Court Opinion

ID: 875490
Source: CourtListenerOpinion
Date Created: 2013-06-04 20:02:05.410431+00
Date Added: 2024-06-11T11:19:00.166645
License: Public Domain

I N THE SUPREME COURT OF THE STATE OF MONTANA

                         No. 11821

THE STATE OF MON'IANA, ACTING
BY AND THROUGH THE STATE HIGHWAY
COMMISSIOIT OF THE STATE OF MONTANA,
                    Plaintiff and Appellant,        ltjls*q
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FRED i. METCALF and KENNYBELLE                        &
                                                      .
NETCALF, husband and wife, and                       + ~ ~ o P B , G ~   $*               ,.<,?
CARL NELSON and JANE DOE NELSON,                          CLERK OF SUPEEME COURT
husband and wife, or as a single                             STATE OF MONTAI'dU
Inan ,
                 Defendants and Respondents.

                        O R D E R

     I T I S ORDERkXl t h a t the above Opinion promulgated on

A u g u s ~8, 1972, be amended in the foflowing manner:
     Om    page 10, l i n e 16 from the top of the page, strike
the following:
      18
       Too, McLeod was allowed to assume the correctness
      of certain facts testified to by other witnesses,
      but outside his personal knowledge as to whether
      such facts were correct. On retrial such testimony
      should not be permitted, unless the criteria set
      forth here can be met. 1 1
      The petition for rehearing is denied.
      Dated this 25th day of September, 1972.
                                    No, 11821

       I N THE SUPREME COURT O THE STATE O MONTANA
                              F
                              . I
                                          F

                                     1972

THE STATE O MONTANA, ACTING BY AND T R U H THE STATE HIGHWAY
           F                        HOG
COMMISSION O THE STATE O MONTANA,
            F           F

                       P l a i n t i f f and A p p e l l a n t ,

FRED L. METCALF & KENNYBELLE METCALF,
husband and w i f e ,

                      Defendants and Respondents,

Appeal from:   D i s t r i c t Court of t h e Third J u d i c i a l . D i s t r i c t ,
               Honorable Sid G. S t e w a r t , Judge p r e s i d i n g ,

Counsel of Record:

       For Appellant :

           Daniel J. S u l l i v a n argued, Helena, Montana 59601.
           James R, Beck, Highway Department, Helena, Montana 59601.

       F o r Respondent:

           Clayton R, Herron argued, Helena, Montana 59601.

                                                            Submitted:      June 1 9 , 1972
Mr. Justice John Conway Harrison delivered the Opinion of the
Court.

       This is an appeal from a judgment for defendants after a
jury verdict in their favor in the district court of the third
judicial district, county of Granite.    Proceedings in the dis.trict
court were in eminent domain following an award by commissioners
appointed to assess damages as compensation by reason of appro-
priation of defendants' property for highway purposes.    Plaintiff,
State of Montana, acting by and through the State Highway Commis-
sion and hereinafter referred to as the Highway Commission, appeals
and presents three issues for this Court's consideration:
       1 In a condemnation action, when it is demonstrated
        .
that a valuation witness does not possess a peculiar knowledge
of the property beyond that which is possessed by men generally,
but is merely basing his testimony upon unsupported assumptions
and conjecture, is it error for the district court not to strike
the testimony of the witness?
       2.   In a condemnation action, is it error for the district
court to refuse the following instruction:
       1I
       You are instructed that where testimony is
      submitted in an effort to establish just com-
      pensation, and that such testimony is obtained
      from expert witnesses, then, and in that event,
      the opinions as expressed by the experts must
      be founded upon substantiated evidence, and
      must not be based upon unsupported assumption,
      conjecture or speculation.1 1
       3.   When the opinion expressed by a witness is based on
speculation and conjecture and is opposed by undisputed facts
and the dictates of common sense, is it sufficient to support
the award in this case?
      The property taken by the state for construction of the
Interstate highway can be broken down into two parcels.   The
total acquisition was some 16.5 acres.   Parcel No. 1---consists
.
>

