West Virginia Dept. of Highways v. Berwind Land Co.

• Citation: 167 W.Va. 726,280 S.E.2d 609
• Decision Date: 17 July 1981
• Docket Number: No. 14284,14284
• Parties: WEST VIRGINIA DEPARTMENT OF HIGHWAYS v. BERWIND LAND CO.
• Court: West Virginia Supreme Court

Page 609

280 S.E.2d 609

167 W.Va. 726

WEST VIRGINIA DEPARTMENT OF HIGHWAYS v. BERWIND LAND CO.

No. 14284.

Supreme Court of Appeals of West Virginia.

July 17, 1981.

Syllabus by the Court

1. If the existence and quantity of minerals or other elements of value in a fee estate can be accurately determined, an expert witness may testify to his opinion of the value in place of one unit of that element and multiply it by the quantity of that resource present in or on the land to determine the value of the element in place.

2. The owner of fee property taken by eminent domain may prove the market value of the land by introducing evidence of the separate value of the elements present in or on the land when it can be shown that (1) the existence and quantity of the element of value can be accurately determined, (2) other factors, such as the expense of production and marketing, were taken into consideration in arriving at the value sought to be introduced, (3) the element is clearly significant in value, and (4) the use of the property for purposes of exploiting that element of value is not inconsistent or incompatible with the highest and best use to which the property may be put or that the subservient use has been devalued to the degree it interferes with the highest and best use of the property taken. The jury should be instructed that the evidence of separate values is only a factor to be considered in determining the total market value of the land; to the extent such separate values are inconsistent with the highest and best use of the land they should be disregarded in arriving at the figure of just compensation.

Jesser & Harrington, Fred A. Jesser, III, Travers R. Harrington, Jr. and D. Clinton Gallaher, IV, Fayetteville, for plaintiff in error.

Marvin W. Masters, Charleston, for defendant in error.

McGRAW, Justice:

This case comes before us on appeal from the final order of the Circuit Court of Fayette County which denied a motion for a new trial made by the appellant, Berwind Land Company, at the close of the eminent domain proceedings below. The jury in that case returned a verdict finding the appellant entitled to the sum of $58,500 as just compensation for real property taken by the appellee, the West Virginia Department of Highways, for public road purposes. The appellant's primary assignment of error is the refusal of the trial court to permit the appellant to prove the value of the property taken by offering testimony as to the value of the surface and minerals as separate items. We agree with the appellant's contention that it was entitled to present evidence of the separate value of the elements, but after a careful review of the record we conclude that such evidence was presented and was in fact before the jury and, therefore, we affirm the judgment of the circuit court denying the motion for a new trial.

The facts giving rise to this dispute are essentially uncontroverted. On April 27, 1963, the West Virginia Department of Highways filed a petition in the Circuit Court of Fayette County to condemn for highway construction purposes real property then owned by the appellant, Berwind Land Company, consisting of approximately 56 acres in fee and a total mineral tract of 17.772 acres. The acquisition of the property by the Department was incidental to the construction of the New River Gorge Bridge and some 1.4 miles of Appalachian Corridor Highway. The Department later filed an amended and supplemental petition and paid into court the sum of $48,800, the amount offered by the Department to the appellant as compensation for the taking of the property, prior to the commencement of eminent domain proceedings. The appellant filed an answer and an amended answer to the petition, alleging that the amount offered by the Department was substantially less than the fair market value of the property and demanding that the property value be determined as provided by law. Upon joint motion of the parties, the circuit court, on October 24, 1974, ordered that the case proceed to trial by jury without a commissioner's hearing.

The first jury trial began on July 2, 1975, but was declared a mistrial upon motion of the Department, on the ground that so much evidence of the separate values of the land and the minerals had been presented that an instruction to the jury would not sufficiently cure the error. A subsequent trial was had on October 13, 1976, during which the trial court refused to permit the appellant to offer certain testimony concerning the separate value of the surface and the minerals with respect to the fee tract. At the conclusion of the evidence, the case was submitted to the jury and a verdict was returned awarding the appellant the sum of $58,500 as just compensation for the property taken by the Department and representing the fair market value of the land owned in fee and the separate mineral tract as of April 27, 1973. The appellant then filed a motion for a new trial which was denied by the circuit court by order dated January 5, 1978. It is from this order that the appellant appeals.

