Title: Energy Transportation Systems, Inc. v. Mackey

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Energy Transportation Systems, Inc. v. Mackey1984 WY 4674 P.2d 744Case Number: 83-68Decided: 01/11/1984ENERGY TRANSPORTATION SYSTEMS, INC., A DELAWARE CORPORATION, APPELLANT (PLAINTIFF),

v.

ROBERT B. MACKEY AND DOROTHY Y. MACKEY, APPELLEES (DEFENDANTS), WYOMING PRODUCTION CREDIT ASSOCIATION, WESTERN MINERALS CORPORATION, AN INDIANA CORPORATION, FARMERS HOME ADMINISTRATION OF THE UNITED STATES DEPARTMENT OF AGRICULTURE, (DEFENDANTS).

Supreme Court of Wyoming
ENERGY TRANSPORTATION 
SYSTEMS, INC., A DELAWARE CORPORATION, APPELLANT (PLAINTIFF),

v.

ROBERT B. MACKEY AND 
DOROTHY Y. MACKEY, APPELLEES (DEFENDANTS), WYOMING PRODUCTION CREDIT 
ASSOCIATION, WESTERN MINERALS CORPORATION, AN INDIANA CORPORATION, FARMERS HOME 
ADMINISTRATION OF THE UNITED STATES DEPARTMENT OF AGRICULTURE, 
(DEFENDANTS).

Appeal from the District 
Court, WestonCounty, Robert A. Hill, 
J.

Kim D. Cannon of 
Burgess & Davis, Sheridan, for 
appellant.

James R. 
McCarty, Casper, 
for appellees.

Before ROONEY, C.J., and THOMAS, ROSE, BROWN and 
CARDINE, JJ.

ROONEY, Chief 
Justice.

[¶1.]     This matter is on 
appeal for the second time. After it was returned to the district court on the 
first appeal (see Energy Transportation 
Systems, Inc. v. Mackey, Wyo., 650 P.2d 1152 (1982)), a judgment was entered 
on a jury verdict awarding the landowners-appellees $26,880.00 plus $50.00 costs 
as just compensation for the taking by appellant of an easement for a pipeline 
over a strip of appellees' land. The easement is 100 feet wide and 4,398 feet 
long. Appellant words the issues now presented as follows:

"I. Is the Judgment 
awarding condemnation damages unsupported by competent evidence and excessive 
where the `after value' determined by the jury is substantially less than the 
`after value' testified to by any witness?

"II. Did the Court commit 
reversible error in failing to instruct the jury that it is not to consider 
damages that may result because some persons may trespess [sic] upon or gain 
access to any of the condemnees' lands outside of the 
easement?"

[¶2.]     We reverse and remand 
the case for a new trial inasmuch as the value of the land after the taking as 
found by the jury was not within the range of such after value contained in the 
evidence.

[¶3.]     The parties are not in 
disagreement that the evidence of fair market value of the ranch unit consisted 
of opinion testimony of four witnesses and was as follows:



 
 
Value 
      Before

Taking

Value 
      After

Taking

 
 
Difference

Appellant's witness 
      Reed

$573.200.00

$572,382.00

$818.00

Appellant's witness 
      Watson

580,000.00

579,000.00

1,000.00

Appellant's witness 
      Williams

860,000.00

815,000.00

45,000.00

Appellant's witness 
      Phillips

644,000.00

575,000.00

68,320.00

 
 
 
 

 [¶4.]    The form of jury verdict 
required a finding of fair market value: (1) before the taking, (2) after the 
taking, and (3) the difference between the other two findings. The jury found 
the before value to be $574,800.00. It was obviously within the range of 
testimony pertaining thereto, i.e. between $573,200.00 and $860,000.00. The jury 
found the after value to be $547,920.00. Just as obvious, it was not within the 
range of testimony pertaining thereto, i.e. not between $572,382.00 and 
$815,000.00. Appellant contends that this finding is reversible 
error.

[¶5.]     Appellees contend that 
the fact that the jury's finding of after taking value was not within the range 
of testimony relative to it is not pertinent inasmuch as the difference between the before and 
after amounts found by the jury is within the range of the differences resulting 
from the before and after amounts testified to by the witnesses, i.e. the amount 
of $26,880.00 (jury before value of $574,800.00 less jury after value of 
$547,920.00) is within the mathematically computed differences between the 
before and after testimony of the four witnesses ($818.00 to $68,320.00). See 
chart supra.

[¶6.]     Under the law and 
reasoning hereinafter noted, appellant's contention is correct and appellees' 
contention is not.

