Iske v. Metropolitan Utilities District of Omaha

157 N.W.2d 887, 183 Neb. 34, 1968 Neb. LEXIS 490
CourtNebraska Supreme Court
DecidedApril 12, 1968
Docket36558
StatusPublished
Cited by30 cases

This text of 157 N.W.2d 887 (Iske v. Metropolitan Utilities District of Omaha) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Iske v. Metropolitan Utilities District of Omaha, 157 N.W.2d 887, 183 Neb. 34, 1968 Neb. LEXIS 490 (Neb. 1968).

Opinions

White, C. J.

This is a proceeding in eminent domain. The defendant, Metropolitan Utilities District of Omaha, which furnishes water service to the metropolitan area of Omaha, Nebraska, is constructing a well field adjacent to the Platte River south of Omaha. As a part of that project, the defendant condemned a 284-acre tract of land owned by the plaintiff, George Thomas Iske.

The Iske tract contains Cedar Island, which has an area of 173 acres and is approximately 1% miles in length, and river-bed land amounting to 111 acres. Cedar Island is separated from the north bank of the Platte River by a narrow chute or waterway. Cedar Island is subject to a gravel lease owned by the Gerhold Company, a corporation

The appraisers appointed by the county judge awarded $190,380 to the plaintiff and $36,660 to the Gerhold Company. The plaintiffs’ Iske and the defendant separately appealed to the district court where the appeals were consolidated. The issue tried there was the fair market value of the land and leasehold taken by the defendant. The jury returned a verdict for the plaintiff in the amount of $510,150, and for the Gerhold Company in the amount of $26,850. The defendant’s motion for new trial was overruled and it has appealed.

The evidence shows that the highest and best use of Cedar Island is for the production of sand and gravel followed by use for recreational purposes. There is sand and gravel to: a depth of approximately 50 feet under Cedar Island with an overburden of from 1% to 3 feet. The sand and gravel deposit could also be used to supply á large volume of water for industrial purposes. The area in Sarpy County immediately north of Cedar Island is zoned for industrial use.

[37]*37The plaintiff’ produced two expert witnesses who testified that in their opinion the fair and reasonable market value of the Iske land was between $825,000 to $925,000, and $1,500,000 respectively. The defendant later moved to strike this testimony. The rulings on the motions to strike and on other objections made to this evidence are the basis for the defendant’s principal assignments of error.

The plaintiff’s first expert witness, Glenn Chase, testified that he had made a detailed study of the Cedar Island area and of the real estate sales in Cass and Sarpy Counties; and that there were no comparable sales of real estate which could be used as the basis for an appraisal. He based his appraisal upon an “income approach.” The parties stipulated that the opinion testimony of this expert witness was not based on the “prices! of other sales of property.”

Chase testified that he considered that the gravel would be exhausted in 12 years; that he computed an annual income by applying the royalty specified in the Gerhold Company lease to this estimate of the gravel which would be produced each year; and that he then applied a “discount or capitalization rate” of 7 percent (factor 7.943) to arrive at the value of this income. He further considered that Cedar Island would be available for recreational use after the gravel had been removed; that he computed an annual income from this use by assuming that there would be 232 lots to be rented and applying a rental rate of $2 per front foot less an amount for “Losses and administration”; and that he then applied a discount factor to this amount to obtain a present value of this income.

The plaintiff’s second expert witness, F. Pace Woods, considered the possibility of industrial use as well as sand and gravel production and recreational use. In valuing the property for sand and gravel production, Woods testified that he considered that it would yield a royalty in excess of $1,000,000. In valuing the prop[38]*38erty for recreational use he testified that he used the “income method” although his testimony does not show any computations used in arriving at a value. His opinion as to its value for industrial uses was based upon the factors that he considered necessary for industrial property.

The defendant contends that the testimony of the plaintiff’s expert witnesses should have been stricken because their testimony was, in part, based upon an improper measure of damages. The defendant argues that these expert witnesses should not have been allowed to testify concerning the quantity of sand and gravel available and the royalty rate specified in the Gerhold Company lease.

Where land taken by eminent domain has valuable deposits of gravel, this circumstance may be considered so far as it may affect the market value of the land, but part of the realty cannot be separately valued for its materials as an item in addition to the market value of the land. Pieper v. City of Scottsbluff, 176 Neb. 561, 126 N. W. 2d 865; Medelman v. Stanton-Pilger Drainage Dist., 155 Neb. 518, 52 N. W. 2d 328. Evidence may be received to show that the lands involved contain gravel deposits that are adaptable to commercial development and the fair market value of the lands in view thereof.

An expert witness may consider the quantity of a mineral in place of its unit price as a factor in determining the fair market value of the land. Pieper v. City of Scottsbluff, supra; United States v. Land in Dry Bed of Rosamond Lake, 143 F. Supp. 314; State Highway Commission v. Nunes, 233 Or. 547, 379 P. 2d 579. An expert witness may be permitted to use and testify to the factors which a well-informed buyer would use in arriving at the price he would pay for the property. Clark v. United States, 155 F. 2d 157.

The record in this case indicates that the plaintiff’s expert witnesses did not value the sand and gravel in place as an item separate from the value of the land, but [39]*39used this information as a factor in arriving at the value of the land.

In determining the value of the plaintiff’s land, after the production of sand and gravel had been completed, at least one of the plaintiff’s expert witnesses assumed that the property would be developed in accordance with a plan that had been described by a previous witness, John J. Thompson.

Thompson is a civil engineer who has had experience in planning and developing property for recreational use. He testified that he was: familiar with Cedar Island and had prepared a design for development of recreational lots on the island. Exhibit 16, which was received over objection, is a design or preliminary plat prepared by Thompson. It is an overlay, drawn over an aerial photograph of Cedar Island. The admission of exhibit 16 is assigned as error.

As a general rule, exhibits which are practically instructive to explain the evidence or aid in its interpretation or application by the jury may be admitted. Dawson v. City of Lincoln, 176 Neb. 311, 125 N. W. 2d 908.

But giving defendant’s objection its maximum range, the exhibit is challenged as being irrelevant because it is speculative, conjectural, and highly prejudicial. The determination of this question overlaps and partially embraces the larger question of the admissibility of the testimony of the expert witness Glenn Chase as to the capitalization of income on the recreational and residential lots as being a relevant factor in the determination of the present market value. In approaching this question we must remember that a direct issue was drawn in this case as to whether Cedar Island could reasonably be developed into a residential or recreational area.

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Bluebook (online)
157 N.W.2d 887, 183 Neb. 34, 1968 Neb. LEXIS 490, Counsel Stack Legal Research, https://law.counselstack.com/opinion/iske-v-metropolitan-utilities-district-of-omaha-neb-1968.