Court Opinion

ID: 9678998
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:38:00.51002+00
Date Added: 2024-06-11T18:17:09.502591
License: Public Domain

Newton, J.,
concurring in part and dissenting in part.
This case has been a difficult one to resolve. It has been before the court for many months and has received constant attention during that period. The opinion of White, C. J., now represents the thinking of a majority of the members of this court. I agree that the judgment obtained by the lessee Gerhold Company, a corporation, should be affirmed, but I respectfully dissent from that portion of the opinion which tends to affirm the judgment obtained by the plaintiff Iske.
The facts regarding the gravel bed found on plaintiff’s property, Cedar Island, are adequately set forth in the majority opinion with the exception of the, provisions contained in the Gerhold Company lease, the same being, in effect, a contract for the removal of the gravel on a royalty basis.
Evidence was received of the prevailing royalty rates paid to landowners for gravel by firms leasing properties *52for the purpose of producing gravel. The plaintiff Ger-hold Company, a corporation, held such a lease on Cedar Island, the island in question, providing for the, payment of royalties considerably in excess of those found elsewhere in the area. At the time of the institution of this action, this company had not produced or sold any gravel from the Cedar Island site, but was engaged in preparations therefor. The Gerhold Company lease runs for 10 years, with an option for renewal for an additional 10 years. It provides for a payment of 15 cents per cubic yard for all sand, sand gravel aggregate, and overburden material removed and sold from the premises and for 18 cents per cubic yard for all road gravel removed and sold. It further provides that in the event the lessee fails to pump or excavate any materials from the leased premises for the period of 12 consecutive months, the lessor may terminate the lease and he may also terminate the lease if the, lessee in any calendar year fails to produce sufficient sand and gravel to entitle the lessor to receive at least $750' in rental royalties. The lease contains no provision whatsoever for the creation of a lake as the result of any pumping activities in connection therewith.
Evidence was introduced by plaintiff showing that this site may have had possibilities as a recreation area, particularly upon any lake that might be left following completion of the gravel-mining operations. In this connection, plaintiff introduced an exhibit consisting of a plat overlaid on an aerial photograph of Cedar Island showing a perfectly formed lake and a subdivision of the area into lakefront and riverfront lots. There was also evidence of the value of such- lots for rental or sale as observed on other nearby lake or riverfront areas.
Two expert witnesses testifying for plaintiff Iske fixed the market value of the island at the time of its taking at $825,000 to $925,000 and $1,500,000 respectively. They stated that they were unable to find and knew of no comparable areas which had been sold on the market in *53recent years; that their opinions were, based upon all attendant factors, including the quantity of gravel that could be recovered, the royalty rate provided in the Ger-hold Company contract, the possibilities of developing the area, after the removal of the gravel, into a recreation area such as was revealed by the lake and 232 lots appearing in the plat designated as exhibit 16, the value of such lots for rental and sale purposes, the possibilities of use for industrial purposes, and all other surrounding factors. The evidence revealed that such recreation development could only be completed after the gravel-mining operations had been completed which would require a minimum period of 10 to 12 years although it would be possible to take advantage of or to partially develop the site for recreational purposes as the gravel mining progressed.
Expert witnesses produced by the defendant testified to numerous sites found in the general area of Cedar Island and Omaha which had been acquired by firms engaged in the mining or production of gravel on the open market. On the basis of such sales, they gave their opinions of the market value of Cedar Island at the time of its taking. These, witnesses valued the property at $85,000, $90,000, and $106,232 respectively.
It is a general rule that a landowner, in an eminent domain action, is entitled to recover the value of his nroperty for any purpose for which it is fitted or may be used in the immediate future. See, Sump v. Omaha Public Power Dist., 168 Neb. 120, 95 N. W. 2d 209; Lybarger v. State, 177 Neb. 35, 128 N. W. 2d 132. In this instance, it appears to be generally conceded that the most advantageous use to which Cedar Island could be put would be that of gravel production. It is contended that consideration should not be given to the development of recreational possibilities because that could’ not be done until after the gravel had been at least partially removed from the island.
