State ex rel. Dept. of Highways v. Campbell
| Decision Date | 31 January 1964 |
| Docket Number | No. 4644,4644 |
| Citation | 80 Nev. 23,388 P.2d 733 |
| Parties | The STATE of Nevada on relation of its DEPARTMENT OF HIGHWAYS, Appellant, v. Cecil G. CAMPBELL and Charlotte Campbell, husband and wife, Respondents. |
| Court | Nevada Supreme Court |
Harvey Dickerson, Atty. Gen., Robert J. Potter, Deputy Atty. Gen., Carson City, Eli Grubic, Special Deputy Atty. Gen., Reno, for appellant.
Goldwater, Taber & Hill, Reno, for respondents.
This is an appeal taken by the State of Nevada on relation of its Department of Highways from that part of the judgment entered by the district court 'assessing damages' against appellant for its condemnation of parcels of land known as 80-B and 80-C and for severance of parcel 80-B. Our main concern is with appellant's contention that the trial court's award of compensation to respondents lacks substantial support in the evidence. We have concluded that this contention is without merit.
80-B is known as the Rye Patch Ranch. 80-C is the parcel of land containing the structures known as Humboldt House. The taking of 80-B was a complete severance. The parcels of land involved are situate along what was known as Highway 40 between the cities of Lovelock and Winnemucca, in Pershing County, and had, before the taking, full access rights to the highway. The parcels were taken by the Nevada Highway Department for the purpose of constructing an interstate freeway, known as Interstate 80. Certain parts had been theretofore subject to a right-of-way in the state. The particular taking and construction here involved was part of a 13-mile project. The federal government required, in completing this project, that the actual fee be acquired by the state and such was the purpose of the condemnation suit.
Prior to the taking, all parcels here involved had complete access to Highway 40. Interstate 80 has now been completed and fenced off. The parcels involved no longer have access to such highway.
The case was tried to the court without a jury in April, 1963, and submitted on written briefs, whereupon the trial court filed a memorandum opinion in which it awarded the respondents damages for the taking of their property as follows:
Parcel 80-A (not involved in
this appeal) $ 27.50
Parcel 80-B 6,499.76
Parcel 80-C 65,003.55
Severance damage from the
taking of parcel 80-B and the
construction of the freeway
resulting to the remaining
lands of respondents' Rye
Patch Ranch 5,797.50
Formal findings followed, together with judgment of condemnation.
The issues before the district court were to determine the value before the taking and the value after the taking. Virginia & Truckee R. R. Co. v. Henry, 8 Nev. 165. The same applies to the severance damage. These were questions of fact. Virginia & Truckee R. R. Co. v. Henry, supra.
Appellant's two professional witnesses consisted of Calven S. Aerick, its 'staff appraiser,' and Merton E. Domonoske, 'professional fee appraiser for appellant.' Both of these witnesses valued part of the land taken in parcel 80-B as adapted to commercial use and therefore placed its worth at $150 per acre. Campbell was in agreement as to the acreage valuation.
We refer briefly to the valuation placed by the respective witnesses on the parcels taken by the state. As to parcel 80-B (a part of respondents' 8,260-acre Rye Patch Ranch), 43.12 acres on the east side of the highway were taken. (Consideration need not be given to an additional 31.76 acres comprising a 200-foot-wide easement for a right-of-way for existing Highway 40, already owned by the state, as the additional vesting of the fee would be of minimal value.) Campbell considered the entire 43.12 acres to have commercial value. Domonoske accorded commercial value to 4 acres, Aerick to 6.5 acres. The court accepted Campbell's testimony, awarding a total of $6,468. 1
The severance of parcel 80-B left 9.5 acres 'landlocked' on the west side of the highway. Aerick valued it at $9 per acre, Domonoske at $8.50 per acre (both characterizing it as grazing land), and Campbell at $150 per acre, characterizing it as commercial.
As to the severance on the east side of the highway resulting from the severance of parcel 80-B, Aerick allotted a value of $2,500, Domonoske awarded it 'nothing,' and Campbell figured a loss of 48 acres at $137 per acre. The per acre figure he arrived at by reducing the $150 per acre commercial value by $13 per acre grazing value, the value of the land after the taking.
The west side severance and the east side severance produced, according to Campbell, a loss of $7,837.50. The court awarded $5,797.50.
In valuing parcel 80-C, the Humboldt House itself, Aerick gave to the land involved $350 an acre; Domonoske, $250 an acre. To the improvements, Aerick accorded $38,620; Domonoske, $33,175. As severance damage, Aerick found 'none'; Domonoske, $4,386. Campbell refused to particularize, but testified that Humboldt House had a value of $90,000. 2 The totals resulted as follows: By Aerick, $39,500; by Domonoske, $38,150; by Campbell, $90,003.55; by the court $65,003.55.
Not only are there serious contradictions in the testimony of the state's two expert witnesses, as noted above, which may indeed have influenced the court in its rejection of their testimony, but they also differed in their approach or method of evaluation. Aerick testified, 'Well, in appraising, our office used the three approaches to value: the market approach, the cost approach, and the income approach.' He then indicated that he considered the cost approach as 'the final approach.' This is determined by finding actual cost less depreciation. The market approach was defined by the witness as finding sales of comparative properties, and valuing the subject property by comparison. (Incidentally, we note here that this appears to be precisely what the witness Campbell did--finding the most comparable sale to be of the Buena Vista property and the conclusion that Humboldt House was worth twice Buena Vista.) He then defined the income approach as 'the processing of income which the property will earn by capitalization into a value which you can use.' He said this method has hazardous elements, 'but you use it to correlate the cost and the market approach.'
He arrived, as above indicated, using his three methods of approach, at a total value, including severance damages, of $39,500. In applying the compensation approach or income approach he capitalized income at 9% per annum, being 7% income and 2% 'return of capital.' On cross-examination he testified that at 4% the value would be capitalized at $69,850, but the witness stated, 'I would never use 4%.' At 5% the value would be capitalized at $55,880. (Later he corrected his figures to show that, capitalized at 4%, the value would appear to be $72,110, and, at 5%, $58,140.) This was his testimony taken at the trial in April, 1962. In a preliminary statement made on March 19, 1961, the witness had indicated that for roadside commercial properties replacement cost less depreciation, plus the land value, should be used. The witness then stated:
The market approach was not used at all by the witness at that time.
Thus, appellant introduced the capitalization-of-income method into the case. Domonoske did not use this approach at all. It will be noted that the capitalization approach, at 5% or at 6% testified to by Aerick on cross-examination, closely approximates the value found by the court.
In State ex rel. Department of Highways v. Shaddock, 75 Nev. 392, 344 P.2d 191, after evidence that the condemned land produced $3,600 a year in rentals and that just compensation would be a sum sufficient to produce an income of $3,600 a year, this court held that it was proper to permit a witness to testify relative to the value of an asset capable of producing such income and said:
Campbell was a member of the Board of County Commissioners of Pershing County for ten years. He was a director of the County Commissioner Association of the Western States and for the past two years was president of that association. He testified that he was familiar with land values in Pershing County; that he had made it a practice to study these land values and he familiarized himself with land values in Pershing County through checking with the owners and the sellers and talking to them and through conversations with the purchasers, that he had an opinion as to the market value of Humboldt House, being parcel 80-C involved in this proceeding. His opinion as to such market value was $90,000 3 as indicated in the list above.
As a member of the Board of County Commissioners he was for ten years a member of the County Board of Equalization, which dealt directly and exclusively with land and other values for...
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