    of hay land; the residence and clinic of Dr. Fred L. Metcalf,
    a veterinarian; and a shelter belt and landscaping around the
    residence.     Parcel No. 2   ---   consists of a two acre tract with
    a mound of earth containing a gypsum or gypsite deposit of some
    23,000 tons.
             The entire thrust of this appeal is directed to the value
    of parcel No. 2 and no discussion or issue is made as to parcel
    No. 1. As to the value of the property taken, the jury was given
    three possible verdicts:       (a) it could set the valuation of the
    deposit, (b) it could have set a separate valuation on each
    parcel, or (c) it could have listed the value of the property
    taken, the damages to the remainder and the total award.        The
    jury chose to make only a total award of $125,000, indicating no
    separate valuations,
             The basic facts involved are not contested by either
    party,
             The land involved is part of a twenty acre tract of land
    owned by Fred L. Metcalf and Kennybelle Metcalf, husband and wife,
    hereinafter referred to as defendants.
             The taking was necessary for the purpose of constructing
    a four lane controlled access Interstate highway.        The Metcalf
    property is located some 4 or 5 miles west of Drummond, Montana.
    The entire tract owned by defendants is south of, and adjoining
    on its length primary U.S. Highway No. 10.        South of the tract
    is the mainlhe of the Northern Pacific Railroad.
             The tract is located on a slope rising upward from east
    to west.   The lower and eastern part of the property was used for
    raising grass.    Above that area was the residence and animal
    clinic of defendant, the only veterinarian in Granite County.
    The property around the house was landscaped and had an extensive
    shelter belt, almost surrounding the house.        West and uphill from
    the improved area was the access road from U.S.Highway No. 10
which r a n southerly from t h e highway, thence e a s t n e a r o r i n t o
t h e Northern P a c i f i c right-of-way,           then back n o r t h t o t h e e a s t
s i d e of dekndants' house and               clinic.      This road was a l s o used by
one M r , Nelson t o gain access from U.S.                   No. 10 t o a s i d i n g of
t h e Northern P a c i f i c Railroad c a l l e d Bradham s i d i n g ,
           Other than t h i s roadway, t h e land west of t h e improved
a r e a was i n i t s n a t u r a l s t a t e and would be considered a s grazing
land.      It contained, however, a long, low .mound running approxi-
mately from U.S,            Highway No. 10 i n a s o u t h e r l y d i r e c t i o n t o , and
i n t o , t h e Northern P a c i f i c right-of-way.            The mound covered
approximately two a c r e s of t h e t r a c t .           This mound became important
i n t h i s c a s e when i t was discovered t h a t i t contained and was com-
posed of t h e chemical compound "gypsum" o r because of t h e t e x t u r e
of t h e d e p o s i t , t h e c o r r e c t terminology could be "gypsite", b u t
h e r e i n a f t e r w i l l be r e f e r r e d t o a s "gypsum".
           The n a t u r e of t h e highway a c q u i s i t i o n was t h a t some 16.5
a c r e s of t h e t r a c t were taken, leaving only a s t r i p of land about
3.5 a c r e s i n s i z e between t h e constructed I n t e r s t a t e and t h e
primary Highway No. 10 which was l e f t i n p l a c e a s a frontage road
f o r the I n t e r s t a t e .   The taking took t h e hay land, t h e residence
and c l i n i c , t h e s h e l t e r b e l t and landscaping, and went through
t h e mound containing t h e gypsum.               The roadway t o t h e r a i l r o a d
s i d i n g was preserved by means of a concrete s t r u c t u r e under t h e
I n t e r s t a t e highway.
           A t t r i a l , t h e r e was disputed testimony a s t o t h e exact
value of t h e damage i n f l i c t e d by t h e taking of p a r c e l No. 1.
Defendants introduced testimony t h a t placed t h e i r damages f o r t h a t
p a r c e l a t $70,000; t h e Highway Commission introduced testimony t h a t
fixed damages a t $40,000. But h e r e , on appeal, the main i s s u e i s
whether o r not t h e gypsum d e p o s i t , o r p a r c e l No. 2 , was c o r r e c t l y
