Case Name: The State of Washington, Respondent, v. The Mottman Mercantile Co., Inc., Appellant
Court: Washington Supreme Court
Jurisdiction: Washington
Decision Date: 1958-02-20
Citations: 51 Wash. 2d 722
Docket Number: No. 33924
Parties: The State of Washington, Respondent, v. The Mottman Mercantile Co., Inc., Appellant.
Judges: 
Reporter: Washington Reports
Volume: 51
Pages: 722–736

Head Matter:
[No. 33924.
En Banc.
February 20, 1958.]
The State of Washington, Respondent, v. The Mottman Mercantile Co., Inc., Appellant.
Pebbles & Swanson and Smith Troy, for appellant.
The Attorney General and Paul E. Sinnitt, Special Assistant, for respondent.
Reported in 321 P. (2d) 912.

Opinion:
Hill, C. J.
The state of Washington seeks to condemn a tract of land, containing 15.6 acres, for the purpose of acquiring material for highway construction, as it is empowered to do by RCW 47.12.010. That statute provides, that the state may acquire certain property and property rights "including deposits of road materials and rights-of-way."
There was a verdict in the sum of "Three Thousand Three Hundred and Fifty Dollars ($3,350) (150.00 Per A.))." One hundred and fifty dollars per acre would have been two thousand three hundred and forty dollars; but an additional one thousand dollars was added, by stipulation of the parties, for the timber on the property.
From the judgment and decree of appropriation entered on the verdict, the owner (Mottman Mercantile Co., Inc.) appeals.
Witnesses for the state testified that, in their opinion, the fair, cash value of the tract as acreage, and without the timber, was from one hundred twenty-five dollars to one hundred and fifty dollars an acre. These witnesses thought the highest and best use of the property was for residential purposes (subsistence farms), and while giving consideration to the possible use of the property as a gravel pit, regarded it as no more valuable for that purpose because of the claimed excess of supply over demand for gravel similar to that on the property.
The property owner's principal, expert witness testified that the property's highest and best use was as a "potential" gravel pit; that it had no other practicable use; and that, as such, it had a market value of six hundred dollars an acre, or nine thousand three hundred and sixty dollars, which, with the one thousand dollars for the timber, made a round figure of ten thousand three hundred and fifty dollars. George Mottman, the president of the corporation which owned the property, placed the value at twenty-four thousand dollars.
The property being acquired by the state is referred to throughout as "pit site J-49," and the state's witnesses concede that it contains 283,000 cubic yards of usable material, and that it could be used for "selected roadway borrow" and for "crushed stone surfacing." It is generally referred to throughout the testimony as gravel.
In view of the fact that there is no suggestion that the state could acquire such material for less than ten cents a cubic yard, under a private enterprise economy, it would appear to be a very profitable acquisition for the state. The ultimate value or benefit to the state is, of course, not the criterion, and it cannot be argued that the property owner is injured because the state is benefited.
The purpose of the condemnation proceeding at this stage is to determine the fair market value of the property, without any consideration of the use to which the state is going to put the property or whether the property owner desires to sell.
Since there was evidence that the highest and best use of the 15.6 acres of land, with which we are here concerned, was as a gravel pit, the property owner was entitled to present any evidence which would enable the jury to determine its fair market value for that purpose. Despite the fact that it is obvious that no one would either buy or sell a gravel pit without having some idea of the amount of gravel available, and its value in its natural condition, the trial court, at the state's insistence, kept out proffered evidence as to the present value of the gravel in its natural state, on a cubic yard basis.
This error stems from a well recognized and sound general rule, i.e., that it is improper to arrive at a conclusion concerning the value of property which has a mineral content by multiplying the assumed number of cubic yards of material available times a given price per unit. United States v. Land In Dry Bed of Rosamond Lake, Cal. (1956), 143 F. Supp. 314.
