Home Gas Co. v. Miles

79 Misc. 2d 26, 358 N.Y.S.2d 846, 49 Oil & Gas Rep. 227, 1974 N.Y. Misc. LEXIS 1577
CourtNew York Supreme Court
DecidedJuly 15, 1974
StatusPublished
Cited by1 cases

This text of 79 Misc. 2d 26 (Home Gas Co. v. Miles) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Home Gas Co. v. Miles, 79 Misc. 2d 26, 358 N.Y.S.2d 846, 49 Oil & Gas Rep. 227, 1974 N.Y. Misc. LEXIS 1577 (N.Y. Super. Ct. 1974).

Opinion

Frederick B. Bryant, J.

This action was instituted by the Home G-as Company pursuant to ECL 23-1303 for the condemnation of underground storage rights in the Oriskany sandstone formation beneath the surface of the defendants’ farm in Schuyler and Yates Counties. By order of this court dated November 5, 1969 such condemnation was authorized and commissioners of appraisal appointed.

Defendants are the owners in fee of 94.77 acres of land in the Town of Tyrone, Schuyler County and the Town of Barrington in Yates County. This property is located in the Wayne portion of what is referred to as the Wayne-Dundee gas field. This field was at one time an active natural gas producing area but has in recent years been used mainly for the storage of natural gas brought in by pipeline from southern United States gas fields. The area consists of an underground layer of porous material known as Oriskany sandstone which lies approximately 1,800 feet beneath the surface of the defendants’ property.

The condemnation order decreed that, subject to determination of damages, the plaintiff was entitled to take title to the following interests in the defendants’ property: 1. The underground layer of Oriskany sandstone beneath the defendants’ property for so long as the plaintiff and its successor in interest shall continue to .store gas in the Wayne-Dundee storage field. 2. Any commercially recoverable native gas and oil in place in such subterranean area. 3. An abandoned gas well, with the right to plug and abandon such well, and a right of way across the surface of defendants’ property for such purpose. At the hearing it was stipulated that the right of way had already been used for this purpose and that the well had, in fact, been plugged and abandoned.

The commissioners spent nine days in hearings extending over a period of 22 months. On December 18, 1973 they filed [28]*28their report awarding a total of $20,361 to the defendants as damages for the taking of the underground storage rights and for gas and oil in place. Such damages included $1,025 for the abandoned well and right of way above referred to and $5,120 for commercially recoverable native gas.

The defendants now move to confirm the award. The plaintiff seeks an order rejecting the award and setting it aside on the grounds of irregularity and excessiveness.

In its final award the commissioners broke down the elements of damage as follows:

Market value of property with gas storage
rights ............................ $28,432
Market value of commercially recoverable
native' gas in place.................. 5,120
$33,552
Market value after condemnation....... $14,216
Loss in market value.................. $19,336
Stipulated value of abandoned well...... 1,000
Rental value of temporary easement .... 25
Total $20,361

For the reasons set forth herein the court concludes that the award must be rejected and set aside and that the issue of damages must be retried before new commissioners unless the defendants shall stipulate to accept a lower amount.

The court is mindful of the limited power which it has in reviewing the decision of commissioners of appraisal in condemnation cases. This power is defined in Matter of Huie (2 N Y 2d 168), in the following language (p. 171): “'The power of the courts to review an award of the commissioners is strictly limited, and every intendment is in favor of the action of the commission (Adirondack Power & Light Corp. v. Evans, 226 App. Div. 490, 493). The Supreme Court at Special Term cannot modify their award, but must either confirm or reject their report (Administrative Code, §§ K41-16.0, K41-23.0). This is not the case of a review by the court of a verdict of a jury (Adirondack Power & Light Corp. v. Evans, supra). The courts will reject a determination of the commissioners only for irregularity in the proceedings, or if based on an erroneous principle of law (see Matter of City of New York [Northern Blvd.], 258 N. Y. 136, 155), or, if it1 shocks not only one’s sense [29]*29of justice, but one’s conscience ’ (Matter of City of New York [Old Third Ave.], 241 App. Div. 13, 16, appeal dismissed 265 N. Y. 503; see Adirondack Power & Light Corp. v. Evans, supra; Matter of Huie [Merrill-City of New York], 306 N. Y. 951; Matter of Cibulas v. Village of Menands, 266 App. Div. 895).”

Thus the court recognizes the power of the commissioners to accept or reject expert testimony and their right to base their determination of value on their own knowledge and. observation. But the authorities do not support an assumption by the commissioners of unrestrained power to arbitrarily determine, the amount of damages to be awarded. In this respect they are in a position similar to that of trial jurors and must find some support for their decision in the evidence. They must determine fair market value on some foundation other than speculation and must follow the rules with reference to what constitutes fair market value as established by the courts..

The commissioners have valued the underground storage rights taken by the plaintiff at $150 per acre. This amounts to 50% of the total market value of the farm found by the commissioners. In the opinion of this court such valuation is so excessive that it shocks the court’s, conscience and sense of justice. (City of Troy v. Manufacturers Nat. Bank, 30 A D 2d 889.) The court is also of opinion that the valuation thus established is not supported by the evidence. Further, the court .finds that the evidence before the commissioners does not support an award for commercially recoverable native gas in place at the time of taking. It is also the court’s opinion that interest has been improperly allowed from 1963 instead of from the date of the award.

VALUATION OP UNDERGROUND STORAGE RIGHTS

While this action to condemn subsurface gas storage rights is a ease of first impression in New York State,, the value of such rights has been established by the courts of other States in accordance with the same rules which prevail here. In Milby v. Louisville Gas & Elec. Co. (375 S. W. 2d 237 [Ky.]), a Kentucky court reversed an award of $140 per acre as excessive. In Peoples Gas Light & Coke Co. v. Buckles (24 Ill. 2d 520), the Illinois court found an award of $25 per- acre for such rights to be proper, while in Midwestern Gas Transmission Co. v. Mason (31 Ill 2d 340), the same court affirmed a finding of the commissioners that such rights had no value to the owner.

Each of these cases recognized and applied well-established principles of law with reference to the valuation of property [30]*30taken in condemnation which appear to this court to have been overlooked by the commissioners in this proceeding.

In determining the question of damages it is important to keep in mind what is being taken. The Wayne-Dundee area was for many years a gas producing area. All of the comparable sales and leases relied on by the expert appraisers and by the commissioners reflect this fact.

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79 Misc. 2d 26, 358 N.Y.S.2d 846, 49 Oil & Gas Rep. 227, 1974 N.Y. Misc. LEXIS 1577, Counsel Stack Legal Research, https://law.counselstack.com/opinion/home-gas-co-v-miles-nysupct-1974.