valued by t h e jury.
          To find the jury's valuation of parcel No. 2 we can only
ascertain it took the valuation testimony of defendants' witness
XcLeod, or $80,000, as its value leaving the balance of the $125,000
award, or $45,000, as the value of parcel No. 1.       On retrial, the
jury should designate the award for each parcel and then the total,
          The gypsum deposit was discovered by state highway geolo-
gists in 1963.       The purpose of their exploration was to determine
the strata of the mound insofar as it would affect highway construc-
tion.     This type of deposit was not suitable base on which to
construct a highway; consequently, the mound was removed and
stockpiled a short distance from the highway.
          The deposit of gypsum occurred naturally from the evapora-
tion and percolation of ground waters.       The two acre deposit
extended downwards from ground surface at an average overall
depth of 7.8 feet, and varied in depth between 3 and 12 feet.
An average of about .4 of a foot of overburden existed over the
deposit.      The deposit contained 23,500 tons of gypsum which was
85% or better pure gypsum.       It contained 21,000 tons which was
90% gypsum or better, a generally accepted commercial grade of
gypsum.       Gypsum, even though the percentage is less than 90%,
can be used for agricultural purposes.
          Agriculturally gypsum has three main purposes: (1) to treat
alkali soils, (2) to provide sulphur nutrients to soils (the gypsum
here involved contained 17% sulphur on the average), and (3) to
condition soils to allow a greater permeation of water and soil
nutrients.      Gypsum is beneficial to sand-loam soils, silt-loam
soils, and to loam and sandy soils generally. All of these types
of soil exist in the lower valley of Granite County and in western
Montana   .
          Defendants introduced testimony that one retail source in
Hamilton, Montana, has been selling 500 to 600 tons of gypsum for
agricultural purposes per year, and that in western Montana generally
the retail buyers of gypsum in bulk have been paying $10 per ton,
plus shipping costs of $10 per ton.    Defendants contended that if
retail buyers could buy gypsum at a cheaper price, they would buy
and sell more.     Defendants also contended ranchers and farmers
in the Drummond area must pay $22 to $26 per ton retail for sacked
gypsum material and that a few weeks after the discovery of this
gypsum deposit defendants sold approximately 130 tons to farmers
and ranchers in the area at a price of $10 per ton, with purchasers
hauling away their gypsum.    These sales stopped when legal counsel
advised defendants that the state of Montana presently owned the
gypsum.     Defendants also introduced testimony that the cost of
shipping this gypsum to Hamilton would be between $5 to $7.37 per
ton, depending on whether rail or road transportation was used.
They further contended that a market exists for the widespread
use of gypsum in western Montana, and that good public relations
and good advertising work would open the market for rapidly in-
creased sales.
          Defendants argued, insofar as the gypsum property was
concerned, they had established proof of its presence, quality,
and quantity; and that there was a need, demand, and market
available at the location of the deposit.
          The Highway Commission contended the gypsum deposit con-
tained excessive amounts of water; consequently, it would not meet
commercial standards.     Its expert testified the gypsum deposit
contained 25% to 30% free water and the presence of free water
in excess of 25% disqualified the deposit as being commercial.
Another Commission expert witness testified the deposit was
definitely too small to be commercially usable and the best that
defendants would be able to do was to make local sales to local
people.    He further testified he was unaware of any deposit of
this nature that had been commercially developed.
       The Highway Commission alleges that a material part of the
verdict was based on speculation and conjecture; therefore, the
judgment should be reversed and a new trial ordered with directions
that the value of the property should be established only on sub-
stantiated, factual evidence. It argues defendants did not produce
