Iske v. Metropolitan Utilities Dist. of Omaha

• Decision Date: 12 April 1968
• Docket Number: No. 36558,36558
• Citation: 157 N.W.2d 887,183 Neb. 34
• Parties: George Thomas ISKE (Cross-Appellant) and Gladys E. Iske, husband and wife; Gerhold Company, a Corporation, Appellees, v. METROPOLITAN UTILITIES DISTRICT OF OMAHA, Appellant, Cross-Appellee.
• Court: Nebraska Supreme Court

Page 887

157 N.W.2d 887

183 Neb. 34

George Thomas ISKE (Cross-Appellant) and Gladys E. Iske, husband and wife; Gerhold Company, a Corporation, Appellees, v. METROPOLITAN UTILITIES DISTRICT OF OMAHA, Appellant, Cross-Appellee.

No. 36558.

Supreme Court of Nebraska.

April 12, 1968.

Syllabus by the Court

1. An expert witness may be permitted to use and testify concerning the factors which a well-informed buyer would use in arriving at the price he would pay for the property.

2. When land taken by eminent domain has valuable deposits of gravel, this circumstance may be considered so far as it may affect the market value of the land, but part of the realty cannot be separately valued for its materials as an item in addition to the market value of the land.

3. An expert witness may consider the quantity of a mineral in place and its unit price as a factor in determining the fair market value of the land.

4. As a general rule, exhibits which are practically instructive to explain the evidence or aid in its interpretation or application by the jury may be admitted.

5. Generally, an expert witness, otherwise properly qualified, may be permitted to use and to testify concerning the different factors affecting valuation which a well-informed buyer would use in arriving at the price which he would pay for the property at the time of the taking.

6. Generally, an expert witness, when properly qualified, may testify as to the valuation of the property, and the weight and credibility of what the witness considers in coming to his conclusion is for the jury to determine.

7. Jurors are not bound by the testimony of expert witnesses. Their evidence is to be weighed as that of all other witnesses.

8. Where a prospective use for recreational or subdivision uses is not merely speculative and not too remote to influence present market value, an exhibit consisting of a plat or plan of such reasonable prospective use may be admissible in evidence.

9. The capitalizing of an estimate of the net rents from a probable use of the property is an accepted method of valuation.

10. Where land taken by eminent domain has a reasonable prospective use for recreational and subdivision purposes, this circumstance may be considered so far as it may affect the market value of the land, at the time of the taking, and that part of the realty cannot be separately valued for its prospective use for recreational and subdivision purposes as an item in addition to the market value of the land.

11. Capitalization of income of rentals from a reasonably prospective use of the property is an acceptable method of arriving at the value of the property as a factor in the determination of its present market value, and an expert witness may testify as to the quantity and unit price resulting from such reasonably prospective use and sale of all or part of said property.

12. A party may not successfully complain of the introduction of evidence of a like character to that which it subsequently introduced.

13. An expert witness' testimony is purely advisory and is not binding on the triers of fact.

14. The amount of damages sustained by a landowner is peculiarly of a local nature and ordinarily is to be determined by the jury, and this court will not ordinarily interfere with the verdict of the jury when the evidence is conflicting unless it is clearly wrong.

C. S. Brubaker, W. L. Strong, Lincoln, James F. Begley, Plattsmouth, for appellant.

Crosby, Pansing, Guenzel & Binning, Lincoln, Harold R. Lebens, Plattsmouth, Walter, Albert, Leininger & Grant, Columbus, for appellees.

Heard before WHITE, C.J., and CARTER, SPENCER, BOSLAUGH, SMITH, McCOWN, and NEWTON, JJ.

WHITE, Chief Justice.

This is a proceeding in eminent domain. The defendant, Metropolitan Utilities District of Omaha, which furnishes water service to the metropolitan area of Omaha, Nebraska, is constructing a well field adjacent to the Platte River south of Omaha. As a part of that project, the defendant condemned a 284-acre tract of land owned by the plaintiff, George Thomas Iske.

The Iske tract contains Cedar Island, which has an area of 173 acres and is approximately 1 1/4 miles in length, and riverbed land amounting to 111 acres. Cedar Island is separated from the north bank of the Platte River by a narrow chute or waterway. cedar Island is subject to a gravel lease owned by the Gerhold Company, a corporation.