Even where, as in this case, the amount of usable material is not assumed, but conceded, no one would argue that the value of the land is the number of cubic yards available, multiplied by a unit price. If one were to attempt to apply such a test, as pointed out by the state in its brief,
"... you are immediately in a complete field of speculation as to market demand, how many years will that demand be present, how many millions or hundreds of millions of cubic yards of like materials are available in the area, if all are put on the market at the same time what happens to the market, what are the costs of extracting the materials, what are marketing costs, together with many other variable factors which affect the actual yardage costs of materials."
However, from the generally recognized rule to which we have referred, the state reasoned that evidence of the present value of gravel, in its natural state, on a cubic yard basis was inadmissible, which is a non sequitur. Nor does our opinion in Seattle, Port Angeles & L. C. R. v. Land (1914), 81 Wash. 206, 142 Pac. 680 support the conclusion that such testimony was inadmissible. The property owner, in that case, was trying to establish speculative profits, based upon his proposed method of handling the gravel. Nichols in his work on Eminent Domain, clearly states the applicable rule:
"If the extent and quality and value of the stone as it lies on the land may not be considered, there would be no way by which the value of the land with the minerals could be shown. All legitimate evidence tending to establish the value of the land with the minerals in it is permissible. This is not to say that such minerals are to be separately evaluated but that consideration may be given to the quantity of the mineral that can be extracted and to the value thereof purely as evidence for arriving at the value of the land." 4 Nichols Eminent Domain (3d ed.) 245, § 13.22 [1],
In National Brick Co. v. United States (1942), 131 F. (2d) 30, 31, in discussing the admissibility of evidence as to the per ton value of sand in place on the property being ac quired, which evidence had been rejected by the trial court, the District of Columbia court of appeals said:
"This opinion of the Court was, of course, wrong, for no rule is better established than that the special value of land due to its adaptability for use in a particular business is an element which the owner of land is entitled to have considered in determining the amount to be paid in just compensation.
"So much as this was said by the Supreme Court in Mitchell v. United States, 267 U. S. 341, 45 S. Ct. 293, 69 L. Ed. 644. And we know of no other evidence by which the jury could be properly guided in determining the value of the property than to be told the per ton value of the sand as it lay, or without this knowledge, how the jury could ever have reached a judgment based on anything more than guess or speculation."
Counsel for the property owner in this case made the following offer of proof:
"May it please the Court, on the authority of what is said in the Roeder case, we offer to prove by this witness, sworn and testifying, that if permitted to testify, he would testify that the value of each yard of sand and gravel and building material contained in the property of the respondents, pit site J-49, is 10^ per yard."
To this offer, the attorney for the state stated its objections as follows:
"Objection, Your Honor. My objection to the offer of proof is that it is based upon an improper method of arriving at a conclusion of value."
That objection was sustained.
It was legitimate evidence, not as affording a measure of recovery, but as explaining and supporting the estimates made of the market value of the property. See Seattle & Montana R. Co. v. Roeder (1902), 30 Wash. 244, 70 Pac. 498, 94 A. S. R. 864; Cade v. United States (1954), 213 F. (2d) 138. The error in refusing to admit it, in this case, was, of necessity, prejudicial because it prevented the property owner from presenting to the jury this evidence as to the value of the gravel, in place on the land, in support of his theory that the highest and best use of pit site J-49 was as a gravel pit.
The trial court could properly instruct the jury, as it did, that the value of the property was not to be "based upon any method of multiplying a certain total cubic yards of gravel times a certain price per yard." As was said in United States v. hand in Dry Bed of Rosamond Lake, Cal., supra,
"As in all cases involving the opinion of the expert as to fair market value, the jury should be instructed that the factors considered by the expert are not in themselves direct evidence of the fair market value of the land condemned, but may be considered by the jury only for the purpose of determining what weight, if any, the jury accords to the testimony of the expert in his ultimate opinion as to the fair market value of the land in question as of the date of taking."