a witness who, by study or experience, understood the true nature
of the deposit of gypsum, so as to be qualified to testify as to
its economic value for commercial purposes.
       Dr. Paul B, Alexander, Ph.D., a professional geographer and
consulting geologist was the defendants' principal expert witness.
He is a professor at the University of Montana and at the time he
testified was president of the Montana Explorations Company, a
mineral exploration company.    Prior to his teaching career, he
was a geologist for the Anaconda Company for five years, had served
as a consultant for various oil companies in California and Canada
and had been self-employed. He was hired by defendants and made
his study of the deposit while it was still in place.   Under his
direction, samples of the gypsum were taken and sent to various
laboratories for valuation.    He determined the deposit contained
some 23,140 tons of 85% or better gypsum, and testified it had
commercial value as an agricultural fertilizer.
       Defendants then produced as a witness one Roy McLeod of
Philipsburg, Montana.   McLeod had been superintendent, assistant
manager, and manager of the Trout Mining Company of Philipsburg
for 18 years.   Although no longer in the mining business, McLeod
was still active, from time to time, as a consultant on value of
mining properties.   Over plaintiff's objections, McLeod testified
the value of the gypsum was $80,000 for the acreage involved.
       The Highway Commission contends McLeod did not have suffi-
cient knowledge to make the estimate he did, and that he should
not have been allowed to testify as to value of the deposit
because he: (1) had never seen the deposit in question, (2) knew
nothing of gypsum, (3) had never studied the economic aspects
of the gypsum market, ( ) had no knowledge of sale of land con-
                       4
taining gypsum in place, (5) had no knowledge of the quality
standards applicable to the chemical compound to make it commer-
cially marketable, and (6) had never investigated any gypsum
deposits.
        In addition to their two expert witnesses, defendants
introduced testimony from individuals directly involved in
agriculture who testified as to the commercial use of gypsum,
County Extension Agent D. L, Becker testified as to the alfalfa
acreage in the county; David Dutton, a rancher in the area who
had purchased a 12 ton load from defendants, told of its use and
value as a fertilizer; Clifford Nelson, a rancher and purchaser,
testified as to its agricultural value; as did Ernest Wight,
another rancher.   All were in agreement that the deposit could
be beneficially used when mixed with the clay type soil of the
area.
        Also, Martin Ueland of Hamilton, manager of the Bitter
Root Cannery testified as to the use of gypsum in that area,
its price and quantity used.   Donald Graham, Corvallis, soil
scientist at the Western Branch Experiment Station, testified
the soil of most of the western Montana counties, particularly
those counties where hay and alfalfa are important crops, would
respond to the application of gypsum.   He introduced slides of
experiments which showed as high as a sevenfold increase in an
alfalfa crop after the application of gypsum.
        With the foregoing as background, we now look to the issues
raised by the Highway Commission.   First, we will consider the
alleged error by the court in refusing to strike the testimony
of witness McLead.   Admittedly both Alexander and McLeod were not
gypsum experts, but both have credentials in the mining field.
Due to the type of deposit involved here, it would have been
almost impossible to have found an expert who could testify as
an expert, as to the type of deposit found. A11 witnesses, for
both plaintiff and defendants, testified that the type of deposit
found here is an unusual deposit, not often found.     However, Dr.
Alexander, a teaching geologist, most certainly has the necessary
professional credentials to help the jury establish the value of
the deposit here involved.
           On rebuttal, Dr. Alexander testified, in answer to the
Highway Conmission's expert witness Criswell, that in evaluating
a deposit such as this one two views must be considered ( ) the
                                                            1
I I large company" evaluation, and (2) the "small guy" valuation.

