Energy Transportation Systems, Inc. v. Mackey

• Decision Date: 11 January 1984
• Docket Number: No. 83-68,83-68
• Citation: 674 P.2d 744
• Parties: ENERGY TRANSPORTATION SYSTEMS, INC., a Delaware corporation, Appellant (Plaintiff), v. Robert B. MACKEY and Dorothy Y. Mackey, Appellees (Defendants), Wyoming Production Credit Association, Western Minerals Corporation, an Indiana corporation, Farmers Home Administration of the United States Department of Agriculture, (Defendants).
• Court: Wyoming Supreme Court

Page 744

674 P.2d 744

ENERGY TRANSPORTATION SYSTEMS, INC., a Delaware corporation, Appellant (Plaintiff), v. Robert B. MACKEY and Dorothy Y. Mackey, Appellees (Defendants) Wyoming Production Credit Association, Western Minerals Corporation, an Indiana corporation, Farmers Home Administration of the United States Department of Agriculture, (Defendants).

No. 83-68.

Supreme Court of Wyoming.

Jan. 11, 1984.

Kim D. Cannon of Burgess & Davis, Sheridan, for appellant.

James R. McCarty, Casper, for appellees.

Before ROONEY, C.J., and THOMAS, ROSE, BROWN and CARDINE, JJ.

ROONEY, Chief Justice.

This matter is on appeal for the second time. After it was returned to the district court on the first appeal (see Energy Transportation Systems, Inc. v. Mackey, Wyo., 650 P.2d 1152 (1982)), a judgment was entered on a jury verdict awarding the landowners-appellees $26,880.00 plus $50.00 costs as just compensation for the taking by appellant of an easement for a pipeline over a strip of appellees' land. The easement is 100 feet wide and 4,398 feet long. Appellant words the issues now presented as follows:

"I. Is the Judgment awarding condemnation damages unsupported by competent evidence and excessive where the 'after value' determined by the jury is substantially less than the 'after value' testified to by any witness?

"II. Did the Court commit reversible error in failing to instruct the jury that it is not to consider damages that may result because some persons may trespass [sic] upon or gain access to any of the condemnees' lands outside of the easement?"

We reverse and remand the case for a new trial inasmuch as the value of the land after the taking as found by the jury was not within the range of such after value contained in the evidence.

The parties are not in disagreement that the evidence of fair market value of the ranch unit consisted of opinion testimony of four witnesses and was as follows:

                                             Value Before  Value After
                                                Taking       Taking     Difference
                                             -------------------------------------
                Appellant's witness Reed      $573,200.00  $575,382.00  $   818.00
                Appellant's witness Watson     580,000.00   579,000.00    1,000.00
                Appellees' witness Williams    860,000.00   815,000.00   45,000.00
                Appellees' witness Phillips    644,000.00   575,680.00   68,320.00
                

The form of jury verdict required a finding of fair market value: (1) before the taking, (2) after the taking, and (3) the difference between the other two findings. The jury found the before value to be $574,800.00. It was obviously within the range of testimony pertaining thereto, i.e. between $573,200.00 and $860,000.00. The jury found the after value to be $547,920.00. Just as obvious, it was not within the range of testimony pertaining thereto, i.e. not between $572,382.00 and $815,000.00. Appellant contends that this finding is reversible error.

Appellees contend that the fact that the jury's finding of after taking value was not within the range of testimony relative to it is not pertinent inasmuch as the difference between the before and after amounts found by the jury is within the range of the differences resulting from the before and after amounts testified to by the witnesses, i.e. the amount of $26,880.00 (jury before value of $574,800.00 less jury after value of $547,920.00) is within the mathematically computed differences between the before and after testimony of the four witnesses ($818.00 to $68,320.00). See chart supra.

Under the law and reasoning hereinafter noted, appellant's contention is correct and appellees' contention is not.

All concerned recognize the law set forth when this case was first before us with reference to the "before and after" rule:

"* * * [W]here there is a partial taking of property, as here, which will result in damages to the remainder not taken, the amount of just compensation to be awarded for that taken or affected is determined by application of the before and after rule, i.e., the difference between the fair market value of the entire parcel before the taking and that after the taking. [Citations.] * * * In the case of taking an easement, then, the measure of just compensation is the difference in value of the whole tract prior to imposition of the easement and the value of the tract after imposition of the easement. [Citation.]" Energy Transportation Systems, Inc. v. Mackey, supra, 650 P.2d at 1154.