[¶7.]     All concerned recognize 
the law set forth when this case was first before us with reference to the 
"before and after" rule:

"* * * [W]here there is a 
partial taking of property, as here, which will result in damages to the 
remainder not taken, the amount of just compensation to be awarded for that 
taken or affected is determined by application of the before and after rule, 
i.e., the difference between the fair market value of the entire parcel before 
the taking and that after the taking. [Citations.] * * * In the case of taking 
an easement, then, the measure of just compensation is the difference in value 
of the whole tract prior to imposition of the easement and the value of the 
tract after imposition of the easement. [Citation.]" Energy Transportation Systems, Inc. v. 
Mackey, supra, 650 P.2d  at 1154.

And both parties 
accept the requirement that the award must be within the range of the 
testimony.

"* * * It is hornbook law 
that a jury's verdict in a condemnation case must be within the lower and upper 
range of the evidence." Coronado Oil 
Company v. Grieves, Wyo., 642 P.2d 423, 442 (1982). See 
United 
States ex rel. 
TennesseeValley Authority v. Two 
Tracts of Land, Etc., 532 F.2d 1083 (6th Cir. 1976), cert. denied 429 U.S. 827, 97 S. Ct. 84, 50 L. Ed. 2d 90 (1976).

"* * * In the face of 
conflicting testimony, if the verdict of the jury or award of commissioners is 
within the range of the testimony, the appellate court will generally sustain 
the finding of the lower tribunal. If outside the range of the testimony, such 
awards have generally been set aside. * * *" 5 Nichols on Eminent Domain (3rd 
ed.), § 17.1[4], p. 17-20.

[¶8.]     A majority of the 
jurisdictions apply the "before and after" rule. The alternative to it is a rule 
which fixes the compensation on the value of the land taken plus damages to the 
remainder lands.

"* * * It is quite 
apparent, of course, that some of the practical difficulties and complexities 
involved in application of the first rule [value of the land taken plus damages 
to the remainder land] are obviated by use of the latter method of valuation 
[before and after rule]. The relationship of the part taken to the whole tract 
need not be considered under the latter method, nor need consideration be given 
to the relationship of the remainder area to the original tract. Duplicate 
consideration of the same elements of damage is thereby avoided. Although 
theoretically both methods should lead to the same result, as a matter of 
practical application this is not always the case. Despite such fact, however, 
the simplicity of application of the before and after rule commends itself to 
the courts as the method most likely to attain a result that is fair both to the 
condemnor and the condemnee." 4A Nichols on Eminent Domain (3rd ed.), § 
14.07[1], p. 14-183.

[¶9.]     The verdict form need 
not reflect a "before and after" valuation as must the testimony, but when the 
form of verdict requires a determination of "before and after" values, as here, 
such values must be consistent with the compensation awarded, and the entire 
verdict must reflect a proper "before and after" valuation reasoning by the 
jury. In other words, if the form of verdict is equivalent to a special verdict 
or a general verdict accompanied by interrogatories, the answers to the special 
questions or interrogatories must be supportable by the evidence. Rule 49, 
W.R.C.P.

[¶10.]  Of importance are the required 
determinations to be made by the jury under the "before and after" standard. It 
must find two things: The value of the entire parcel before the taking, and that 
after the taking. These findings must result from the evidence. The amount of 
compensation to be awarded is a simple arithmetic computation from these two 
things but the compensation itself is not that upon which evidence is directly 
submitted. The "before and after" rule expressly confutes reasoning whereby the 
compensation is other than by first ascertaining the before value and then 
ascertaining the after value to both of which a mathematical computation is 
applied in arriving at just compensation.

"* * * [T]he rule should 
be that the fixing by the jury of an `after' value that is not within the range 
of the evidence will be considered reversible error * * *." Commonwealth, Department of Highways v. 
Stephens Estate, Ky., 502 S.W.2d 71, 73 (1973). Also see Roberts v. State, Tex.Civ.App., 350 S.W.2d 388 (1961); and Citizens Electric 
Corporation v. Amberger, Mo., 591 S.W.2d 736 
(1979).

 

[¶11.]  The fact that the jury set an "after 
taking" value outside of the range of evidence reflects a failure on its part to 
properly consider the evidence of "after taking" value. Such is reversible error 
since compensation must be determined by application of an "after taking" value 
ascertained from the evidence.

