Nedrow v. Michigan-Wisconsin Pipe Line Co.

• Decision Date: 15 December 1953
• Docket Number: MICHIGAN-WISCONSIN,No. 48108,48108
• Parties: NEDROW et al. v.PIPE LINE CO.
• Court: Iowa Supreme Court

Page 687

61 N.W.2d 687

245 Iowa 763

NEDROW et al. v. MICHIGAN-WISCONSIN PIPE LINE CO.

No. 48108.

Supreme Court of Iowa.

Dec. 15, 1953.

Donald Evans, Des Moines, Lane & Waterman, Davenport, for appellant.

D. W. Harris, Bloomfield, for appellees.

MULRONEY, Justice.

Defendant pipe line company brought condemnation proceedings, under Chapter 472, Code 1953, I.C.A., to acquire a right-of-way for its pipe line across the farm owned by plaintiffs. The sheriff's jury assessed the damages sustained by plaintiff as a result of the appropriation in the sum of $1480. Plaintiffs appealed and after an extended trial and much evidence concerning a limestone quarry on the farm, from which plaintiffs were receiving royalty of 5 cents a ton, and evidence of the amount of limestone that would be rendered unobtainable by the presence of the pipe line, the trial court rendered its opinion fixing the damages for the surface in the sum of $1,440 and the damage to the quarry in the sum of $100,000, or a total damage in the sum of $101,440.

I. The main error relied upon by defendant is the measure of damages applied by the trial court. We have studied the long record in this case, which has been excellently abstracted, but we think it will be sufficient to state, and quote from the trial court's opinion and findings, with only brief references to the testimony, in order to discuss the assigned error.

The trial court found the defendant had by proper procedure condemned a right-of-way, 75 feet wide and 248 rods long (approximately 6.9 acres), across plaintiffs' 200-acre farm in Van Buren County. The commissioners awarded damages in the sum of $1480.00 and defendant deposited this sum with the sheriff and at the time of the trial of plaintiffs' appeal from the award, the pipe had been installed and was in use.

The trial court's opinion states:

'Plaintiffs' land is rather rough and not too well adapted for tillage, being more suitable for pasture land.

'That plaintiffs' land is all, or most of it, underlaid with limestone. There are two ledges of the stone, the top ledge being from 15 to 17 feet thick and the lower ledge being 58 1/2 to 59 1/2 feet in thickness, and the two ledges being separated from each other by a ledge of sandstone varying from 4 to 7 feet in thickness.

'The limestone on plaintiffs' land was at and prior to the condemnation proceeding under lease for the quarrying and removal at a royalty of five cents per ton, and the Kaser Construction Company as sub-lessee was operating the quarry and engaged in the removal of the top ledge of the stone. The quarry had been in operation since August 1946, and plaintiffs had been receiving a royalty on the rock quarried, crushed and sold amounting to approximately $4000.00 per year.

'The evidence shows that the rock is of such quality in both the upper and lower ledges as to be suitable for both agricultural and road construction purposes, and that there is, and apparently will continue to be, a demand for such rock in the quantities being produced for as long a time as is now forseeable in the future.'

Here it might be pointed out the record shows the Nedrow farm was close to the Davis County line and the original royalty lease was with the Davis County Soil Conservation District and it gave the district exclusive right to quarry and process limestone on the farm by paying five cents a ton royalty for 10 years from 1945, subject to plaintiffs' right to cancel the lease if the district failed to produce at least 2000 tons in any 12-month period. Following this lease the lessees made a contract with the Kaser Construction Company in April of 1946 for the quarrying of the limestone for six cents a ton royalty. The contract with Kaser was for three years renewable for additional three-year periods by mutual consent and it recognizes Kaser will operate with portable equipment and maintain a stock pile, and the royalty was to be paid when the product was sold. The record shows Kaser operated about six months out of the year, producing stock piles of lime rock for aggricultural purposes and for road rock purposes from which piles there was sold in the four years 1946 to 1949 about 168,706 tons of agricultural lime rock and 117,287 tons of road rock.

The trial court's opinion goes on to say: 'The question thus presented is how much less is plaintiffs' land worth with the right-of-way and pipe line thus located across it than it was before the condemnation was effected.'