He testified that a large company would find such a deposit
valueless, but that a small operator could commercially develop
the deposit by using a back-hoe or prime mover to load the gypsum
on trucks.
          Wilbur Criswell, the expert witness for the Highway Commis-
sion, was a graduate of the Montana School of Mines with a B.S.
in mining engineering.     He had pursued this occupation for some
24 years and had considerable experience in locating, evaluating
and securing market information on gypsum, but for the most part
he was interested in rock gypsum deposits as opposed to a small
II
     gypsite" deposit, as here involved. He felt that such a small
deposit had no commercial use, at least not to the people for whom
he had worked.
          Reviewing the expert testimony before the jury, we find
( ) Dr. Alexander testified that in his opinion the deposit had
 1
commercial value, but set no figure; (2) Mr. Criswell testified
it had little or no value, but (3) Mr. McLeod testified the
deposit had a value of $80,000.     Mr. McLeod was allowed to testify
over repeated objections by plaintiff Highway Commission, and we
 f i n d t h a t allowing such testimony was p r e j u d i c i a l e r r o r n e c e s s i -
 t a t i n g r e v e r s a l and a new t r i a l .
            Here, McLeod was allowed t o t e s t i f y and s e t a f i g u r e based
 on a h y p o t h e t i c a l q u e s t i o n which assumed f a c t s n o t i n evidence
                                                                            the
 a s t o t h e market v a l u e s of gypsum and t h e v a l u e o f / gypsum i n
 place.       C l e a r l y , from t h e evidence produced and from ~ c ~ e o d ' s
 experience a s a mining man, he could n o t t e s t i f y a s t o a gypsum
 d e p o s i t what amount a w i l l i n g buyer would pay and a w i l l i n g s e l l e r
 would a c c e p t , n e i t h e r of whom was a c t i n g under d u r e s s , which i s
 t h e accepted l e g a l d e f i n i t i o n of t h e f a i r market v a l u e of p r o p e r t y .
 C e r t a i n l y , h i s f i g u r e of $80,000 had a m a t e r i a l e f f e c t on t h e
 verdict.         The Highway Commission moved t o s t r i k e t h e answer t o
 t h e h y p o t h e t i c a l q u e s t i o n , b u t was o v e r r u l e d .   The l e n g t h y
 h y p o t h e t i c a l q u e s t i o n covered a l l of t h e f a c t m a t e r i a l l i s t e d
 h e r e t o f o r e , and more, b u t i t lacked t h e e x p e r t i s e needed t o provide
 information on a w i l l i n g buyer and a w i l l i n g s e l l e r .                    T-os, M-eod
was al-1-d           to a-ssume Che c-orret-ess                   of   cer-tagit. f-aets test434-d
 t+ -by ocher Wi-t*e.sser;-,            bu* o u t 4 d e hi-s per-sonel- knowledge as to-
whether sueh Eacas were c+errec%.Qn-retxza-1 such testirneny s h m l d
 not be per-mi&&ecl,           un1.e~-s the cxi---i.-~~           set for*        here can be met.
            Both t h e Highway Commission and defendants r e l y on two
cases of t h i s Court r e g a r d i n g w i t n e s s e s competent t o make v a l u a t i o n
 figures.         S t a t e v. P e t e r s o n , 134 Mont. 52, 63, 328 P.2d 617;
 S t a t e Highway Comm'n v . A n t o n i o l i , 145 Mont. 411, 416, 401 P.2d
563.
            I n Peterson, t h i s Court s a i d t h a t t o q u a l i f y a s a w i t n e s s
 competent t o g i v e opinion testimony a s t o v a l u e , t h a t w i t n e s s
 must have:
            "* *   9~ some p e c u l i a r means of forming an i n t e l l i g e n t
            and c o r r e c t judgment a s t o t h e v a l u e of t h e p r o p e r t y
            i n q u e s t i o n beyond what i s presumed t o be possessed
            by men g e n e r a l l y . 1 1
         In Antonioli, the Court stated:
         "'Where the testimony submitted to the jury and
         relied upon by the landowners in their efforts
         to establish just compensation is testimony from
         exDert witnesses. the opinions as expressed by
         thb experts must'be founded upon substantiated
         evidence and must not be based upon unsupported
         assumption, conjecture or speculation. "' (Emphasis
         added).
See: United States v. Certain Land, Etc. (~.c.Ala.l963), 214
F.Supp, 148, 150; Texas Electric Service Co. v. Vest (Tex.Civ.
App. 1958), 310 S.W.2d 733; Los Angeles County v. Signal Realty
Co., 86 Cal. App. 704, 261 P. 536; State Highway Comm'n v. Smith
&   Jesson, 141 Mont. 302, 377 P.2d 352.
        Clearly, based on the holdings of the above cited two
Montana cases, McLeod lacked the peculiar knowledge required to
set the value estimate of $80,000.
        In view of our holding on the first issue, it is unnecessary
to consider appellant's second and third issues which to some
extent have been covered in our discussion herein and they should
not arise on retrial.
        Judgment is reversed and the cause remanded to the district
court for a new trial.
                                                                   /

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                                   R   o    c     i     h      i       W

We Concur:                         L l
................................
     Chief Justice

     Associaa Justices.