BURNS, JJ.

HOLBROOK, Judge.

This is an appeal ¹ by defendants, the Nieneker Trust ² and the Walter Webber interests ³ from the final condemnation awards for compensation as confirmed in the probate court for Allegan county, incident to the taking of certain interests in land ⁴ for gas storage purposes pursuant to M.C.L.A. § 486.252 Et seq. (Stat.Ann.1969 Cum.Supp. § 22.1672 Et seq.). The area is called the Salem gas storage field.

The original petition in this matter was filed in the probate court November 2, 1961. Commissioners were duly appointed and after testimony was heard the commission filed their report finding necessity on April 10, 1962 which was confirmed on April 12, 1963. This order is not contested on appeal.

The hearing of just compensation was adjourned from time to time. A stipulation between the parties herein was signed October 4, 1963, providing that the date of taking for the purpose of determining just compensation be November 2, 1961. On October 8, 1963, plaintiff filed a petition for an order authorizing it to occupy the premises pending further proceedings. The petition was granted by order of the court filed on October 16, 1963.

On January 5, 1966, the petitioner moved to appoint new commissioners because the then present commissioners had just served on a similar condemnation case involving the Overisel gas storage field. Counsel for the Nieneker Trust joined in the motion and the probate judge granted the motion and appointed new commissioners on January 31, 1966.

On September 14, 1966 after hearing extensive testimony the commissioners filed a report awarding just compensation for the taking of the property rights of $404,866.93 to the Nieneker Trust and of $74,156.28 to the Walter Webber interests. The defendants moved that these awards by the commission be confirmed. This motion was refused by the court. The plaintiff moved that the report except as to the surface awards be set aside because of the admission of claimed improper expert testimony as to value introduced by defendants and other claimed errors. The court granted the motion, set aside the report and referred the matter back to the commissioners to re-try under M.C.L.A. § 486.252e (Stat.Ann. 1969 Cum.Supp. § 22.1672(5)).

The hearings were then continued with additional testimony being heard and the commissioners reported a second time on January 6, 1967, awarding as just compensation for the taking, $132,729.25 to the Nieneker Trust and $37,656.28 to the Walter Webber interests.

On January 20, 1967, the probate court entered an order confirming the report of the commissioners. The defendants have taken this appeal.

Before considering the many issues raised on appeal we consider it proper to set forth the general law that we believe to be applicable to this condemnation case and also to state some of the background.

Authority for this condemnation suit is contained in § 2 of the Act which is stated in part as follows:

'To condemn all lands, easements, rights of way, gas royalties, dry natural gas leaseholds, and other property and and and all interests therein * * * which may be necessary for pipeline rights of way or for an underground natural gas storage field or fields * * *. In any case where the petitioner seeks * * * for the purpose of acquiring any property or interest therein for use as a natural gas storage field, the petitioner shall first have acquired * * * by any means other than by condemnation, a (sic) least 75%, computed in respect to surface area, of the property rights and interests in the underground field required for storage purposes * * *.'

The hearings for determination of just compensation having commenced in 1966, the applicable fundamental law is set forth in Const.1963, art. 10, § 2, which provides:

'Private property shall not be taken for public use without just compensation therefor being first made or secured in a manner prescribed by law. Compensation shall be determined in proceedings in a court of record.'

Under this provision of the Constitution it has been ruled in the cases of State Highway Commissioner v. Gulf Oil Corporation (1966), 377 Mich. 309, 140 N.W.2d 500; State Board of Education v. von Zellen (1965), 1 Mich.App. 147, 134 N.W.2d 828, and State Highway Commissioner v. Snell (1967), 8 Mich.App. 299, 154 N.W.2d 631, that the judge presiding acts in condemnation cases with the same powers that he has in other civil matters. GCR 1963, 516.5 provides:

'Judges of courts of record in which condemnation proceedings have been instituted shall preside over the proceedings in person and shall instruct the jury or commissioners on questions of law and admissibility of evidence.'

We conclude that the court in condemnation cases should follow all the rules pertaining to civil trials, except as otherwise provided by specific statute. After the commissioners filed their first report the trial judge permitted the attorneys to question the commissioners as to the factors that they relied upon in determining just compensation and also to question them as to specific determinations of fact. We know of no precedent under the present law for such a procedure nor have we been cited any authority by counsel. This procedure is objectionable, not authorized by law and was error.

The operation of a gas storage field in Michigan is uniform in purpose and operation. This statement is fortified in the testimony in this case and is succinctly set forth in the case of Michigan Consolidated Gas Company v. Austin Township (1964), 373 Mich. 123, 128 N.W.2d 491, by Mr. Justice ADAMS on pp. 129--132, 128 N.W.2d at pp. 495--496:

'The storage of gas in these underground ground gas storage fields may be defined as the storage in reservoirs of porous rock at various depths beneath the surface of the earth of large quantities of natural gas not native to those reservoirs. The storage fields are self-contained and natural gas can be stored indefinitely in them at high pressures. They are physically separated from plaintiff's transmission lines by surface facilities--dehydrators, gathering lines, compressors, meters, et cetera--which are used to process the gas into the reservoir and to return it to the transmission lines.

'Base gas was injected into the storage fields. The purpose of the base gas is to keep out foreign material, including water, and to keep depleted gas fields as operating storage facilities. The amount of base gas remains a constant through the years except for any change in the pressure base, But the base gas intermixes with other gas in the field. Gas which is stored in the storage fields as injected Base gas is accounted for as a Capital asset. The additional gas which is injected into a storage field over and above the base gas is known as Inventory, current or working gas. It is withdrawn from time to time to meet the needs of plaintiff's customers. The base gas could be withdrawn, but if it were water would come into the fields, making them inefficient.

'* * * Gas that is injected into the fields from time to time intermixes with the gas already in the fields. Since their use for storage, huge quantities of natural gas have always been stored in the fields in addition to the injected base gas and native gas.

'* * * The storage of the natural gas commences when gas is delivered to the field gathering system and ends when the gas enters the transmission lines to take it to market. Plaintiff's utilization of these reservoirs for storage of gas is no different from the utilization of facilities for the storage of any other commodity except for the difference in the nature of the commodity.

'The plaintiff's suppliers do not have sufficient pipeline capacity available to provide plaintiff with the gas required to meet cold weather space heating needs of plaintiff's customers, but have available a supply of gas in excess of plaintiff's customers' needs as their space heating requirements are minimized during warm weather. By the use of storage facilities, the plaintiff is able to store the excess pipeline supply and thereby utilize that excess to meet cold weather requirements of its customers.

'Storage capacity somewhat in excess of annual pipeline supply is desirable to provide for unpredictable factors such as business conditions, strikes, and abnormal winters. The storage program also tends to insure an adequate supply of gas in case of disruption in service bringing the gas from the southwest.' (Emphasis supplied)

The Salem storage field differs from the Austin storage field in that the Salem field did not have to be injected with purchased base gas for it was already filled with native gas. The native gas was utilized for base gas and, because it intermixes with injected gas, it is utilized by the petitioner when it withdraws gas from storage for the market.

Petitioner herein, like other public utilities, is subject to regulation by the Michigan Public Service Commission Except for its storage operations. Michigan Consolidated Gas Company v. Austin Township, Supra, p. 128, 128 N.W.2d 491.

The transcripts of the testimony comprise 6,000 pages; the briefs submitted are voluminous and exhaustive, approaching 700 pages. It is difficult to capsule the facts, but the effort may be rewarding.

Before November 2, 1961, the date of filing the petition, the Consumers Power Company had first agreed with the oil and gas...