Defendant urges that the trial court erred in permit*54ting the introduction of a plat purporting to show a theoretical lake created on Cedar Island and a subdivision of the remainder of the island into 232 waterfront lots, together with the possible sale or rental value of such lots. It is said that the development of the island after the removal of the, gravel deposits for recreational purposes cannot be shown because such use was not so reasonably probable and so reasonably expected in the immediate future as to affect the market value of the land. Ordinarily any factor which affects the present market value of the property may be shown. See, 27 Am. Jur. 2d, Eminent Domain, § 280, p. 70; Pieper v. City of Scottsbluff, 176 Neb. 561, 126 N. W. 2d 865; Langdon v. Loup River Public Power Dist., 144 Neb. 325, 13 N. W. 2d 168; Papke v. City of Omaha, 152 Neb. 491, 41 N. W. 2d 751.
As a general rule: “The uses which may be considered must be so reasonably probable as to have an effect on the present market value of the land; a purely imaginative or speculative value cannot be considered. There must be a possibility considerable enough to be a practical consideration and actually to influence prices. For example, although, when a tract taken by eminent domain is used as a farm, the owner is entitled to have its possible value for building purposes considered, the jury or other tribunal is not permitted to determine how it could best be divided into building lots, nor conjecture how fast they could be sold, nor at what price per lot. The fair market value of undeveloped land immediately before condemnation is not a speculative value based on an imaginary subdivision and sales in lots to- many purchasers; it is the fair market value of the land as a whole in its then state according to the purpose or purposes to which it is best adapted and in accordance with its best and highest capabilities, and it is not proper for a jury to consider an undeveloped tract of land as though a subdivision thereon is an accomplished fact.” 27 Am. Jur. 2d, Eminent Domain, § 280, p. 72.
*55“Evidence based on conjecture and speculation is inadmissible. The owner cannot base his estimate of value on the profits which he would expect to derive from a speculative enterprise; and it is improper on the issue of market value to admit evidence showing the number of building lots into which the tract could be divided, that a witness would be willing to buy lots if the land was subdivided, what such lots would be worth separately, or the value, of the property based on the value of lots shown by a preliminary plat, where such lots did not exist, although such evidence is admissible on the issue of the suitability of the tract for subdivision purposes.
“On the other hand, where use for subdivision purposes is not merely speculative and too remote to influence present market value, evidence relative to the division of the property into residential lots and its net value for such purposes after deduction of improvement costs has been held admissible, and it has been held that evidence as to the number and value of lots in a going subdivision and their kind and character is admissible; however, the possible future value if subdivision were made may not be shown. Evidence of a subdivision made after the condemnor hias made entry on the land but before the institution of the condemnation proceedings is inadmissible to establish the market value of the property.” 29A C. J. S., Eminent Domain, § 273 (2), p. 1196.
As may be gathered from the foregoing, a division exists among the authorities on the question of admissibility of a plat of a proposed but nonexistent subdivision. Some authorities hold such a plat inadmissible for any purpose. Others admit it for the sole purpose of showing the susceptibility of the land in its existing condition to sudivision and its adaptability to commercial or residential use. See Commonwealth v. Evans (Ky. App.), 361 S. W. 2d 766. In the present case we do not have a situation such as is ordinarily encountered dealing with a tract of land immediately adjacent to a growing municipality *56which is, in its then or existing condition at the time of the taking, adapted to platting and to commercial or residential use. Here we are dealing with a tract which it is conceded will be very materially altered by the removal of gravel before it can be platted. There is no way to ascertain its condition after the removal of the gravel or its adaptability to platting at that time. We are dealing, not with a reality, hut with an unknown and conjectural element. The plat is not admissible in this ease for any purpose.
Although the authorities diverge on the question of admissibility of a plat of a proposed subdivision, they are almost unanimous in holding that it is improper to show the value of lots in a prospective subdivision as an element to be considered in determining value.
In the case of E. M. Kerstetter, Inc. v. Commonwealth, 404 Pa. 168, 171 A. 2d 163, it was held: “Equally improper is evidence showing how many building lots the tract under consideration could be divided into, and what such lots would be worth separately.” See, also, State Highway Commission v. Deal, 191 Or. 661, 233 P. 2d 242; Barnes v. Highway Commission, 250 N. C. 378, 109 S. E. 2d 219; Northern Ind. Pub. Serv. Co. v. McCoy, 239 Ind. 301, 157 N. E. 2d 181; Thornton v. City of Birmingham, 250 Ala. 651, 35 So. 2d 545, 7 A. L. R. 2d 773; Louisiana Ry. & Nav. Co. v. Baton Rouge Brickyard, 136 La. 833, 67 So. 922.
