From the Circuit Court of Washington County; Civil Appeal; Special Judge Charles A. Weber; Reversed and Remanded
Motion for Rehearing Overruled, Transfer Denied October 4, 1983. Application Denied November 22, 1983
Before Simon, P.j., Stephan, Karohl, JJ.
The opinion of the court was delivered by: Karohl
Plaintiff-respondent State Highway Commission condemned forty-four acres in Washington County for the relocation of a highway right of way. Defendant-appellant Pfizer, Inc. owned only the mineral rights on the condemned acreage. The Commissioners awarded defendant $60,000 and plaintiff filed exceptions. Defendant appeals from the jury verdict of $12,000.
On appeal defendant argues: (1) the trial court erred in admitting plaintiff's evidence of value since plaintiff's appraisers improperly calculated the loss; and (2) the trial court should have admitted plaintiff's proferred testimony of an unaccepted offer to purchase the right to mine the condemned acreage. We reverse and remand.
On September 14, 1978, plaintiff brought a condemnation petition seeking to exercise its eminent domain powers over forty-four acres located in a tract of land known as the "Kingston tract." In 1963, defendant had obtained by deed, a fee interest in all barite, tiff, chat and lead recovered incidental to mining barite located in and under the Kingston tract. Defendant had an absolute right to recover and remove all the minerals by whatever mining method would be commercially feasible, to destroy the surface of the land in recovery of minerals, and to maintain and construct facilities for processing barite. The only issue at trial was the loss to defendant's fee interest in the mineral rights, not the loss to the fee owner of the surface land.
Defendant had actively mined barite within the Kingston tract until 1975. On December 10, 1979, defendant leased the exclusive right to mine barite within the Kingston tract to DeSoto Mining Company. The leasehold estate included the forty-four acres condemned by plaintiff. Under the lease, DeSoto agreed to pay defendant $5.04 per ton for each ton of recoverable barite mined.
Defendant first contends that plaintiff's experts used an incorrect method of computing defendant's damages and that such evidence should not have been admitted. Plaintiff's experts attempted to value defendant's mineral interest by determining how the presence of barite enhanced the per acre value of the entire Kingston tract, over 6,000 acres, and applying that value to the subject forty-four acres. One appraiser attempted to use a comparable sales method, locating one sale of land in Washington County containing barite. Using that sale, the appraiser estimated that the mineral interest was $150 per acre. The purported comparable sale, however, was a purchase of the entire fee, not just the mineral rights. He did not know the extent of the mineral deposits on the comparable or condemned property, but valued defendant's interest in the entire Kingston tract before and after the condemnation, arriving at a $10,000 loss.
Plaintiff's other appraiser also valued defendant's interest in the entire Kingston tract before and after the taking. He stated that defendant's interest in the entire tract was $275 per acre. Multiplying that amount by the number of acres taken, forty-four, he arrived at a $12,000 loss. The appraiser considered himself unqualified to value defendant's interest in the barite.
Plaintiff also called a geologist who testified that there were 1,182 tons of barite located in the forty-four acres taken for the highway right of way. Defendant's witness criticized the geologist's methods for estimating the amount of barite.
Defendant argues that plaintiff's evidence attempted to measure how the presence of barite enhanced the value of the entire Kingston tract, when the proper measure of damages should have been the value of the barite in place on the date of taking. Defendant's expert, Russell Dessieux, attempted to make such a valuation. A geological engineer employed by DeSoto Mining Company, Dessieux had previously worked with Pfizer and had been directly involved with prospecting and mining barite in the Kingston tract before the condemnation. Prior to plaintiff's construction of the new right of way, DeSoto had conducted an exploration to determine the amount of recoverable barite that would be destroyed by the state's taking. From those tests DeSoto projected the presence of 13,544 tons of recoverable barite within the boundary of the highway right of way, and 2.722 tons within the areas immediately adjacent to the right of way that would be lost for mining purposes. DeSoto calculated a total loss of 16,226 tons.
Dessieux then testified to the market demand for barite, its uses, and the retail value of barite at the date of taking. In calculating the value of the barite in place, Dessieux considered the market value of the ore, the topography of the Kingston tract, ability to mine the ore, location within the right of way, overburden, costs of reclamation, and distance from the washer plant. He arrived at a value in place of about $5.50 per ton, and total damages of approximately $80,000.
The general rule is that mineral deposits are not to be valued separately, but only as they enhance the value of the land. This rule only applies, however where there is no severance of the land into separate estates of surface and mineral rights. State ex rel. State Highway Commission v. Foeller, 396 S.W.2d 714, 719 (Mo. 1965); State ex rel. Milchem, Inc. v. Third Judicial District Court, 84 Nev. 541, 445 P.2d 148, 152 (1968); Hultberg v. Hjelle, 286 N.W.2d 448, 457 (N.D. 1979). Where there is a mineral deed, the subsurface rights create a separate, distinct interest apart from the surface rights. Foeller, 396 S.W.2d at 719. The issue at trial therefore is the value of the minerals in place. Id.; State Highway Commission v. Fegin, 2 Mich.App. 698, 141 N.W.2d 312, 315 (1966). See 4 Nichols' The Law of Eminent Domain § 13.22 (rev. 3d ed. 1981).
The testimony of plaintiff's appraisers had no relevant probative value, as they made no effort to make any calculations of the amount of minerals in the right of way or their value. See United States v, 237,500 Acres of Land, 236 F.Supp. 44, 50 (S.D. Cal. 1964), aff'd sub nom. United States v. American Pumice Co., 404 F.2d 336 (9th Cir. 1968). It was improper to limit the ...