Grand Hydro v. Grand River Dam Authority

• Decision Date: 27 April 1943
• Docket Number: 30447.
• Parties: GRAND HYDRO v. GRAND RIVER DAM AUTHORITY.
• Court: Oklahoma Supreme Court

139 P.2d 798

192 Okla. 693, 1943 OK 158

GRAND HYDRO v. GRAND RIVER DAM AUTHORITY.

No. 30447.

Supreme Court of Oklahoma

April 27, 1943

Rehearing Denied June 29, 1943.

Second Petition for Rehearing Denied Aug. 3, 1943.

Syllabus by the Court.

In determining the market value of real property taken by power of eminent domain, it is not merely the value of the property for the use to which it has been employed by the owner that should be considered, but its adaptability to all purposes present and prospective, to which it may reasonably be applied by the condemnee must be considered and taken into account in fixing such value.

Appeal from District Court, Mayes County; N. B. Johnson, Judge.

Proceedings in condemnation by Grand River Dam Authority against Grand Hydro, a corporation. From an alleged insufficient award of compensation, the condemnee appeals.

Reversed and remanded with directions.

RILEY and HURST, JJ., dissenting.

Harve N. Langley and R. A. Wilkerson, both of Pryor, S. F. Fowler of Knoxville, Tenn., and R. D. Hudson, of Tulsa, for plaintiff in error.

Edw. P Marshall, of Tulsa, J. B. Dudley, of Oklahoma City, and R. L Davidson, of Tulsa, for defendant in error.

GIBSON Vice Chief Justice.

This is an appeal by the condemnee from the judgment of the district court of Mayes county rendered on a verdict in condemnation proceedings.

The proceedings were instituted by Grand River Dam Authority, a corporate instrumentality of the State, against Grand Hydro, a corporation, to condemn some 1400 acres of land located in the Grand River valley. The commissioners appointed by the court awarded Grand Hydro the sum of $281,802.74, whereupon said corporation filed its objections thereto and demanded a jury trial. Thereafter said Authority also filed its objections, and demanded a jury. The trial resulted in a verdict fixing the damages at $136,250, and Grand Hydro appeals from the ensuing judgment.

Grand River Dam Authority was created by S.B. No. 395, c. 70, art. 4, S.L.1935, now 82 O.S.1941 §§ 861-881, as later amended, and was the corporate name applied to a conservation and reclamation district thereby created, and comprising certain designated counties, including the county of Mayes. Said Authority, as "a governmental agency, body politic and corporate," was endowed with the power, among numerous others, to develop water power and electric energy within the boundaries of said district and on the Grand River, including the power of eminent domain.

Grand Hydro was incorporated in 1929 under the laws of this State for the purpose of developing and selling hydro-electric energy and water for irrigation on Grand River. Pursuant to its corporate powers it acquired title to the lands here involved and which include the land selected by the Authority as a dam site for the erection of its power project. In 1931 said corporation applied for and obtained from the State Conservation Commission a license and permit to appropriate the waters of Grand River for beneficial use including the construction of a dam and the development of hydro-electric power for sale, pursuant to chapter 40, R.L.1910, 82 O.S.1941 §§ 1-83, and chapter 70, S.L.1927, 82 O.S.1941 §§ 451-510, as subsequently amended.

The Authority claims the right to use the stream in the development of electric power, etc., under article 4, chapter 70, S.L.1935, as amended by articles 1 and 2, chapter 70, S.L.1937, 82 O.S.1941 §§ 861-881.

The principal controversy on appeal involves the action of the trial court in striking the testimony of certain expert witnesses relating to the value of a portion of the premises, a tract of 417 acres, from the standpoint of its special adaptability to damsite purposes. The trial court withdrew the evidence from the jury on the ground that the adaptability of the tract to such purpose was not a proper element for consideration in estimating the market value thereof.

Grand Hydro says the trial court erred in striking the testimony, and erred in its admonition to the jury not to consider the same, and erred in refusing certain requested instructions pertaining to the right to have such testimony considered. And it is insisted that this action of the court resulted in depriving the condemnee of its property without due process of law, and without just compensation.