The appellant asserts that the trial court erred in refusing to permit it to prove the market value of the fee estate by introducing evidence of the separate value of the coal underlying it, thus placing an undue burden on the appellant, which effectively reduced and restricted its proof of damages in violation of Article III, section 9 of the West Virginia Constitution and of the Fifth and Fourteenth Amendments to the Constitution of the United States. The appellant also contends that the trial court erred in restricting its presentation of the value of the minerals taken by eminent domain. It is the appellant's contention that by virtue of these errors committed at trial, it is entitled to a new trial.

The evidence adduced at trial shows that the land which was the subject of the eminent domain proceedings below consisted of 56 acres of land underlaid with coal and other mineral deposits, which were owned in fee by the appellant prior to the taking, and 17.772 acres of minerals, the surface of which was not owned by the appellant. It was established that the coal in both estates is part of the Sewell seam of coal, one of the highest quality metalurgical coal seams in the world. Mining operations to extract the coal from these tracts were first commenced at the beginning of the twentieth century and continued until sometime in the 1920's, at which time the then-owner, New River and Pocahontas Consolidated Coal Company, closed the mine. The Kaymoor No. 2 mine, as it is called, was reconditioned and reopened during the 1940's and coal was mined from the land until sometime in the 1950's when the mine was again closed for economic reasons. Since that time there have been no active mining operations on the land in question.

The appellant's first witness, Virgil Burgess, a mining engineer and longtime employee of Berwind Land Company, testified that the coal on both the fee acreage and the mineral tract was mineable and that the seam was of an average height of 36 inches. Mr. Burgess testified that the amount of coal remaining in the mineral tract was 20,728 tons and that the fee acreage contained approximately 108,257 tons. He estimated that the value of the coal in the mineral tract at the time of the taking was approximately one dollar per ton, based on a market price per ton of twenty dollars and an expected return of five percent. The appellant's second and third witnesses, who were familiar with land values and appraisals, testified that in their opinion the highest and best use to which the land taken could be put would be residential development and estimated the fair market value of the property to be $212,400 and $264,016, respectively, based on comparable sales of residential property in the area. The next witness, the president of Berwind Land Company, testified that the tracts in question had been mined only partially during the previous mining operations. He testified that in his opinion the coal remaining in the 17.772 acre mineral tract was worth $20,720, based on the amount of coal remaining in that tract at a value of one dollar per ton, but admitted that perhaps only eighty-five percent of that tonnage was recoverable through mining operations. He also testified that the fair market value of the fee acreage was $214,355, although the appellant had valued the property at $10 per acre for tax purposes in 1973. The appellant's final witness was a retired coal operator and consultant who valued the fee tract at $3700 per acre and valued the coal on the 17.772 acre tract at one dollar per ton.

The Department introduced the testimony of one of its employees, a real estate appraiser, to the effect that only part of the fee tract was suitable for residential development and, on the basis of comparable sales, that the market value of the tract was $46,100. This witness also testified that the value of the fee acreage had been enhanced by the proposed highway construction prior to the taking. Another witness, an independent mining engineer who had been hired by the Department to appraise the taken property, testified that the amount of coal recoverable from old mines that are reopened is between 60% and 75% of the coal in place. He stated that most of the coal originally a part of the land taken had already been mined out by the previous operations and estimated that only 7,400 tons of recoverable coal remained under the mineral tract, the market value of which he place at $1,100, and that only 48,200 tons remained under the fee tract. He stated that due to deteriorated conditions in the Kaymoor No. 2 mine it would be impossible to mine the coal on the mineral tract and economically unfeasible to mine the coal remaining on the fee tract. He estimated the value of the coal in the mineral tract at the time of the taking at between five to fifteen cents per ton.

The major issue for our...