Further evidence of the prevalence of this rule may be found in the following recent decisions: City of Medina v. Cook (1966), 69 Wash. 2d 574, 418 P. 2d 1020. See, also, City of Corpus Christi v. Polasek (Tex. Civ. App. 1966), 404 S. W. 2d 826; State, by Lord v. Kohler (1964), 268 Minn. 77, 128 N. W. 2d 90; Arkansas State Highway Comm. v. Potts (1966), 240 Ark. 506, 401 S. W. 2d 3; Redondo Beach School Dist. v. Flodine (1957), 153 Cal. App. 2d 437, 314 P. 2d 581; Arkansas Louisiana Gas Co. v. Howard (1966), 240 Ark. 511, 400 S. W. 2d 488; Arkansas State Highway Comm. v. Watkins (1958), 229 *57Ark. 27, 313 S. W. 2d 86; Coral-Glade Co. v. Board of Public Instruction (Fla. App., 1960), 122 So. 2d 587; State Road Comm. v. Ferguson (1964), 148 W. Va. 742, 137 S. E. 2d 206; State v. Willey (Tex., 1962), 360 S. W. 2d 524. See, also. 5 Nichols (3d Ed.), Eminent Domain, § 18.11(2), pp. 159, 160, and 161.
The majority opinion states that the recent cases hold contrary to the propositions mentioned on admission of plats. The foregoing rules are still the rules in effect in a majority of the jurisdictions in this country and reference to those cited is convincing of the incorrectness of the statement made in the majority opinion. It will be noted that most of the cases cited are of very recent origin.
As a general rule, the capitalization of rents and profits derived solely from the intrinsic nature of the property and not from a business conducted thereon is a valid criterion of value. See, Annotation, 65 A. L, R. 455; Annotation, 134 A. L. R. 1125. It is also a general rule that future income from a use to which the property could be adapted, but for which it was never used, is too uncertain to be accepted. See, Annotation, 65 A. L. R. 464; Annotation, 16 A. L. R. 2d 1113. As heretofore pointed out, the quantity and value of minerals such as gravel may be shown. This is sometimes regarded as an exception to the foregoing rules, but is not such in fact. Income derived from a sale of gravel is not a rent or profit derived solely from the intrinsic nature of the property, but is rather income derived from a sale of a capital asset, that is of the property itself. How then are these rules applicable to the capitalization of rents from prospective lots which are not only yet to be platted but yet to be created? Obviously evidence in this regard is subject to exclusion under the rule that future income from a prospective use cannot be considered as a criterion of value.
This court has held that evidence of rentals received in the past is properly admissible as a criterion of value. *58In the case of Graceland Park Cemetery Co. v. City of Omaha, 173 Neb. 608, 114 N. W. 2d 29, the court stated: “We point out that a capitalization of anticipated profits is not a proper method of fixing the value of property. Whether anticipated profits would actually be made ordinarily depends on so many contingencies that a verdict cannot be grounded on them. Experience teaches us that future paper profits are more often illusory than real.” In direct contradiction of this statement, the majority opinion now holds that anticipated rents and profits from the rental or sale of recreation lots are properly admissible and a proper criterion of value.
It appears that even where a piece of property is readily and immediately available for subdivision purposes, it is not permissible to show the number of lots into which it could be subdivided and the values of such lots when separately sold. In the present instance, we are dealing with an island which, in its: present condition as above cited, has some slight recreation,al possibilities and upon which additional recreational possibilities can possibly be developed. The evidence of the plat and subdivision introduced in this case by the plaintiff Iske assumes the creation of a perfectly formed lake which is now nonexistent. There is evidence in the record that the gravel-pumping operations may result in the creation of a lake on this' island. There is no evidence that a lake of this particular size and type can or will result. On the contrary, there is evidence introduced by the defendant to the effect that the formation of such a lake would not be feasible. As a direct result of the removal of the gravel, the base would be destroyed. Attention is also called to the fact that the Gerhold Company contract does not require the construction of a lake of any type nor does it require that the gravel be removed within any specific period of time. The only binding provision in the contract is that it remove sufficient gravel each year so that the royalty payment to plaintiff Iske will amount to $750. Under this provision of the contract, it is con*59ceivable that the gravel may not be removed, for a period of 25 to 50 years, if then, and the contract may be subject to forfeiture or abandonment. In fact, the contract itself appears somewhat speculative in that the amount of royalty that the Gerhold Company has agreed to pay is considerably higher than that paid anywhere else in the general area and it is possible that should the lessee find that he has priced himself out of the market, he may cease operations altogether.