The measure of compensation in such case is the fair market or cash value of the land condemned. City of Tulsa v. Creekmore, 167 Okl. 298, 29 Pac.2d 101, 102. In that case the court, speaking of the elements to be considered in determining market value, said: "It is the market value that is the test and not its value for some particular use to which it might be subjected, although its adaptability to this particular use may be considered as one of the factors in ascertaining the market value when they enter into and affect the cash market value of the property. Revell v. City of Muskogee, 36 Okl. 529, 129 P. 833; Public Service Co. v. Leatherbee, 311 Ill. 505, 143 N.E. 97." And in theSyllabus by the Court the fair cash or market value of land taken in eminent domain is defined as follows: "By fair market value is meant the amount of money which a purchaser willing but not obliged to buy the property would pay to an owner willing but not obliged to sell it taking into consideration all uses to which the land was adapted and might in reason be applied."

With reference to the question of adaptability or availability for a particular use as an element in determining market value, the court held as follows: "In determining the market value of a piece of real estate for the purposes of a taking by eminent domain, it is not merely the value of the property for the use to which it has been applied by the owner that should be taken into consideration, but the possibility of its use for all purposes, present and prospective, for which it is adapted and to which it might in reason be applied, must be considered, and its value for the use to which men of prudence and wisdom and having adequate means would devote the property if owned by them must be taken as the ultimate test."

The above case contains a reasonably clear statement of the law obtaining in this State and which must be applied here. The condemnee is ordinarily entitled to compensation measured not only by the value of the land for the use to which he has applied it, but the value thereof for all possible purposes, present and prospective, to which he or his ordinary grantee might legally apply the same.

However, it is urged that the law announced in the above case does not entirely cover the situation here presented. It is said that the rule may apply generally to all uses to which the condemnee or his grantee at a free sale may lawfully employ the land, but does not apply in those instances where, as here, the condemnee or his ordinary grantee would have no legal right to use the land for the purpose for which the condemnee now urges as an element of compensation.

We agree that the rule for the measure of compensation as announced in the Creekmore case applies only to those adaptable uses to which the condemnee or his ordinary grantee may lawfully place the land. United States v. Boston, C. C. & N.Y. Canal Co., 1 Cir., 271 F. 877, 893. In the opinion in that case the court said: "We are of the opinion that, in ascertaining the market value of property taken in a condemnation proceeding the utility or availability of the property for the special purpose of the taker cannot be shown, if the taker is the only party who can use the property for that purpose. If, however, the property has a special utility or availability, not only to the taker, but to other parties who could use the property for the particular purpose intended by the taker, then this utility or availability may be shown." See also United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 33 S.Ct. 667, 677, 57 L.Ed 1063, wherein it was said that the question in cases of this character "is what has the owner lost, and not what has the taker gained."

The Authority urges that as a governmental instrumentality of the State it had exclusive authority to use the waters of Grand River for commercial purposes, and that Grand Hydro possessed neither that right nor the right to construct a dam and to empound the waters for any purpose, and could not sell to any one possessing those rights other than to the Authority, and was therefore not entitled to urge the adaptability of the land in that respect as an element of compensation.

The above contention forms the basis of the principal question in this case.

The owner of land may use the water of a natural stream flowing across the same, but he may not prevent the natural flow thereof. 60 O.S. 1941 § 60.

The statute, supra, creating the Grand River Dam Authority and defining its functions purports to be an express appropriation by the State of the waters in Grand River to be applied to the uses therein stated, and to place in its said agency exclusive authority to develop the stream in the manner therein provided. The State may control the flow of all nonnavigable streams such as the Grand River. And it may reserve to itself or grant to private parties the right to utilize such streams for power and other purposes. 67 C.J. 683, sec. 10.

As a basis for its argument that Grand Hydro merely owned the land and was without right to use the waters for developing power, the Authority says that Grand Hydro's purported license and permit issued by the Conservation Commission was void, or at least had expired by its own terms, and was no longer in force and effect.

First it was urged that said permit was void for the reason that no judicial decree by any court had been entered determining...