There is no contention but that the jury could have concluded that the amount of gravel contiguous to pit site J-49 was so great, and the foreseeable demand so slight, it was more valuable for home sites than it was for a gravel pit. That was the state's position, and it put in substantial evidence on that theory. The property owner was entitled to present his theory that the highest and best use of pit site J-49 was that for which the state was acquiring it, i.e., a gravel pit. The refusal to receive his evidence as to the value of the gravel in place eliminated an important factor in determining the market value of pit site J-49. Such evidence is permissible because, as Nichols points out,
"If the extent and quality and value of the stone as it lies on the land may not be considered, there would be no way by which the value of the land with the minerals could be shown." 4 Nichols, Eminent Domain, supra.
March 22, 1957, the ninth circuit court of appeals in Phillips v. United States, 243 F. (2d) 1, 4, reversed the district court for the eastern district of Washington, southern division, and sent a case back for retrial because the trial court had unduly restricted the property owners in their evidence as to the value of mineral rights. (Oil rights in that parti cular case.) In that case, the circuit court quotes from Mississippi & Rum River Boom Co. v. Patterson (1879), 98 U. S. 403, 407, 25 L. Ed. 206, as follows:
" Tn determining the value of land appropriated for public purposes, the same considerations are to be regarded as in a sale of property between private parties. The inquiry in such cases must be what is the property worth in the market, viewed not merely with reference to the uses to which it is at the time applied, hut with reference to the uses to which it is plainly adapted; that is to say, what is it worth from its availability for valuable uses?' "
It further quotes from Simpson v. Shepard (1913), 230 U. S. 352, 434, 57 L. Ed. 1511, 33 S. Ct. 729, 754, as follows:
" 'The ascertainment of that value is not controlled by artificial rules. It is not a matter of formulas, but there must be a reasonable judgment, having its basis in a proper consideration of all relevant facts.' [Emphasis supplied.]"
Unless we can say that if we were buying a gravel pit we would not regard the amount of the gravel, or its value in the land, as a relevant fact in determining its market value, we must of necessity hold that the evidence offered should have been admitted.
The property owner also urges that instruction No. 8 was erroneous for the reason that it "unduly emphasized for the consideration of the jury the factor of acreage property." This assignment of error is also well taken.
What seems to us a very fair, clear, accurate, and comprehensive statement of the law applicable to the case was slanted unfairly against the property owner by the injection of instruction No. 8, which tells the jury that they are to "consider all of the property . as acreage property," and, after referring to a consideration of the property's adaptability for the extraction of gravel, it tells the jury that
" . . . as this property is not now being used for that purpose and at present is acreage property, you are to arrive at your verdict by valuing this property as acreage property."
This instruction is in conflict with instructions Nos. 7, 7A, and 9, which tell the jury that in determining the value of the land being taken, they are not limited to the value of the land for the purpose for which it is or has been used. However, those instructions are general and abstract statements of law, and instruction No. 8 is slanted, specific, explicit, and, we believe, prejudicial.
The failure to give a requested instruction relating to the consideration that may be given to the value of the "building material that could be gotten from the land," is also assigned as error.
It is true that the language of the instruction receives support from portions of the opinion in Seattle & Montana R. Co. v. Roeder, supra; that case makes it clear, however, that
" . . . the profits or price or value of the minerals, if the minerals themselves are taken out, may not be considered, yet the value and extent and quality of the stone, or the buildings, or the timber, as the case may be, as it exists upon the land may be considered."
The limitation, "as it exists upon the land," is not included in the proposed instruction, and it emphasizes, as a guide to value, evidence which is admissible only to explain and support the estimates made of the market value of the property. The trial court did not err in refusing to give the requested instruction in the form suggested.
Our conclusion that there must be a new trial for the reasons indicated renders it unnecessary to consider the appellant's assignments of error predicated upon the denial of its motion for mistrial.
New trial granted.
Donworth, Finley, Weaver, Rosellini, and Foster, JJ., concur.