And both parties accept the requirement that the award must be within the range of the testimony.

"* * * It is hornbook law that a jury's verdict in a condemnation case must be within the lower and upper range of the evidence." Coronado Oil Company v. Grieves, Wyo., 642 P.2d 423, 442 (1982). See United States ex rel. Tennessee Valley Authority v. Two Tracts of Land, Etc., 532 F.2d 1083 (6th Cir.1976), cert. denied 429 U.S. 827, 97 S.Ct. 84, 50 L.Ed.2d 90 (1976).

" * * * In the face of conflicting testimony, if the verdict of the jury or award of commissioners is within the range of the testimony, the appellate court will generally sustain the finding of the lower tribunal. If outside the range of the testimony, such awards have generally been set aside. * * *" 5 Nichols on Eminent Domain (3rd ed.), § 17.1, p. 17-20.

A majority of the jurisdictions apply the "before and after" rule. The alternative to it is a rule which fixes the compensation on the value of the land taken plus damages to the remainder lands.

" * * * It is quite apparent, of course, that some of the practical difficulties and complexities involved in application of the first rule [value of the land taken plus damages to the remainder land] are obviated by use of the latter method of valuation [before and after rule]. The relationship of the part taken to the whole tract need not be considered under the latter method, nor need consideration be given to the relationship of the remainder area to the original tract. Duplicate consideration of the same elements of damage is thereby avoided. Although theoretically both methods should lead to the same result, as a matter of practical application this is not always the case. Despite such fact, however, the simplicity of application of the before and after rule commends itself to the courts as the method most likely to attain a result that is fair both to the condemnor and the condemnee." 4A Nichols on Eminent Domain (3rd ed.), § 14.07, p. 14-183.

The verdict form need not reflect a "before and after" valuation as must the testimony, but when the form of verdict requires a determination of "before and after" values, as here, such values must be consistent with the compensation awarded, and the entire verdict must reflect a proper "before and after" valuation reasoning by the jury. In other words, if the form of verdict is equivalent to a special verdict or a general verdict accompanied by interrogatories, the answers to the special questions or interrogatories must be supportable by the evidence. Rule 49, W.R.C.P.

Of importance are the required determinations to be made by the jury under the "before and after" standard. It must find two things: The value of the entire parcel before the taking, and that after the taking. These findings must result from the evidence. The amount of compensation to be awarded is a simple arithmetic computation from these two things but the compensation itself is not that upon which evidence is directly submitted. The "before and after" rule expressly confutes reasoning whereby the compensation is other than by first ascertaining the before value and then ascertaining the after value to both of which a mathematical computation is applied in arriving at just compensation.

"* * * [T]he rule should be that the fixing by the jury of an 'after' value that is not within the range of the evidence will be considered reversible error * * *." Commonwealth, Department of Highways v. Stephens Estate, Ky. 502 S.W.2d 71, 73 (1973). Also see Roberts v. State, Tex.Civ.App., 350 S.W.2d 388 (1961); and Citizens Electric Corporation v. Amberger, Mo., 591 S.W.2d 736 (1979).

The fact that the jury set an "after taking" value outside of the range of evidence reflects a failure on its part to properly consider the evidence of "after taking" value. Such is reversible error since compensation must be determined by application of an "after taking" value ascertained from the evidence.

This is not to say that the amount of compensation resulting from the difference between the "before and after" rule is not vital to a proper verdict. If a jury took an "after value" of one witness and applied it to a "before value" of another witness, without more, the result could be unbelievable. Each witness can use different appraisal methods--income, reproduction, market data. Each witness can have a different opinion as to the highest and best use--agricultural, residential, commercial, etc. Each witness can make adjustments for different items--topography, soil, access to utilities, inflation, age of structures, location, etc. Each witness can apply different percentages to the adjustments. Each witness can find different costs of labor and materials. Each witness can find different rates of depreciation and obsolescense. Each witness can use different comparable sales. Each witness can differ as to the cost of money or cost of management. These and other differences often surface in an eminent domain proceeding. Because of these differences, strange results could occur if that applied by one witness in obtaining his "before value" were not carried forward for use in obtaining a corresponding "after value." For example, if witness Reed's "before" value ($573,200.00) were used together with witness Williams' "after" value ($815,000.00), the landowner would owe the condemnor $241,800.00. See Genge v. City of Baraboo, 72 Wis.2d 531, 241 N.W.2d 183 (1976).

The jury must gauge the credibility of the witnesses and...