[¶12.]  This is not to say that the amount of 
compensation resulting from the difference between the "before and after" rule 
is not vital to a proper verdict. If a jury took an "after value" of one witness 
and applied it to a "before value" of another witness, without more, the result 
could be unbelievable. Each witness can use different appraisal methods - 
income, reproduction, market data. Each witness can have a different opinion as 
to the highest and best use - agricultural, residential, commercial, etc. Each 
witness can make adjustments for different items - topography, soil, access to 
utilities, inflation, age of structures, location, etc. Each witness can apply 
different percentages to the adjustments. Each witness can find different costs 
of labor and materials. Each witness can find different rates of depreciation 
and obsolescense. Each witness can use different comparable sales. Each witness 
can differ as to the cost of money or cost of management. These and other 
differences often surface in an eminent domain proceeding. Because of these 
differences, strange results could occur if that applied by one witness in 
obtaining his "before value" were not carried forward for use in obtaining a 
corresponding "after value." For example, if witness Reed's "before" value 
($573,200.00) were used together with witness Williams' "after" value 
($815,000.00), the landowner would owe the condemnor $241,800.00. See Genge v. City of Baraboo, 72 Wis.2d 
531, 241 N.W.2d 183 (1976).

[¶13.]  The jury must gauge the credibility of 
the witnesses and of their appraisal methods and techniques and arrive at a 
"before" and at an "after" value, both within the ranges of evidence presented 
for such purposes. But to avoid an 
unbelievable result, it must also end 
up with a difference between the two within the range of the differences 
resulting from the "before" and "after" values of each 
witness.

"The range of the 
testimony concept has been held to apply to the before and after values as well as to the final award of 
damages." (Emphasis added.) 5 Nichols on Eminent Domain, supra, § 17.1[4], p. 
17-21, 1983 Cum.Supp.

[¶14.]  The jury verdict was within the range of 
the evidence relative to the "before taking" value and relative to the final 
award of damages (differences between the "before and after" values), but it was 
not within the range of the evidence relative to the "after taking" value. A 
final award figure must result from a proper determination of the "before 
taking" value and the "after taking" value. The failure to determine a proper 
"after taking" value, i.e., within the range of testimony for such, was 
error.

[¶15.]  A timely objection was made to the 
verdict for failure to determine an "after taking" value within the range of the 
evidence. The trial court erred in overruling the 
objection.

[¶16.]  Inasmuch as this case must be returned 
for a new trial, it is proper for us to address the other issue presented on 
appeal inasmuch as it is bound to arise in the new trial. Rocky Mountain Oil and Gas Association v. 
State, Wyo., 645 P.2d 1163 (1982); and 
Madison v. Marlatt, Wyo., 
619 P.2d 708 (1980).

[¶17.]  Appellant contends the trial court erred 
in refusing an offered instruction directing the jury to not consider trespass 
damage to appellees' lands in determining compensation. Appellees agree that 
past or future trespass upon the remainder land is not to be considered in 
assessment of damages in partial-taking cases. Coronado Oil Company v. Grieves, supra. 
But appellees note that the only evidence which could possibly pertain to 
trespass damage was the following response to appellant's question on 
cross-examination of witness Williams concerning factors other than two 
comparable sales which were considered by him in arriving at his opinion: "[A] 
primary factor is the fact that Mr. Mackey no longer has sole operation, sole 
control of his entire ranch."

[¶18.]  The court did not abuse its discretion in 
refusing the offered instruction which was premised only on such testimony 
elicited by appellant on cross-examination. The instruction was not sustained by 
the evidence. Beard v. Brown, 
Wyo., 616 P.2d 726 (1980); and Hernandez v. Gilveli, Wyo., 626 P.2d 74 
(1981).

[¶19.]  Reversed and remanded for a new 
trial.

CARDINE, Justice, dissenting, 
with whom ROSE, Justice, 
joins.

[¶20.]  I would affirm.

[¶21.]  This case has now been tried twice to a 
jury. The first trial resulted in a verdict for the landowner in the amount of 
$49,995, Energy Transportation Systems, 
Inc. v. Mackey, Wyo., 650 P.2d 1152 (1982). The second trial resulted in a 
verdict for the landowner in the amount of $26,880. The majority would now send 
the case back for a third trial, not because the verdict is incorrect in amount, 
but because the jury didn't "do it" right. When form takes precedence over 
substance, something is wrong with what is occurring.

[¶22.]  Section 1-26-702(b), W.S. 1977, Cum. 
Supp. 1983, states:

"(b) If there is a 
partial taking of property, the measure of compensation is the greater of the 
value of the property rights taken or the amount by which the fair market value 
of the entire property immediately before the taking exceeds the fair market 
value of the remainder immediately after the taking."

I would hold 
that this statute establishes the method and procedure which must be followed by 
witnesses in first determining and then testifying to the measure of just 
compensation for the taking. Once the witnesses have given their opinion of what 
they find would be just compensation, the jury, then considering all of the 
evidence and testimony and applying their own common sense, experience and 
judgment to it, should return a general verdict after being instructed that the 
award of damage for the taking must fall within the high and low determinations 
established by the evidence. They should not be required to return a special 
verdict or be

"* * * required to 
explain the exact thought processes they utilized nor are they required to 
develop and apply a mathematical formula which can be programmed, computerized 
and then reviewed by the district court like an algebraic equation. * * *" United States v. 573.88 Acres of Land, More 
or Less, in Crawford et al., Counties, State of Indiana, 531 F.2d 847, 849 
(7th Cir. 1976).