In the recent case of Lybarger v. State, supra, it was stated: “ ‘The evidence as to the adaptability of property for certain uses must be limited to uses reasonably anticipated in the immediate future.
“ "The adaptability for uses which may be considered must be so reasonably probable and so reasonably expected in the immediate future as to affect the reasonable market value of the land at the time the land is taken or damaged.’ ” Can it be said, with due consideration to logic and common sense, that the creation of a recreational area such as is evidenced by the plat in this case is either “reasonably probable” or “reasonably expected in the immediate future?”
Whether or not a satisfactory lake would result from the gravel-pumping operations and the property could be satisfactorily subdivided is entirely without foundation, theoretical, and speculative as is also the value of such lots in the somewhat distant future, particularly in view of the fact that exhibits in evidence disclose there are a considerable number of such undeveloped lakes existing in the area. It would, therefore, appear that the present case is a much more exaggerated one than those to which the foregoing rules are ordinarily applied. I conclude that this evidence was not admissible and was not a factor which could be reasonably considered by an expert witness in arriving at an opinion as to the present value of the land in question. In this case both of plaintiff’s expert witnesses testified that in arriving at their estimates of value, they considered, as a material *60element of such value, the recreational features evidenced by the proposed subdivision and plat. Such evidence being inadmissible, it is apparent that there was not a proper foundation for the evidence of these witnesses. The opinion of an expert witness has no probative force unless the assumptions for it are shown to be true. Blobaum v. State, 179 Neb. 304, 137 N. W. 2d 855; Cover v. Platte Valley Public Power & Irr. Dist., 167 Neb. 788, 95 N. W. 2d 117; Pueppka v. Iowa Mut. Ins. Co., 165 Neb. 781, 87 N. W. 2d 410.
In an attempt to nail down the decision arrived at in the majority opinion, the following rule followed in a few jurisdictions is mentioned: “A party may not successfully complain of the introduction of evidence, of a like character to that which it subsequently introduced, even if it is developed on cross-examination.” I submit that this is entirely too broad a statement of the rule. Such a rule, so broadly interpreted, simply provides a ready vehicle for an appellate court to dispose of almost any case without regard to- its merits and leads to unfairness; and injustice. Were this rule to be literally interpreted, it would mean that in an eminent domain case after the plaintiff had rested, the defendant who also seeks to introduce evidence of the value of the property taken, would be deemed to have waived any error whatsoever found in plaintiff’s evidence of value if he, the defendant, introduced evidence on a like subject. The rule has been altogether too broadly interpreted in a number of jurisdictions. 1 Wigmore on Evidence (3d Ed.), § 18, p. 344, states: “Another instance is the curing of an error of admission by the opponent’s subsequent use of evidence similar to that already objected to (except where this was done merely in self-defense, to explain or rebut the original evidence,).” It will be noted that Wigmore definitely qualifies the rule so that a litigant who has objected to improper evidence and whose objection has been overruled may still seek to comply with the order of the court and at the same time protect *61himself by means of cross-examination and rebuttal evidence. This is still the general rule in this country where incompetent evidence is admitted over objection, and where it becomes expedient to rebut the same in order to avoid any unfair prejudice which might arise; resort may be had to the same type of objectionable evidence without waiving the original error. In re Estate of Cheney, 78 Neb. 274, 110 N. W. 731; See, also, Sayner v. Sholer, 77 N. M. 579, 425 P. 2d 743; Williams v. Dawidowicz, 209 Md. 77, 120 A. 2d 399; Standard Accident Ins. Co. v. Terrell, 180 F. 2d 1; State v. Kile, 29 N. M. 55, 218 P. 347; Smith v. State, 247 Ala. 354, 24 So. 2d 546; Hoel v. City of Los Angeles, 136 Cal. App. 2d 295, 288 P. 2d 989; Fred J. Brotherton, Inc. v. Kreielsheimer, 22 N. J. Super. 385, 92 A. 2d 57; Goodale v. Murray, 227 Iowa 843, 289 N. W. 450, 126 A. L. R. 1121; Sevener v. Northwest Tractor & Equipment Corp., 41 Wash. 2d 1, 247 P. 2d 237; Parker v. T. O. Sutton & Sons (Tex. Civ. App.), 384 S. W. 2d 433.
This judgment should be reversed and the cause remanded for a new trial insofar as plaintiff Xske’s cause of action is concerned.