The appraisers appointed by the county judge awarded $190,380 to the plaintiff and $36,660 to the Gerhold Company. The plaintiffs' Iske and the defendant separately appealed to the district court where the appeals were consolidated. The issue tried there was the fair market value of the land and leasehold taken by the defendant. The jury returned a verdict for the plaintiff in the amount of $510,150, and for the Gerhold Company in the amount of $26,850. The defendant's motion for new trial was overruled and it has appealed.

The evidence shows that the highest and best use of Cedar Island is for the production of sand and gravel followed by use for recreational purposes. There is sand and gravel to a depth of approximately 50 feet under Cedar Island with an overburden of from 1 1/2 to 3 feet. The sand and gravel deposit could also be used to supply a large volume of water for industrial purposes. The area in Sarpy County immediately north of Cedar Island is zoned for industrial use.

The plaintiff produced two expert witnesses who testified that in their opinion the fair and reasonable market value of the Iske land was between $825,000 to $925,000, and $1,500,000 respectively. The defendant later moved to strike this testimony. The rulings on the motions to strike and on other objections made to this evidence are the basis for the defendant's principal assignments of error.

The plaintiff's first expert witness, Glenn Chase, testified that he had made a detailed study of the Cedar Island area and of the real estate sales in Cass and Sarpy Counties; and that there were no comparable sales of real estate which could be used as the basis for an appraisal. He based his appraisal upon an 'income approach.' The parties stipulated that the opinion testimony of this expert witness was not based on the 'prices of other sales of property.'

Chase testified that he considered that the gravel supply would be exhausted in 12 years; that he computed an annual income by applying the royalty specified in the Gerhold Company lease to this estimate of the gravel which would be produced each year; and that he then applied a 'discount or capitalization rate' of 7 percent (factor 7.943) to arrive at the value of this income. He further considered that Cedar Island would be available for recreational use after the gravel had been removed; that he computed an annual income from this use by assuming that there would be 232 lots to be rented and applying a rental rate of $2 per front foot less an amount for 'Losses and administration'; and that he then applied a discount factor to this amount to obtain a present value of this income.

The plaintiff's second expert witness, F. Pace Woods, considered the possibility of industrial use as well as sand and gravel production and recreational use. In valuing the property for sand and gravel production, Woods testified that he considered that it would yield a royalty in excess of $1,000,000. In valuing the property for recreational use he testified that he used the 'income method' although his testimony does not show any computations used in arriving at a value. His opinion as to its value for industrial uses was based upon the factors that he considered necessary for industrial property.

The defendant contends that the testimony of the plaintiff's expert witnesses should have been stricken because their testimony was, in part, based upon an improper measure of damages. The defendant argues that these expert witnesses should not have been allowed to testify concerning the quantity of sand and gravel available and the royalty rate specified in the Gerhold Company lease. clearly wrong.

Where land taken by eminent domain has valuable deposits of gravel, this circumstance may be considered so far as it may effect the market value of the land, but part of the realty cannot be separately valued for its materials as an item in addition to the market value of the land. Pieper v. City of Scottsbluff, 176 Neb. 561, 126 N.W.2d 865; Medelman v. Stanton-Pilger Drainage Dist., 155 Neb. 518, 52 N.W.2d 328. Evidence may be received to show that the lands involved contain gravel deposits that are adaptable to commercial development and the fair market value of the lands in view thereof.

An expert witness may consider the quantity of a mineral in place and its unit price as a factor in determining the fair market value of the land. Pieper v. City of Scottsbluff, supra; United States v. Land in Dry Bed of Rosamond Lake Highway Commission, D.C., 143 F.Supp. 314; State by & through State Highway Commission v. Nunes, 233 Or. 547, 379 P.2d 579. An expert witness may be permitted to use and testify to the factors which a well-informed buyer would use in arriving at the price he would pay for the property. Clark v. United States, 8 Cir. 155 F.2d 157.

The record in this case indicates that the plaintiff's expert witnesses did not value the sand and gravel in place as an item separate from the value of the land, but used this information as a factor in arriving at the value of the land.

In determining the value of the plaintiff's land, after the production of sand and gravel had been completed, at least one of the plaintiff's expert witnesses assumed that the property would be developed in accordance with a plan that had been described by a previous witness, John J. Thompson.

Thompson is a civil engineer who has had experience in planning and developing property for recreational use. He testified that he was familiar with Cedar Island and had prepared a design for...