[¶23.]  Four expert witnesses testified to the 
fair market value of the ranch before and after the taking by condemnation. The 
value before taking ranged from a low of $573, 200 to a high of $860,000 and 
after taking from a low of $572,382 to a high of $815,000. Each expert also 
testified to the difference between the respective high and low values 
determined by him, which, in his opinion, was the amount appellee should have 
recovered. These differences ranged from a low of $818 to a high of $68,320. The 
verdict, $26,880, falls within the range of verdicts proper in the opinion of 
the experts.

[¶24.]  These types of cases are costly to 
present. Expert opinion evidence is most often required. Too many cases are 
being reversed and sent back for retrial. See, Commonwealth, Depart. of Highways v. 
Stephens Estate, Ky., 502 S.W.2d 71 (1973), and cases cited 
therein; Citizens Electric Corp. v. 
Amberger, Mo. App., 591 S.W.2d 736 (1979). The market value of property is 
always a matter of opinion. The values testified to by the witnesses and the 
numbers they assign are not precise. Yet, the majority seems to treat them as 
precise and the final determinations of just compensation as a figure to be 
arrived at by exact mathematical computation. It has never been that and never 
will be. If the amount of the verdict, in all events, falls within the range of 
just compensation as determined by the witnesses testifying and all of the 
evidence presented, it ought to be affirmed, if it can be sustained on any 
reasonable basis. 

[¶25.]  In this case the jury found the value 
before taking to be $574,800. That was in the low range of value testified to by 
one of appellant's expert witnesses. One of appellee's expert witnesses 
testified that the diminution in value as a result of the taking was 5 percent 
and the other testified it was 18 percent. Appellee's witnesses determined 
values immediately before and immediately after taking as required by § 
1-26-702(b), supra, and correctly determined the percentage diminution. What 
occurred then was that the jury essentially accepted the value before taking of 
appellant's expert; but found not credible his suggestion that the diminution in 
value because of the taking was $818 (.14 percent). The jury then accepted the 
testimony of one of appellee's expert witnesses that the diminution in value as 
a result of the taking was approximately 5 percent, and arrived at a value after 
taking of $547,920. Thus, the jury accepted the testimony of appellant's expert 
to arrive at a value before and the testimony of appellee's expert to determine 
the diminution in value and also the value after taking. These determinations by 
the jury were reasonable, within and supported by the evidence 
presented.

[¶26.]  A number of cases have held 
that

"* * * a jury is at 
liberty to reach its conclusion by blending all of the evidence admitted before 
them, aided by their own experience and knowledge of the subject of inquiry; 
that they are not compelled to accept all the testimony of any witness or to 
reject it all. Moreover, opinion evidence is not conclusive and a jury may 
consider and accept or reject such opinions or it may find its own opinion from 
evidence and by utilizing its own experience in matters of common knowledge. * * 
*" Silberstein v. State, Tex.Civ. 
App., 522 S.W.2d 562, 564 (1975).

I do not propose 
here that we go so far as to permit a jury to return a verdict outside the range 
of fair compensation as established by the witnesses and evidence. That would 
not occur by affirming this verdict. The jury should be allowed considerable 
latitude in determining questions of credibility, weighing and accepting or 
rejecting evidence and resolving conflicts therein. We should affirm the amount 
of this verdict because it is supported by the evidence. This appellee landowner 
has borne the expense of two jury trials now. If a third trial is required and 
he ever makes a recovery for the taking of his property, it will probably be 
consumed by costs and expenses of the trials. That result is of concern and 
should be avoided.

[¶27.]  There is a second reason why this verdict 
ought to be affirmed. I would hold that if there were error, it was harmless 
error, for as we have said before,

"* * * [I]n order [for 
appellant] to obtain a reversal here on such ground, even though his complaint 
might be well founded, he must go further and demonstrate that such claimed 
error prejudiced the substantial rights of plaintiff. [Citations.] On the record 
we conclude that this has not been accomplished." Willis v. Asbury Transportation Co., 
Wyo., 386 P.2d 934, 937 (1963). See also, Joelson v. 
State, Wyo., 674 P.2d 229 
(1984).

[¶28.]  The verdict in the amount of $26,880 was 
a proper verdict. Had the jury been required by the court to retire and correct 
the high and low values in their verdict, they in all probability, after further 
instruction by the court concerning permissible high and low values before and 
after taking, would have done so; and the result would have been the same. In 
this circumstance, what prejudice has appellant shown? What is to be 
accomplished by a new trial?

[¶29.]  I would affirm.