This was a strip mining operation where the overburden of dirt is removed and the rock blasted out by dynamite. The trial court went into a discussion of the evidence of how close to the pipe line the quarry operator could safely blast, deeming that 'the principal and most difficult question in the case.' He did not feel the evidence of quarry tests 'reliable' and, mostly on the authority of a Government Bulletin (where the shock effect calculations started at 500 feet) he concluded it would not be safe to blast within 500 feet of the pipe line and he stated: 'I make my calculations on this basis.' The opinion then states:

'The next problem presented is the amount of damages sustained by the plaintiffs from the construction of the pipe line. Of course, the amount of damages is the difference in value of the farm as a whole before and after the construction of the pipe line across it. Ordinarily it is the difference in the market value just before and after the taking by condemnation.

'In this case, however, there is no evidence of any comparable land sales charged with such burden. In fact, there is no evidence of any property selling on which there is any comparable quarry or royalty return. The testimony of Mr. Sargent that the land as a whole is worth $2000.00 less is as ridiculous as plaintiffs' claim that it is worth $12,000.00 per acre.

'I conclude the land has no ascertainable market value because there are no sales of like lands so developed and producing similar rentals or royalties in this part of the United States. If we accept the Court's conclusion that it is unsafe to blast within 500 feet of the pipe line, then there is little or no rock on the three 40's that can be removed with the pipe line in operation thereon.

'In arriving at the value of the land it is always permissible to take into consideration what it is reasonably capable of producing in the way of income and in this case it is the principal factor that should be taken into consideration. The finding of the sheriff's jury that the damage to the farm was $1440.00 (elsewhere in the record this is $1480.00) was a reasonable allowance for the damage to the surface, but it is grossly inadequate to compensate the plaintiffs for the loss of the royalties of $4000.00 per year for a long period of years.'

The court then had recourse to some map exhibits. He found the top ledge could be profitably mined wherever the overburden was not more than 40 feet and he had 'no doubt' that after the top ledge was mined a 'practical quarry operator' could remove the 58 1/2 feet of limestone in the lower ledge after first removing the seven feet of sandstone on top of it. The maps, based on core drillings, showed him the area lying within 500 feet of the pipe line where the overburden was not over 40 feet and he computed 'a total of 40,608,750 cubic feet of rock' could be economically quarried 'but for the pipe line.' By resort to the evidence showing the weight of a cubic foot of limestone the court went on to arrive at the following computation of damages:

'* * * assuming as the evidence shows, a cubic foot of limestone weighs 160 pounds we have a total of 3,248,700 tons of limestone on which if quarried and sold, the royalty at five cents per ton would amount to $162,435.00.

'But this is not the measure of the damages, since this sum would be payable at the rate of $4,000.00 per year consequently it would not all be paid until 41 plus years elapse from the commencement of the removal of the stone. It is further shown that the operation on the areas computed would not commence for a period of from three to five years, it would mean that payments would not be completed for 46 plus years. The payments would commence in five years and continue for a period of 41 years. The present worth of this sum is the measure of plaintiffs' loss by reason of being prevented by the pipe line from removing the stone in the areas above set out.'

The opinion then fixed the plaintiffs' damages as the present worth of $162,435.00 payable $4,000 a year for 41 years beginning five years from date, fixing the value of the use of the money at 2 1/2 per cent per annum and arrived at a figure of $100,000 and then held: 'Assuming the correctness of the computation the amount of plaintiffs' damage is $1440.00 damage to the surface plus $100,000.00 or a total of $101,440.00.'

II. The assignment of error in defendant's brief is: 'The court erred in awarding to the Nedrows the amount of royalties of which it assumed they would be deprived by the existence of the pipe line across their land.' The admissibility of the evidence of royalty income and the presence of undeveloped limestone was not challenged and such evidence was proper as having a direct relation to the value of plaintiffs' farm.

The foundation finding for the damage award in condemnation is the value of the property before condemnation. If it can be established that there is a market for the property, by evidence of a general buying and selling of that kind of property, the first finding will be the market value. But if the nature of the property be such that no market for that kind of property can be ascertained or established, the primary finding will be intrinsic or actual value of the property. Once the value is found before condemnation, either market or actual as the case may be, the next question is the value after condemnation. If the whole of the property is taken the first finding of value...